Circuit City Stores, Inc.

Employment Agreement for Philip J. Schoonover



     This EMPLOYMENT AGREEMENT is made, entered into, and is effective as of the

4th day of October,  2004 (the  "Effective  Date"),  by and between Circuit City

Stores, Inc. (the "Company") and Philip J. Schoonover (the "Executive").


     WHEREAS,  the Company  desires to employ the  Executive as  Executive  Vice

President of Circuit City Stores, Inc.;


     WHEREAS,  the Company  recognizes the  Executive's  intimate  knowledge and

experience in the business of the Company,  and desires to secure the employment

of the Executive in the role of Executive Vice President of the Company; and


     WHEREAS,  the  Executive  will  develop  and/or  come in  contact  with the

Company's  proprietary  and  confidential   information  which  is  not  readily

available to the public,  and which is of great importance to the Company and is

treated by the Company as secret and confidential information.


     NOW, THEREFORE,  in consideration of the mutual covenants and agreements of

the  parties  set  forth  in this  Agreement,  and of other  good  and  valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, the

parties hereto, intending to be legally bound, agree as follows:


Article 1.  Term of Employment


     The Company hereby agrees to employ the Executive and the Executive  hereby

accepts  employment as Executive  Vice  President of the Company,  in accordance

with the terms and conditions set forth herein, for an initial period of two (2)

years,  commencing as of the Effective Date of this Agreement as indicated above

(the "Initial  Term");  subject,  however,  to earlier  termination as expressly

provided herein.


     The Initial Term shall  automatically be renewed for additional  periods of

one (1) year each at the end of the  Initial  Term,  and then  again  after each

successive year thereafter (collectively, the "Renewal Periods," which, together

with the Initial Term, constitute the "Term" of this Agreement). However, either

party may terminate this Agreement at the end of the Initial Term, or at the end

of any Renewal Period, by giving the other party written notice of intent not to

renew,  delivered at least  forty-five (45) days prior to the end of the Initial

Term or any Renewal Period. For purposes of this Agreement, an "Employment Year"

shall  mean any  twelve  (12) month  period  during  the Term of this  Agreement

beginning on the Effective Date or on any anniversary thereof.


Article 2.  Position and Responsibilities


     During  the  Term of this  Agreement,  the  Executive  agrees  to  serve as

Executive  Vice  President  of the Company.  In his  capacity as Executive  Vice

President of the Company, the Executive shall report directly to the Executive's

immediate  manager and shall have the duties and  responsibilities  of Executive

Vice  President  of the Company and such other duties and  responsibilities  not

inconsistent  with the  performance of his duties as Executive Vice President of

the Company, including but not limited to: merchandising, supply chain, business

development and strategic planning.


Article 3.  Standard of Care


     During  the  term  of  this  Agreement,  the  Executive  agrees  to  devote

substantially  his full-time  attention and energies to the Company's  business.

The Executive covenants, warrants, and represents that he shall:


         (a)      Devote his full and best  efforts and talents full time to the

                  performance of his employment  obligations  and duties for the



         (b)      Exercise  the  highest  degree  of  loyalty  and  the  highest

                  standards of conduct in the performance of his duties;


         (c)      Comply with all rules,  regulations,  and policies established

                  or issued by the Company; and


         (d)      Refrain from taking  advantage,  for himself or others, of any

                  corporate opportunities of the Company.


Article 4.  Other Employment.


     The Executive shall not, during the term hereof, be interested  directly or

indirectly, in any manner, as partner, officer, director, investor, stockholder,

advisor,  employee,  or in any other capacity,  in any other business similar to

Company's business for the Executive's  personal advantage or benefit or that of

others.  Any other  employment  or  position  which might  reasonably  be deemed

contrary to the best interests of the Company is prohibited.  During the term of

employment  hereunder,  the  Executive  agrees to obtain the  Company's  written

consent prior to entering into any other occupation,  even if dissimilar to that

of the  Company.  Such  consent  may be granted or  withheld,  in the  Company's

absolute  discretion.  Nothing  herein  contained  shall be deemed to prevent or

limit  the  right of the  Executive  to  invest  in the  capital  stock or other

securities of any corporation  whose stock or securities are regularly traded on

any public  exchange,  nor shall anything herein  contained be deemed to prevent

the Executive from investing in real estate for his own benefit (so long as such

investment  (a) is not  related  to or in  support  of any  entity  engaged in a

business  similar  to that of the  Company  or (b)  does  not  detract  from the

Executive's performance of his duties and obligations hereunder).


Article 5.  Compensation and Benefits


     As remuneration for all services to be rendered by the Executive during the

Employment Period, and as consideration for complying with the covenants herein,

the Company shall pay and provide to the Executive the following:


     5.1. Base Salary. During the Term of this Agreement,  the Company shall pay

the Executive a Base Salary in an amount which shall be established and approved

by the Compensation Committee of the Board of Directors; provided, however, that

such Base Salary shall be  established  at a rate of not less than  $600,000 per

year.  This Base Salary  shall be subject to all  appropriate  federal and state

withholding taxes and payable in accordance with the normal payroll practices of

the Company.  The Base Salary shall be reviewed at least annually  following the

Effective Date of this Agreement,  while the Term of this Agreement is in force,

to ascertain whether, in the judgment of the Compensation  Committee,  such Base

Salary  should be changed.  If changed,  the Base Salary as stated  above shall,

likewise, be changed for all purposes of this Agreement.


     5.2. Annual Bonus.  In addition to his Base Salary,  the Executive shall be

entitled to participate in the Company's  short-term  incentive program, as such

program may exist from time to time during the Term of this Agreement.


     Under the  Company's  short-term  incentive  plan,  the  Executive  has the

opportunity  to earn an annual  bonus with  respect  to any  fiscal  year of the

Company ("Annual Bonus").  Upon conclusion of fiscal year 2005, you will receive

an annual bonus in the amount of $480,000. In the remaining Initial Term and any

Renewal Period,  the Annual Bonus, if earned with respect to a particular fiscal

year,  will generally be in an amount that is not less than eighty percent (80%)

of the  Executive's  Base Salary for the fiscal  year with  respect to which the

Annual Bonus is being paid (the "Minimum Bonus Rate") and is  commensurate  with

the position of Executive Vice President of the Company.


