Document:

exhibit102.htm

 

CARMAX, INC.

RETIREMENT RESTORATION PLAN

Originally Effective

January 1, 2009

As Amended and Restated

June 30, 2011

  

  

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

TABLE OF CONTENTS

 

Page

	
INTRODUCTION

	  	  	
1

	
ARTICLE I

	  	
DEFINITIONS

	
2

	  	
1.01

	  	
Account

	
2

	  	
1.02

	  	
Beneficiary

	
2

	  	
1.03

	  	
Board

	
2

	  	
1.04

	  	
Code

	
2

	  	
1.05

	  	
Committee

	
2

	  	
1.06

	  	
Company

	
3

	  	
1.07

	  	
Compensation

	
3

	  	
1.08

	  	
Deferral Election

	
3

	  	
1.09

	  	
Elective Deferral Contribution

	
3

	  	
1.10

	  	
Elective Deferral Contribution Account

	
3

	  	
1.11

	  	
Eligible Employee

	
3

	  	
1.12

	  	
Employee

	
3

	  	
1.13

	  	
ERISA

	
4

	  	
1.14

	  	
Key Employee

	
4

	  	
1.15

	  	
Matching Contribution

	
4

	  	
1.16

	  	
Matching Contribution Account

	
4

	  	
1.17

	  	
Participant

	
4

	  	
1.18

	  	
Performance-Based Compensation

	
4

	  	
1.19

	  	
Plan

	
5

	  	
1.20

	  	
Plan Asset Committee

	
5

	  	
1.21

	  	
Plan Compensation

	
5

	  	
1.22

	  	
Plan Year

	
5

	  	
1.23

	  	
Related Company

	
5

	  	
1.24

	  	
Retire

	
5

	  	
1.25

	  	
Retirement Contribution

	
5

	  	
1.26

	  	
Retirement Restoration Contribution

	
5

	  	
1.27

	  	
Retirement Restoration Contribution Account

	
6

	  	
1.28

	  	
Retirement Savings Plan

	
6

	  	
1.29

	  	
Spouse or Surviving Spouse

	
6

	  	
1.30

	  	
Termination of Employment

	
6

	  	
1.31

	  	
Totally and Permanently Disabled

	
6

	  	
1.32

	  	
Valuation Date

	
6

	  	
1.33

	  	
Year of Vesting Service

	
6

	
ARTICLE II

	  	
ELIGIBILITY AND PARTICIPATION

	
7

	  	
2.01

	  	
Eligibility Requirements

	
7

	  	
2.02

	  	
Participation in the Plan

	
7

	  	
2.03

	  	
Deferral Elections

	
7

 

 

  

i

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
ARTICLE III

	  	
ACCOUNTS AND INVESTMENTS

	
9

	  	
3.01

	  	
Establishment of Accounts

	
9

	  	
3.02

	  	
Retirement Restoration Contributions

	
9

	  	
3.03

	  	
Elective Deferral Contributions

	
9

	  	
3.04

	  	
Matching Contributions

	
9

	  	
3.05

	  	
Investment Options and Allocation of Net Income/Loss

	
10

	  	
3.06

	  	
Vesting

	
10

	
ARTICLE IV

	  	
DISTRIBUTIONS

	
11

	  	
4.01

	  	
Payment of Benefits

	
11

	  	
4.02

	  	
Form of Distribution

	
11

	  	
4.03

	  	
Federal Income Tax Withholding

	
11

	  	
4.04

	  	
Discharge of Obligation

	
11

	
ARTICLE V

	  	
ADMINISTRATION

	
12

	  	
5.01

	  	
Administrator

	
12

	  	
5.02

	  	
Appointment of the Committee

	
12

	  	
5.03

	  	
Powers of the Committee

	
12

	  	
5.04

	  	
Indemnification

	
13

	  	
5.05

	  	
Binding Decisions or Actions

	
13

	  	
5.06

	  	
Administrative Costs

	13
	  	
5.07

	  	
Discretion

	
13

	
ARTICLE VI

	  	
AMENDMENT AND TERMINATION OF THE PLAN

	
14

	  	
6.01

	  	
Amendment of the Plan

	
14

	  	
6.02

	  	
Termination of the Plan

	
14

	
ARTICLE VII

	  	
CLAIMS

	
15

	  	
7.01

	  	
Right to File Claim

	
15

	  	
7.02

	  	
Denial of Claim

	
15

	  	
7.03

	  	
Claims Review Procedure

	
15

	  	
7.04

	  	
Decision on Review

	
16

	  	
7.05

	  	
Legal Action

	
16

	  	
7.06

	  	
Exclusive Forum

	
16

	
ARTICLE VIII

	  	
GENERAL PROVISIONS

	
17

	  	
8.01

	  	
No Guarantee of Employment

	
17

	  	
8.02

	  	
Unfunded Plan

	
17

	  	
8.03

	  	
Trust

	
17

	  	
8.04

	  	
Payments to Minors and Incompetents

	
17

	  	
8.05

	  	
Notice

	
18

	  	
8.06

	  	
Non-Alienation of Benefits

	
18

	  	
8.07

	  	
Headings

	
18

	  	
8.08

	  	
Construction

	
18

 

 

  

ii

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	  	
8.09

	  	
Invalid or Unenforceable Provisions

	
18

	  	
8.10

	  	
Lost Participants or Beneficiaries

	
19

	  	
8.11

	  	
Beneficiary Designation

	
19

	  	
8.12

	  	
Errors and Omissions

	
19

	  	
8.13

	  	
Governing Law

	
19

	  	
8.14

	  	
Omnibus Provisions

	
19

 

 

 

  

iii

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

INTRODUCTION

The CarMax, Inc., Retirement Restoration Plan (“Plan”) was adopted effective January 1, 2009.  The Plan, as amended and restated on June 30, 2011, is intended to allow the deferral of both salary and annual bonus compensation and to make other changes related to the administration of the Plan.  The purpose of the Plan is to supplement the benefits payable for a select group of management or highly compensated employees of CarMax, Inc. and its affiliates to the extent that retirement contributions are limited under the CarMax, Inc., Retirement Savings Plan as a result of the application of sections 415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended.  The Plan is also intended to provide supplemental savings to eligible employees through a program of elective deferral contributions (that are matched, in part, by employer contributions in accordance with the terms of the Plan).  The Company has determined that the adoption of the Retirement Restoration Plan will assist in attracting and retaining those employees whose abilities and experience will contribute to its continued success.

The Plan is intended to be a plan that is unfunded and maintained by the Company for the purpose of providing deferred compensation for a select group of management or highly compensated employees as described in the Employee Retirement Income Security Act of 1974, as amended.  The Plan also is intended to satisfy the requirements of Code section 409A.  All questions concerning the Plan should be interpreted in light of the Company’s intention to conform to the applicable requirements of ERISA and Code section 409A.

  

1

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE I

DEFINITIONS

	
1.01  

	
Account

The account or bookkeeping record reflecting a Participant’s interest in the Plan.  A Participant may have several Accounts under the Plan, including an Elective Deferral Contribution Account, a Matching Contribution Account and a Retirement Restoration Contribution Account.  When the term “Account” is used without modification, it means the sum of all of the Participant’s Plan Accounts.

	
1.02  

	
Beneficiary

The person or entity specified by a Participant by the method prescribed by the Committee for that purpose.  If a Participant does not designate a Beneficiary or if the designated Beneficiary predeceased the Participant or is not in existence on the date of the Participant’s death, then Beneficiary means the Participant’s Surviving Spouse, or if there is no Surviving Spouse, the executor(s) or administrator(s) of the Participant’s estate.

	
1.03  

	
Board

The Board of Directors of CarMax, Inc.

	
1.04  

	
Code

The Internal Revenue Code of 1986, as amended from time to time and as construed, interpreted and modified by regulations or rulings.

	
1.05  

	
Committee

A committee of no less than three members, as described in Article V, to be responsible for the general administration of the Plan.  The Committee may delegate all or a part of its duties to one or more individuals or entities, and references herein to the Committee shall include such individuals and entities to the extent of such delegation.

 

 

  

2

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
1.06  

	
Company

CarMax, Inc., and all of its Related Companies, subsidiaries and divisions except for those Related Companies, subsidiaries and divisions whose employees or segments thereof have not been designated to be included in this Plan.  Where only a segment of a Related Company’s, subsidiary’s or division’s employees has been designated for coverage hereunder, “Company” applies to such Related Company, subsidiary or division only as it relates to such entity’s employees eligible for coverage.

	
1.07  

	
Compensation

“Compensation,” as defined under the Retirement Savings Plan, without regard to the subsections of the Retirement Saving Plan “Compensation” definition:

(a)           that relate to top-heavy rules and anti-discrimination rules; and

(b)           that impose the limits prescribed and adjusted by Code section 401(a)(17) and 415(d).

	
1.08  

	
Deferral Election

The deferral election made by a Participant pursuant to Plan Section 2.03.

	
1.09  

	
Elective Deferral Contribution

A Participant’s elective deferrals made at the election of the Participant pursuant to Plan Section 2.03.

	
1.10  

	
Elective Deferral Contribution Account

The account or bookkeeping record reflecting the Participant’s Elective Deferral Contributions, including any “salary reduction contributions” credited prior to June 30, 2011.

	
1.11  

	
Eligible Employee

An Employee who is a member of a select group of management or highly compensated employees of the Company.

	
1.12  

	
Employee

A person employed by the Company as a common law employee on the Company’s U.S. payroll.  It is expressly intended that persons not employed as common law employees on the Company’s U.S. payroll are to be excluded from participation in the Plan, even if a court or administrative agency determines that such individuals are common law employees.  The term “Employee” shall not include independent contractors or leased employees within the meaning of Code section 414(n)(2).

