Exhibit
10(n)


 


 


PACCAR INC SAVINGS
INVESTMENT PLAN


 


 


Amendment
and Restatement Effective January 1, 2007


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  PURPOSE AND SCOPE

  	
  1

  
	
  1.1

  	
  Purpose of Plan

  	
  1

  
	
  1.2

  	
  Scope of Plan

  	
  2

  
	
  1.3

  	
  PACCAR Inc Administers for Participating
  Subsidiaries; Allocation of Cost

  	
  2

  
	
  ARTICLE 2

  	
  DEFINITIONS AND CONSTRUCTION

  	
  2

  
	
  2.1

  	
  General Definitions

  	
  2

  
	
   

  	
  (a)

  	
  “Accounts”

  	
  2

  
	
   

  	
  (b)

  	
  “Aggregate 401(k) Contributions”

  	
  2

  
	
   

  	
  (c)

  	
  “Aggregate 401(m) Contributions”

  	
  3

  
	
   

  	
  (d)

  	
  “Beneficiary”

  	
  3

  
	
   

  	
  (e)

  	
  “Benefit”

  	
  3

  
	
   

  	
  (f)

  	
  “Company”

  	
  3

  
	
   

  	
  (g)

  	
  “Company Contributions”

  	
  3

  
	
   

  	
  (h)

  	
  “Company Contributions Account”

  	
  3

  
	
   

  	
  (i)

  	
  “Compensation”

  	
  3

  
	
   

  	
  (j)

  	
  “Current or Accumulated Earnings and Profits”

  	
  4

  
	
   

  	
  (k)

  	
  “Eligible Employee”

  	
  4

  
	
   

  	
  (l)

  	
  “Employee”

  	
  4

  
	
   

  	
  (m)

  	
  “Employee Accounts”

  	
  5

  
	
   

  	
  (n)

  	
  “ERISA”

  	
  5

  
	
   

  	
  (o)

  	
  “Excess Aggregate Contributions”

  	
  5

  
	
   

  	
  (p)

  	
  “Excess Contributions”

  	
  5

  
	
   

  	
  (q)

  	
  “Excess Deferrals”

  	
  5

  
	
   

  	
  (r)

  	
  “Fiduciary”

  	
  5

  
	
   

  	
  (s)

  	
  “Highly Compensated Employee”

  	
  5

  
	
   

  	
  (t)

  	
  “Investment Options”

  	
  6

  
	
   

  	
  (u)

  	
  “Investment Manager”

  	
  6

  
	
   

  	
  (v)

  	
  “IRC”

  	
  6

  
	
   

  	
  (w)

  	
  “Layoff”

  	
  6

  
	
   

  	
  (x)

  	
  “Member”

  	
  6

  
	
   

  	
  (y)

  	
  “Member Contributions”

  	
  6

  
					



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (z)

  	
  “Nonhighly Compensated Employee”

  	
  6

  
	
   

  	
  (aa)

  	
  “PACCAR Stock”

  	
  6

  
	
   

  	
  (bb)

  	
  “PACCAR Stock Fund”

  	
  6

  
	
   

  	
  (cc)

  	
  Period of Service

  	
  7

  
	
   

  	
  (dd)

  	
  “Plan”

  	
  7

  
	
   

  	
  (ee)

  	
  “Plan Year”

  	
  7

  
	
   

  	
  (ff)

  	
  “Required Beginning Date”

  	
  8

  
	
   

  	
  (gg)

  	
  “Restricted Member”

  	
  8

  
	
   

  	
  (hh)

  	
  “Retirement”

  	
  8

  
	
   

  	
  (ii)

  	
  “Retirement Plan”

  	
  8

  
	
   

  	
  (jj)

  	
  “Rollover Contributions”

  	
  8

  
	
   

  	
  (kk)

  	
  “Salary Deferrals”

  	
  8

  
	
   

  	
  (ll)

  	
  “Salary Deferral Account”

  	
  8

  
	
   

  	
  (mm)

  	
  “Section 414(s) Compensation”

  	
  8

  
	
   

  	
  (nn)

  	
  “Subsidiary”

  	
  9

  
	
   

  	
  (oo)

  	
  “Top-Paid Group”

  	
  10

  
	
   

  	
  (pp)

  	
  “Total Compensation”

  	
  10

  
	
   

  	
  (qq)

  	
  “Totally Disabled”

  	
  10

  
	
   

  	
  (rr)

  	
  “Trust Agreement”

  	
  10

  
	
   

  	
  (ss)

  	
  “Trust Fund”

  	
  11

  
	
   

  	
  (tt)

  	
  “Trustee”

  	
  11

  
	
   

  	
  (uu)

  	
  “USERRA”

  	
  11

  
	
   

  	
  (vv)

  	
  “Valuation Date”

  	
  11

  
	
  2.2

  	
  Construction

  	
  11

  
	
  ARTICLE 3

  	
  ELIGIBILITY AND MEMBERSHIP

  	
  11

  
	
  3.1

  	
  Commencement of Membership

  	
  11

  
	
  3.2

  	
  Enrollment Procedures

  	
  11

  
	
  3.3

  	
  Termination of Membership

  	
  12

  
	
  3.4

  	
  Restricted Membership

  	
  12

  
	
  ARTICLE 4

  	
  SALARY DEFERRALS AND ROLLOVER CONTRIBUTIONS

  	
  13

  
	