     The award and  amount of any Annual  Bonus  shall be  determined  under the

Company's  short-term  incentive  plan, at the sole  discretion of the Company's

Compensation  Committee.  If the  Minimum  Bonus  Rate  is  changed,  it  shall,

likewise, be changed for all purposes of this Agreement.


     5.3. Long-Term Incentives. During the Term of this Agreement, the Executive

shall be eligible to participate in the Company's  long-term  incentive plan, to

the  extent  that the Board of  Directors  of the  Company  or the  Compensation

Committee,  in  their  discretion,  determines  is  appropriate.  The  Board  of

Directors will make its  determination  consistent with the methodology  used by

the Company for compensating its comparably situated employees.


     5.4. Retirement  Benefits.  During the Term of this Agreement,  the Company

shall provide to the Executive the opportunity for  participation in all Company

retirement,  insurance,  fringe benefit,  and executive  compensation  plans and

programs,  subject to the  eligibility  and  participation  requirements of such



     5.5.  Employee  Benefits.  During the Term of this  Agreement,  the Company

shall provide the Executive all benefits,  as commensurate  with the position of

Executive  Vice  President of the Company,  but at a minimum not less than those

provided by the Company to other comparably  situated  employees  subject to the

eligibility  requirements  and  other  provisions  of  such  arrangements.  Such

benefits may include group term life insurance,  comprehensive  health and major

medical  insurance,  dental and life  insurance,  and  short-term  and long-term



     5.6.  Perquisites.  During the Term of this  Agreement,  the Company  shall

provide to the  Executive,  at the Company's  cost, all  perquisites,  which are

commensurate with the position of Executive Vice President of the Company.


     5.7. Right to Change Plans.  By reason of Articles 5.5 and 5.6 herein,  the

Company shall not be obligated to institute, maintain, or refrain from changing,

amending,  or  discontinuing  any benefit  plan or  perquisite,  so long as such

changes are similarly applicable to comparably situated employees.


Article 6.  Expenses


     During the Term of this  Agreement,  the Company shall pay or reimburse the

Executive for all ordinary and necessary expenses, in a reasonable amount, which

the Executive  incurs in performing his duties under this  Agreement  including,

but not limited to, travel, entertainment,  professional dues and subscriptions,

and  all  dues,  fees,  and  expenses  associated  with  membership  in  various

professional,  business,  and  civic  associations  and  societies  in which the

Company finds that the Executive's participation is in the best interests of the

Company. The payment of reimbursement of expenses shall be subject to such rules

concerning  documentation of expenses and the type or magnitude of such expenses

as the Compensation  Committee of the Board of Directors may establish from time

to time.


Article 7.  Employment Termination


     7.1.  Termination  Due to Retirement or Death. In the event the Executive's

employment  ends  by  reason  of  Retirement   (defined  as  voluntary   "Normal

Retirement"  under the then  established  definitions and rules of the Company's

tax-qualified  retirement plan) or the Executive's death during the term of this

Agreement,  the Executive's  benefits shall be determined in accordance with the

Company's retirement,  survivor's benefits,  insurance,  and/or other applicable

programs of the Company then in effect.  In addition,  all stock grants,  except

performance-based  grants in the case of  Retirement,  will  become  immediately

vested  and  may  be  exercised  by  the  Executive,  the  Executive's  personal

representatives,  distributees,  legatees,  or  estate  at any time  before  the

expiration date of the grant.


     The Effective Date of  Termination  due to Retirement or death shall be (a)

ninety (90) days  following  the date the  Executive  provides  the Company with

written  notice that the Executive is ending  employment by reason of Retirement

or (b) on the Executive's  date of death, as the case may be. Upon the Effective

Date of Termination,  the Company shall be obligated to pay the Executive or, if

applicable, the Executive's estate; (a) any Base Salary or Annual Bonus that was

accrued but not yet paid as of the Effective  Date of  Termination;  and (b) all

other rights and  benefits  that the  Executive is vested in,  pursuant to other

plans and programs of the Company.


     7.2.  Termination  Due to  Disability.  The Company shall have the right to

terminate the Executive's  employment for  disability.  For the purposes of this

Agreement,  disability  shall mean any physical or mental illness or injury that

causes the  Executive  to be unable to  substantially  perform  the  Executive's

normal  duties;  provided  however that the  Executive  shall not be  considered

disabled  until:  (i) the Executive has been so disabled for 180 days during any

period  of  twelve  (12)  consecutive  months;  (ii) the  Executive's  attending

physician shall have furnished to the Company  certification  that the return of

the Executive to his normal duties is  impossible  or  improbable;  or (iii) the

Executive is determined to be totally  disabled by the  disability  insurer then

insuring the Executive, if any.


     The Effective Date of Termination due to Disability shall be specified,  in

a written notice, by the Executive's  immediate manager, and such written notice

shall be  delivered  to the  Executive,  but shall be no less than  thirty  (30)

calendar days after the delivery of such written notice to the  Executive.  Upon

the  Effective  Date of  Termination,  the Company shall be obligated to pay the

Executive [or, if applicable,  the Executive's  estate]: (a) any salary that was

accrued but not yet paid as of the Effective Date of Termination; (b) the unpaid

Annual Bonus,  if any,  with respect to the fiscal year  preceding the Effective

Date of Termination  (such Annual Bonus,  if any, to be determined in the manner

it would have been determined and payable at the time it would have been payable

under Article 5.2 had there been no termination of the Employment  Period);  and

(c) all other rights and benefits that the  Executive is vested in,  pursuant to

other plans and programs of the Company.