 

 

  

3

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
1.13  

	
ERISA

The Employee Retirement Income Security Act of 1974, as amended from time to time and as construed, interpreted and modified by regulations or rulings.

	
1.14  

	
Key Employee

A Participant who, as of December 31st of a calendar year, meets the requirements of Code section 409A(a)(2)(B)(i) to be treated as a “specified employee” of the Company, i.e., a key employee (as defined in Code section 416(i)(1)(A)(i), (ii) or (iii) applied in accordance with the regulations thereunder and disregarding Code section 416(i)(5)).  A Participant who meets the criteria in the preceding sentence will be considered a Key Employee for purposes of the Plan for the 12-month period commencing on the next following April 1.

	
1.15  

	
Matching Contribution

Any unfunded matching contribution allocation made for the benefit of the Participant by the Company under Plan section 3.04.

	
1.16  

	
Matching Contribution Account

The account or bookkeeping record reflecting the Matching Contributions made on behalf of a Participant.

	
1.17 

	
Participant

An Eligible Employee who satisfies the requirements of Article II.

	
1.18  

	
Performance-Based Compensation

Compensation where the amount thereof, or entitlement thereto, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months.  Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established.  The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treasury Regulation Section 1.409A-1(e) and applicable guidance.

  

4

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

	
1.19  

	
Plan

The CarMax, Inc. Retirement Restoration Plan as set forth herein and as amended from time to time.  The term “Plan Section” shall refer to a section of this Plan.

	
1.20  

	
Plan Asset Committee

A committee of no less than three members, appointed by the Chief Executive Officer of the Company, to have the rights and duties described in Articles III and V.  The Plan Asset Committee may delegate all or a part of its duties to one or more individuals or entities, and references herein to the Plan Asset Committee shall include such individuals and entities to the extent of such delegation.

	
1.21  

	
Plan Compensation

The excess (if any) of (a) the Participant’s Compensation for the Plan Year over (b) the annual tax-qualified plan compensation limitation set forth under Code section 401(a)(17), as adjusted for that Plan Year.

	
1.22  

	
Plan Year

The calendar year.

	
1.23  

	
Related Company

Any corporation which, when considered with the Company, would constitute a controlled group of corporations within the meaning of Code section 1563(a), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(C) or any entity, whether or not incorporated which, when considered with the Company, would constitute a controlled group in accordance with Code section 414(c) and regulations promulgated thereunder.

	
1.24  

	
Retire

A Termination of Employment by a Participant at or after age 65, other than due to death.

	
1.25  

	
Retirement Contribution

“Retirement Contribution,” as defined under the Retirement Savings Plan.

	
1.26  

	
Retirement Restoration Contribution

The Company’s unfunded contribution to a Participant’s Account as provided in Plan section 3.02.

 

 

  

5

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
1.27  

	
Retirement Restoration Contribution Account

The account or bookkeeping record reflecting the Retirement Restoration Contributions made on behalf of a Participant.

	
1.28  

	
Retirement Savings Plan

The CarMax, Inc., Retirement Savings Plan, as in effect on January 1, 2009, and as subsequently amended for the applicable time.

	
1.29  

	
Spouse or Surviving Spouse

The person to whom the Participant is legally married as determined under federal law and under the laws of the state of his domicile, on his death or on the date benefits are paid, whichever is earlier.

	
1.30  

	
Termination of Employment

 A Participant’s separation from service from the Company, whether an Employee Retires or through any other termination of employment, within the meaning of Code section 409A and Treasury Regulations thereunder.

	
1.31  

	
Totally and Permanently Disabled

The Participant is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under a disability plan covering employees of the Company.

	
1.32  

	
Valuation Date

Any day that the New York Stock Exchange is open for business.

	
1.33  

	
Year of Vesting Service

Each Plan Year for which an Employee is entitled to a Year of Vesting Service in accordance with and subject to the rules set forth in the Retirement Savings Plan.

  

6

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE II

ELIGIBILITY AND PARTICIPATION

	
2.01  

	
Eligibility Requirements

An individual shall become a Participant in the Plan as of the first day of the first Plan Year in which such individual is an Eligible Employee whose Compensation for such Plan Year exceeds the compensation dollar limit imposed under Code section 401(a)(17) (for example, $245,000 for calendar year 2011).

	
2.02  

	
Participation in the Plan

(a)           An Eligible Employee who wishes to make Elective Deferral Contributions under the Plan must submit a Deferral Election to the Committee in accordance with the procedures set forth in Plan Section 2.03.

(b)           Each Eligible Employee and Participant must correctly disclose to the Committee all requested information necessary for the administration of the Plan.

(c)           A Participant shall continue to be a Participant of the Plan until the date that he is no longer entitled to benefits under the Plan.

	
2.03  

	
Deferral Elections

(a)           Amount of Elective Deferral Contributions.  A Participant may elect to defer a percentage (in one percent (1%) increments) of his Plan Compensation under the Plan up to the maximum percentage announced by the Committee each Plan Year.

(b)           Timing of Elections.  Except as provided in Plan Section 2.03(c), a Participant may make an irrevocable Deferral Election to defer Plan Compensation earned during a Plan Year only if such election is made no later than December 31 of the prior Plan Year, or by such earlier date as may be announced by the Committee.  Notwithstanding the foregoing, if any portion of the Plan Compensation subject to a Deferral Election pertains to Performance-Based Compensation, such Deferral Election must be made and will become irrevocable no later than the date that is six months before the end of the performance period as permitted by the Committee.  A Deferral Election will rollover and apply to subsequent Plan Years and performance periods, as applicable, unless the Participant revokes such election or timely files a new Deferral Election in accordance with Code section 409A.  Each Deferral Election shall be made on a form provided by the Committee and shall specify such additional information as the Committee may require.

 

 

  

7

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

(c)           First Year of Eligibility.  In the first Plan Year in which an Eligible Employee becomes eligible to participate in the Plan, the Eligible Employee may make an initial Deferral Election within 30 days after he becomes eligible to participate in the Plan.  Such Deferral Election shall only be valid with respect to Compensation paid for services rendered after the date of the initial deferral election.

  

8

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE III

ACCOUNTS AND INVESTMENTS

	
3.01 

	
Establishment of Accounts

The Committee shall establish and maintain an Elective Deferral Contribution Account, a Matching Contribution Account and a Retirement Restoration Contribution Account for each Participant in the Plan.  As required for appropriate recordkeeping, the Committee may establish and name subaccounts for each Participant.

	
3.02 

	
Retirement Restoration Contributions

If a Retirement Contribution is declared under the Retirement Savings Plan for a Plan Year, as soon as practicable after the end of such Plan Year, the Company shall credit to the Participant’s Retirement Restoration Contribution Account an amount equal to (a) the percentage declared under the Retirement Savings Plan for purposes of calculating that Participant’s Retirement Contribution, if any, times (b) the Participant’s Plan Compensation.  A Participant will not receive a Retirement Restoration Contribution for a Plan Year unless the Participant receives a Retirement Contribution for a Plan Year.  A Participant must be employed on the last day of such Plan Year to be eligible for a Retirement Restoration Contribution except in the case of a Participant who has died, or who has Retired after completing 1,000 Hours of Service (for purposes of the Retirement Savings Plan), during the Plan Year.

	
3.03 

	
Elective Deferral Contributions

If a Participant makes a Deferral Election under Plan Section 2.03, the Company shall credit to the Participant’s Elective Deferral Contribution Account each pay period an amount equal to the amount of Plan Compensation deferred pursuant to such Participant’s Deferral Election.

	
3.04 

	
Matching Contributions

A Participant who makes an Elective Deferral Contribution for a Plan Year and who has completed at least one Eligibility Computation Period (as defined in the Retirement Savings Plan) shall be entitled to a Matching Contribution with respect to such Elective Deferral Contribution.  The amount of such Matching Contribution shall be equal to fifty percent (50%) of a percentage (as announced by the Committee) of such Elective Deferral Contribution for such Plan Year, but not to exceed five percent (5%) of Compensation for the Plan Year.

  

9

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

	
3.05 

	
Investment Options and Allocation of Net Income/Loss

 

(a)           Investment options will be determined by the Plan Asset Committee.  The Plan Asset Committee, in its sole and absolute discretion, may add or remove investment options from the Plan menu from time to time.

(b)           A Participant shall select investment options at the time he files an application to become a Participant (any such selections shall be in increments of one percent (1%)).  If a Participant does not select the funds in which his Account shall be invested, his Account shall be invested in the manner determined by the Plan Asset Committee or, if no such determination is announced, in the applicable default investment fund or funds under the Retirement Savings Plan.  The Plan Asset Committee shall have no responsibility to any Participant or anyone claiming a benefit through a Participant if the Participant fails to make an investment allocation or to change any investment allocation.  A Participant may change his investment options on a daily basis.

(c)           As of each Valuation Date, the Company shall credit to each Participant electing investment in a fund, the net income (or loss), including all realized and unrealized gains and losses, of that fund since the last Valuation Date attributable to his Account, according to the ratio of the portion of each Participant’s Account invested in that fund as of the day immediately following the last Valuation Date, less any withdrawals or transfers since such date, to the sum of all portions of the Participants’ Account balances invested in that fund, similarly determined.

(d)           All investments under this Plan section are deemed investments used solely for measurement of the value of a Participant’s Account.

	
3.06 

	
Vesting

 

(a)           Elective Deferral Contribution Account.  A Participant shall at all times have a one hundred percent (100%) vested, nonforfeitable interest in his Elective Deferral Contribution Account.

