FORM OF CARMAX EXECUTIVE OFFICER EMPLOYMENT AGREEMENT
Exhibit 10.5
FORM OF CARMAX EXECUTIVE OFFICER EMPLOYMENT AGREEMENT
[Date]
[Executive Officer Name & Address]
Dear [Name]:
This letter will confirm the terms of your employment with CarMax Auto Superstores,
Inc., a Virginia corporation (also referred to in this letter as the “Company” or “CarMax”):
a. |
Position. You have agreed to accept the position of [name of position]. During your employment, you shall perform such services as
may be assigned to you by your manager or other member of management. |
b. |
Compensation Your initial base rate will be [rate/frequency of pay]. The Company annually reviews performance and salaries. You
are eligible to participate in our CarMax fiscal year-end bonus program initially at [ %] of your base salary. Year-end bonuses are governed by the provisions of the Company’s bonus program, are based on both individual
and Company performance (compared to its profit objectives), and are not guaranteed [insert any exception applicable to the individual officer’s bonus for the first year]. This bonus is prorated for the number of months you are employed during
the fiscal year. To receive a bonus, you must have been employed before the preceding December 1st. Bonuses, if issued, are distributed in May, and you must be actively employed with the Company at that time to receive a bonus.
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c. |
Consideration. In consideration of your executing this Agreement and agreeing to be bound by its terms, the Company will:
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(1) |
pay you the severance mentioned in paragraph 12.a. below, (in the event that your employment is terminated “without cause”);
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(2) |
[insert any specific stock grant included in the individual officer’s initial compensation; and] |
(3) |
continue your eligibility for future grants in [name of stock based compensation plan] (subject to meeting the other requirements of participation, such as
full-time active status, position, etc.). |
[Name]
Employment Agreement
[Date]
Page 2
a. |
You will be deemed to “be associated with” a Competing Business if you: (1) become an employee of; or (2) directly or indirectly, alone or as a member
of a partnership, own greater than a 5% interest in; or (3) manage, operate, control, or act as a consultant to; or (4) serve as an officer or director or in any managerial or executive position with; or (5) loan money to any Competing Business. In
every case, the good faith judgment of the Board of Directors shall be conclusive as to whether you are associated with a Competing Business. |
b. |
A “Competing Business” is any business entity which engages in the Business of the Company (hereinafter defined and engages in Substantial Competition
(hereinafter defined) with the Company or its subsidiaries in one or more Designated Market Area (“DMA”) as defined by the Xxxxxxx Corporation, in which the Company or its subsidiaries have their operation, or in which, as of the date of
this Agreement, the Company or its subsidiaries are engaged in real estate site selection or have taken further steps toward the commencement of operation in the future, either alone or in association with another entity (“Future Statistical
Areas”), and whether or not such has been publicly announced. |
(1) |
The term “Business of the Company” is defined as the retail sale of automobiles, either new or used, with or without after-sale service.
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(2) |
A business will be deemed to be in “Substantial Competition” if it is a retailer of new or used automobiles which has: at least one (1) site which
has, or is expected to have within its first three years of operation, gross sales of at least one (1) million dollars annually; or b) mimics the Business of the Company. |
The following is a list of some businesses which, by way of example, as of the date of this Agreement, are among those considered to be a competing business of the
Company. These known competitors include, but are not limited to: [insert list of current competitors].
c. |
The term “Territory” shall mean the United States of America and its territories and Canada (“the Territory”).
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[Name]
Employment Agreement
[Date]
Page 3
You recognize and acknowledge that such Confidential Information, Trade Secrets or Technology, as may exist from time to time, is a valuable, special and unique asset of the Company and its
subsidiaries, and that this Confidential Information and its use have been responsible for the growth and expansion of the Company and its subsidiaries, and if known by a Competing Business, would cause irreparable harm to the Company and/or its
subsidiaries.