     It is expressly  understood  that the  Disability  of the  Executive  for a

period of one hundred eighty (180) calendar days or less in the aggregate during

any period of twelve (12) consecutive  months,  in the absence of any reasonable

expectation  that his Disability will exist for more than such a period of time,

shall not constitute a failure by him to perform his duties  hereunder and shall

not be  deemed a  breach  or  default,  and the  Executive  shall  receive  full

compensation  for any such  period  of  Disability  or for any  other  temporary

illness or incapacity during the term of this Agreement.


     If the employment of the Executive terminates because of Disability, all of

the Executive's  outstanding  stock grants,  excluding  restricted  stock grants

issued under a performance based plan, will become immediately vested, effective

as of  the  date  of  the  Executive's  Disability.  Then,  the  Executive,  the

Executive's personal representatives, distributees, or legatees may exercise the

Executive's grants at any time before the expiration date of the grant.


     7.3.  Voluntary  Termination by the Executive.  The Executive may terminate

his  employment  and this  Agreement  at any time by giving the Company at least

forty-five (45) days written notice.  The Company  reserves the right to require

the  Executive  not to work during the notice period but shall pay the Executive

his full Base  Salary,  at the rate then in effect as  provided  in Article  5.1

herein, through the notice period plus all other benefits to which the Executive

has a  vested  right  on the  last  day of  employment  (for  purposes  of  this

paragraph,  the Executive shall not be paid any Annual Bonus with respect to the

fiscal year in which voluntary  termination under this Article 7.3 occurs).  The

Company thereafter shall have no further obligations under this Agreement.


     7.4 Involuntary  Termination by the Company Without Cause.  The Company may

terminate the  Executive's  employment,  at any time,  for any reason other than

death, Disability,  Retirement,  or for "Cause", by providing the Executive with

at least forty-five (45) days written notice.


(a)               The  Company's  decision  not to renew this  Agreement  at the

                  Expiration  Date of the  Initial  Term or any  Renewal  Period

                  shall be  deemed an  involuntary  termination  without  cause;

                  provided,  however, that for purposes of this Article 7.4 (a),

                  no variation, alteration,  modification,  cancellation, change

                  or amendment made to this  Agreement  pursuant to Article 12.3

                  or  12.4  at a time  other  than  the  Expiration  Date of the

                  Initial  Term  or any  Renewal  Period,  shall  be  deemed  an

                  involuntary termination without Cause.


(b)               Upon  the  Effective  Date  of  Termination  specified  by the

                  Company for  termination  by the Company  without  cause,  the

                  Company  shall  pay  to  the   Executive,   in  equal  monthly

                  installments  over the  following  twelve (12) month period an

                  amount  equal  to  the  product  of one  (1)  times  both  the

                  Executive's  Base  Salary and the  Executive's  target  Annual

                  Bonus established for the fiscal year in which the Executive's

                  Effective Date of Termination occurs. In addition, the Company

                  shall  continue,  at the same cost to the Executive as existed

                  as of the  Effective  Date  of  Termination,  all  health  and

                  welfare  benefit  plan  participation  for two (2) full  years

                  following the Executive's termination of employment; provided,

                  however,  that the applicable COBRA "period of coverage" under

                  any plan subject to Section 4980B of the Internal Revenue Code

                  of 1986, as amended (the "Code"),  or Sections 601 through 609

                  of the Employee Retirement Income Security Act of 1974 (ERISA)

                  shall begin as of the Effective Date of Termination.


(c)               The Company shall also provide the Executive with outplacement

                  services  not to  exceed  a cost  of  fifty  thousand  dollars



(d)               Any  unvested  stock  options  or any  outstanding  restricted

                  stock,  excluding  restricted  stock  grants  issued  under  a

                  performance  based plan,  that would  become  vested (that is,

                  transferable and non-forfeitable) if the Executive remained an

                  employee  through the Initial Term or the then current Renewal

                  Period of this  Agreement will become vested as of the date of

                  the Executive's termination of employment.  The Executive must

                  satisfy the tax withholding requirements.


(e)               The  Executive  will be credited  with age and service  credit

                  through the end of the Initial Term or current  Renewal Period

                  of this Agreement for purposes of computing benefits under the

                  Company's  pension,  medical and other benefit plans,  and the

                  Company  will  continue  the  Executive's  coverage  under the

                  Company's benefit plans as if the Executive  remained employed

                  through the end of the term of this Agreement. Notwithstanding

                  the  foregoing,  if crediting  such age and service  credit or

                  continued    coverage   could   adversely   affect   the   tax

                  qualification or tax treatment of a benefit plan, or otherwise

                  have  adverse  legal  ramifications  to either the plan or the

                  Company,  the  Company  may pay the  Executive a lump sum cash

                  amount that reasonably approximates the after-tax value to the

                  Executive  of  such  age  and  service  credit  and  continued

                  coverage  through  the end of the term of this  Agreement,  in

                  lieu of giving such credit and continued coverage.


     The  Company  thereafter  shall  have no  further  obligations  under  this



     7.5. Termination For Cause. Nothing in this Agreement shall be construed to

prevent the Company  from  terminating  the  Executive's  employment  under this

Agreement, without notice or liability for doing so, for "Cause."


     For purposes of this Agreement, "Cause" means:


         (a)      The  Executive's  material  breach  of this  Agreement,  which

                  breach is not cured  within  ten (10) days of  receipt  by the

                  Executive of written  notice from the Company  specifying  the



         (b)      The  Executive's  gross  negligence in the  performance of his

                  material  duties  hereunder,   intentional  nonperformance  or

                  intentional  misperformance  of  such  duties,  misconduct  or

                  refusal  to abide by or  comply  with  the  directives  of the

                  Board, his superior  officers,  or the Company's  policies and

                  procedures,  which  actions  continue for a period of ten (10)

                  days after receipt by the  Executive of written  notice of the

                  need to cure or cease;


         (c)      Conviction  of  a  felony  or  other  crime   involving  moral



         (d)      The Executive engaging in illegal conduct, dishonesty or fraud

                  with respect to the business or affairs of the Company that in

                  the  reasonable   judgment  of  the  Company   materially  and

                  adversely affects the operations or reputation of the Company;


         (e)      Failure  of the  Executive  to  disclose  to  the  Executive's

                  manager a conflict of interest,  of which the  Executive  knew

                  or, with reasonable diligence, would have known, in connection

                  with any transaction entered into on behalf of the Company; or


         (f)      Failure of the  Executive to agree to a  modification  of this

                  Agreement,  pursuant to paragraph 12.3 below, when the purpose

                  of the  modification  is to comply  with  applicable  federal,

                  state  and/or  local  laws  or   regulations,   or  when  such

                  modification is designed to further define the restrictions of

                  Article 8 or otherwise  enhance the  enforcement  of Article 8

                  without increasing the scope of the Article 8 restrictions.