(b)           Matching Contribution and Retirement Restoration Contribution Accounts. A Participant who dies prior to terminating employment with the Company or Retires shall have a one hundred percent (100%) vested, nonforfeitable interest in his Matching Contribution and Retirement Restoration Contribution Accounts.  Otherwise, a Participant shall have a one hundred percent (100%) vested, nonforfeitable interest in his Matching Contribution and Retirement Restoration Contribution Accounts only after he has completed three Years of Vesting Service with the Company.  Prior to the vesting events described in this Plan section 3.06, a Participant’s Matching Contribution and Retirement Restoration Contribution Accounts shall be entirely forfeitable.

  

10

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE IV

DISTRIBUTIONS

	
4.01  

	
Payment of Benefits

(a)           In the event of a Participant’s Termination of Employment (including due to death) or Total and Permanent Disability, the Plan shall pay the Participant or his Beneficiary, as the case may be, the total vested value of the Participant’s Account.  Such payment shall be made within sixty (60) days following the earliest of (i) the Participant’s Termination of Employment, (ii) death or (iii) the date such Participant is determined to be Totally and Permanently Disabled.

(b)           Notwithstanding Plan section 4.01(a), if required by Code section 409A, for a Participant who is entitled to a distribution upon Termination of Employment other than due to death or Total and Permanent Disability, and who is a Key Employee on the date of his Termination of Employment, the Plan shall pay the Participant the total vested value of the Participant’s Account on the first day of the month following the six-month anniversary of such Participant’s Termination of Employment.

	
4.02 

	
Form of Distribution

Payment shall be made from the Plan to a Participant or Beneficiary in a single sum in cash.

	
4.03 

	
Federal Income Tax Withholding

Participants and, if applicable, Beneficiaries shall be provided with proper notice and election forms for the purpose of withholding Federal income tax from distributions from the Plan in accordance with Code section 3405.

	
4.04 

	
Discharge of Obligation

Payment of the vested value of the Participant’s Account under this Article shall discharge the Company’s obligation to the Participant or his Beneficiary.

  

11

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE V

ADMINISTRATION

	
5.01  

	
Administrator

The Plan will be administered by the Committee.

	
5.02  

	
Appointment of the Committee

The Chief Executive Officer of CarMax, Inc. shall appoint at least three persons to serve on the Committee.

	
5.03  

	
Powers of the Committee

      

Except where responsibilities have been allocated or delegated to another person or entity, including the Plan Asset Committee, the Committee will have full power and discretion to administer the Plan, including as to all of its details, including the power to decide Plan benefit claims.  For the purpose of administering the Plan, the Committee’s power will include, but will not be limited to, the following authority:

(a)           to make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan or as required to comply with applicable law;

(b)           to interpret the Plan, its interpretation thereof in good faith to be final and conclusive as to any current or former Employee, Participant, or Beneficiary;

 

 

(c)           to decide all questions concerning the Plan, including whether a payment of Plan benefits is due;

(d)           to compute the amount of benefits payable to any current or former Employee, Participant, or Beneficiary in accordance with the Plan, and to determine the person or persons to whom such benefits will be paid;

(e)           to authorize the payment of Plan benefits;

(f)           to keep such records and submit such filings, elections, applications, returns or other documents or forms as may be required under the Code and applicable regulations, or under state or local law and regulations; and

(g)           to appoint such agents, counsel, accountants, consultants and record keepers as may be required to assist in administering the Plan.

  

12

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

	
5.04 

	
Indemnification

The Company shall indemnify the Committee, the Plan Asset Committee, their respective members, and each other Employee who is involved in the administration of the Plan against all costs, expenses and liabilities, including attorneys’ fees, incurred in connection with any action, suit or proceeding that alleges, arises out of, or relates in any way to any good faith act or failure to act in connection with, or related in any way to, the Plan.  Promptly after receipt by an indemnified party of notice of the commencement of any such action, suit or proceeding, the indemnified party shall notify the Company.  The Company shall be entitled to participate at its own expense in the defense or to assume the defense of any indemnified party.  If the Company elects to assume the defense, counsel chosen by the Company shall conduct the defense, and the indemnified party shall bear the fees and expenses of any additional counsel retained by him.

	
5.05  

	
Binding Decisions or Actions

The decision or action of the Committee or the Plan Asset Committee in respect of any question within the scope of their respective duties arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

	
5.06 

	
Administrative Costs

All reasonable costs incurred in the administration of the Plan shall be paid by the Company.

	
5.07 

	
Discretion

In discharging the duties assigned to them under the Plan, each of the Company, the Committee, the Plan Asset Committee and each other individual or entity authorized by the Committee or the Plan Asset Committee (each, an “Authorized Person”) has the discretion to: interpret the Plan; adopt, amend and rescind rules and regulations pertaining to its duties under the Plan; and to make all other determinations necessary or advisable for the discharge of its duties under the Plan.  The discretionary authority of an Authorized Person is absolute and exclusive.  The express grant in the Plan of any specific power to an Authorized Person with respect to any duty assigned to it under the Plan must not be construed as limiting any power or authority of such Authorized Person to discharge its duties.  A decision of an Authorized Person is final and conclusive in any subsequent action, suit, or proceeding unless it is established that the decision constituted an abuse of discretion.  No Plan benefits shall be paid to any Participant, Beneficiary or other person unless an Authorized Person shall determine, in its sole and absolute discretion, that such benefits are due.

  

13

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE VI

AMENDMENT AND TERMINATION OF THE PLAN

	
6.01 

	
Amendment of the Plan

The Company shall have the right by action of the Committee to amend the Plan from time to time (a) as necessary to ensure the Plan meets requirements under the Code; or (b) to implement changes in Plan design that are not financially material to the Company or the Company’s shareholders; provided, however, that no amendment shall retroactively reduce any benefit to a Participant or Beneficiary (to the extent that such benefit was accrued and vested prior to such amendment).  Any amendment to the Plan that is financially material to the Company or the Company’s shareholders must be approved by the Board.

	
6.02 

	
Termination of the Plan

The Company reserves the right to terminate the Plan at any time by action of the Board provided that any such action shall not, in any way, retroactively reduce any benefit to a Participant or Beneficiary (to the extent that such benefit was accrued and vested prior to such termination).  Any termination of the Plan must satisfy the requirements of Code section 409A.

  

14

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE VII

Claims

	
7.01   

	
Right to File Claim

A Participant, Beneficiary or former Participant (each a “Claimant”) shall be entitled to file with the Committee’s delegate a claim for benefits under the Plan.  The claim must be in writing.  Unless another individual or entity is named by the Committee to hear claims for benefits, the Committee’s delegate shall be the Company’s Director of Benefits or the Plan’s recordkeeper.

	
7.02   

	
Denial of Claim

 

If the claim is denied by the Committee’s delegate in whole or in part, the Claimant shall be furnished within 90 days after the receipt by the Committee’s delegate of the claim (or within 180 days after such receipt if special circumstances require an extension of time) a written notice of denial of the claim containing the following:

(a)           the specific reason or reasons for the denial;

(b)           specific reference to the Plan provisions on which the denial is based;

(c)           a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

(d)           an explanation of the procedure for review of the denied or partially denied claim (set forth below) and applicable time limits, including a statement of the Claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

	
7.03   

	
Claims Review Procedure

           

Upon denial of a claim, in whole or in part, the Claimant or his duly authorized representative will have the right to submit a request to the Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Committee.  The notice of appeal must be filed within 60 days of the receipt by the Claimant of written notice of the denial of the claim.  The Claimant or his representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing.  The Committee will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial decision on the claim.

If the Claimant fails to file an appeal within 60 days of the receipt by the Claimant of the denial of the claim, the claim will be deemed abandoned and the Claimant precluded from reasserting it.  If the Claimant does file an appeal, his request must include a description of the issues and evidence he deems relevant.

 

 

  

15

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
7.04   

	
Decision on Review

 

The Committee will review and decide whether an appeal is approved or denied.  A written notice of the decision will be furnished to the Claimant within 60 days of the date on which the appeal is received by the Committee.  If special circumstances require a longer period, the Claimant will be notified in writing, prior to the expiration of the 60-day period, of the reasons for an extension of time and the date by which a decision is expected; provided, however, that no extensions will be permitted beyond 60 days after the expiration of the initial 60-day period.  An appeal is considered approved only if its approval is communicated in writing to the Claimant.  If an appeal is denied, in whole or in part, the written notice will clearly set forth:

 

(a)           the specific reason or reasons for the adverse determination;

(b)           specific reference to the Plan provisions on which the adverse determination is based;

(c)           a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and

(d)           a statement of the Claimant’s right to bring an action under ERISA section 502(a).

	
7.05   

	
Legal Action

          

A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his administrative remedies under such claims procedures.  Any such legal action must be commenced within one year of a final determination hereunder with respect to such claim.

	
7.06   

	
Exclusive Forum

        

Any action by a current or former Participant or Beneficiary arising out of or related to this Plan shall be litigated exclusively in the United States District Court for the Eastern District of Virginia, Richmond Division (“District Court”) and any reviewing appellate court thereof.  In the event that the District Court lacks subject matter jurisdiction over such an action, then, and only then, such action shall be litigated exclusively in the Circuit Court of Goochland, Virginia and any reviewing appellate court thereof.

  

16

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

ARTICLE VIII

GENERAL PROVISIONS

	
8.01  

	
No Guarantee of Employment

The Plan shall not be deemed to constitute a contract between the Company and any Participant or to be consideration or an inducement for the employment of any Participant of the Company.  Nothing contained in the Plan shall be deemed to give any Participant the right to be retained in the service of the Company or to interfere with the rights of the Company to discharge or to terminate the service of any Participant at any time without regard to the effect such discharge or termination may have on any rights under the Plan.

	
8.02  

	
Unfunded Plan

All Plan Participants and Beneficiaries are general unsecured creditors of the Company with respect to the benefits due hereunder and the Plan constitutes a mere promise by the Company to make benefit payments in the future.  It is the intention of the Company that the Plan be considered unfunded for tax purposes.