  4.1

  	
  Amount of Salary Deferrals

  	
  13

  
					



 


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  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
  Involuntary Reduction of Salary Deferral Rate

  	
  13

  
	
  4.3

  	
  Voluntary Change of Salary Deferral Rate

  	
  13

  
	
  4.4

  	
  Voluntary Suspension of Salary Deferrals

  	
  14

  
	
  4.5

  	
  Return of Excess Deferrals

  	
  14

  
	
  4.6

  	
  Average Deferral Percentage Limitation

  	
  15

  
	
  4.7

  	
  Determination of Maximum Actual Deferral Percentage
  and Dollar Amount of Excess Contributions

  	
  15

  
	
  4.8

  	
  Allocation of Excess Contributions to Highly
  Compensated Employees

  	
  16

  
	
  4.9

  	
  Distribution of Excess Contributions

  	
  16

  
	
  4.10

  	
  Qualified Company Contributions

  	
  16

  
	
  4.11

  	
  Special Rules

  	
  16

  
	
  4.12

  	
  Allocation of Salary Deferrals

  	
  18

  
	
  4.13

  	
  Diversification of Salary Deferral Account or
  Employee Account

  	
  18

  
	
  4.14

  	
  Rollover Contributions

  	
  18

  
	
  4.15

  	
  Age 50 Catch-Up Rules

  	
  19

  
	
  ARTICLE 5

  	
  COMPANY CONTRIBUTIONS

  	
  20

  
	
  5.1

  	
  Amount of Company Contributions

  	
  20

  
	
  5.2

  	
  Allocation of Company Contributions

  	
  20

  
	
  5.3

  	
  Average Contribution Percentage Limitation

  	
  21

  
	
  5.4

  	
  Determination of Maximum Actual Contribution
  Percentage and Dollar Amount of Excess Aggregate Contributions

  	
  21

  
	
  5.5

  	
  Allocation of Excess Aggregate Contributions to
  Highly Compensated Employees

  	
  22

  
	
  5.6

  	
  Distribution of Excess Aggregate Contributions

  	
  22

  
	
  5.7

  	
  Use of Salary Deferrals

  	
  22

  
	
  5.8

  	
  Special Rules

  	
  22

  
	
  5.9

  	
  Company Contributions Paid From Earnings and
  Profits; Other Limitations on Company Contributions

  	
  24

  
	
  5.10

  	
  Company Contributions in PACCAR Stock

  	
  25

  
	
  5.11

  	
  Diversification of Company Contributions Account

  	
  25

  
	
  5.12

  	
  Return of Company Contributions

  	
  25

  
					



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  THE TRUSTEE AND THE TRUST FUND

  	
  25

  
	
  6.1

  	
  The Trustee and Investment Managers

  	
  25

  
	
  6.2

  	
  Investment Funds

  	
  26

  
	
  6.3

  	
  Voting of PACCAR Stock

  	
  26

  
	
  6.4

  	
  Other Instructions by Members

  	
  27

  
	
  6.5

  	
  Trust Fund Investment Losses: Interest in Trust Fund

  	
  27

  
	
  6.6

  	
  ERISA 404(c) Requirements

  	
  27

  
	
  6.7

  	
  Expenses of Plan and Trust

  	
  29

  
	
  ARTICLE 7

  	
  ACCOUNTS AND VALUATIONS

  	
  29

  
	
  7.1

  	
  Types of Accounts

  	
  29

  
	
  7.2

  	
  Valuation of Accounts

  	
  30

  
	
  7.3

  	
  Statements for Members

  	
  31

  
	
  ARTICLE 8

  	
  AMOUNT AND DISTRIBUTION OF BENEFITS

  	
  31

  
	
  8.1

  	
  Vesting and Amount of Benefits

  	
  31

  
	
  8.2

  	
  Normal Time of Distribution

  	
  31

  
	
  8.3

  	
  Time of Distribution

  	
  32

  
	
  8.4

  	
  Special Rules Regarding Distribution

  	
  32

  
	
  8.5

  	
  Reemployment

  	
  32

  
	
  8.6

  	
  Available Forms of Distribution

  	
  33

  
	
  8.7

  	
  Election of a Form of Distribution

  	
  33

  
	
  8.8

  	
  Small Benefits

  	
  33

  
	
  8.9

  	
  Survivors’ Benefits

  	
  34

  
	
  8.10

  	
  No Alienation of Benefits; Qualified Domestic
  Relations Order

  	
  34

  
	
  8.11

  	
  Facility of Payment

  	
  35

  
	
  8.12

  	
  Unclaimed Benefits

  	
  35

  
	
  8.13

  	
  Payments Discharge Plan; Adverse Claims

  	
  36

  
	
  8.14

  	
  Direct Rollovers

  	
  36

  
	
  ARTICLE 9

  	
  LOANS

  	
  37

  
	
  9.1

  	
  Amount of Loans

  	
  37

  
	
  9.2

  	
  Aggregate Loan Limitation

  	
  38

  
	
  9.3

  	
  Terms of Loans

  	
  38

  
					



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
  Company Consent

  	
  39

  
	
  9.5

  	
  Source of Loans

  	
  39

  
	
  9.6

  	
  Disbursement of Loans

  	
  39

  
	
  9.7

  	
  Valuation Date

  	
  39

  
	
  9.8

  	
  Loan Fees

  	
  40

  
	
  ARTICLE 10

  	
  WITHDRAWALS

  	
  40

  
	
