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Chief Auto Parts Severance Plan

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Sectors: Retail
Effective Date: January 01, 1998
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CHIEF AUTO PARTS INC. SEVERANCE PLAN
IN THE EVENT OF CHANGE OF CONTROL


PURPOSE: Chief Auto Parts Inc. (the "Company") recognizes that even the possibility of a change of control and the uncertainty and disruption a change of control may result in the departure or distraction of the Company's office and support employees. Such distraction or departures would be to the Company's detriment at a critical time.


Therefore, the Company and its Board of Directors considers it in the best interest of Chief and its stockholders to provide the following severance benefits for certain employees whose employment is terminated as a result of a change in control.


The Company hereby adopts the Chief Auto Parts Inc. Severance Plan In Event of Change of Control (the "Plan"), effective as of January 1, 1998, for the benefit of certain Employees of the Company, on the terms and conditions hereinafter stated.


The Plan, as a "severance pay arrangement" within the meaning of Section 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of "employee pension benefit plan" and "pension plan" set forth under Section 3(2) of ERISA, and is intended to meet the descriptive requirements of a plan constituting a "severance pay plan" within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, Section 2510.3-2(b).


SECTION 1. DEFINITIONS. As hereinafter used:


1.1 "Ancillary Benefits" means any of the benefits set forth in Section 3 hereof to which Employees may be entitled upon the occurrence of a Severance.


1.2 "Board" means the Board of Directors of the Company.


1.3 "Cause" means an Employee's poor work performance or misconduct, more specifically, (i) an Employee's willful or continued failure to substantially perform his or her duties with the Company or a Successor Employer, or (ii) an Employee's willful engagement in conduct which is demonstrably and materially injurious to the Company or Successor Employer, monetarily or otherwise; provided, however, that no act, or failure to act, on an Employee's part shall be deemed "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that such action or omission was in the best interest of the Company or Successor Employer.


1.4 "Change of Control" shall mean:


(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act,


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except that for purposes of this clause (i) such person shall be deemed to
have "beneficial ownership" of all shares that such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total
voting power of the then outstanding Voting Stock of the Company;


(b) during any period of two consecutive years commencing after the
Company's initial public equity offering, individuals who at the beginning
of such period constituted the Board of Directors (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of 66_%
of the directors of the Company then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors then in office; or


(c) the merger or consolidation of the Company with or into another Person
or the merger of another Person with or into the Company, or the sale of
all or substantially all of the assets of the Company to another Person (in
each case other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation or a parent corporation that owns all of the capital
stock of such corporation that represent immediately after such
transaction, at least 50% of the aggregate voting power of the Voting Stock
of the surviving corporation or such parent corporation, as the case may
be.


1.5 "Closing Date" means, as to any Employee, the date of the closing of the sale of the Company whether in whole, or a Region or Regions thereof.


1.6 "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time.


1.7 "Company" means Chief Auto Parts Inc., or any successors thereto.


1.8 "Effective Period" means, as to any Employee, the period that begins on his Closing Date and ends on the earlier of (i) the date which is twelve (12) months from such Closing Date or (ii) the Expiration Date.


1.9 "Employee" means a person who is employed by the Company as a regular full-time employee or a regular part-time employee with more than three (3) months of Service in a position listed in Section 2.1, immediately prior to the applicable Closing Date. Notwithstanding the foregoing, this Plan shall not apply to any employee covered by a


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collective bargaining agreement, or to any store employee, any hourly paid distribution center employee, distribution center supervisors, maintenance employees, set-up crews, or employees of the PPW division of the Company.


1.10 "Employee's Region" means a subsidiary, division or other distinct operating group as so designated by the Company, in which an Employee is employed immediately prior to the Closing Date.


1.11 "ERISA" means the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.


1.12 "Expiration Date" means the date this Plan expires and becomes null and void and of no further effect, which unless specifically extended by the Board, shall be August 1, 2001.


1.13 "Good Reason" means circumstances where


(a) the Employee's position is or will be eliminated as a
result of a sale of the Employee's Region;


(b) in offering the Employee continued employment, (i) the
Employee is asked to transfer to another facility of the
Company or Successor Employer (other than the Company's
corporate office) which is outside the same general
metropolitan area from the Employee's then current place of
employment, (ii) the Employee is asked to accept a material
reduction in salary or (iii) the Employee is asked to accept
a material change in the Employee's title, duties or
responsibilities in the nature of a demotion (other than for
Cause); and


(c) the Employee elects not to accept the offer of continued
employment because of (b)(i), (b)(ii) and/or (b)(iii) above.


1.14 "Permitted Holders" means (i) The Principal Fund, Trust Company of the West or any of their respective Affiliates and (ii) Oaktree Capital Management LLC and its Affiliates, including any partnerships, separate accounts, or other entities managed by Oaktree.


1.15 "Plan" means the Chief Auto Parts Inc. Severance Plan In Event of Change of Control, as set forth herein, and as the same may be amended from time to time.


1.16 "Plan Administrator" means the Vice President, Human Resources of the Company or such other person as may be appointed by the Company from time to time to administer the Plan and to determine benefit eligibility.


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1.17 "Salary" means, for a Salaried Employee, base annual salary with the Company as of his Severance Date (or Closing Date, if earlier) and, for an Employee paid on an hourly basis, the average monthly wages received by the Employee from the Company during the twelve (12) month period immediately preceding his Severance Date (or Closing Date, if earlier). "Salary" does not include overtime, shift differential, bonus, or any other remuneration. A "Month of Salary" and a "Week of Salary" shall be calculated in accordance with the Company's regular payroll procedure.


1.18 "Service" means the Employee's period of employment with the Company beginni
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