	
8.03  

	
Trust

The Company may, but is not required to, establish a grantor trust, commonly known as a rabbi trust, which may be used to hold assets of the Company which are maintained as reserves against the Company’s unfunded, unsecured obligations hereunder.  Such reserves shall at all times be subject to the claims of the Company’s creditors.  To the extent such trust or other vehicle is established, and assets contributed, for the purpose of fulfilling the Company’s obligation hereunder, then such obligation of the Company shall be reduced to the extent such assets are utilized to meet its obligations hereunder.  Any such trust and the assets held thereunder are intended to conform in substance to the terms of the model trust described in Revenue Procedure 92-64.

	
8.04  

	
Payments to Minors and Incompetents

If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed so by the Committee or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, benefits will be paid to such person as the Committee might designate.  Such payments shall, to the extent made, be deemed a complete discharge of any liability for such payment under the Plan.

  

17

  

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

	
8.05  

	
Notice

Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing.  Notice shall be deemed given as of the date of receipt of the notice by the Committee.  Notice shall be sent by certified mail to:

CARMAX, INC.

ATTN: DIRECTOR OF BENEFITS

12800 TUCKAHOE CREEK PARKWAY

RICHMOND, VIRGINIA 23238

With a copy to:

CARMAX, INC.

ATTN: LEGAL DEPARTMENT

12800 TUCKAHOE CREEK PARKWAY

RICHMOND, VIRGINIA 23238

Any notice or submission required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and either hand-delivered or sent by mail to the last known address of the Participant.

	
8.06  

	
Non-Alienation of Benefits

To the extent permitted by law, no benefit payable under the Plan will be subject in any manner to anticipation, assignment, garnishment or pledge.  Any attempt to anticipate, assign, garnish or pledge the same will be void and no such benefits will be made in any manner liable for or subject to the debts, liabilities, engagements or torts of any Participants.

	
8.07  

	
Headings

 

The headings of Plan Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

	
8.08  

	
Construction

 

Unless the context requires otherwise, all words in any gender shall extend to and include all genders, all words used in the singular shall extend to and include the plural, and all words used in the plural shall extend to and include the singular.

	
8.09  

	
Invalid or Unenforceable Provisions

If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole and absolute discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

 

 

  

18

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

	
8.10 

	
Lost Participants or Beneficiaries

Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his current mailing address.  If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing.  The Committee, after making such efforts as in its sole and absolute discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments.

	
8.11 

	
Beneficiary Designation

At the time of enrollment in the Plan, each Participant must designate a Beneficiary to receive settlement of his Plan account in the event of his death during employment.  A Participant may, from time to time, change a Beneficiary or Beneficiaries under the Plan.  In the event that no designated Beneficiary is surviving at the time of the Participant’s death, settlement under the Plan will be made as provided in Plan Section 1.02.

	
8.12 

	
Errors and Omissions

           

In the event an error or omission is discovered in the operation or administration of the Plan, the Committee may make such equitable adjustments that it deems necessary or desirable to correct the error or omission, so long as the adjustments comply with Section 409A.

	
8.13 

	
Governing Law

      

Except as otherwise provided by federal law, the provisions of this Plan shall be construed, administered and enforced according to the laws of the Commonwealth of Virginia, without giving effect to its conflicts of law rules.

	
8.14 

	
Omnibus Provisions

   

(a)           Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2).  Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).

 

 

  

19

CarMax, Inc.

Retirement Restoration Plan

As Amended and Restated June 30, 2011

 

(b)           It is specifically intended that all elections, consents and modifications thereto under the Plan will comply with the requirements of Code section 409A (including any transition or grandfather rules thereunder).  The Company, through the Committee, is authorized to adopt rules or regulations deemed necessary or appropriate in connection therewith to anticipate and/or comply with the requirements of Code section 409A (including any transition or grandfather rules thereunder) and to declare any election, consent or modification thereto void if non-compliant with Code section 409A.

* * * * *

WITNESS the following signature as of the 29th day of June, 2011.

 

CARMAX, INC.

	
By:

	
/s/ Keith D. Browning

	  	
Keith D. Browning

	  	
Executive Vice President, Finance

         

20exhibit103.htm

 

CarMax, Inc.

 

Executive Deferred Compensation Plan

Originally Effective

January 1, 2011

As Amended and Restated

June 30, 2011

  

  

  

CarMax, Inc. Executive Deferred Compensation Plan

 

	
Introduction

	  	
1

	  	  	  
	
 Article I

	
Definitions

	
1

	  	  	  
	
Article II

	
Eligibility and Participation

	
7

	  	  	  
	
Article III

	
Deferrals

	
8

	  	  	  
	
Article IV

	
Company Contributions

	
11

	  	  	  
	
Article V

	
Benefits

	
12

	  	  	  
	
Article VI

	
Modifications to Payment Schedules

	
16

	  	  	  
	
Article VII

	
Valuation of Accounts; Investments

	
17

	  	  	  
	
Article VIII

	
Administration

	
18

	  	  	  
	
Article IX

	
Amendment and Termination

	
20

	  	  	  
	
Article X

	
Informal Funding

	
21

	  	  	  
	
Article XI

	
Claims

	
22

	  	  	  
	
Article XII

	
General Provisions

	
24

  

  

  

CarMax, Inc. Executive Deferred Compensation Plan

Introduction

To attract and retain key employees, CarMax, Inc. hereby establishes the CarMax, Inc. Executive Deferred Compensation Plan, effective January 1, 2011.  This Plan was amended and restated on June 30, 2011, to make certain changes related to the administration of the Plan.

The purpose of the Plan is to provide Participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation and to have those amounts paid at termination of employment or on a date or dates selected by the Participant.

The Plan is unfunded for federal tax purposes and is intended to be an unfunded arrangement for Eligible Employees who are part of a select group of management or highly compensated Employees within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.

The Plan is intended to meet the requirements of Section 409A and shall be implemented, administered and interpreted consistent with ERISA and Section 409A.

Article I

Definitions

Capitalized terms used in this Plan shall have the meanings specified in this Article I.

	
1.1  

	
Account.  A bookkeeping account maintained by the Company to record the payment obligation of an Employer to a Participant as determined under the terms of the Plan.  The Company may maintain an Account to record both the total obligation to a Participant and any sub-Accounts reflecting amounts payable at different times and in different forms.  A Participant may have several sub-Accounts under the Plan, including the Retirement/Termination Account, one or more Specified Date Accounts and a Company Contribution Account.  When the term “Account” is used without modification, it means all of the Participant’s sub-Accounts.

	
1.2  

	
Beneficiary.  The person or entity selected by the Participant who is to receive any benefits payable from the Plan on account of a Participant’s death.  If the Participant does not designate a Beneficiary, or if the Beneficiary predeceases the Participant, or is not in existence on the date of the Participant’s death, then Beneficiary means the Participant’s Surviving Spouse.  If there is no Surviving Spouse, then Beneficiary means the executor or administrator of the Participant’s estate.

	
1.3  

	
Board.  The Board of Directors of CarMax, Inc.

 

 

  

-1-

CarMax, Inc. Executive Deferred Compensation Plan

  

	
1.4  

	
Change in Control.  Any of the following events: (i) a change in the ownership of the Company, (ii) a change in the effective control of the Company, or (iii) a change in the ownership of a substantial portion of the assets of the Company.

For purposes of this definition, a change in the ownership of the Company occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company.  A change in the effective control of the Company occurs on (i) the date any one person or group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock, or (ii) the date a majority of the members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board before the date of the appointment or election.  A change in the ownership of a substantial portion of the assets of the Company occurs on the date on which any one person, or more than one person acting as a group (other than a person or group of persons that is related to the Company), acquires assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

An event constitutes a Change in Control with respect to a Participant only if the Participant’s relationship to the Company satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii).

The determination as to the occurrence of a Change in Control shall be based on objective facts and shall be made in accordance with the requirements of Section 409A.

	
1.5  

	
Code.  The Internal Revenue Code of 1986, as amended from time to time and as construed, interpreted and modified by regulations or rulings.

	
1.6  

	
Committee.  A committee of no less than three members, as described in Article VIII, to be responsible for the general administration of the Plan.  The Committee may delegate all or a part of its duties to one or more individuals or entities, and references herein to the Committee shall include such individuals and entities to the extent of such delegation.

	
1.7  

	
Company.  CarMax, Inc.

	
1.8  

	
Company Contribution.  A credit by the Employer to a Participant’s Account in accordance with Article IV of the Plan.

 

 

  

-2-

CarMax, Inc. Executive Deferred Compensation Plan

  

 

	
1.9  

	
Company Contribution Account.  A sub-Account established by the Company to record Company Contributions credited to a Participant pursuant to Article IV of the Plan.

	
1.10  

	
Company Contribution Benefit.  The benefit payable to a Participant under the Plan in accordance with Plan Section 5.3.

	
1.11  

	
Compensation.  A Participant’s base salary, monthly bonus, annual bonus, and such other cash remuneration for services rendered to an Employer by an Employee and approved by the Committee as Compensation that may be deferred under this Plan.  Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Section 409A.

	
1.12  

	
Compensation Deferral Agreement.  An agreement between a Participant and an  Employer that specifies: (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with Article III, and (ii) the Payment Schedule applicable to the Account or one or more sub-Accounts.  The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component.  Unless otherwise permitted, a Participant may defer up to 75% of his annual base salary and monthly bonus for a Plan Year and up to 90% of Performance-Based Compensation; provided, however, that such deferrals must be designated in whole percentages.  A Compensation Deferral Agreement may also specify the Participant’s investment allocation as described in Plan Section 7.4.

