CARMAX, INC. NOTICE OF MARKET STOCK UNIT GRANT
CARMAX,
INC.
NOTICE OF
MARKET STOCK UNIT GRANT
[Date]
________________________________
________________________________
________________________________
________________________________
Dear
_____________________:
The Board
of Directors of CarMax, Inc. (the “Company”) wants to provide you with an
opportunity to share in the success of our Company. Accordingly, I am
pleased to inform you that, as of _________________ (the “Grant Date”), the
Compensation and Personnel Committee of the Board of Directors of the Company
(the “Committee”) exercised its authority pursuant to the CarMax, Inc. 2002
Stock Incentive Plan, as amended and restated (the “Plan”) and granted you
Market Stock Units of the Company (the “Market Stock Units”) as set forth
herein.
The
Market Stock Units are a form of Restricted Stock Units under the Plan and are
subject to the provisions of the Plan. The Committee administers the
Plan. The terms of the Plan are incorporated into this Notice of
Market Stock Unit Grant (the “Notice of Grant”) and in the case of any conflict
between the Plan and this Notice of Grant, the terms of the Plan shall
control. All capitalized terms not defined herein shall have the
meaning given to them in the Plan. Please refer to the Plan for
certain conditions not set forth in this Notice of
Grant. Additionally, a copy of a Prospectus for the Plan, which
describes material terms of the Plan, can be found on The CarMax
Way. Copies of the Prospectus, the Plan and the Company’s annual
report to shareholders on Form 10-K for fiscal year 20__ are available from the
Company’s corporate secretary at (000) 000-0000.
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Number
of Market Stock Units:
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Grant
Date Fair Market Value:
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Vesting of Market Stock
Units
Except as
otherwise provided in this Notice of Grant, the Market Stock Units will vest and
become nonforfeitable on [THREE YEAR ANNIVERSARY DATE] or such earlier date as
may be provided in this Notice of Grant or the Plan (the “Vesting Date”)
provided you continue to be employed by the Company from the Grant Date until
the Vesting Date. Prior to the Vesting Date, the Market Stock Units
are not transferable by you by means of sale, assignment, exchange, pledge or
otherwise.
Additional Vesting and
Forfeiture Provisions
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1.
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Termination
Without Cause or for Good Reason. If the Company terminates
your employment with the Company for any reason other than “Cause” (as
defined in your employment or severance agreement with the Company),
including for “Involuntary Termination Without Cause” or “Termination
Without Cause” (as applicable and as defined in your employment or
severance agreement with the Company) or you terminate your employment for
“Good Reason” (if applicable and as defined in your employment or
severance agreement with the Company) then all Market Stock Units will
become immediately vested and nonforfeitable, effective as of the date of
the termination of your employment. In such instance, the
Payment Date shall be the Vesting
Date.
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2.
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Termination
For Cause. Upon termination of your employment with the Company for Cause,
and notwithstanding the terms of the “Age and Service Vesting” section set
forth below, your Market Stock Units will be immediately forfeited,
effective as of the date of your
termination.
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3.
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Change
in Full-Time Employment Status. In the event that your
employment with the Company changes from full-time to part-time for any
reason, and notwithstanding the terms of the “Age and Service Vesting”
section set forth below, your Market Stock Units will be immediately
forfeited, effective as of the date of the
change.
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4.
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Resignation;
Leave. In the event that you resign your employment with the
Company, your Market Stock Units will be immediately forfeited, effective
as of your resignation date, except as otherwise provided in the “Age and
Service Vesting” section set forth below. Employees on
authorized leave (as determined under the Company’s authorized leave
policy) will not be considered as having terminated merely by reason of
the leave.
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Payment for Market Stock
Units
Payment
for your Market Stock Units shall be made in shares of Company Stock as soon as
practicable following [THREE YEAR ANNIV DATE], but in no event later than the
last day such payment may be made while still qualifying for the short–term
deferral exception from Code Section 409A. [THREE YEAR ANNIV DATE]
shall be referred to herein as the “Payment Date.”
Number of Shares of Company
Stock To Be Awarded on the Payment Date
The
number of shares of Company Stock that will be awarded to you on the Payment
Date shall be determined in accordance with the following formula:
(Number
of Market Share Units granted in this Notice of Xxxxx)
multiplied
by
((the
Payment Date Fair Market Value) divided by (the Grant Date Fair Market
Value)).
2
For
purposes of the formula set forth above:
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1.
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The
Grant Date Fair Market Value, which is set forth on page one of this
Notice of Grant, shall be equal to the volume-weighted average trading
price of the Company Stock occurring on the New York Stock Exchange on the
Grant Date.
