Document:

Form of Notice of Stock Option Grant

    
      

    

    CARMAX,
      INC.

    NOTICE
      OF
      STOCK OPTION GRANT

    

    

    

    %%FIRST_NAME%-%
      %%LAST_NAME%-%    

    %%ADDRESS_LINE_1%-%

    %%ADDRESS_LINE_2%-%

    %%CITY%-%
      , %%STATE%-% %%ZIPCODE%-%

     

    

    Dear
      %%FIRST_NAME%-% %%LAST_NAME%-%

    

    The
      Board
      of Directors of CarMax, Inc. (the “Company”) wants to provide you with an
      opportunity to share in the success of our Company. Accordingly, I am pleased
      to
      inform you that, as of %%OPTION_DATE%_% the Compensation and Personnel Committee
      of the Board of Directors of the Company (the “Committee”) exercised its
      authority pursuant to the CarMax, Inc. 2002 Stock Incentive Plan, as amended
      and
      restated (the “Plan”) and granted you non-statutory
      options
      to
      purchase shares of the common stock of CarMax, Inc. (the “Options”) as set forth
      herein. The Options are not
      qualified for Incentive Stock Option tax treatment. Limited stock appreciation
      rights (“SARs”), described below, were also granted in connection with these
      Options. 

    

    The
      Options and SARs are subject to the provisions of the Plan. The Committee
      administers the Plan. The terms of the Plan are incorporated into this notice
      of
      Stock Option Grant (the “Notice of Grant”) and in the case of any conflict
      between the Plan and this Notice of Grant, the terms of the Plan shall control.
      All capitalized terms not defined herein shall have the meaning given to them
      in
      the Plan. Please refer to the Plan for certain conditions not set forth in
      this
      Notice of Grant. Additionally, a copy of a Prospectus for the Plan, which
      describes material terms of the Plan, can be found on The CarMax Way. Copies
      of
      the Prospectus, the Plan and the Company’s annual report to shareholders on Form
      10-K for fiscal year 20__ are available from the Company’s corporate secretary
      at (804) 747-0042. 

    

    
      	
              Number
                of Shares Subject to Option:

            	
              %%TOTAL_SHARES_GRANTED%%

            
	
              Option
                Price Per Share: 

            	
              %%OPTION_PRICE%%

            

    

    

    

    

    Vesting
      of Options

    

    Except
      as
      otherwise provided in this Notice of Grant, the Options will vest and become
      exercisable according to the following schedule: one-fourth on
      %%VEST_DATE_PERIOD1%-% , one-fourth on %%VEST_DATE_PERIOD2%-% , one-fourth
      on
      %%VEST_DATE_PERIOD3%-% , and one-fourth on %%VEST_DATE_PERIOD4%-% provided
      you
      continue to be employed by the Company on such dates. 

    

    Termination
      of Options

    

    The
      unexercised Options shall terminate upon the earliest to occur of the following
      conditions:

    

    
      	1.  	
              Expiration.
                The Options will expire on %%EXPIRE_DATE_PERIOD1%-% (the “Expiration
                Date”). 

            

    

    

    
      	2.  	
              Termination
                Without Cause; Immediate Vesting. If the Company terminates your
                employment with the Company for any reason other than Cause (as defined
                in
                your employment agreement with the Company), including for “Involuntary
                Termination Without Cause” or “Termination Without Cause”, as applicable,
                as defined in your employment agreement with the Company, all of
                your
                Options will become immediately vested and exercisable, effective
                as of
                the date of the termination of your employment. You, your personal
                representative, distributees, or legatees, must exercise your Options
                within three (3) months of the effective date of such termination.
                

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	3.  	
              Termination
                For Cause. Upon termination of your employment with the Company for
                “Cause” as defined in your employment agreement with the Company, your
                unexercised vested and unvested Options will terminate immediately.
                

            

    

    

    
      	4.  	
              Change
                in Full-Time Employment Status. In the event that your employment
                with the
                Company changes from full-time to part-time for any reason, your
                unvested
                Options will expire on the date of the change. Your vested Options
                will be
                unaffected and remain subject to the terms of this Notice of
                Grant.