	
1.13  

	
Death Benefit.  The benefit payable under the Plan to a Participant’s Beneficiary(ies) upon the Participant’s death as provided in Plan Section 5.4.

	
1.14  

	
Deferral.  A credit to a Participant’s Account that records the portion of the Compensation that the Participant has elected to defer in accordance with Article III.  Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes investment gains and losses attributable to such Deferrals, as described in Plan Section 7.2.

A Deferral shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings.  However, a Deferral shall be reduced as necessary so that following deduction or withholding from a Participant’s gross cash Compensation of all required income and employment taxes, other employee benefit deductions, and other deductions required by law, the Deferral does not exceed 100% of the Participant’s remaining cash Compensation.  Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Section 409A.

 

  

-3-

CarMax, Inc. Executive Deferred Compensation Plan

  

 

	
1.15  

	
Effective Date.  The Effective Date of the Plan is January 1, 2011.  A Participant may make elections prior to the Effective Date to the extent necessary to comply with Section 409A with regard to compensation payable in 2011.

	
1.16  

	
Eligible Employee.  A member of a “select group of management or highly compensated employees” of an Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and who is selected by the Committee to be an Eligible Employee.

	
1.17  

	
Employee.  Any person employed by an Employer as a common-law employee on the Employer’s U.S. payroll.  It is expressly intended that persons not employed as common law employees on an Employer’s U.S. payroll are to be excluded from participation in the Plan, even if a court or administrative agency determines that such individuals are common law employees.  The term “Employee” shall not include independent contractors or leased employees within the meaning of Code section 414(n)(2).

	
1.18  

	
Employer.  The Company and any Related Company, unless the Company determines by action of the Committee that the Related Company shall not be an Employer for purposes of this Plan.

	
1.19  

	
ERISA.  The Employee Retirement Income Security Act of 1974, as amended from time to time and as construed, interpreted and modified by regulations or rulings.

	
1.20  

	
Key Employee.  An Employee who, as of the date of his Separation from Service, meets the requirements of Code section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable regulations thereunder and without regard to Code section 416(i)(5)) at any time during the 12-month period ending on a given December 31.  Such Employee shall be treated as a Key Employee for the entire 12-month period beginning on the next following April 1, provided that the Company is a “public company” (as determined under Section 409A) on the date of the Participant’s Separation from Service.  The December 31 and April 1 dates in this definition may be changed by the Committee, but only in accordance with the applicable requirements imposed by Section 409A.

	
1.21  

	
Participant.  An Eligible Employee who commences participation in the Plan in accordance with Article II, or a former Eligible Employee who previously commenced participation in the Plan in accordance with Article II and whose Account balance is greater than zero dollars ($0.00).

	
1.22  

	
Payment Date.  The date on which a distribution under the Plan is scheduled to be paid, and the date from which extensions and advanced election time periods for modifications under Article VI are measured.  In the event that the Payment Date under the Plan is determined by a range of days, such as “within 60 days,” or not provided under the Plan, the Payment Date shall be the date of the triggering event or, if later, the first date that payment could have been made.

 

 

  

-4-

CarMax, Inc. Executive Deferred Compensation Plan

  

 

	
1.23  

	
Payment Schedule.  The Payment Date or Dates and the form in which payment will be made.

	
1.24  

	
Performance-Based Compensation.  Compensation where the amount thereof, or entitlement thereto, is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months.  Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established.  The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treasury Regulation Section 1.409A-1(e) and applicable guidance.

	
1.25  

	
Plan.  The CarMax, Inc. Executive Deferred Compensation Plan as set forth herein and as amended from time to time.  The term “Plan Section” shall refer to a section of this Plan.

	
1.26  

	
Plan Asset Committee.  A committee of no less than three members, appointed by the Chief Executive Officer of the Company, to have the rights and duties described in Articles VII, VIII and X.  The Plan Asset Committee may delegate all or a part of its duties to one or more individuals or entities, and references herein to the Plan Asset Committee shall include such individuals and entities to the extent of such delegation.

	
1.27  

	
Plan Year.  The calendar year.

	
1.28  

	
Related Company.  Any corporation or business organization that is: (i) under common control with the Company (as determined under Code section 414(b) or (c)) or controlled by the Company; (ii) a member of an affiliated service group with the Company (as determined under Code section 414(m)); or (iii) an entity required to be aggregated pursuant to Code section 414(o) and the regulations thereunder.

	
1.29  

	
Retirement/Termination Account.  A sub-Account established by the Company to record the amounts payable to a Participant upon Separation from Service.  Unless otherwise determined by the Committee, a Participant may maintain no more than one Retirement/Termination Account.

	
1.30  

	
Section 409A.  Section 409A of the Code, and regulations and other guidance issued thereunder by the Treasury Department and Internal Revenue Service.

	
1.31  

	
Separation from Service.  The date that the Participant dies, retires or otherwise experiences a termination of employment with the Employer.  Whether a Separation from Service has occurred, including as a result of military leave, sick leave or other bona fide leave of absence, shall be determined in accordance with Section 409A.

 

 

  

-5-

CarMax, Inc. Executive Deferred Compensation Plan

  

 

Except in the case of an Employee on an approved leave of absence as determined under Section 409A, an Employee is deemed to have incurred a Separation from Service on a date if the Employer and the Employee reasonably anticipate that the level of services to be performed by the Employee after that date would be reduced to 35% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which the Employee was on an approved leave of absence.

	
1.32  

	
Specified Date Account.  A sub-Account or sub-Accounts established by the Company to record the amounts payable at a future date as specified in the Participant’s Compensation Deferral Agreement.  Unless otherwise determined by the Committee, a Participant may maintain no more than five Specified Date Accounts.

	
1.33  

	
Specified Date Benefit.  The benefit payable to a Participant under the Plan in accordance with Plan Section 5.2.

	
1.34  

	
Spouse or Surviving Spouse.  The person to whom a Participant is legally married, as determined under the laws of the state of the Participant’s domicile, on the Participant’s death or the date benefits are paid, whichever is earlier.

	
1.35  

	
Termination Benefit.  The benefit payable to a Participant under the Plan in accordance with Plan Section 5.1 following the Participant’s Separation from Service for reasons other than the death of the Participant.

	
1.36  

	
Unforeseeable Emergency.  A severe financial hardship to the Participant resulting from: (i) an illness or accident of the Participant, the Participant’s Spouse, the Participant’s dependent (as defined in Code section 152, without regard to Code section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee.

	
1.37  

	
Valuation Date.  Any day that the New York Stock Exchange is open for business.

  

-6-

  

CarMax, Inc. Executive Deferred Compensation Plan

Article II

Eligibility and Participation

	
2.1  

	
Eligibility and Participation.  Only Eligible Employees may become Participants in the Plan.  An Eligible Employee becomes a Participant on the date on which the initial Deferral election made by the Eligible Employee becomes irrevocable, as described in Plan Section 3.2.

	
2.2  

	
Duration.  A Participant shall be eligible to defer Compensation for as long as such Participant remains an Eligible Employee.

 

	  	
(a)

 

 

 

	

Loss of Eligible Employee Status.  A Participant who is no longer an Eligible Employee but has not incurred a Separation from Service may not elect to defer Compensation under the Plan beyond the Plan Year in which he became ineligible but may otherwise exercise all of the rights of a Participant under the Plan with respect to his Account; provided, however, that such Participant must continue any previously elected Deferrals through the end of the Plan Year for which such elected Deferrals previously became irrevocable, in accordance with Plan Section 3.1(c).

 

	 	
(b)

	

Separation from Service.  Upon a Separation from Service, a Participant shall remain a Participant as long as his Account balance is greater than zero dollars ($0.00), and during such time may continue to make allocation elections as provided in Plan Section 7.4.

 

	  	
(c)

	

Cessation of Participation.  An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he is entitled have been paid.

 

 

  

-7-

  

CarMax, Inc. Executive Deferred Compensation Plan

Article III

Deferrals

	
3.1  

	
Deferral Elections.

	
  

	
(a)

	
A Participant may elect to make a Deferral by submitting a Compensation Deferral Agreement during the enrollment periods established by the Committee in accordance with Plan Section 3.2.  A Compensation Deferral Agreement that is not timely submitted with respect to a service period or component of Compensation shall be void and shall have no effect with respect to such service period or Compensation.  The Committee may extend an enrollment period, so long as the election becomes irrevocable as of the date specified under the rules of Plan Section 3.2 and complies with the requirements of Section 409A.

	
  

	
(b)

	
The Participant shall specify on his Compensation Deferral Agreement the amount of Deferrals and whether to allocate Deferrals to a Retirement/Termination Account or to one or more Specified Date Accounts.  If no Specified Date Account allocation designation is made, Deferrals shall be allocated to the Retirement/ Termination Account.  A Participant may also specify in his Compensation Deferral Agreement the Payment Schedules applicable to his Plan Account and any sub-Accounts.  If a Payment Schedule is not specified in a Compensation Deferral Agreement, payments shall be made in accordance with Plan Section 5.1(c) or 5.2(c), as applicable.

	
  

	
(c)

	
A Participant’s Deferral elections under this Plan Section 3.1 shall continue in force until a new election is made or, in the event the Participant ceases to be an Eligible Employee, until the end of the Plan Year for which such Deferral elections previously became irrevocable.  A Participant whose Deferrals are cancelled in accordance with Plan Section 3.7 will be required to submit a new Compensation Deferral Agreement under this Article III in order to recommence Deferrals under the Plan.

	
3.2  

	
Timing Requirements for Compensation Deferral Agreements.

	
  

	
(a)

	
First Year of Eligibility.  For individuals who become Eligible Employees after August 27, 2010, in the first year in which such an Eligible Employee becomes eligible to participate in the Plan, such Eligible Employee has up to 30 days following notification by the Committee of his initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year.