     In the event this Agreement is terminated for Cause,  the Company shall pay

the Executive  his Base Salary  through the Effective  Date of  Termination  for

cause and the  Executive  shall  immediately  thereafter  forfeit all rights and

benefits  (other than vested  benefits) he would otherwise have been entitled to

receive  under this  Agreement.  The  Company  thereafter  shall have no further

obligations under this Agreement.


     7.6.  Termination  for Good  Reason.  At any time  during  the term of this

Agreement,  the  Executive  may  terminate  this  Agreement  for Good Reason (as

defined below) by giving the Company forty-five (45) days written notice,  which

notice  sets  forth in detail the facts and  circumstances  claimed to provide a

basis for such  termination.  However,  the Company shall,  at its option,  have

thirty  (30)  days  from  receipt  of such  written  notice to cure any event or

circumstance that could constitute Good Reason.


     If the Company chooses not to cure, the Effective Date of Termination

for Good Reason shall occur upon the expiration of the forty-five (45) days

prior notice period that is specified by the Executive in the written notice,

and the Company shall pay and provide to the Executive the benefits set forth in

this Article 7.6.


     For  purposes  of this  Agreement,  Good  Reason  shall  mean,  without the

Executive's  express written  consent,  the occurrence of any one (1) or more of

the following:


          (a)     Failing  to  maintain  the  Executive's  participation  in the

                  Company's  annual  bonus  and  long-term  incentive  plan in a

                  manner  that  is  consistent  with  other  similarly  situated

                  Executive employees of the Company;


         (b)      Failing  to  maintain  the  Executive's   benefits  under,  or

                  relative  level of  participation  in, the Company's  employee

                  benefit or retirement plans, perquisites, policies, practices,

                  or arrangements in which the Executive  participates as of the

                  Effective  Date of this Agreement at a level  consistent  with

                  other similarly situated Executive employees of the Company;


         (c)      Reducing the Executive's Base Salary;


(d)               Terminating  the  Executive's  employment  otherwise  than  as

                  expressly permitted by this Agreement; or


(e)               Failing to comply with and satisfy  Article  10.1 by requiring

                  any  successor  to the  Company to assume and agree to perform

                  the Company's obligations hereunder.


     Upon the Effective Date of Termination,  the Executive shall be entitled to

receive the same payments and benefits as he is entitled to receive following an

involuntary  termination  of his  employment by the Company  without  Cause,  as

specified in Article 7.4 herein.  Said payment shall commence within  forty-five

(45) calendar days following the Effective Date of Termination.


     The Executive's right to terminate  employment for Good Reason shall not be

affected by the Executive's incapacity due to physical or mental illness.


Article 8.  Noncompetition and Confidentiality


     8.1. Noncompetition.


          (a)     During the Executive's  employment and for a period of one (1)

                  years  following the last day of the  Executive's  employment,

                  the Executive  shall not directly or  indirectly  compete with

                  the Company by engaging,  in a  competitive  capacity,  in any

                  business  that is engaged in the same or similar  business  of

                  the  Company  in one or more  Metropolitan  Statistical  Areas

                  ("MSAs"),   specifically  including  Best  Buy,  Radio  Shack,

                  Wal-Mart and CompUSA,  in which the Company is doing  business

                  on the last day of the Executive's employment. A business will

                  not be  considered to be in  competition  with the Company for

                  purposes of this  paragraph  8.1(a) or paragraph  8.1(b) below



                  (i)      The business or the operating unit of the business in

                           which the  Executive  is  employed  or with which the

                           Executive is associated  (collectively  the "Business

                           Unit") is not engaged in the retail sales of consumer



                  (ii)     If sales of the Business  Unit's products or services

                           in  the  retail   sales  and   service  of   consumer

                           electronics constitute less than ten percent (10%) of

                           such Business Unit's sales; or


                  (iii)    If the sales of the Business Unit in the retail sales

                           and service of  consumer  electronics  do  constitute

                           more  than  ten  percent  (10%)  of the  sales of the

                           Business  Unit,  but there is no  geographic  overlap

                           between  such  Business   Unit's  and  the  Company's

                           business locations.


     Notwithstanding the foregoing, nothing herein shall be deemed to prevent or

limit  the  right of the  Executive  to  invest  in the  capital  stock or other

securities of any corporation  whose stock or securities are regularly traded on

any public  exchange,  nor shall anything herein  contained be deemed to prevent

Employee  from  investing  in real  estate for his own  benefit (as long as such

investment is not related to or in support of any entity  engaged in the same or

similar  business as the Company in competition  with the Company in one or more

MSA's in which the Company is doing business during the Executive's employment).


         (b)      During the Executive's  employment and for a period of one (1)

                  years  following the last day of the  Executive's  employment,

                  the Executive  shall not directly or  indirectly  compete with

                  the Company by engaging,  in a  competitive  capacity,  in any

                  business  engaged  in the  same  or  similar  business  of the

                  Company  in one or more  MSAs  where,  on the  last day of the

                  Executive's employment,  the Company is engaged in real estate

                  site   selection  or  has  taken   further  steps  toward  the

                  commencement  of  operations  in  the  future,  of  which  the

                  Executive is aware.