            

    

    

    
      	5.  	
              Resignation;
                Leave. In the event that you resign your employment with the Company,
                you
                must exercise your vested Options within three (3) months of your
                resignation date or they will expire. Options that have not vested
                by your
                resignation date will expire on your resignation date. Employees
                on
                authorized leave (as determined under the Company’s authorized leave
                policy) will not be considered as having terminated merely by reason
                of
                the leave and will continue to be eligible to exercise and sell their
                Options during the period of the
                leave.

            

    

    

    Exercise
      of Options 

    

    When
      the
      Options are exercisable, you may purchase shares of Company common stock under
      your Option by:

    

    
      	1.  	
              Giving
                written notice to the Company, signed by you, stating the number
                of shares
                you have elected to purchase; and

            

    

    

    
      	2.  	
              Remitting
                payment of the purchase price in full (You may deliver Mature Shares
                of
                Company common stock that you own in satisfaction of all or any part
                of
                the purchase price or make other arrangements satisfactory to the
                Company
                and permitted by the Plan regarding payment of the purchase price);
                and

            

    

    

    
      	3.  	
              Remitting
                payment to satisfy the income tax withholding requirements for
                non-statutory options or making other arrangements to satisfy such
                withholding that are satisfactory to the Company and permitted by
                the
                Plan. 

            

    

    

    Death,
      Disability or Retirement

    

    If
      your
      employment by the Company terminates because you die, become disabled or retire
      (in accordance with retirement eligibility provisions of the Company’s
      retirement plan) all of your Options covered by this Notice of Grant will become
      immediately vested and exercisable, effective as of the date of the termination
      of your employment, and you, your personal representative, distributees, or
      legatees, as applicable, may exercise your vested Options at any time before
      the
      Expiration Date.

    

    Transferability
      of Options

    

    Except
      as
      provided below, the Options are not transferable by you other than by will
      or by
      the laws of descent and distribution and is exercisable during your lifetime
      only by you. You may transfer your rights under the Option during your lifetime
      subject to the following limitations:

    

    
      	1.  	
              Transfers
                are allowed only to the following
                transferees:

            

    

    

    
      	a)  	
              Your
                spouse, children, step-children, grandchildren, step-grandchildren
                or
                other lineal descendants (including relationships arising from legal
                adoptions). Such individuals are hereinafter referred to as “Immediate
                Family Members”.

            

    

    
      	b)  	
              Trust(s)
                for the exclusive benefit of any one or more of your Immediate Family
                Members.

            

    

    
      	c)  	
              Partnership(s),
                limited liability company(ies) or other entity(ies), the only partners,
                members or interest holder of which are among your Immediate Family
                Members.

            

    

    
      	d)  	
              Pursuant
                to a court issued divorce decree or Domestic Relations Order (as
                defined
                in the Code or Title I of the Employee Retirement Income Security
                Act (or
                rules thereunder)).

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        	2.  	
                You
                  may not receive any consideration in connection with the
                  transfer.

              

      

    
      	3.  	
              Transferees
                may not subsequently transfer their rights under the Option except
                by will
                or by the laws of descent or
                distribution.

            

    

    

    
      	4.  	
              Following
                the transfer, the Option will continue to be subject to the same
                terms and
                conditions as were applicable immediately prior to transfer (except
                that
                the transferee may deliver the Option exercise notice and payment
                of the
                exercise price).

            

    

    

    
      	5.  	
              You
                must give written notice of the transfer to the Company and the Company
                may require that any transfer is conditioned upon the transferee
                executing
                any document or agreement requested by the
                Company.

            

    

    

    Any
      Option transferred in accordance with the terms hereof shall be accompanied
      by
      the associated SAR.

    

    Change
      of Control; SARs

    

    Notwithstanding
      anything to the contrary herein, in the event of a Change of Control, all
      unvested Options granted hereunder shall immediately vest and you shall have
      the
      right during the period beginning on the date of the Change of Control and
      ending on the Expiration Date to exercise any and all vested Options in
      accordance with the provisions of this Notice of Grant. 