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2.
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The
Payment Date Fair Market Value shall be equal to the average of the
closing price of the Company Stock occurring on the New York Stock
Exchange on the Payment Date and the 39 trading dates preceding the
Payment Date.
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3.
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Notwithstanding
the calculation set forth in the preceding paragraph, the Payment Date
Fair Market Value shall be capped at two times the Grant Date Fair Market
Value.
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Shareholder
Rights
The
Market Stock Units shall not represent an equity security of the Company and
shall not carry any voting or dividend rights, except the right to receive
payments equivalent to dividends as set forth below.
Dividend Equivalent
Rights
You shall
accumulate dividend equivalent rights on all Market Stock Units in an amount
equal to the dividends paid, if any, with respect to a share of Company Stock on
each date that a dividend is paid on the Company Stock prior to the Payment
Date. The dividend equivalent rights shall be converted into
additional Market Stock Units based on the Fair Market Value of a share of
Company Stock on the date the dividend is paid and shall accumulate and be paid
in additional shares of Company Stock when the payment for the corresponding
Market Stock Units is made. Such additional Market Stock Units shall
be subject to the same forfeiture restrictions as apply to the Market Stock
Units to which they relate and shall be converted into shares of Company Stock
using the same formula, Grant Date Fair Market Value and Payment Date Fair
Market Value set forth above.
Tax
Withholding
On the
Payment Date, you will have taxable income equal to the value of the Market
Stock Units on that date. You will be required to reimburse the
Company for the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect
to the vesting of the Market Stock Units (“Tax Withholdings”). The
Company has the right to retain and withhold from any payment under this
Agreement any required Tax
Withholdings. At its discretion, the Company may require you to
reimburse it for any Withholding Taxes and withhold any payments, in whole or in
part, until the Company is so reimbursed. The Company shall also have
the unrestricted right to withhold from any other cash amounts due (or to become
due) from the Company to you, including from your wages or commissions, an
amount equal to any Tax Withholdings.
3
Death or Disability
If your
employment by the Company terminates because you die or become disabled, all
Market Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.
Age and Service
Vesting
If your
employment with the Company terminates, such termination is not for cause and as
of the date if the termination you have:
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1.
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Attained
55 years of age and completed ten years or more of continuous employment
with the Company;
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2.
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Attained
62 years of age and completed seven years or more of continuous employment
with the Company; or
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3.
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Attained
65 years of age and completed five years or more of continuous employment
with the Company;
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then all
Market Stock Units covered by this Notice of Grant will become immediately
vested and nonforfeitable, effective as of the date of the termination of your
employment.
Change of
Control
Notwithstanding
anything to the contrary herein, in the event of a Change of Control, all Market
Stock Units covered by this Notice of Grant shall vest in accordance with the
following:
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·
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50%
of your Market Stock Units shall vest effective upon the date of the
Change of Control. In such instance, the Payment Date shall be
the Vesting Date.
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·
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50%
of your Market Stock Units shall vest effective upon the one-year
anniversary of the date of the Change of Control. In such
instance, the Payment Date shall be the Vesting
Date.
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Notwithstanding
the foregoing, in the event that any of your Market Stock Units would have
vested sooner than the one-year anniversary of the date of the Change of Control
(based upon the vesting schedule set forth in the “Vesting of Market Stock
Units” section hereof or
any other terms or conditions affecting vesting rights contained herein), such
sooner vesting date shall apply to such Market Stock Units.
4
Change of Capital
Structure
If the
number of outstanding shares of the Company Stock is increased or decreased as a
result of a stock dividend, stock split, subdivision or consolidation of shares,
or other similar change in capitalization, the number of Market Stock
Units covered by this Notice of Grant and the Grant Date Fair Market Value will
automatically be adjusted, as provided in the Plan and as the Committee shall
determine to be equitably required so as to preserve the value of the Market
Stock Units that existed immediately before the change; provided, however, that
the Company will not be required to issue any fractional shares as a result of
such adjustment.
By
accepting this grant on-line, this Notice of Grant, together with the Plan, will
become an agreement between you and the Company that is governed by and
construed and enforced in accordance with the laws of the Commonwealth of
Virginia. By accepting this online agreement, you agree that you are
in compliance with, and will abide by, the Company’s “Policy Against Xxxxxxx
Xxxxxxx – Associates” which can be found on The CarMax Way.
Sincerely,
[Name,
Title]
ACCEPTED:
Signature
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Printed
Name
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Employee
ID
Number
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5