  10.1

  	
  Regular Withdrawals

  	
  40

  
	
  10.2

  	
  Source of Withdrawals

  	
  40

  
	
  10.3

  	
  Application for Withdrawals: Time and Form of
  Distribution

  	
  40

  
	
  10.4

  	
  Limitations on Withdrawals

  	
  41

  
	
  ARTICLE 11

  	
  SALE OF STOCK TO TRUSTEE

  	
  41

  
	
  ARTICLE 12

  	
  PLAN ADMINISTRATION

  	
  41

  
	
  12.1

  	
  Company as Plan Administrator

  	
  41

  
	
  12.2

  	
  Carrying out Fiduciary Duties

  	
  41

  
	
  12.3

  	
  Appointment of Public Accountant

  	
  42

  
	
  12.4

  	
  Reliance on Plan Records; Member’s Duty to Notify

  	
  42

  
	
  ARTICLE 13

  	
  CLAIMS AND REVIEW PROCEDURES

  	
  42

  
	
  13.1

  	
  Applications for Benefits

  	
  42

  
	
  13.2

  	
  Denial of Applications

  	
  42

  
	
  13.3

  	
  Requests for Review

  	
  43

  
	
  13.4

  	
  Decision on Review

  	
  44

  
	
  13.5

  	
  Exhaustion of Administrative Remedies; Limitations

  	
  44

  
	
  ARTICLE 14

  	
  GENERAL PROVISIONS

  	
  45

  
	
  14.1

  	
  Information and Reports to Members

  	
  45

  
	
  14.2

  	
  Compliance With USERRA

  	
  45

  
	
  14.3

  	
  Applicable Law

  	
  45

  
	
  14.4

  	
  No Employment Rights Conferred

  	
  45

  
	
  14.5

  	
  Service Upon Plan; Limitations on Actions Against
  Plan

  	
  45

  
	
  14.6

  	
  Plan Office; Records

  	
  46

  
	
  14.7

  	
  Form of Applications, Elections and Other
  Communications

  	
  46

  
	
  14.8

  	
  Spousal Consents

  	
  46

  
					



 


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  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  14.9

  	
  Merger, Consolidation and Transfer of Assets or
  Liabilities

  	
  46

  
	
  ARTICLE 15

  	
  CONTRIBUTION LIMITATIONS

  	
  47

  
	
  15.1

  	
  Basic Limitation

  	
  47

  
	
  15.2

  	
  Effect on Future Contributions

  	
  47

  
	
  15.3

  	
  Effect on Prior Contributions

  	
  47

  
	
  15.4

  	
  Definitions

  	
  47

  
	
  ARTICLE 16

  	
  AMENDMENT OR TERMINATION OF PLAN

  	
  48

  
	
  16.1

  	
  Plan May Be Amended or Terminated

  	
  48

  
	
  16.2

  	
  Amendments Cannot Reduce Accrued Benefits

  	
  49

  
	
  16.3

  	
  Procedure Upon Plan Terminations

  	
  49

  
	
  16.4

  	
  Partial Terminations

  	
  49

  
	
  16.5

  	
  Intent to Comply with ERISA

  	
  49

  
	
  16.6

  	
  Fiduciary Powers Continue Until Distribution
  Complete

  	
  49

  
	
  ARTICLE 17

  	
  PRIOR PROFIT SHARING PLAN

  	
  49

  
	
  17.1

  	
  No Reduction of Accrued Benefit

  	
  50

  
	
  17.2

  	
  Full Vesting

  	
  50

  
	
  17.3

  	
  Continuing Distributions

  	
  50

  
	
  17.4

  	
  Beneficiary Designations

  	
  50

  
	
  17.5

  	
  Company Contributions

  	
  50

  
	
  17.6

  	
  Effective Date

  	
  50

  
	
  ARTICLE 18

  	
  SPECIAL TOP-HEAVY RULES

  	
  50

  
	
  18.1

  	
  Determination of Top-Heavy Status

  	
  50

  
	
  18.2

  	
  Minimum Allocations

  	
  51

  
	
  18.3

  	
  Definitions

  	
  51

  
	
  ARTICLE 19

  	
  EXECUTION

  	
  52

  
					



 


vi

















 


PACCAR INC SAVINGS INVESTMENT PLAN


 


(As
Amended and Restated Effective January 1, 2007)


 


Effective
January 1, 1955, Pacific Car and Foundry Company, the corporate
predecessor of PACCAR Inc (a Delaware corporation), adopted the Pacific Car and
Foundry Company Profit Sharing Plan and executed a Trust Agreement to provide
profit-sharing benefits for its salaried employees.


 


The
Plan has been subsequently amended and restated and has been renamed the “PACCAR
Inc Savings Investment Plan.”  Effective April 1,
2005, PACCAR Inc amended and restated the Plan to provide that a portion of the
Plan will constitute an employee stock ownership plan within the meaning of IRC
section 4975(e)(7).  Effective January 1,
2006, PACCAR Inc amended and restated the Plan to comply with final regulations
under IRC section 401(k) and to make certain other amendments.  Effective January 1, 2007, PACCAR Inc
further amended and restated the Plan to incorporate amendments requested by
the Internal Revenue Service in its October 23, 2008 determination letter
for the Plan.  Certain provisions, which
are specifically identified, have a different effective date.