    

    Pursuant
      to this Notice of Grant, you have been granted one (1) SAR for every Option
      granted to you hereunder. Following a Change of Control, you may choose to
      exercise the SARs granted hereunder in lieu of exercising your vested Options.
      Doing so will relieve you of the obligation to pay for the exercise of your
      Options as described above and, instead, will allow you to receive a cash
      payment of the net value of your SARs as calculated below without having to
      remit any payment to the Company. The SARs granted in connection with the
      Options are limited SARs and may be exercised in accordance with the Plan and
      the terms hereof as follows:

    

    
      	1.  	
              The
                SARs shall only be exercisable if a Change of Control occurs. In
                such
                event, the Options will be exercisable at any time during a period
                of 90
                days beginning on the date the Change of Control occurs. To the extent
                that the SARs or their underlying Options are not exercised during
                an
                exercise period, the SARs will become unexercisable again until such
                time
                as another Change of Control occurs or %%EXPIRE_DATE_PERIOD1%-% ,
                when
                they expire.

            

    

    

    
      	2.  	
              When
                the SARs become exercisable, you may exercise the SARs by giving
                written
                notice to the Company, signed by you, stating the number of SARs
                that you
                are exercising.

            

    

    

    
      	3.  	
              Upon
                exercise of the SARs, you shall receive in exchange from the Company
                an
                amount equal to the excess of (x) the value of the Company’s common stock
                on the date of exercise, over (y) the exercise price of the underlying
                Option. For purposes of this paragraph, the value of the Company’s common
                stock shall be the Fair Market Value of the Company’s common stock on the
                date of exercise; provided, however, if the net after tax benefit
                to you,
                after considering all applicable taxes, interest and penalties, including
                taxes, interest and penalties imposed under Code section 409A, would
                be
                greater if the value was determined based on the highest closing
                price of
                the Company’s common stock, on the exchange on which it is then traded,
                during the 90 days immediately preceding the Change of Control, the
                value
                of the Company’s common stock shall be such higher amount. The
                determination of the net after tax benefit to you shall be made by
                the
                Company in its reasonable
                discretion.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              4.

            	
              The
                Company’s obligation arising upon exercise of the SARs shall be paid in
                cash and shall be subject to required income tax withholdings.
                

            

    

    

    
      	 	
              5.

            	
              To
                the extent a SAR is exercised, the underlying Option must be surrendered.
                The underlying Option, to the extent surrendered, shall no longer
                be
                exercisable. 

            

    

    

    Change
      in Capital Structure

    

    If
      the
      number of outstanding shares of the Company’s common stock is increased or
      decreased as a result of a stock dividend, stock split, subdivision or
      consolidation of shares, or other similar change in capitalization, the number
      of Company shares for which you have unexercised Options and the exercise price
      will automatically be adjusted, as provided in the Plan, (i) so as to preserve
      the ratio that existed immediately before the change between the number of
      such
      shares and the total number of shares of Company stock previously outstanding,
      and (ii) so that your aggregate Option price remains the same; provided,
      however, that the Company will not be required to issue any fractional shares
      upon exercise of your Options as a result of such adjustment. 

    

    Legal
      Fees

    

    The
      grant
      of these Options does not obligate the Company to continue your employment.
      If
      there is any litigation involving Options, each party will bear its own
      expenses, including all legal fees, except
      that in the event of an action brought by you under this Notice of Grant
      following a Change in Control, then insofar as such action is not deemed to
      be
      frivolous by the arbitrator, the Company shall bear all expenses related to
      the
      arbitration, including all legal fees incurred by you. The
      Committee shall have the authority to interpret and administer this Notice
      of
      Grant.

    

    By
      accepting this grant on-line, this Notice of Grant, together with the Plan,
      will
      become a Stock Option Agreement between you and the Company which is governed
      by
      and construed and enforced in accordance with the laws of the Commonwealth
      of
      Virginia. Further, by
      accepting this grant online, you agree that you are in compliance with, and
      will
      abide by, the Company’s “Policy Against Insider Trading - Management” which can
      be found on The CarMax Way. Further, by accepting this Notice of Grant, you
      agree that if you have not yet achieved the Company stock ownership levels
      required for your position, as applicable, as set forth in the Company’s Stock
      Ownership Guidelines for Certain Executive Officers, then upon exercise of
      any
      Options you will retain at least 50% of the underlying shares remaining after
      satisfaction of the option exercise cost and applicable tax
      liability.

    

    Sincerely,

    

    

    

    [Name,
      Title]

    

    

    ACCEPTED:

    

    Signature

    

    
      	
              %%FIRST_NAME%-%%%LAST_NAME%-%
                

            	
              %%EMPLOYEE_IDENTIFIER%-%

            
	
              Printed
                Name

            	
              Employee
                ID NumberCarMax, Inc. 2002 Non-Employee Directors Stock Incentive Plan

    
      

    

     CARMAX,
      INC. 