          (c)     The Executive agrees that competition, as set forth in Article

                  8.1(a) above,  shall include,  but not be limited to, engaging

                  in competitive activity, as an individual,  as a partner, as a

                  joint  venturer  with any  other  person or  entity,  or as an

                  employee,  agent,  or  representative  of any other  person or



         (d)      It is the specific  intent of the parties  that the  Executive

                  shall be restricted from competing directly or indirectly with

                  any segment of the  Company's  business in which the Executive

                  engaged prior to the last day of his  employment  and from any

                  segment of the  Company's  business  about which the Executive

                  acquired  proprietary or confidential  information  during the

                  course of his employment.


         (e)      If any  provision  of this  Article  8.1  relating to the time

                  period,  geographic  area or  scope of  restricted  activities

                  shall be  declared  by a court of  competent  jurisdiction  to

                  exceed the maximum  time period,  geographic  area or scope of

                  activities,  as applicable,  that such court deems  reasonable

                  and enforceable, said time period, geographic area or scope of

                  activities shall be deemed to be, and thereafter shall become,

                  the  maximum  time  period,  scope of  activities  or  largest

                  geographic   area  that  such  court  deems   reasonable   and

                  enforceable   and  this  Agreement  shall   automatically   be

                  considered  to have been  amended and revised to reflect  such



         (f)      The  Executive  and the Company  have  examined in detail this

                  Covenant Not to Compete and agree that the  restraint  imposed

                  upon the Executive is  reasonable  in light of the  legitimate

                  interests of the Company,  and it is not unduly harsh upon the

                  Executive's ability to earn a livelihood.


     8.2.  Non-Solicitation  of Employees.  The Executive agrees that during the

Executive's  employment  with  the  Company  and for a period  of two (2)  years

following the last day of the Executive's  employment,  the Executive shall not,

directly or indirectly,  solicit or induce, or attempt to solicit or induce, any

employee of the Company to leave the Company for any reason  whatsoever  or hire

any  individual  employed by the  Company.  For  purposes of this  Article  8.2,

employee  shall mean any  individual  employed by the Company on the last day of

the Executive's  employment or within the  three-month  period prior to the last

day of the Executive's employment.


     8.3.  Confidentiality.  The  Company  has  advised  the  Executive  and the

Executive  acknowledges  that it is the  policy of the  Company to  maintain  as

secret and confidential all Protected  Information (as defined below),  and that

Protected  Information  has been and will be developed at  substantial  cost and

effort to the Company.  The Executive  agrees to hold in strict  confidence  and

safeguard any information of or about the Company gained by the Executive in any

manner or from any source during the Executive's employment. The Executive shall

not, without the prior written consent of the Company,  at any time, directly or

indirectly,  divulge,  furnish,  use, disclose or make accessible to any person,

firm,  corporation,  association,  or  other  entity  (otherwise  than as may be

required in the regular course of the Executive's employment), either during the

Executive's  employment  with the Company or  subsequent  to the last day of the

Executive's employment, any Protected Information, or cause any such information

of the Company to enter the public domain.


     The  Executive  understands  and agrees that any  information,  data and/or

trade secrets about Company or its suppliers and/or distributors is the property

of the Company and is essential to the protection of the Company's  goodwill and

to the maintenance of the Company's  competitive position and accordingly should

be kept secret.  For purposes of this Agreement,  "Protected  Information" means

trade secrets, confidential and proprietary business information of or about the

Company,  and any other  information of the Company,  including,  customer lists

(including potential customers), sources of supply, processes, plans, materials,

pricing  information,  internal memoranda,  marketing plans,  promotional plans,

internal policies, research,  purchasing,  accounting and financial information,

computer programs,  hardware,  software,  and products and services which may be

developed  from  time to time  by the  Company  and  its  agents  or  employees,

including the Executive;  provided,  however,  that  information  that is in the

public domain (other than as a result of a breach of this  Agreement),  approved

for release by the Company or lawfully  obtained  from third parties who are not

bound  by a  confidentiality  agreement  with  the  Company,  is  not  Protected



     Nothing  contained  in  this  Article  is  intended  to  reduce  in any way

protection available to the Company pursuant to the Uniform Trade Secrets Act as

adopted in Virginia or any other state or other  applicable  laws which prohibit

the misuse or disclosure of confidential or proprietary information.


     8.4.  Acknowledgement of Covenants. The parties hereto acknowledge that the

Executive's services are of a special, extraordinary, and intellectual character

which  gives him unique  value,  and that the  business  of the  Company and its

subsidiaries is highly  competitive,  and that violation of any of the covenants

provided in this Article 8 would cause immediate,  immeasurable, and irreparable

harm,  loss, and damage to the Company not adequately  compensable by a monetary

award.  The  Executive  acknowledges  that the  time,  scope of  activities  and

geographical  area restrained by the provisions of this Article 8 are reasonable

and do not impose a greater  restraint than is necessary to protect the goodwill

of the Company's  business.  The Executive further  acknowledges that he and the

Company have  negotiated  and bargained for the terms of this Agreement and that

the  Executive  has  received  adequate  consideration  for  entering  into this

Agreement. In the event of any such breach or threatened breach by the Executive

of any one or more of such  covenants,  the  Company  shall be  entitled to such

equitable  and  injunctive  relief as may be available to restrain the Executive

from  violating  the  provisions  hereof.  Nothing  herein shall be construed as

prohibiting the Company from pursuing any other remedies  available at law or in

equity for such breach or threatened  breach,  including the recovery of damages

and the immediate  termination of the employment of the Executive  hereunder for



Article 9.  Change in Control


     9.1. Change in Control. This Article 9 shall not become effective,  and the

Company shall have no obligation  hereunder,  if the employment of the Executive

with the  Company  shall  terminate  prior to a Change in Control (as defined in

Article 9.2 below) of the Company.