 


ARTICLE 1


 


PURPOSE AND SCOPE


 


1.1                                 Purpose
of Plan


 


The
purposes of this amended and restated Plan are:


 


(a)                                  To
encourage systematic savings and investment by Eligible Employees as a means of
building financial security;


 


(b)                                 To
increase the identification of Eligible Employees with the Company’s financial
success;


 


(c)                                  To
provide Eligible Employees with a flexible savings and investment program
enabling them to make decisions concerning the rate of return and relative risk
of the investments made for their Accounts, as their personal or economic
conditions change; and


 


(d)                                 To
offer additional inducements which will attract and retain Eligible Employees
with the knowledge and skills necessary for the Company’s success.


 


The
Plan provides for contributions to be made by the Company to aid in
accomplishing these purposes.


 


The
Plan and the Trust Agreement are intended to meet the requirements of IRC
sections 401(a), 401(k) and 501(a). 
The assets of the Plan are held in trust and are invested for the
exclusive purpose of providing benefits to Members of the Plan and their
Beneficiaries.


 


1

















 


The
Plan is intended to qualify as an eligible individual account plan under
section 407(d)(3) of ERISA, which is permitted to acquire and hold
any amount of qualifying employer securities, and a portion of the Plan is
intended to qualify as an employee stock ownership plan under IRC section
4975(e)(7), which portion is designed to invest primarily in PACCAR Stock.


 


1.2                                 Scope
of Plan


 


The
Plan, as set forth herein, applies to Members who are in employment as
Employees on or after January 1, 2007. 
The rights and benefits, if any, of a former Employee shall be determined
in accordance with the provisions of the Plan as in effect on the date when his
employment terminated.


 


1.3                                 PACCAR
Inc Administers for Participating Subsidiaries; Allocation of Cost


 


All
acts required of the Company hereunder shall be performed by PACCAR Inc for
itself and each of its participating Subsidiaries.  The cost of the Plan shall be apportioned
equitably among PACCAR Inc and its participating Subsidiaries; provided that if
a Subsidiary is prevented from making any contribution which it otherwise would
have made under the Plan by reason of having insufficient Current or
Accumulated Earnings and Profits, then the contribution which such Subsidiary
would have made shall be made by PACCAR Inc and its other participating
Subsidiaries in such proportions as PACCAR Inc may determine, and in accordance
with and subject to the deductible contribution limitations of IRC
section 404 and the provisions of Article 5.


 


ARTICLE 2


 


DEFINITIONS AND CONSTRUCTION


 


2.1                                 General
Definitions


 


The
following words and phrases when used herein shall have the following meanings,
unless the context otherwise requires:


 


(a)                                  “Accounts”
means a Member’s Employee, Salary Deferral and Company Contributions Accounts
(to the extent applicable).


 


(b)                                 “Aggregate
401(k) Contributions” means, for any Plan Year, the sum of the
following: (1) the Member’s Salary Deferrals for the Plan Year; and (2) the
Company Contributions allocated to the Member’s Accounts as of a date within
the Plan Year, to the extent that such Company Contributions are aggregated
with Salary Deferrals pursuant to Section 4.10.  The foregoing Paragraph (1) to the
contrary notwithstanding, Aggregate 401(k) Contributions shall not include
Age 50 Catch-Up Deferrals and the Excess Deferrals of a Nonhighly Compensated
Employee that are refunded to such Nonhighly Compensated Employee pursuant to Section 4.5,
provided that such Excess Deferrals are solely attributable to elective
deferrals (within the meaning of section 402(g)(3) of the IRC) under
a plan or plans (including the Plan) maintained by PACCAR Inc or any Subsidiary
(as defined in Section 2.1(nn) without regard to the last sentence
thereof).


 


2
















 


(c)                                  “Aggregate
401(m) Contributions” means, for any Plan Year, the sum of the
following: (1) the Company Contributions allocated to the Member’s
Accounts as of a date within the Plan Year; and (2) the Member’s Salary
Deferrals for the Plan Year, to the extent that such Salary Deferrals are
aggregated with Company Contributions pursuant to Section 5.7.


 


(d)                                 “Beneficiary”
means a person designated pursuant to Section 8.9(b) who is entitled
to receive all or part of a Member’s Benefit under the Plan in the event of
such Member’s death prior to the total distribution of such Benefit.


 


(e)                                  “Benefit”
means the nonforfeitable balance in a Member’s Accounts (reduced by the amount
of any loan balance that remains outstanding under Article 9 at the time
such Benefit is paid or at the time of the Member’s death, whichever is
earlier, and reduced by any prior distribution to the Member) which is
distributable to such Member under the Plan, determined pursuant to Article 8.


 


(f)                                    “Company”
means (1) PACCAR Inc and (2) all of its Subsidiaries which have been
designated to participate in the Plan by PACCAR Inc and which have accepted
such designation in writing, while such designation is in effect.


 


(g)                                 “Company
Contributions” means amounts contributed to the Plan by the Company
pursuant to Article 5.


 


(h)                                 “Company
Contributions Account” means the account to which is credited a Member’s
share of Company Contributions pursuant to Article 5, as more specifically
described in Article 7.