    2002
      NON-EMPLOYEE DIRECTORS

    STOCK
      INCENTIVE PLAN

    (AS
      AMENDED AND RESTATED APRIL
      24, 2006)

     

    1. Purpose.
      The
      purpose of this CarMax, Inc. 2002 Non-Employee Directors Stock Incentive Plan
      (the “Plan”) is to encourage ownership in CarMax, Inc. (the “Company”) by
      non-employee members of the Board of Directors of the Company, in order to
      promote long-term shareholder value and to provide non-employee directors with
      an incentive to continue as directors of the Company. 

    

    2. Definitions.
      As used
      in the Plan, the following terms have the meanings indicated: 

    

    (a) “Act”
      means the Securities Exchange Act of 1934, as amended. 

    

    (b) “Board”
      means the Board of Directors of the Company. 

    

    (c) “Change
      of Control” means the occurrence of either of the following events: (i) any
      individual, entity or group (as defined in Section 13(d)(3) of the Act) becomes,
      or obtains the right to become, the beneficial owner (as defined in Rule
      13(d)(3) under the Act) of Company securities having 20% or more of the combined
      voting power of the then outstanding securities of the Company that may be
      cast
      for the election of directors to the Board of the Company (other than as a
      result of an issuance of securities initiated by the Company in the ordinary
      course of business); or (ii) as the result of, or in connection with, any cash
      tender or exchange offer, merger or other business combination, sale of assets
      or contested election, or any combination of the foregoing transactions, the
      persons who were directors of the Company before such transactions shall cease
      to constitute a majority of the Board or of the board of directors of any
      successor to the Company.

    

    (d) “Code”
      means the Internal Revenue Code of 1986, as amended. 

    

    (e) “Company”
      means CarMax, a Virginia corporation. 

    

    (f) “Company
      Stock” means shares of CarMax Common Stock subject to the limits of Section 4.
      Such shares shall be subject to adjustment as provided in Section 14.

    

    (g) “Date
      of
      Grant” means the date on which an Incentive Award is granted by the Board.

    

    (h) “Disability”
      or “Disabled” means a disability as determined by the Board. 

    

    (i) “Fair
      Market Value” means, for any given date, the fair market value of the Company
      Stock as of such date, as determined by the Board on a basis consistently
      applied based on actual transactions in Company Stock on the exchange on which
      it generally has the greatest trading volume. 

    
      
        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (j) “Incentive
      Award” means, collectively, the award of an Option, Stock Appreciation Right,
      Restricted Stock, or Stock Grants under the Plan. 

    

    (k) “Nonstatutory
      Stock Option” means an Option that does not meet the requirements of Code
      section 422 or, even if meeting the requirements of Code section 422, is not
      intended to be an incentive stock option under Code section 422 and is so
      designated. 

    

    (l) “Option”
      means a right to purchase Company Stock granted under the Plan, at a price
      determined in accordance with the Plan. 

    

    (m) “Participant”
      means any non-employee member of the Board who receives an Incentive Award
      under
      the Plan. 

    

    (n) “Restricted
      Stock” means Company Stock awarded upon the terms and subject to the
      restrictions set forth in Section 6. 

    

    (o) “Restricted
      Stock Award” means an award of Restricted Stock granted under the Plan.

    

    (p) “Rule
      16b-3” means Rule 16b-3 adopted pursuant to section 16(b) of the Act. A
      reference in the Plan to Rule 16b-3 shall include a reference to any
      corresponding rule (or number redesignation) of any amendments to Rule 16b-3
      adopted after the effective date of the Plan’s adoption. 

    

    (q) “Stock
      Appreciation Right” means a right to receive amounts from the Company awarded
      upon the terms and subject to the restrictions set forth in Section 8.

    

    (r) “Stock
      Grant” means Company Stock awarded without restrictions in accordance with
      Section 9. 

    

    3. General.
      Incentive Awards may be granted under the Plan in the form of Nonstatutory
      Stock
      Options, Stock Appreciation Rights, Restricted Stock, and Stock Grants.