	
  

	
The Compensation Deferral Agreement described in this Plan Section 3.2(a) becomes irrevocable upon the end of such 30-day period.

 

 

  

-8-

CarMax, Inc. Executive Deferred Compensation Plan

  

 

 

	
  

	
Subject to Plan Section 3.2(c) with respect to Performance-Based Compensation, a Compensation Deferral Agreement submitted to the Company under this Plan Section 3.2(a) applies to Compensation earned on and after the date the Compensation Deferral Agreement becomes irrevocable, i.e., beginning with Compensation earned during the first full payroll period that begins after the date the Compensation Deferral Agreement becomes irrevocable.

 

	 	
(b)

	
Annual Election.  Except as otherwise provided in this Plan Section 3.2, a Participant may defer Compensation by submitting a Compensation Deferral Agreement within the enrollment period designated by the Committee, but no later than 11:59 p.m. EST on December 31 of the year prior to the year in which the Compensation to be deferred is earned.

 

Base salary payable in a calendar year (the “subsequent year”) solely for services performed during the final regular payroll period of the Company containing December 31 of the prior calendar year is treated as Compensation earned in such subsequent year, in accordance with Treasury Regulation Section 1.409A-2(a)(13).

A Compensation Deferral Agreement described in this Plan Section 3.2(b) becomes irrevocable with respect to such Compensation at 11:59 p.m. EST on December 31 of the year immediately preceding the year in which such Compensation is, or begins to be, earned.

 

	 	
(c)

	
Performance-Based Compensation. A Participant may submit a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:

	
  

	
(i)

	
the Participant performs services for the Employer continuously from the later of the beginning of (a) the performance period or (b) the date the criteria are established, through the date the Compensation Deferral Agreement becomes irrevocable; and

	
  

	
(ii)

	
the Performance-Based Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement becomes irrevocable.

A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation at 11:59 p.m. EST on the latest date for filing such election.

Any election to defer Performance-Based Compensation that is made in accordance with this Plan Section 3.2(c) and that becomes payable prior to the satisfaction of the performance criteria as a result of the Participant’s death or upon a change in control (as defined in Treasury Regulation Section 1.409A-3(i)(5)) will be void.

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

 

	
3.3  

	
Allocation of Deferrals.  A Compensation Deferral Agreement may allocate Deferrals to one or more Specified Date Accounts and/or to the Retirement/Termination Account.

	
3.4  

	
Conditions on Specified Date Accounts.  The initial Payment Date for a Specified Date Account may not be more than fifteen years from the date on which the Compensation Deferral Agreement establishing such Specified Date Account becomes irrevocable.  In addition, the Committee may, in its sole and absolute discretion, require a minimum deferral period prior to receiving distributions from a Specified Date Account (for example, the third Plan Year following the year Compensation is first allocated to such accounts).

	
3.5  

	
Deductions from Pay.  The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.

	
3.6  

	
Vesting.  Deferrals shall be 100% vested at all times.

	
3.7  

	
Cancellation of Deferrals.  The Committee may cancel a Participant’s Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable Emergency occurs, or (ii) if the Participant receives a hardship distribution under the Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six month anniversary of the hardship distribution falls.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article IV

Company Contributions

	
4.1  

	
Company Contribution.  Effective as of the last day of each Plan Year or such other time as is determined by the Committee, the Company may, in its sole and absolute discretion, credit a Participant’s Company Contribution Account with the following amounts, if any, for the Plan Year:

	
  

	
(a)

	
a Company matching contribution equal to the additional amounts the Participant would have received as matching contributions under the CarMax, Inc. Retirement Savings Plan and CarMax, Inc. Retirement Restoration Plan for such Plan Year had he not deferred Compensation into this Plan.  The Company matching contribution described in this Plan Section 4.1(i) shall be determined based on the percentage(s) used for the Company matching contributions for the Participant under the CarMax, Inc. Retirement Savings Plan and CarMax, Inc. Retirement Restoration Plan, respectively, over such Plan Year.

	
  

	
(b)

	
a Company retirement contribution equal to the additional amounts the Participant would have received as discretionary retirement contributions under the CarMax, Inc. Retirement Savings Plan and CarMax, Inc. Retirement Restoration Plan for such Plan Year had he not deferred Compensation into this Plan.

	
4.2  

	
Vesting.  Company Contributions described in Plan Section 4.1 above, and the investment gains and losses thereon, shall vest in accordance with the vesting schedule(s) applicable to Company matching contributions under the CarMax, Inc. Retirement Savings Plan.  All Company Contributions shall become 100% vested upon the occurrence of the earliest of: (i) the death of the Participant while the Participant is an Employee, or (ii) a Change in Control.  The portion of a Participant’s Account that remains unvested upon his Separation from Service after the application of the terms of this Plan Section 4.2 shall be forfeited.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article V

Benefits

	
5.1  

	
Termination Benefit.  Upon the Participant’s Separation from Service other than due to death, he shall be entitled to a Termination Benefit.  The Participant’s Termination Benefit shall be equal to the value of the Participant’s Retirement/Termination Account.

	 	
(a)  

	
Amount of Termination Benefit.  The Termination Benefit shall be based on the value(s) of the Retirement/Termination Account as of the later of: (i) the end of the month in which Separation from Service occurs; (ii) in the event of a lump sum distribution subsequent to Separation from Service under Plan Section 5.1(b)(ii), the end of the month immediately preceding the month in which the lump sum distribution is to be made; or (iii) in the event of installment payments, the end of the month immediately preceding the month in which each installment payment is made.

	 	
(b)  

	
Payment Date of Termination Benefit.  Subject to Plan Section 5.7, the Payment Date of the Termination Benefit shall be: (i) the fifteenth day of the month following the month in which Separation from Service occurs, or as soon as administratively practicable thereafter; or (ii) such other objectively determinable date with respect to a Separation from Service designated by the Participant in the Compensation Deferral Agreement and permitted by the Committee; provided, however, that no Participant may designate an initial Payment Date for a Termination Benefit that is later than five years after the Participant’s Separation from Service.  Notwithstanding anything in this Plan Section 5.1(b) to the contrary, with respect to a Participant who is a Key Employee as of the date he incurs a Separation from Service, the Payment Date shall be the later of the date designated in the Compensation Deferral Agreement or the first day of the seventh month following the month in which Separation from Service occurs.  With respect to such Key Employee, if the Termination Benefit is paid in the form of installments, any subsequent installment payments to a Key Employee will be paid on the anniversary of the date the initial installment payment was made.

	 	
(c)  

	
Form of Payment of Termination Benefit.  Subject to Plan Section 5.7, a Participant who is entitled to receive a Termination Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects on his applicable Compensation Deferral Agreement to have the Retirement/Termination Account paid in one of the following alternative forms of payment, in which case the Participant shall receive his Termination Benefit in accordance with his election: (i) substantially equal annual installments over a period of two to ten years, as elected by the Participant, or (ii) a lump sum payment of a percentage of the balance in the Retirement/Termination Account, with the balance paid in substantially equal annual installments over a period of two to ten years, as elected by the Participant.

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

 

	
5.2  

	
Specified Date Benefit. If the Participant has established one or more Specified Date Accounts, he shall be entitled to a Specified Date Benefit with respect to each such Specified Date Account.

	 	
(a)  

	
Amount of Specified Date Benefit.  The Specified Date Benefit shall be equal to the value(s) of the Specified Date Account as of the end of the month(s) immediately preceding the month(s) designated by the Participant on the applicable Compensation Deferral Agreement.

	 	
(b)  

	
Payment Date of Specified Date Benefit.  The Payment Date for a Specified Date Benefit is the fifteenth day of the month designated by the Participant.

	
  

	
(c)

	
Form of Payment of Specified Date Benefit.  The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the applicable Compensation Deferral Agreement to have the Specified Date Benefit paid in substantially equal annual installments over a period of two to five years, as elected by the Participant, in which case the Participant shall receive his Specified Date Benefit in accordance with his election.

	
5.3  

	
Company Contribution Benefit.  Upon the Participant’s Separation from Service, other than due to death, the Participant shall be entitled to a Company Contribution Benefit, if any.

	
  

	
(a)

	
Amount of Company Contribution Benefit.  The Company Contribution Benefit shall be equal to the vested portion of the Company Contribution Account, based on the value of that Account as of the end of the month in which a Separation from Service occurs.

	
  

	 

	
  

	
(b)

	
Payment Date of Company Contribution Benefit.  The Payment Date of the Company Contribution Benefit shall be the fifteenth day of the month following the month in which Separation from Service occurs, or as soon as administratively practicable thereafter.  However, with respect to a Participant who is a Key Employee as of the date such Participant incurs a Separation from Service, the Payment Date shall be the first day of the seventh month following the month in which Separation from Service occurs.

	
  

	
(c)

	
Form of Payment of Company Contribution Benefit.  A Participant who is entitled to receive a Company Contribution Benefit shall receive payment of such benefit in a single lump sum.

  

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CarMax, Inc. Executive Deferred Compensation Plan

	
5.4  

	
Death Benefit. In the event of the Participant’s death before all benefits under the Plan have been paid, his Beneficiary shall be entitled to a Death Benefit.

	
  

	
(a)

	
Amount of Death Benefit.  The Death Benefit shall be equal to the value of the Retirement/Termination Account, all Specified Date Accounts, and the vested portion of the Company Contribution Account.  The Death Benefit shall be based on the value of these accounts as of the date of death.

	
  

	
(b)

	
Payment Date of Death Benefit. The Payment Date for a Death Benefit shall be the fifteenth day of the month following the month in which the Participant’s death occurred, or as soon as administratively practicable thereafter.