 


(i)                                     “Compensation”
means “wages” paid to a Member by the Company while such Member is an Eligible
Employee, and includes the amounts described in section 3401(a) of
the IRC for purposes of income tax withholding at the source, but determined:


 


(1)                                  Without
regard to any rules that limit the remuneration included in “wages” based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in section 3401(a)(2) of the
IRC);


 


(2)                                  By
including elective deferrals excludable from the Member’s gross income under
section 125, section 132(f)(4) or section 402(e)(3) of the
IRC and made to a plan maintained by the Company, including amounts contributed
to the Plan as Salary Deferrals;


 


(3)                                  By
excluding reimbursements or other expense allowances (such as, for example,
hardship allowances, currency allowances, housing allowances, education
allowances, car allowances, tuition reimbursement, tax equalization payments to
relocated Employees or Employees on foreign service, cost-of-living allowances
to Employees on foreign service), fringe benefits (cash and non-cash), moving
expenses, deferred compensation, payments received under an extended or
long-term disability plan maintained by the Company, welfare benefits, payments
received under the Company’s Long Term


 


3

















 


Incentive Plan or
any similar plan and amounts realized from the exercise, sale, exchange or
other disposition of a stock option or stock appreciation right; and


 


(4)                                  By
excluding amounts in excess of $200,000, as adjusted by the Commissioner of the
Internal Revenue to reflect increases in the cost-of-living in accordance with
section 401(a)(17)(B).  If the Plan
Year is less than 12 consecutive months, the compensation limit shall be
prorated accordingly.  With respect to
Salary Deferrals, the $200,000 indexed limitation shall be applied as follows:
the percentage deferral elected by the Member under Section 4.1 shall
apply to his or her entire Compensation for the payroll period (even if on an
annualized basis Compensation would exceed $200,000 as indexed), provided,
however, that aggregate Salary Deferrals for the Plan Year shall not exceed the
lesser of (i) the dollar limitation under section 402(g) of the
IRC (described in Section 4.5) or (ii) the dollar amount determined
by multiplying the $200,000 indexed amount by the maximum deferral percentage
permitted under Section 4.1.


 


(j)                                     “Current
or Accumulated Earnings and Profits” of any corporation participating in
the Plan means current or accumulated net income or profits, as determined by
it upon the basis of its books of account in accordance with generally accepted
accounting practices, without any deduction for taxes based on income or for
Company Contributions made by such corporation under the Plan, and before
consolidation of its financial statements with any other corporation affiliated
with it.


 


(k)                                  “Eligible
Employee” means any Employee of the Company who is receiving Compensation,
as defined in Section 2.1(i).  “Eligible
Employee” does not include (1) any individual whose employment is covered
by a collective-bargaining agreement (unless the collective-bargaining
agreement expressly provides for the individual’s participation in the Plan), (2) any
individual classified as a commissioned salesman, (3) any individual who
is neither a resident nor citizen of the United States, (4) any “leased
employee” (within the meaning of section 414(n) of the IRC) or any
individual who would be a leased employee but for the period-of-service
requirement under section 414(n) of the IRC, (5) any individual
who is not classified by the Company as an Employee (but, for example, is
classified as an “independent contractor”) even if such individual is later
determined to be an Employee, and (6) any individual who is subject to a
written agreement that provides that such individual shall not be eligible to
participate in the Plan.  If, during any
period, the Company has not treated an individual as an Employee and, for that
reason, has not withheld employment taxes with respect to that individual, then
that individual shall not be an Eligible Employee for that period, even in the
event that the individual is determined, retroactively, to have been an
Employee during all or any portion of that period.


 


(l)                                     “Employee”
means any individual who (1) is a common-law employee of PACCAR Inc or any
of its Subsidiaries under the customary employer-employee relationship or (2) is,
with respect to PACCAR Inc or any of its Subsidiaries, a “leased employee”
(within the meaning of section 414(n) of the IRC).


 


4

















 


(m)                               “Employee
Accounts”  means the account to which
a Member’s Member Contributions were credited, as further described in Section 7.1(c),
and which is adjusted for any distributions and withdrawals by the Member.


 


(n)                                 “ERISA”
means the Employee Retirement Income Security Act of 1974 (P.L. 93-406) and
includes subsequent amendments of such Act. 
Reference to a section of ERISA shall include such section and any
comparable section of any future legislation amending, supplementing or
superseding such section.


 


(o)                                 “Excess
Aggregate Contributions” means the amount by which the Aggregate 401(m) Contributions
of Highly Compensated Employees are reduced pursuant to Section 5.6.


 


(p)                                 “Excess
Contributions” means the amount by which the Aggregate 401(k) Contributions
of Highly Compensated Employees are reduced pursuant to Section 4.9.


 


(q)                                 “Excess
Deferrals” means the amount of a Member’s Salary Deferrals and elective
deferrals (within the meaning of section 402(g)(3) of the IRC), other
than Age 50 Catch-Up Deferrals, that exceed the limits set forth in Section 4.5.


 


(r)                                    “Fiduciary”
means a person having specific fiduciary responsibilities for Plan or Trust
Fund administration, as further described in Article 12.


 


(s)                                  “Highly
Compensated Employee” means any active Employee who:


 


(1)                                  Was
a five-percent owner (as defined in Section 416 of the IRC taking into
account the attribution rules as defined in Section 318(a) of
the IRC) at any time during the Plan Year or the preceding Plan Year; or


 


(2)                                  For
the preceding Plan Year:


 


(i)                                     Received
Total Compensation from PACCAR Inc and any Subsidiary (as defined in Section 2.1(nn)
without regard to the last sentence thereof) of more than $85,000 (or such
larger amount as may be provided on account of cost of living adjustments
pursuant to sections 414(q) and 415(d) of the IRC); and


 


(ii)                                  Provided
the Company elects to apply this rule in accordance with the consistency
and other requirements in regulations, was a member of the Top-Paid Group.