    

    4. Stock.
      Subject
      to Section 14 of the Plan, there shall be reserved for issuance under the Plan
      (i) an aggregate of 250,000 shares of CarMax Common Stock, which shall be
      authorized, but unissued shares. Shares of CarMax Common Stock that have not
      been issued and allocated to options or portions thereof that expire or
      otherwise terminate unexercised may be subjected to an Incentive Award under
      the
      Plan. Shares of a series of Company Stock that have not been issued under the
      Plan and that are allocable to Incentive Awards or portions thereof that expire
      or otherwise terminate unexercised may again be subjected to an Incentive Award
      under the Plan relating to shares of the same series of Company Stock.
      Similarly, if any shares of Restricted Stock issued pursuant to the Plan are
      reacquired by the Company as a result of a forfeiture of such shares pursuant
      to
      the Plan, such shares may again be subjected to an Incentive Award under the
      Plan relating to shares of the same series of Company Stock as those reacquired.
      

    
      
         

        

        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    5. Eligibility. 

    

    (a) Each
      director of the Company who is not a full-time employee of the Company or any
      parent or subsidiary of the Company shall be eligible to receive Incentive
      Awards under the Plan. The Board shall have the power and complete discretion,
      as provided in Section 15, to select which directors shall receive Incentive
      Awards and to determine for each such Participant the terms and conditions,
      the
      nature of the award and the number of shares to be allocated to each Participant
      as part of each Incentive Award. 

    

    (b) The
      grant
      of an Incentive Award shall not obligate the Company to pay a Participant any
      particular amount of remuneration or to make further grants to the Participant
      at any time thereafter. 

    

    6. Restricted
      Stock Awards. 

    

    (a) Whenever
      the Board deems it appropriate to grant a Restricted Stock Award, notice shall
      be given to the Participant stating the number of shares of Restricted Stock
      for
      which the Restricted Stock Award is granted and the terms and conditions to
      which the Restricted Stock Award is subject. This notice shall become an award
      agreement between the Company and the Participant. A Restricted Stock Award
      may
      be made by the Board in its discretion without cash consideration. 

    

    (b) Restricted
      Stock issued pursuant to the Plan shall be subject to the following
      restrictions: 

    

    (i) None
      of
      such shares may be sold, assigned, transferred, pledged, hypothecated, or
      otherwise encumbered or disposed of until the restrictions on such shares shall
      have lapsed or shall have been removed pursuant to paragraph (d) or (e) below.
      

    

    (ii) The
      restrictions on such shares must remain in effect and may not lapse for a period
      of three years beginning on the date of grant, except as provided under
      paragraph (d) or (e) in the case of Disability, retirement, death or a Change
      in
      Control. 

    

    (iii) If
      a
      Participant ceases to be a director of the Company, the Participant shall
      forfeit to the Company any shares of Restricted Stock, the restrictions on
      which
      shall not have lapsed or shall not have been removed pursuant to paragraph
      (d)
      or (e) below, on the date such Participant shall cease to serve as a member
      of
      the Board. 

    

    (iv) The
      Board
      may establish such other restrictions on such shares that the Board deems
      appropriate, including, without limitation, events of forfeiture. 

    

    (c) Upon
      the
      acceptance by a Participant of a Restricted Stock Award, such Participant shall,
      subject to the restrictions set forth in paragraph (b) above, have all the
      rights of a shareholder with respect to the shares of Restricted Stock subject
      to such Restricted Stock Award, including, but not limited to, the right to
      vote
      such shares of Restricted Stock and the right to receive all dividends and
      other
      distributions paid thereon. Certificates representing Restricted Stock shall
      

    
      
         

        

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    bear
      a
      legend referring to the restrictions set forth in the Plan and the Participant’s
      award agreement. If shares of Restricted Stock are issued without certificates,
      notice of the restrictions set forth in the Plan and the Participant’s Award
      Agreement must be given to the shareholder in the manner required by law.

    

    (d) The
      Board
      shall establish as to each Restricted Stock Award the terms and conditions
      upon
      which the restrictions set forth in paragraph (b) above shall lapse. Such terms
      and conditions may include, without limitation, the lapsing of such restrictions
      as a result of the Disability, death or retirement of the Participant or the
      occurrence of a Change of Control. 