	
  

	
(c)

	
Form of Payment of Death Benefit. A Participant’s Beneficiary will receive payment of the Participant’s Death Benefit in a single lump sum.

	
5.5  

	
Unforeseeable Emergency Payments. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any portion of his Retirement/Termination Account and Specified Date Accounts.  Whether a Participant is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of an Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed: (i) through insurance or otherwise; (ii) by liquidation of the Participant’s assets, to the extent such liquidation would not cause severe financial hardship; or (iii) by cessation of Deferrals under this Plan.  If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of any cancellation of Deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment.  The amount of the emergency payment shall be subtracted first from the Participant’s Retirement/Termination Account until depleted and then from the Specified Date Accounts, beginning with the Specified Date Account with the latest payment commencement date.  Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is determined by the Committee to be on account of an Unforeseeable Emergency.

	
5.6  

	
Change in Control. Notwithstanding any Compensation Deferral Agreement or any other provisions of this Plan, a Participant will receive his Termination Benefit, Specified Date Benefit(s) and Company Contribution Benefit in a single lump sum payment if Separation from Service occurs within 24 months following a Change in Control.  This lump sum payment shall be based on the value of the Participant’s Account as of the end of the month in which Separation from Service occurs.  The Payment Date of this lump sum payment shall be the fifteenth day of the month following the month in which Separation from Service occurs, or as soon as administratively practicable thereafter; provided, however, that with respect to a Participant who is a Key Employee as of the date he incurs a Separation from Service, the Payment Date shall be the first day of the seventh month following the month in which the Separation of Service occurs.

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

  

 

	
5.7  

	
Small Account Balance. Notwithstanding any Compensation Deferral Agreement or other provisions of this Plan, a Participant’s Retirement/Termination Account will be paid in a single lump sum within 60 days following Separation from Service if, upon the Participant’s Separation from Service, the total value of the Retirement/Termination Account is not greater than $50,000; provided, however, that if such Participant is a Key Employee, the payment date for this single lump sum shall be the first day of the seventh month following the month in which Separation from Service occurs.

	
5.8  

	
Rules Applicable to Installment Payments. If a Payment Schedule specifies annual installment payments, such payments will be made beginning as of the payment commencement date for such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid.  The amount of each installment payment shall be determined by dividing the value of the Account or applicable sub-Account as of each Valuation Date immediately preceding the Payment Date by the remaining number of installment payments.

For purposes of Article VI, installment payments will be treated as a single payment.  If a Participant elects to receive a lump sum equal to less than 100% of the Retirement/Termination Account, as described in Plan Section 5.1(c), the payment commencement date for the installment form of payment will be the first anniversary of the payment of the lump sum.

	
5.9  

	
Acceleration of or Delay in Payments.  The Committee, in its sole and absolute discretion, may accelerate the time or alter the form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treasury Regulation Section 1.409A-3(j)(4).  The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treasury Regulation Section 1.409A-2(b)(7).

If the Plan receives a domestic relations order (within the meaning of Code section 14(p)(1)(B)) directing that all or a portion of a Participant’s Account be paid to an "alternate payee,” any amounts to be paid to the alternate payee shall be paid in a single lump sum as soon as administratively practicable following the receipt of the executed order.

	
5.10  

	
Payments Treated As Made Upon the Payment Date.  Payments are treated as having been made on the Payment Date if they are made at a later date within the same taxable year of the Participant or, if later, by the fifteenth day of the third calendar month following the Payment Date, provided that the timing of such payment satisfies Treasury Regulation Section 1.409A-3(d).

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article VI

Modifications to Payment Schedules

	
6.1  

	
Participant’s Right to Modify.  A Participant may modify any or all of the Payment Schedules set forth in a Compensation Deferral Agreement, consistent with the permissible Payment Schedules available under the Plan, provided such modification complies with the requirements of this Article VI.

	
6.2  

	
Time of Modification Election.  The date on which a modification election is submitted must be at least 12 months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification. Any modification election that is not submitted within such time shall be void.

	
6.3  

	
Date of Payment under Modified Payment Schedule.  Except with respect to modifications that relate to the payment of a Death Benefit, the modified Payment Date must be no earlier than five years after the original Payment Date or, if later, the modified Payment Date for payments previously modified.  Under no circumstances may a modification election result in an acceleration of payments in violation of Section 409A.

	
6.4  

	
Effective Date.  A modification election submitted in accordance with this Article VI is irrevocable upon receipt by the Committee.

	
6.5  

	
Effect on Accounts.  An election to modify a Payment Schedule is specific to the Account, sub-Account, or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Account or sub-Accounts.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article VII

Valuation of Accounts; Investments

	
7.1.  

	
Valuation.  Deferrals shall be credited to the appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement.  Company Contributions shall be credited to the Company Contribution Account in accordance with Plan Section 4.1.  Valuation of Accounts shall be performed under procedures approved by the Committee.

	
7.2.  

	
Adjustment for Earnings.  Each Account will be adjusted to reflect investment gains or losses on each Valuation Date.  Adjustments shall reflect the net earnings, gains, losses, expenses, appreciation and depreciation associated with an investment option for each portion of the Account allocated to such option pursuant to Plan Section 7.4.

	
7.3.  

	
Investment Options.  Investment options will be determined by the Plan Asset Committee.  The Plan Asset Committee, in its sole and absolute discretion, may add or remove investment options from the Plan menu from time to time.

	
7.4.  

	
Investment Allocations.  A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu.  At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall an Employer or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant’s investment allocation.  A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account.

A Participant shall specify an investment allocation for each of his sub-Accounts in accordance with procedures established by the Committee.  Allocation among the investment options must be designated in whole percentages.  The Participant’s investment allocation will become effective as soon as administratively practicable.

A Participant may change an investment allocation at any time, both with respect to future credits to the Plan and with respect to existing Account or sub-Account balances, in accordance with procedures adopted by the Committee.  Changes shall become effective as soon as administratively practicable.

	
7.5.  

	
Unallocated Deferrals and Accounts.  If the Participant fails to make an investment allocation with respect to an Account or sub-Account, such Account or sub-Account shall be invested in an investment option, a primary objective of which is the preservation of capital, as determined by the Plan Asset Committee.  The Plan Asset Committee shall have no responsibility to any Participant or anyone claiming a benefit through a Participant if the Participant fails to make an investment allocation or to change any investment allocation.

  

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CarMax, Inc. Executive Deferred Compensation Plan

  

Article VIII

Administration

	
8.1  

	
Administrator.  This Plan shall be administered by the Committee.  The Chief Executive Officer of the Company shall appoint at least three persons to serve on the Committee.

	
8.2  

	
Powers of the Committee.  Except where responsibilities have been allocated or delegated to another person or entity, including the Plan Asset Committee, the Committee will have full and exclusive power and discretion to administer the Plan, including as to all of its details, including the power to decide Plan benefit claims.  For the purpose of administering the Plan, the Committee’s power will include, but will not be limited to, the following authority:

	
  

	
(a)

	
to make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan or as required to comply with applicable law;

	
  

	
(b)

	
to interpret the Plan, its interpretation thereof in good faith to be final and conclusive as to any current or former Employee, Participant, or Beneficiary;

 

 

	
  

	
(c)

	
to decide all questions concerning the Plan, including whether a payment of Plan benefits is due;

	
  

	
(d)

	
to compute the amount of benefits payable to any current or former Employee, Participant, or Beneficiary in accordance with the Plan, and to determine the person or persons to whom such benefits will be paid;

 
	 	
(e)

	
to authorize the payment of Plan benefits;

    

	
  

	
(f)

	
to keep such records and submit such filings, elections, applications, returns or other documents or forms as may be required under the Code and applicable regulations, or under state or local law and regulations; and

 

	 	
(g)

	
to appoint such agents, counsel, accountants, consultants and record keepers as may be required to assist in administering the Plan.

	
8.3  

	
Withholding.  An Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit).  Withholdings with respect to amounts credited to the Plan shall be deducted from the Participant’s Compensation that has not been deferred to the Plan.

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

  

 

	
8.4  

	
Indemnification.  The Company shall indemnify the Committee, the Plan Asset Committee, their respective members, and each other Employee who is involved in the administration of the Plan against all costs, expenses and liabilities, including attorneys’ fees, incurred in connection with any action, suit or proceeding that alleges, arises out of, or relates in any way to any good faith act or failure to act in connection with, or related in any way to, the Plan.  Promptly after receipt by an indemnified party of notice of the commencement of any such action, suit or proceeding, the indemnified party shall notify the Company.  The Company shall be entitled to participate at its own expense in the defense or to assume the defense of any indemnified party.  If the Company elects to assume the defense, counsel chosen by the Company shall conduct the defense, and the indemnified party shall bear the fees and expenses of any additional counsel retained by him.

	
8.5  

	
Binding Decisions or Actions.  The decision or action of the Committee or the Plan Asset Committee in respect of any question within the scope of their respective duties arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

	
8.6  

	
Administrative Costs.  All reasonable costs incurred in the administration of the Plan shall be paid by the Company.

	
8.7  

	
Discretion.  In discharging the duties assigned to them under the Plan, each of the Company, the Committee, the Plan Asset Committee, and each other individual or entity authorized by the Committee or the Plan Asset Committee (each, an “Authorized Person”) has the discretion to interpret the Plan; adopt, amend and rescind rules and regulations pertaining to its duties under the Plan; and to make all other determinations necessary or advisable for the discharge of its duties under the Plan.  The discretionary authority of an Authorized Person is absolute and exclusive.  The express grant in the Plan of any specific power to an Authorized Person with respect to any duty assigned to it under the Plan must not be construed as limiting any power or authority of such Authorized Person to discharge its duties.  A decision of an Authorized Person is final and conclusive in any subsequent action, suit, or proceeding unless it is established that the decision constituted an abuse of discretion.  No Plan benefits shall be paid to any Participant, Beneficiary or other person unless an Authorized Person shall determine, in its sole and absolute discretion, that such benefits are due.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article IX

Amendment and Termination

	
9.1  

	
Amendment and Termination.  The Company may at any time amend the Plan or may terminate the Plan as provided in this Article IX.  The Company may at any time determine that a Related Company shall no longer participate (or shall again participate) in the Plan.