     9.2.  Definition  of Change in  Control.  Change in Control of the  Company

means,  and shall be deemed to have occurred,  upon the first to occur of any of

the following events:


         (a)      The  acquisition  by  any  individual,  entity,  or  group  (a

                  "Person"),  including a "person" within the meaning of Section

                  13(d)(3) or 14(d)(2) of the  Securities  Exchange Act of 1934,

                  as amended (the  "Exchange  Act"),  but excluding an Affiliate

                  (as defined  below) of the Company,  of  beneficial  ownership

                  within  the  meaning  of  Rule  13d-3  promulgated  under  the

                  Exchange Act, of thirty-five  percent (35%) or more of either:

                  (i) the then outstanding shares of common stock of the Circuit

                  City  Group  (the  "Outstanding  Common  Stock");  or (ii) the

                  combined  voting power of the then  outstanding  securities of

                  the Company  entitled  to vote  generally  in the  election of

                  directors (the "Outstanding  Voting  Securities");  excluding,

                  however, the following:  (A) any acquisition directly from the

                  Company (excluding an acquisition  resulting from the exercise

                  of an option,  conversion right, or exchange  privilege unless

                  the security  being so  exercised,  converted or exchanged was

                  acquired  directly from the Company);  (B) any  acquisition by

                  the Company;  (C) any acquisition by an employee  benefit plan

                  (or related  trust)  sponsored or maintained by the Company or

                  any  corporation   controlled  by  the  Company;  or  (D)  any

                  acquisition by any corporation pursuant to a transaction which

                  complies with clauses (i),  (ii),  and (iii) of subsection (c)

                  of this Article 9.2;


         (b)      Individuals  who, as of the  Effective  Date,  constitute  the

                  Board of  Directors  (the  "Incumbent  Board")  cease  for any

                  reason  to  constitute  at  least a  majority  of such  Board;

                  provided  that any  individual  who  becomes a director of the

                  Company  subsequent to the Effective Date, whose election,  or

                  nomination  for election by the  Company's  stockholders,  was

                  approved by the vote of at least a majority  of the  directors

                  then  comprising the Incumbent  Board shall be deemed a member

                  of  the  Incumbent  Board;  and  provided  further,  that  any

                  individual  who was  initially  elected as a  director  of the

                  Company  as a  result  of an  actual  or  threatened  election

                  contest,  as such terms are used in Rule 14a-11 of  Regulation

                  14A promulgated under the Exchange Act, or any other actual or

                  threatened solicitation of proxies or consents by or on behalf

                  of any  Person  other  than the  Board  shall  not be deemed a

                  member of the Incumbent Board;


         (c)      The consummation of a reorganization,  merger or consolidation

                  of  the  Company  or  sale  or  other  disposition  of  all or

                  substantially  all of the assets of the Company (a  "Corporate

                  Transaction");  excluding,  however,  a Corporate  Transaction

                  pursuant  to  which:  (i)  all  or  substantially  all  of the

                  individuals  or  entities  who  are  the  beneficial   owners,

                  respectively,   of  the  Outstanding   Common  Stock  and  the

                  Outstanding  Voting  Securities   immediately  prior  to  such

                  Corporate  Transaction  will  beneficially  own,  directly  or

                  indirectly,  more than sixty percent  (60%) of,  respectively,

                  the  outstanding  shares of  common  stock,  and the  combined

                  voting power of the outstanding securities of such corporation

                  entitled to vote  generally in the election of  directors,  as

                  the  case  may be,  of the  corporation  resulting  from  such

                  Corporate  Transaction  (including,   without  limitation,   a

                  corporation,  which as a result of such  transaction  owns the

                  Company or all or  substantially  all of the Company's  assets

                  either  directly  or  indirectly)  in  substantially  the same

                  proportions   relative  to  each  other  as  their  ownership,

                  immediately  prior  to  such  Corporate  Transaction,  of  the

                  Outstanding   Common   Stock   and  the   Outstanding   Voting

                  Securities,  as the case may be; (ii) no Person  (other  than:

                  the  Company;  any employee  benefit  plan (or related  trust)

                  sponsored  or  maintained  by the  Company or any  corporation

                  controlled by the Company; the corporation resulting from such

                  Corporate  Transaction;  and  any  Person  which  beneficially

                  owned,   immediately  prior  to  such  Corporate  Transaction,

                  directly or indirectly,  twenty-five  percent (25%) or more of

                  the  Outstanding   Common  Stock  or  the  Outstanding  Voting

                  Securities,  as  the  case  may  be)  will  beneficially  own,

                  directly or indirectly,  twenty-five percent (25%) or more of,

                  respectively,  the  outstanding  shares of common stock of the

                  corporation  resulting from such Corporate  Transaction or the

                  combined  voting power of the  outstanding  securities of such

                  corporation  entitled  to vote  generally  in the  election of

                  directors;  and  (iii)  individuals  who were  members  of the

                  Incumbent  Board will  constitute  at least a majority  of the

                  members of the board of directors of the corporation resulting

                  from such Corporate Transaction; or


         (d)      The   consummation   of  a  plan  of   complete   liquidation,

                  dissolution,  or sale of  substantially  all the assets of the



     For purposes of this Article 9, "Affiliate"  shall mean with reference to a

specified Person, any Person that directly or indirectly through one (1) or more

intermediaries  controls or is controlled by or is under common control with the

specified Person. For purposes of this definition,  "control"  (including,  with

correlative meaning, the terms "controlled by" and "under common control with"),

as used in  respect  to any  Person,  shall  mean the  possession,  directly  or

indirectly,  of the power to direct or cause the  direction  of  management  and

policies of such Person,  whether through  ownership of voting  securities or by

contract or otherwise.