    

    (e) Notwithstanding
      the forfeiture provisions of paragraph (b)(iii) above, the Board may at any
      time, in its sole discretion, accelerate the time at which any or all
      restrictions will lapse or remove any and all such restrictions. 

    

    7. Stock
      Options. 

    

    (a) Whenever
      the Board deems it appropriate to grant Options, notice shall be given to the
      eligible non-employee director stating the number of shares for which Options
      are granted, the Option price per share, the extent, if any, to which Stock
      Appreciation Rights are granted, and the conditions to which the grant and
      exercise of the Options are subject. This notice shall become a stock option
      agreement between the Company and the eligible non-employee director.

    

    (b) The
      exercise price of shares of Company Stock covered by a Nonstatutory Stock Option
      shall be not less than 100% of the Fair Market Value of such shares on the
      Date
      of Grant. 

    

    (c) Options
      may be exercised in whole or in part at such times as may be specified by the
      Board in the Participant’s stock option agreement. 

    

    (d) The
      Board
      may, in its discretion, grant Options that by their terms become fully
      exercisable upon a Change of Control notwithstanding other conditions on
      exercisability in the stock option agreement. 

    

    8. Stock
      Appreciation Rights. 

    

    (a) Whenever
      the Board deems it appropriate, Stock Appreciation Rights may be granted. The
      terms and conditions of the award shall be set forth in a stock appreciation
      rights agreement between the Company and the Participant. The following
      provisions apply to all Stock Appreciation Rights that are granted:

    

    (i) Stock
      Appreciation Rights shall entitle the Participant, upon the exercise of all
      or
      any part of the Stock Appreciation Rights, to receive from the Company an amount
      equal to the excess of (x) the fair market value on the date of exercise of
      the
      Company Stock covered by the Stock Appreciation Rights over (y) the fair market
      value on the Date of Grant of the Company Stock covered by the Stock
      Appreciation Rights. The Board may limit the amount that the Participant may
      be
      entitled to receive upon exercise of the Stock Appreciation Right.

    
      
         

        

        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    (ii) Stock
      Appreciation Rights shall be exercisable, in whole or in part, at such times
      as
      the Board shall specify in the Participant’s stock appreciation rights
      agreement. 

    

    (b) The
      manner in which the Company’s obligation arising upon the exercise of a Stock
      Appreciation Right shall be paid shall be determined by the Board and shall
      be
      set forth in the Participant’s stock appreciation rights agreement. The Board
      may provide for payment in Company Stock or cash, or a fixed combination of
      Company Stock or cash, or the Board may reserve the right to determine the
      manner of payment at the time the Stock Appreciation Right is exercised. Shares
      of Company Stock issued upon the exercise of a Stock Appreciation Right shall
      be
      valued at their Fair Market Value on the date of exercise.

    

    9. Stock
      Grants. 

    

    (a) Whenever
      the Board deems it appropriate, a Stock Grant may be made to eligible
      non-employee directors. The Board shall have complete discretion to make such
      Stock Grants and may do so whenever it considers it appropriate. 

    

    (b) Whenever
      the Board deems it appropriate, it may permit eligible non-employee directors
      to
      elect to receive a Stock Grant in lieu of retainer, meeting fees or other such
      fees to which such directors would otherwise be entitled. The Company Stock
      to
      be issued in connection with such a Stock Grant shall have a Fair Market Value
      equal to such fees otherwise payable, determined as of the date on which such
      payment of fees would otherwise become payable to such member of the Board.
      

    

    10. Method
      of Exercise of Options and Stock Appreciation Rights. 

    

    (a) Options
      and Stock Appreciation Rights may be exercised by the Participant giving notice
      of the exercise to the Company, stating the number of shares the Participant
      has
      elected to purchase under the Option or the number of Stock Appreciation Rights
      he has elected to exercise. In the case of a purchase of shares under an Option,
      such notice shall be effective only if accompanied by the exercise price in
      full
      paid in cash; provided that, if the terms of an Option so permit, the
      Participant may: (i) deliver shares of Participant-owned Company Stock (valued
      at their Fair Market Value on the date of exercise) in satisfaction of all
      or
      any part of the exercise price; or (ii) to the extent permitted under applicable
      laws and regulations, deliver a properly executed exercise notice together
      with
      irrevocable instructions to a broker to exercise all or part of the Option,
      sell
      a sufficient number of shares of Company Stock to cover the exercise price
      and
      other costs and expenses associated with such sale and deliver promptly the
      amount necessary to pay the exercise price. The Participant shall not be
      entitled to make payment of the exercise price other than in cash unless
      provisions for an alternative payment method are included in the Participant’s
      stock option agreement or are agreed to in writing by the Company with the
      approval of the Board prior to exercise of the Option. 