 


The
term “Highly Compensated Employee” shall also include a former Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for PACCAR Inc or any Subsidiary (as
defined in Section 2.1(nn) without regard to the last sentence thereof)
during the determination year, and was a Highly Compensated Employee as an
active Employee for either the separation year or any determination year ending
on or after the Employee’s 55th birthday.


 


5

















 


The
determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the Top-Paid Group,
will be made in accordance with section 414(q) of the IRC and
regulations thereunder.


 


(t)                                    “Investment
Options” means with respect to any Plan Year or portion of a Plan Year, the
investment media selected by the Company and established under the Trust Fund
for investment of one or more types of contributions under the Plan.


 


(u)                                 “Investment
Manager” means any person (other than the Trustee appointed pursuant to Article 6
and the Company):


 


(1)                                  Who
has the power to manage, acquire or dispose of any assets of the Plan;


 


(2)                                  Who
is (i) registered as an investment adviser under the Investment Advisers
Act of 1940; (ii) a bank, as defined in such Act; or (iii) an
insurance company qualified to perform services described in (1) above
under the laws of more than one state; and


 


(3)                                  Who
has acknowledged in writing that he (it) is a Fiduciary with respect to the
Plan.


 


(v)                                 “IRC”
means the United States Internal Revenue Code of 1986 and includes subsequent
amendments of such Code.  Reference to a
section of the IRC shall include such section and any comparable section of any
future legislation amending, supplementing or superseding such section


 


(w)                               “Layoff”
means one of the following types of layoff for lack of work: (1) layoff
due to the closure of a plant or other facility, (2) layoff due to job elimination
on account of technological change, change in business focus or similar change,
without reassignment of duties to another position (all as determined by the
Company), (3) layoff due to a general or limited manpower reduction
program mandated by the Company or (4) layoff due to the sale or other
transfer of all or substantially all of the assets of a division, facility or
line of business to a buyer other than a Subsidiary.


 


(x)                                   “Member”
means an individual who is included in Plan membership pursuant to Article 3.  “Member” includes a Restricted Member, unless
the Plan otherwise provides or the context otherwise requires.


 


(y)                                 “Member
Contributions” means any amounts contributed to the Plan by a Member prior
to February 1, 1983.


 


(z)                                   “Nonhighly
Compensated Employee” for any Plan Year means any active Employee who is
not a Highly Compensated Employee.


 


(aa)                            “PACCAR
Stock” means the common stock of PACCAR Inc or any of its Subsidiaries
which is readily tradable on an established securities market.


 


(bb)                          “PACCAR
Stock Fund” is described in Section 6.2.


 


6

















 


(cc)                            Period
of Service


 


An
Employee’s “Period of Service” shall commence on his Employment Date or
Reemployment Date (as the case may be) and shall end when he quits, retires, is
discharged, or dies.  In determining
whether an Employee has completed a 12-month Period of Service, the following rules shall
apply:


 


(1)                                  Bridging
Rule


 


In the
case of an Employee who quit, retired or was discharged, his Period of Service
shall include the period following such quit, retirement or discharge, if he is
rehired as an Employee within 12 months after the date when he first became
absent from active employment (whether by reason of such quit, retirement or
discharge or for any other reason).


 


(2)                                  Aggregation
Method


 


In the
case of a reemployed Employee, all of his separate Periods of Service shall be
aggregated and treated as a single continuous Period of Service.  When partial months are aggregated, 30 days
shall be deemed to equal one full month.


 


(3)                                  Service
Records; Additional Credit


 


An
Employee’s Period of Service shall be determined by the Company on the basis of
employment records or on such other reasonable and nondiscriminatory basis as
it may adopt.  The Company, pursuant to
written rules, may recognize as a Period of Service any period of time not
otherwise described in this Section, subject to such conditions and limitations
as it may adopt.


 


(4)                                  Definitions


 


As
used in this Section, the following words and phrases shall have the following
meanings:


 


(A)                              “Employment
Date” means the date on which the Employee’s active employment as an
Employee commences.


 


(B)                                “Reemployment
Date” means the date on which the Employee’s active employment as an
Employee recommences following an absence which is not included in the Employee’s
aggregate Period of Service under (a) above.


 


(dd)                          “Plan”
means this PACCAR Inc Savings Investment Plan, as amended from time to time.


 


(ee)                            “Plan
Year” means the calendar year.


 


7

















 


(ff)                                “Required
Beginning Date” means, with respect to a Member:


 


(1)                                  if
he attains or attained age 701⁄2 before January 1, 1999 (and after January 1,
1989), April 1 of the calendar year following the calendar year in which
he attains or attained age 701⁄2;


 


(2)                                  if
he attains age 701⁄2 on or after January 1, 1999, and is not a five-percent
owner (as defined in Section 416 of the IRC and taking into account any
modifications under Section 401(a)(9) of the IRC), April 1 of
the calendar year following the later of the calendar year in which he ceases
to be an Employee or the calendar year in which he attains age 701⁄2; and


 


(3)                                  if
he attains age 701⁄2 on or after January 1, 1999, and is a five-percent
owner (as defined in Section 416 of the IRC and taking into account any
modifications under Section 401(a)(9) of the IRC), April 1 of
the calendar year following the calendar year in which he attains age 701⁄2.