     9.3.  Change-in-Control  Severance Benefits. If at any time during the Term

of  this  Agreement  there  is a  Change  in  Control  of the  Company  and  the

Executive's   employment  is  terminated   for  any  reason  other  than  death,

Disability,  Retirement,  Voluntary  Termination other than Good Reason or Cause

within the one (1) year period  following the Change in Control or the Executive

voluntarily terminates for any reason in the thirteenth month following a Change

in Control of the  Company,  the  Company  shall  provide to the  Executive  the



         (a)      Base  Salary  and  all  other  benefits  due  him as if he had

                  remained  an  employee  pursuant  to  Article  5  through  the

                  remainder of the month in which the termination  occurs,  less

                  applicable  withholding  taxes  and other  authorized  payroll



         (b)      A lump-sum  severance  allowance in an amount that is equal to

                  the product of two (2) times both the Executive's  Base Salary

                  at the rate in effect immediately prior to the termination and

                  the Executive's target Annual Bonus established for the fiscal

                  year  in  which  the  Executive's  termination  of  employment



         (c)      Continuation  at the same cost to the  Executive as existed as

                  of the  Effective  Date of  Termination  of  Agreement  of all

                  health,  welfare,  and benefit plan  participation for two (2)

                  full years following employment termination;


         (d)      Provision of  outplacement  services for the  Executive not to

                  exceed a cost of fifty thousand dollars ($50,000);


         (e)      A  lump-sum  payment  equal  to  the  two  (2)  year  cost  of

                  perquisites outlined in Article 5.6 above; and


         (f)      Any  unvested  stock  options  or any  outstanding  restricted

                  stock,  excluding  restricted  stock  grants  issued  under  a

                  performance  based plan,  that would  become  vested (that is,

                  transferable and non-forfeitable) if the Executive remained an

                  employee  through the Initial Term or the then current Renewal

                  Period of this  Agreement will become vested as of the date of

                  the Executive's termination of employment.  The Executive must

                  satisfy the tax withholding requirements.


     9.4.  Excise Tax  Equalization  Payment.  In the event  that the  Executive

becomes  entitled  to  severance  benefits  under  this  Agreement  or any other

agreement with or plan of the Company (in the aggregate,  the "Total Payments"),

if any of the Total  Payments  will [be  subject to the tax (the  "Excise  Tax")

imposed  by  Section  4999 of the  Code]  or any  similar  excise  tax  that may

hereafter  be  imposed),  the  Company  shall  pay to the  Executive  in cash an

additional amount (the "Gross-Up Payment"), such that the net amount retained by

the Executive  after deduction of any Excise Tax upon the Total Payments and any

federal,  state,  and local income tax and Excise Tax upon the Gross-Up  Payment

provided for by this Article 9.4  (including  FICA and FUTA),  shall be equal to

the Total Payments. The Company shall make such payment to the Executive as soon

as  practicable  following the Effective  Date of  Termination,  but in no event

beyond thirty (30) days from such date.


     For  purposes  of  determining  the  amount of the  Gross-Up  Payment,  the

Executive  shall be deemed to pay federal  income taxes at the highest  marginal

rate of federal  income  taxation  in the  calendar  year in which the  Gross-Up

Payment is to be made, and state and local income taxes at the highest  marginal

rate of taxation in the state and locality of the  Executive's  residence on the

Effective Date of  Termination,  net of the maximum  reduction in federal income

taxes which could be obtained from deduction of such state and local taxes.


     The Company's Compensation Committee shall determine, based upon the advice

of the Company's independent certified public accountants,  whether any payments

or benefits hereunder are subject to the Excise Tax.


     9.5.  Subsequent  Recalculation.  In the event the Internal Revenue Service

adjusts  the  computation  of the Company  under  Article 9.4 herein so that the

Executive did not receive the greatest net benefit,  the Company shall reimburse

the Executive for the full amount necessary to make the Executive whole,  plus a

market rate of interest, as determined by the Compensation Committee.


Article 10.  Assignment


     10.1.  Assignment by Company,  This  Agreement may and shall be assigned or

transferred to, and shall be binding upon and shall inure to the benefit of, any

successor of the Company, and any such successor shall be deemed substituted for

all purposes of the "Company" under the terms of this Agreement. As used in this

Agreement,  the term "successor" shall mean any person,  firm,  corporation,  or

business entity which, at any time, whether by merger,  purchase,  or otherwise,

acquires all or substantially  all of the assets or the business of the Company.

In addition,  the  obligations of the Executive  under Articles 8 and 12 of this

Agreement shall continue after the termination of the Executive's employment and

shall be binding on the Executive's heirs, executors,  legal representatives and



     Failure of the Company to obtain the agreement of any successor to be bound

by the terms of this Agreement prior to the effectiveness of any such succession

shall be a breach of this Agreement, and shall immediately entitle the Executive

to compensation from the Company in the same amount and on the same terms as the

Executive would be entitled in the event of a Termination of Employment for Good

Reason as provided by Article 7.6.  Except as provided  herein,  the Company may

not otherwise assign this Agreement.


     10.2. Assignment by Executive. The services to be provided by the Executive

to the Company  hereunder  are personal to the  Executive,  and the  Executive's

duties  may not be  assigned  by the  Executive;  provided,  however,  that this

Agreement  shall inure to the benefit of and be enforceable  by the  Executive's

personal or legal representatives,  executors,  and administrators,  successors,

heirs,  distributees,  devisees,  and legatees.  If the Executive dies while any

amounts payable to the Executive hereunder remain outstanding, all such amounts,

unless otherwise provided herein,  shall be paid in accordance with the terms of

this Agreement to the Executive's devisee, legatee, or other designee or, in the

absence of such designee, to the Executive's estate.


Article 11.  Dispute Resolution and Notice


     11.1.  Issue  Resolution.  Except for actions  initiated  by the Company to

enjoin a breach  by,  and/or  recover  damages  from the  Executive  related  to

violation of any of the  restrictive  covenants in Article 8 of this  Agreement,

which  Company  may  bring  in an  appropriate  court  of  law  or  equity,  any

disagreement  between the Executive and the Company concerning  anything covered

by this  Agreement or concerning  other terms or  conditions of the  Executive's

employment or the termination of the  Executive's  employment will be settled by

final  and  binding  arbitration  pursuant  to  the  Company's  Associate  Issue

Resolution Program.  The Dispute Resolution Agreement and the Dispute Resolution

Rules and  Procedures  are  incorporated  herein by reference as if set forth in

full in this Agreement. The decision of the arbitrator will be final and binding

on  both  the  Executive  and the  Company  and may be  enforced  in a court  of

appropriate jurisdiction.