    

    (b) Until
      the
      Participant has made any required payment, and has had issued to him a
      certificate for the shares of Company Stock acquired, he shall possess no
      shareholder rights with respect to the shares. 

    
      
         

        

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    

    (c) Notwithstanding
      anything herein to the contrary, if the Company is subject to section 16 of
      the
      Act, Options and Stock Appreciation Rights shall always be granted and exercised
      in such a manner as to conform to the provisions of Rule 16b-3. 

    

    (d) Any
      shares of already owned Company Stock that are delivered by a Participant in
      satisfaction of all or any part of the exercise price of an Option shall be
      of
      the same series of Company Stock as the shares of Company Stock to which such
      Incentive Award relates. 

    

    11. Transferability
      of Incentive Awards.
      Nonstatutory Stock Options and Stock Appreciation Rights may be transferable
      by
      a Participant and exercisable by a person other than the Participant, but only
      to the extent specifically provided in the Incentive Award; provided, however,
      that no transfer for value or consideration will be permitted without the prior
      approval of the Company’s shareholders. 

    

    12. Effective
      Date of the Plan and Transition. 

    

    (a) This
      Plan
      shall be effective as of the date of separation between the Company and Circuit
      City Stores, Inc., and shall be submitted to the shareholders of Circuit City
      Stores, Inc. for approval prior to the separation. No Option or Stock
      Appreciation Right shall be exercisable and no Company Stock shall be issued
      under the Plan until (i) the Plan has been approved by the Company’s
      shareholders, (ii) shares issuable under the Plan have been registered with
      the
      Securities and Exchange Commission and accepted for listing on the New York
      Stock Exchange upon notice of issuance, and (iii) the requirements of any
      applicable state securities laws have been met. 

    

    (b) As
      of the
      date of separation between the Company and Circuit City Stores, Inc., this
      Plan
      shall assume obligations, including outstanding awards, from the Circuit City
      Stores, Inc. Amended And Restated 1989 Non-Employee Directors Stock Option
      Plan,
      to the extent provided in an agreement between the Company and Circuit City
      Stores, Inc. 

    

    13. Termination,
      Modification, Change.
      If not
      sooner terminated by the Board, this Plan shall terminate at the close of
      business on the day immediately preceding the tenth anniversary of the
      separation between the Company and Circuit City Stores, Inc. No Incentive Awards
      shall be granted under the Plan after its termination. The Board may terminate
      the Plan or may amend the Plan in such respects as it shall deem advisable;
      provided that no change shall be made that increases the total number of shares
      of Company Stock reserved for issuance pursuant to Incentive Awards granted
      under the Plan (except pursuant to Section 14) or permit repricing of options,
      unless such change is authorized by the shareholders of the Company.
      Notwithstanding the foregoing, the Board may unilaterally amend the Plan and
      Incentive Awards as it deems appropriate to ensure compliance with Rule 16b-3.
      Except as provided in the preceding sentence, a termination or amendment of
      the
      Plan shall not, without the consent of the Participant, adversely affect a
      Participant’s rights under an Incentive Award previously granted to him.

    
      
         

        

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    14. Change
      in Capital Structure. 

    

    (a) The
      number of shares reserved for issuance under the Plan, the terms of Incentive
      Awards, and all computations under the Plan shall be appropriately adjusted
      by
      the Board should the Company effect one or more stock dividends, stock splits,
      subdivisions or consolidations of shares, or other similar changes in
      capitalization, or if the par value of Company Stock is altered; provided,
      however, that no adjustment of an outstanding Option or Stock Appreciation
      Right
      may be made that would create a deferral of income or a modification, extension
      or renewal of such Option or Stock Appreciation Right under Code Section 409A
      except as may be permitted in applicable Treasury Regulations. If the adjustment
      would produce fractional shares with respect to any unexercised Option, the
      Board may adjust appropriately the number of shares covered by the Option so
      as
      to eliminate the fractional shares. 