 


(gg)                          “Restricted
Member” means a Member who has limited membership rights under the Plan, as
further described in Section 3.4.


 


(hh)                          “Retirement”
means termination of employment as an Employee (for a reason other than death)
after a Member has fulfilled all requirements for a normal or early retirement
benefit under any Retirement Plan.


 


(ii)                                  “Retirement
Plan” means the PACCAR Inc Retirement Plan, the PACCAR Inc Retirement Plan
for Weekly Paid Salaried Employees in effect prior to June 1, 1989, or any
other defined-benefit or defined-contribution plan (other than this Plan)
maintained by PACCAR Inc or any of its Subsidiaries which covers a Member and
which is intended primarily to provide retirement income to its members, as
determined and designated by the Company.


 


(jj)                                  “Rollover
Contributions” means any amounts contributed to the Plan by an Eligible
Employee under Section 4.14.


 


(kk)                            “Salary
Deferrals” means amounts paid to the Plan by the Company on a Member’s
behalf pursuant to Section 4.1.


 


(ll)                                  “Salary
Deferral Account” means the account to which a Member’s Salary Deferrals
are credited, as further described in Section 7.1(b), and which is
adjusted for any distributions and withdrawals by the Member.


 


(mm)                      “Section 414(s) Compensation”
means any one of the following definitions of compensation received by an
Employee from PACCAR Inc and any Subsidiary (as defined in Section 2.1(nn)
without regard to the last sentence thereof):


 


(1)                                  Compensation
as defined in section 1.415-2(d) and (d)(3) of the Income Tax
Regulations or any successor thereto;


 


8

















 


(2)                                  Compensation
as defined in Income Tax Regulation section 1.415-2(d)(10) or any
successor thereto.


 


(3)                                  “Wages”
within the meaning of section 3401(a) and all other payments of
compensation (in the course of such employer’s trade or business) for which
such employer is required to furnish the Employee a written statement under
sections 6041(d), 6051(a)(3), and 6052, but determined without regard to any rules under
section 3401(a) that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in section 3401(a)(2)).  (Generally, this option is wages as reflected
on the taxable federal wages box of the Form W-2 of the Employee.)


 


(4)                                  “Wages”
as defined in section 3401(a) of the IRC for purposes of income tax
withholding at the source, but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in section 3401(a)(2) of the IRC);


 


(5)                                  Any
of the definitions of Section 414(s) Compensation set forth in
Paragraphs (1), (2), (3) and (4) above, reduced by all of the
following items (even if includable in gross income): reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation and welfare benefits;


 


(6)                                  Any
of the definitions of Section 414 (s) Compensation set forth in
Paragraphs (1), (2), (3), (4) and (5) above, modified to include any
elective contributions made by a member of the Affiliated Group on behalf of
the Employee that are not includable in gross income under section 125,
132(f)(4), 402(e)(3), 402(h) or 403(b) of the IRC; or


 


(7)                                  Any
reasonable definition of compensation that does not by design favor Highly
Compensated Employees and that satisfies the nondiscrimination requirement set
forth in section 1.414(s)-1T(d)(2) of the Income Tax Regulations or
the successor thereto.


 


Any
definition of Section 414(s) Compensation shall be used consistently
to define the compensation of all Employees taken into account in satisfying
the requirements of an applicable provision of this Plan for the relevant
determination period.  Section 414(s) Compensation
shall not include compensation paid to an Employee for a Plan Year in excess of
$200,000 (as adjusted by the Commissioner of Internal Revenue to reflect
increases in the cost-of-living in accordance with section 401(a)(17)(B)).  For purposes of these limitations, if the
Plan Year is less than 12 consecutive months, the limitation shall be prorated
accordingly.


 


(nn)                          “Subsidiary”
means any corporation which is a member of a “controlled group of corporations”
(within the meaning of IRC section 1563(a), determined without regard to
IRC sections 1563(a)(4) and 1563(e)(3)(C)) of which group PACCAR Inc is


 


9

















 


also a member,
while such a corporation.  “Subsidiary”
also means, to the extent and for the purposes specified by the Company from
time to time, any other corporation in which PACCAR Inc, or one or more of its
Subsidiaries or affiliated corporations, has an ownership interest.


 


(oo)                          “Top-Paid
Group” for any Plan Year means the top 20 percent (in terms of Total
Compensation) of all Employees of PACCAR Inc and its Subsidiaries (as defined
in Section 2.1(nn) without regard to the last sentence thereof) on a U.S.
dollar payroll, excluding the following:


 


(1)                                  Any
Employee covered by a collective bargaining agreement except to the extent
otherwise provided under Income Tax Regulation 1.414(q)-1T;


 


(2)                                  Any
Employee who has not completed six-month Period of Service at the end of the
Plan Year;


 


(3)                                  Any
Employee who normally works less than 171⁄2 hours per week;


 


(4)                                  Any
Employee who normally works no more than six months during any year; and


 


(5)                                  Any
Employee who has not attained the age of 21 at the end of the Plan Year.


 


(pp)                          “Total
Compensation” means “wages” as defined in section 3401(a) of the
IRC for purposes of income tax withholding at the source, but determined:


 


(1)                                  Without
regard to any rules that limit the remuneration included in “wages” based
on the nature of location of the employment of the services performed (such as
the exception for agricultural labor in section 3401(a)(2) of the
IRC); and


 


(2)                                  By
including amounts deferred but not refunded under a cafeteria plan, as such
term is defined in section 125(c) of the IRC and under a plan,
including this Plan, qualified under section 401(k) of the IRC, and
amounts excludable from a Member’s gross income under section 132(f)(4) of
the IRC.