     11.2.  Notice.  Any notices,  requests,  demands,  or other  communications

provided for by this Agreement shall be sufficient if in writing, and if sent by

registered  or certified  mail to the Executive at the last address he has filed

in writing  with the Company or, in the case of the  Company,  at its  principal



Article 12.  Miscellaneous


     12.1. Entire Agreement.  This Agreement  supersedes any prior agreements or

understandings, oral or written, between the parties hereto, with respect to the

subject matter hereof,  and constitutes the entire agreement of the parties with

respect thereto. Without limiting the generality of the foregoing sentence, this

Agreement completely  supersedes any and all prior employment agreements entered

into by and between the Company, and the Executive,  and all amendments thereto,

in their entirety.


     12.2.  Return  of  Materials.  Upon  the  termination  of  the  Executive's

employment with the Company, however such termination is effected, the Executive

shall promptly deliver to Company all property, records,  materials,  documents,

and copies of documents concerning the Executive's business and/or its customers

(hereinafter  collectively  "Company  Materials") which the Executive has in his

possession or under his control at the time of  termination  of his  employment.

The  Executive  further  agrees  not to take or extract  any  portion of Company

Materials  in  written,  computer,  electronic  or any other  reproducible  form

without the prior written consent of the Executive's immediate manager.


     12.3. Modification.  This Agreement shall not be varied, altered, modified,

canceled,  changed,  or in any way  amended  except by mutual  agreement  of the

parties in a written  instrument  executed by the parties  hereto or their legal



     12.4. Severability.  It is the intention of the parties that the provisions

of the restrictive  covenants  herein shall be enforceable to the fullest extent

permissible  under  the  applicable  law.  If any  clause or  provision  of this

Agreement is held to be illegal,  invalid,  or  unenforceable  under  present or

future  laws  effective  during  the term  hereof,  then the  remainder  of this

Agreement shall not be affected thereby, and in lieu of each clause or provision

of this Agreement  which is illegal,  invalid or  unenforceable,  there shall be

added, as a part of this Agreement, a clause or provision as similar in terms to

such illegal,  invalid or  unenforceable  clause or provision as may be possible

and as may be legal, valid, and enforceable.


     12.5.  Counterparts.  This  Agreement  may be  executed  in one (1) or more

counterparts,  each of which shall be deemed to be an original, but all of which

together will constitute one and the same Agreement.


     12.6. Tax  Withholding.  The Company may withhold from any benefits payable

under this Agreement all federal, state, city, or other taxes as may be required

pursuant to any law or governmental regulation or ruling.


     12.7.  Restrictive  Covenants of the Essence. The restrictive  covenants of

the Executive set forth herein are of the essence of this Agreement;  they shall

be construed as independent of any other  provision in this  Agreement;  and the

existence of any claim or cause of action of the Executive  against the Company,

whether  predicated on this  Agreement or not, shall not constitute a defense to

the enforcement by the Company of the restrictive  covenants  contained  herein.

The Company shall at all times  maintain the right to seek  enforcement of these

provisions  whether or not the Company has  previously  refrained  from  seeking

enforcement  of any such  provision as to the Executive or any other  individual

who has signed an agreement with similar provisions.


     12.8 Beneficiaries.  The Executive may designate one (1) or more persons or

entities as the primary  and/or  contingent  beneficiaries  of any amounts to be

received under this Agreement.  Such designation must be in the form of a signed

writing acceptable to the Executive's  immediate manager. The Executive may make

or change such designation at any time.


     12.9. Payment  Obligation  Absolute.  The Company's  obligation to make the

payments  and  the  arrangement  provided  for  herein  shall  be  absolute  and

unconditional,  and  shall  not be  affected  by any  circumstances,  including,

without  limitation,  any offset,  counterclaim,  recoupment,  defense, or other

right which the  Company may have  against the  Executive  or anyone  else.  All

amounts payable by the Company hereunder shall be paid without notice or demand.

Each and every  payment made  hereunder by the Company  shall be final,  and the

Company  shall  not seek to  recover  all or any part of such  payment  from the

Executive  or  from  whomsoever  may  be  entitled  thereto,   for  any  reasons



     The Executive shall not be obligated to seek other employment in mitigation

of the  amounts  payable  or  arrangements  made  under  any  provision  of this

Agreement,  and the  obtaining  of any such other  employment  shall in no event

effect any  reduction  of the  Company's  obligations  to make the  payments and

arrangements required to be made under this Agreement;  provided,  however, that

continued health,  welfare,  and benefit plan participation  pursuant to Article

7.4 or  Article  9.3 herein  shall be  discontinued  in the event the  Executive

becomes  eligible to receive  substantially  similar  benefits  from a successor



     12.10. Contractual Rights to Benefits. This Agreement establishes and vests

in the  Executive a  contractual  right to the  benefits to which he is entitled

hereunder.  However,  nothing  herein  contained  shall  require or be deemed to

require,  or  prohibit  or be deemed to  prohibit,  the  Company  to  segregate,

earmark,  or  otherwise  set  aside  any  funds  or  other  assets,  in trust or

otherwise, to provide for any payments to be made or required hereunder.


Article 13.  Governing Law


     To the  extent  not  preempted  by  federal  law,  the  provisions  of this

Agreement  shall be construed  and enforced in  accordance  with the laws of the

Commonwealth of Virginia, without reference to Virginia's choice of law statutes

or decisions.


     IN WITNESS  WHEREOF,  the  Executive  and the Company  have  executed  this

Agreement as of the Effective Date.




By:    /s/ W. Alan McCollough


      W. Alan McCollough

      Chairman, President and Chief Executive Officer




 /s/ Philip J. Schoonover


Philip J. Schoonover








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