    

    (b) If
      the
      Company is a party to a consolidation or merger in which the Company is not
      the
      surviving corporation, a transaction that results in the acquisition of
      substantially all of the Company’s outstanding stock by a single person or
      entity, or a sale or transfer of substantially all of the Company’s assets, the
      Board may take such actions with respect to outstanding Incentive Awards as
      the
      Board deems appropriate. 

    

    (c) Any
      determination made or action taken under this Section 14 by the Board shall
      be
      final and conclusive and may be made or taken without the consent of any
      Participant. 

    

    15. Administration
      of the Plan.
      The Plan
      shall be administered by the Board. The Board shall have general authority
      to
      impose any limitation or condition upon an Incentive Award that the Board deems
      appropriate to achieve the objectives of the Incentive Award and the Plan and,
      without limitation and in addition to powers set forth elsewhere in the Plan,
      shall have the following specific authority: 

    

    (a) The
      Board
      shall have the power and complete discretion to determine (i) which eligible
      non-employee directors shall receive an Incentive Award and the nature of the
      Incentive Award, (ii) the number of shares of Company Stock to be covered by
      each Incentive Award, (iii) when, whether and to what extent Stock Appreciation
      Rights shall be granted, (iv) the fair market value of Company Stock, (v) the
      time or times when an Incentive Award shall be granted, (vi) whether an
      Incentive Award shall become vested over a period of time and when it shall
      be
      fully vested, (vii) when Options and Stock Appreciation Rights may be exercised,
      (viii) whether a Disability exists, (ix) the manner in which payment will be
      made upon the exercise of Options or Stock Appreciation Rights, (x) conditions
      relating to the length of time before disposition of Company Stock received
      upon
      the exercise of Options or Stock Appreciation Rights is permitted, (xi) the
      terms and conditions applicable to Restricted Stock Awards, (xii) the terms
      and
      conditions on which restrictions upon Restricted Stock shall lapse, (xiii)
      whether to accelerate the time at which any or all restrictions with respect
      to
      Restricted Stock will lapse or be removed, (xiv) notice provisions relating
      to
      the sale of Company Stock acquired under the Plan, and (xv) any additional
      requirements relating to Incentive Awards that the Board deems appropriate.
      The
      Board shall have the power to amend the terms of previously granted Incentive
      Awards so long as the terms as amended are consistent with the terms of the
      Plan
      and provided that the consent 

    
      
         

        

        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    of
      the
      Participant is obtained with respect to any amendment that would be detrimental
      to the Participant, except that such consent will not be required if such
      amendment is for the purpose of complying with Rule 16b-3. 

    

    (b) The
      Board
      may adopt rules and regulations for carrying out the Plan. The interpretation
      and construction of any provision of the Plan by the Board shall be final and
      conclusive. The Board may consult with counsel, who may be counsel to the
      Company, and shall not incur any liability for any action taken in good faith
      in
      reliance upon the advice of counsel.

    

    (c) A
      majority of the members of the Board shall constitute a quorum, and all actions
      of the Board shall be taken by a majority of the members present. Any action
      may
      be taken by a written instrument signed by all of the members, and any action
      so
      taken shall be fully effective as if it had been taken at a meeting.

    

    16. Notice.
      All
      notices and other communications required or permitted to be given under this
      Plan may be in writing and shall be deemed to have been duly given if delivered
      personally or mailed first class, postage prepaid, as follows: (a) If to the
      Company—at its principal business address to the attention of the Secretary; (b)
      If to any Participant—at the last address of the Participant known to the sender
      at the time the notice or other communication is sent. 

    

    17. Miscellaneous.
      By
      accepting any Incentive Award under the Plan, each Participant, and each person
      claiming under or through such person, shall be conclusively deemed to have
      given his or her acceptance and ratification of, and consent to, any action
      taken with respect thereto by the Company or the Board. 

    

    IN
      WITNESS HEREOF, this instrument has been executed this 24th
      day of
      April, 2006. 

     

     

    
      	 	
              CARMAX,
                INC.

            
	 	 
	 	
              By:  /s/
                Keith D. Browning

            
	 	
              Keith
                D. Browning

            
	 	
              Executive
                Vice President &

            
	 	
              Chief
                Financial Officer

            
	 	 

    

     

     

     

     

     

    8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]