| | Severance Agreements. On February 14, 2007, CarMax, Inc. (the “Company”) and each of the Company’s executive officers named in the table below (the “Officers”) entered into a CarMax, Inc. Severance Agreement for Executive Officer (each, a “Severance Agreement”), which provides certain terms and conditions of each Officer’s employment by the Company and details the potential payments upon an Officer’s termination or the change-in-control of the Company. Each Severance Agreement supersedes each Officer’s prior employment agreement with the Company. Pursuant to each Severance Agreement, there is no specified employment period for any Officer. In consideration of each Officer’s provision of his services pursuant to the respective Severance Agreements, the Company shall pay each Officer a base annual salary and a target annual bonus equal to a percentage of each Officer’s base annual salary, which are set forth in the table below. An Officer’s annual bonus is payable in accordance with the terms of his respective Severance Agreement and the CarMax, Inc. Annual Performance-Based Bonus Plan, as amended and restated on April 24, 2006. Additionally, each Officer shall continue to be eligible to participate in: (i) the Company’s 2002 Stock Incentive Plan, as amended and restated on April 24, 2006, and other incentive plans applicable to executive officers; (ii) all Company tax-qualified and nonqualified retirement and deferred compensation plans, policies and programs; and (iii) all Company welfare benefit plans, policies and programs. During the period of each Officer’s employment and for a period of two years thereafter, each Officer shall be subject to a covenant not to compete and a covenant not to solicit or induce Company employees to leave the Company. Additionally, pursuant to each respective Severance Agreement, during each Officer’s employment and subsequent to the last day of each Officer’s employment with the Company, each Officer agrees to hold in strict confidence and safeguard any and all Protected Information (as defined in each Severance Agreement). In the event that the Company terminates an Officer’s employment with the Company without Cause (as defined in each Severance Agreement), or an Officer terminates his employment with the Company for Good Reason (as defined in each Severance Agreement), the Company shall provide such Officer with certain termination and severance benefits, including payments totaling two times the sum of such Officer’s base annual salary and last annual bonus, and outplacement services not to exceed $25,000. In the event that a Change in Control or an Asset Sale (each as defined in each Severance Agreement) occurs and the Company terminates an Officer’s employment with the Company (other than for Cause or due to Disability (as defined in each Severance Agreement)), or an Officer |