	
9.2  

	
Amendments.  The Company shall have the right by action of the Committee to amend the Plan from time to time (a) as necessary to ensure the Plan meets requirements under the Code; or (b) to implement changes in Plan design that are not financially material to the Company or the Company’s shareholders; provided, however, that no amendment shall reduce the vested Account balances of any Participant accrued as of the date of such amendment (as if the Participant had incurred a voluntary Separation from Service on such date) or reduce any rights of a Participant under the Plan with respect to Deferrals made prior to the date of such amendment without the consent of the Participant.  Any amendment to the Plan that is financially material to the Company or the Company’s shareholders must be approved by the Board.

	
9.3  

	
Termination.  The Company, by action taken by the Board, may terminate the Plan and pay Participants and Beneficiaries their Account balances in a single lump sum at any time, to the extent of and in accordance with Treasury Regulation Section 1.409A-3(j)(4)(ix).  If an Employer’s participation in the Plan is terminated, the benefits of affected Employees shall nevertheless be paid at the time provided in Article V.

	
9.4  

	
Accounts Taxable Under Section 409A.  The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Section 409A.  The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Section 409A.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article X

Informal Funding

	
10.1  

	
General Assets.  Obligations established under the terms of the Plan may be satisfied from the general funds of an Employer, or a trust described in this Article X.  No Participant, Spouse, Beneficiary or other person shall have any right, title or interest whatsoever in assets of an Employer pursuant to this Plan.  Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between an Employer and any current or former Employee, Participant, Spouse, or Beneficiary.  To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Employer.

	
10.2  

	
Rabbi Trust.  The Company or an Employer may, in its sole and absolute discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan.  Payments under the Plan may be paid from the assets of an Employer or from the assets of any such rabbi trust.  Payment from any source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.  In the event the Company or an Employer establishes a grantor trust, as set forth above, and such grantor trust contains a funding requirement, each Participant whose Plan benefits may be paid from such trust shall be an intended beneficiary of, and shall be entitled to enforce, such requirement as if such person had been a party to such trust.

	
10.3  

	
Trustee.  In connection with any trust established pursuant to Plan Section 10.2, the Plan Asset Committee’s power will include, but will not be limited to, the following authority:

	
  

	
(a)

	
to establish investment guidelines;

	
  

	
(b)

	
to receive and issue reports on the performance of the trust assets;

	
  

	
(c)

	
to appoint and remove a trustee or trustees (including one or more successor trustees) with respect to a portion of or all of the assets of a trust, including the power to enter into (and amend or terminate) any agreement or agreements with a bank, trust company, or other institution (including, in the Plan Asset Committee’s discretion, the power to maintain (and amend or terminate) any agreement entered into by the Company or an Employer on behalf of the Plan) to hold and invest trust assets;

	
  

	
(d)

	
to direct any trustee with respect to the investment and management (including any voting rights) of the assets in a trust; and

	
  

	
(e)

	
to appoint, monitor, and remove one or more investment managers.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article XI

Claims

11.1           Right to File Claim.  A Participant, Beneficiary or former Participant (each a “Claimant”) shall be entitled to file with the Committee’s delegate a claim for benefits under the Plan. The claim must be in writing.  Unless another individual or entity is named by the Committee to hear claims for benefits, the Committee’s delegate shall be the Company’s Director of Benefits or the Plan’s recordkeeper.

11.2           Denial of Claim.  If the claim is denied by the Committee’s delegate in whole or in part, the Claimant shall be furnished within 90 days after the receipt of the claim by the Committee’s delegate (or within 180 days after such receipt if special circumstances require an extension of time) a written notice of denial of the claim containing the following:

 

 
	
  

	
(a)

	
the specific reason or reasons for the denial;

	 	
(b)

	
specific reference to the Plan provisions on which the denial is based;

    

	
  

	
(c)

	
a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

	
  

	
(d)

	
an explanation of the procedure for review of the denied or partially denied claim (set forth below) and applicable time limits, including a statement of the Claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.

	
11.3

	
Claims Review Procedure.  Upon denial of a claim, in whole or in part, the Claimant or his duly authorized representative will have the right to submit a request to the Committee for a full and fair review of the denied claim by filing a written notice of appeal with the Committee.  The notice of appeal must be filed within 60 days of the receipt by the Claimant of written notice of the denial of the claim.  The Claimant or his representative will have, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits and may submit issues and comments in writing.  The Committee will take into account all comments, documents, records, and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial decision on the claim.

If the Claimant fails to file an appeal within 60 days of the receipt by the Claimant of the denial of the claim, the claim will be deemed abandoned and the Claimant precluded from reasserting it.  If the Claimant does file an appeal, his request must include a description of the issues and evidence he deems relevant.

  

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CarMax, Inc. Executive Deferred Compensation Plan

  

	
11.4

	
Decision on Review.  The Committee will review and decide whether an appeal is approved or denied.  A written notice of the decision will be furnished to the Claimant within 60 days of the date on which the appeal is received by the Committee.  If special circumstances require a longer period, the Claimant will be notified in writing, prior to the expiration of the 60-day period, of the reasons for an extension of time and the date by which a decision is expected; provided, however, that no extensions will be permitted beyond 60 days after the expiration of the initial 60-day period.  An appeal is considered approved only if its approval is communicated in writing to the Claimant.  If an appeal is denied, in whole or in part, the written notice will clearly set forth:

 
	 	
(a)

	
the specific reason or reasons for the adverse determination;

	
  

	
(b)

	
specific reference to the Plan provisions on which the adverse determination is based;

	
  

	
(c)

	
a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and

 

	 	
(d)

	
a statement of the Claimant’s right to bring an action under ERISA section 502(a).

      

	
11.5

	
Legal Action.  A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his administrative remedies under such claims procedures.  Any such legal action must be commenced within one year of a final determination hereunder with respect to such claim.

	
11.6

	
Exclusive Forum. Any action by a current or former Participant or Beneficiary arising out of or related to this Plan shall be litigated exclusively in the United States District Court for the Eastern District of Virginia, Richmond Division (“District Court”) and any reviewing appellate court thereof.  In the event that the District Court lacks subject matter jurisdiction over such an action, then, and only then, such action shall be litigated exclusively in the Circuit Court of Goochland, Virginia and any reviewing appellate court thereof.

  

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CarMax, Inc. Executive Deferred Compensation Plan

Article XII

General Provisions

	
12.1  

	
Assignment.  No interest of any Participant or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant or Beneficiary.  Notwithstanding anything to the contrary herein, however, the Committee has the sole and absolute discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code section 414(p)(1)(B)).

	
  

	
The Company may assign any or all of its liabilities under this Plan in connection with any restructuring, recapitalization, sale of assets or other similar transactions affecting a Related Company without the consent of the Participant.

	
12.2  

	
No Legal or Equitable Rights or Interest.  No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan.  The Employer makes no representations or warranties as to the tax consequences to a Participant or a Participant’s Beneficiaries resulting from a deferral of income pursuant to the Plan.

	
12.3  

	
No Employment Contract.  The establishment of this Plan shall not be construed as conferring any legal or other rights upon any Employee or any other person for continuation of employment.  Nor shall it interfere with the right of the Employer to discharge any Employee or to deal with him without regard to the effect thereof under the Plan.

	
12.4  

	
Notice.  Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing.  Notice shall be deemed given as of the date of receipt of the notice by the Committee.  Notice shall be sent by certified mail to:

CARMAX, INC.

ATTN: DIRECTOR OF BENEFITS

12800 TUCKAHOE CREEK PARKWAY

RICHMOND, VIRGINIA 23238

With a copy to:

CARMAX, INC.

ATTN: LEGAL DEPARTMENT

12800 TUCKAHOE CREEK PARKWAY

RICHMOND, VIRGINIA 23238

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

 

Any notice or submission required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and either hand-delivered or sent by mail to the last known address of the Participant.

	
12.5  

	
Headings.  The headings of Plan Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control.

	
12.6  

	
Construction.  Unless the context requires otherwise, all words in any gender shall extend to and include all genders, all words used in the singular shall extend to and include the plural, and all words used in the plural shall extend to and include the singular.

	
12.7  

	
Invalid or Unenforceable Provisions.  If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole and absolute discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

	
12.8  

	
Errors and Omissions.  In the event an error or omission is discovered in the operation or administration of the Plan, the Committee or its delegate may make such equitable adjustments that it deems necessary or desirable to correct the error or omission, so long as such adjustments comply with Section 409A.

	
12.9  

	
Lost Participants or Beneficiaries.  Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his current mailing address.  If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing.  The Committee, after making such efforts as in its sole and absolute discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments.

	
12.10  

	
Facility of Payment to a Minor.  If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its sole and absolute discretion, make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his residence; or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee.  Any such distribution shall fully discharge the Committee, the Company, and the Plan from further liability on account thereof.

	
12.11  

	
Governing Law.  Except as otherwise provided by federal law, the provisions of this Plan shall be construed, administered and enforced according to the laws of the Commonwealth of Virginia, without giving effect to its conflicts of law rules.

 

 

  

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CarMax, Inc. Executive Deferred Compensation Plan

 

WITNESS the following signature as of the 29th day of June, 2011.

 

CARMAX, INC.

 /s/ Keith D. Browning                                                                

Keith D. Browning

Executive Vice President, Finance

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