Therefore, during your employment and thereafter until the same shall have been (i) voluntarily
disclosed to the public by the Company, (ii) independently developed and disclosed to the public by others, or (iii) otherwise enters the public domain by lawful means, you will not:
a. |
Make or cause to be made any reproductions of any Confidential Information, Trade Secrets or Technology belonging to or in the possession of the Company or its
subsidiaries; or |
b. |
Remove any Confidential Information, Trade Secrets or Technology from the premises of the Company or its subsidiaries or fail or refuse to surrender the same to
the Company or its subsidiaries immediately upon their request; or |
c. |
Use for your own benefit or purposes or disclose to or use (or the benefit or purposes of anyone other than the Company or its subsidiaries, any Trade Secrets
or other Confidential Information, whether you learned the information before or after signing this Agreement and whether you leave employment with the Company. |
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[Name]
Employment Agreement
[Date]
Page 4
a. |
your neglect of your employment duties; |
b. |
evidence of your use, possession, or distribution of illegal drugs; |
c. |
deliberate misconduct by you in connection with the performance of your duties, including, for example, misappropriation of funds or property of the Company or
accepting bribes or kick-backs in connection with any transaction entered into on behalf of the Company; |
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[Name]
Employment Agreement
[Date]
Page 5
d. |
your failure to disclose to the Company any personal interest you have in a Company transaction; |
e. |
your violation of the confidentiality, non-competition, or non-solicitation provisions contained in this Agreement; |
f. |
your conviction of a felony; |
g. |
deliberate actions by you which are contrary to the best interests of the Company; |
h. |
actions by you which are in violation of any state or federal laws or regulations; |
i. |
actions by you which are unethical, as defined by the CarMax Statement of Business Ethics. |
j. |
[insert specific provisions for new hires (if the officer was not previously employed by Circuit City Stores, such as failure to successfully pass the new
hire/post-hire screening process and criminal background check; misrepresentation on the employment application or other documents that the officer provided to the Company or the employment agency who referred the person to the Company]
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a. |
If the Company terminates your employment without cause, in exchange for your agreeing to and honoring all the provisions of this Agreement (including,
but not limited to, paragraph 4 non-competition, paragraph 5 confidential information, paragraph 6 work product, paragraph 7 surrender of Company property, and paragraph 8 non-solicitation, you will receive twelve (12) months of base salary (as of
the date of termination), after termination, disbursed according to the Company’s regular biweekly paycheck schedule and sent to you via U.S. mail. |
During the period of the payment in 12.a. above, it will be your responsibility to seek alternative employment. Any payments you receive for the performance of services
during this period will reduce by one-half the Company’s obligation to pay the remaining payments specified in 12.a. above. You agree to notify the Company immediately if you secure employment.
b. |
If the Company terminates your employment due to the fact that the Company ceases to be in the business of the Company, in exchange for your agreeing to
and honoring all the provisions of this Agreement (except paragraph 4 non-competition), you will receive four |
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[Name]
Employment Agreement
[Date]
Page 6
(4) months of base salary (as of the date of termination), after termination,
disbursed according to the Company’s regular biweekly paycheck schedule and sent to you via U.S. mail.
c. |
If you terminate your employment, you will not be entitled to any compensation under this agreement, beyond the date of termination.
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d. |
[insert any additional provisions applicable to the particular executive upon termination] |
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[Name]
Employment Agreement
[Date]
Page 7
strict observance of the terms of this agreement on all occasions does not mean that the terms have been
changed or that strict observance cannot be required at a later time.
The offer contained in this letter remains open until [ a.m./
p.m.] on [date]. To confirm that this letter states our agreement, please initial each page in the space provided, sign the Agreement on the line above your name, date it, and return the signed copy to [Human Resources Administrator], at [address]
in the enclosed envelope by [date]. This agreement is not effective until received [Human Resources Administrator], who will initial your copy to verify receipt.
Sincerely yours, | ||
Xxxxxxx X. Xxxxx | ||
President, CarMax |
AGREED TO: By accepting this
Agreement, I agree to be bound by all its terms and conditions while in the employ of the Company and following the termination of my employment (for whatever reason) for the period(s) of time as detailed in each individual paragraph.
Date: |
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[Name]
SS# - -
RECEIPT VERIFIED:
Date: |
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[Human Resources Administrator] |
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