 


(qq)                          “Totally
Disabled” or “Total Disability” means, that because of injury or
sickness the Member (1) has been paid long-term disability benefits for a
period of at least 24 months under the PACCAR Inc Long-Term Disability Plan or
any other long-term disability plan maintained by the Company or any of its
subsidiaries, and continues to be eligible for such benefits under such
long-term disability plan, (2) is eligible to receive disability benefits
under the federal Social Security program, or (3) has a life expectancy of
24 months or less which has been certified in writing by an attending physician
and approved by the Company.


 


(rr)                                “Trust
Agreement” means the trust agreement or agreements entered into by the
Company and a Trustee pursuant to Section 6.1.


 


10

















 


(ss)                            “Trust
Fund” means the assets of the Plan held in trust by a Trustee pursuant to a
Trust Agreement.


 


(tt)                                “Trustee”
means the corporate Fiduciary or Fiduciaries appointed from time to time by the
Company to hold the assets of the Plan in trust pursuant to a Trust Agreement.


 


(uu)                          “USERRA”
means the Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended.


 


(vv)                          “Valuation
Date” means each business day.


 


Certain other defined
terms used in particular provisions of the Plan are defined where used.


 


2.2                                 Construction


 


Any
gender, where appearing in the Plan, shall be deemed to include the other gender,
the singular shall include the plural, and the plural shall include the
singular, unless the context otherwise requires.  Titles are for reference only.  In the event of a conflict between a title
and the text of the Plan, the text of the Plan shall control.  In the event of a conflict between the text
of the Plan and any summary, description or other information regarding the
Plan, the text of the Plan shall control.


 


ARTICLE 3


 


ELIGIBILITY AND MEMBERSHIP


 


3.1                                 Commencement
of Membership


 


Only
an Eligible Employee may become a Member of the Plan.  Any other individual is excluded from
becoming a Member until such time as he becomes an Eligible Employee.  An Eligible Employee may elect to become a
Member as soon as reasonably practicable as of or after the date he has
completed a 30-day Period of Service, provided that he is then an Eligible
Employee.  An Eligible Employee who does
not elect to become a Member when he is first eligible to do so may elect to
become such a Member at any time thereafter.


 


3.2                                 Enrollment
Procedures


 


An
Eligible Employee who wishes to become a Member shall apply for membership in
such manner as specified under the Company’s written procedures.  In filing an application for membership, an
Eligible Employee shall agree to abide by the terms and conditions of the Plan
and to provide such elections, designations or other information as the Company
deems necessary for the proper administration of the Plan.  An application to become a Member shall be
implemented as soon as reasonably practicable after its receipt by the Company.


 


11

















 


3.3                                 Termination
of Membership


 


An
Eligible Employee, having become a Member, shall cease to be such a Member upon
the termination of his employment as an Eligible Employee (although he will
continue as a Restricted Member until the earlier of (a) his death or (b) the
full distribution of any Benefit to which he is entitled under the Plan).


 


3.4                                 Restricted
Membership


 


(a)                                  Status
as Restricted Member


 


As
long as any portion of the Benefit to which a Member is entitled under the Plan
has not been distributed, such Member (while living) shall have the status of a
Restricted Member for any period with respect to which:


 


(1)                                  The
Member is contributing no Salary Deferrals under the Plan, whether as a result
of a suspension of contributions pursuant to Section 4.4, as a result of a
determination by the Company pursuant to Section 4.2, because the Member
is receiving no Compensation, or for other reasons;


 


(2)                                  The
Member fails to qualify as an Eligible Employee, whether by reason of a change
in employment status, a transfer to a Subsidiary which does not participate in
the Plan, or for other reasons, but remains an Employee; or


 


(3)                                  Employment
as an Employee has terminated but the distribution of any Benefit to which the
Member is entitled has not been completed.


 


An
Employee (while living) shall also have the status of a Restricted Member if he
is not a Member for all purposes of the Plan but has made a Rollover Contribution
and such Contribution has not been fully distributed.


 


(b)                                 Effect
of Restricted Membership


 


The
following rules shall apply to Restricted Members and their Accounts with
respect to periods during which they are Restricted Members:


 


(1)                                  Except
as provided in Section 5.2, no Company Contributions shall be credited to
a Restricted Member’s Company Contributions Account; and


 


(2)                                  No
Salary Deferrals shall be contributed to a Restricted Member’s Salary Deferral
Accounts.


 


12
















 


ARTICLE 4


 


SALARY DEFERRALS AND ROLLOVER CONTRIBUTIONS


 


4.1           Amount
of Salary Deferrals


 


Salary
Deferrals are required of all Members other than Restricted Members.  Subject to Section 4.15 and the
limitations of this Article 4 and Article 15, any such Member may
elect to contribute Salary Deferrals equal to any whole percentage of his
Compensation received each pay period after becoming a Member, but not in
excess of 35 percent of such Compensation. 
Salary Deferrals are not permitted to be made by a Member for any payday
on which such Member is not an Eligible Employee.


 


The
amount of a Member’s Salary Deferrals shall be withheld by the Company from his
Compensation on each payday.  All Salary
Deferrals so withheld shall be paid by the Company to the Trustee as soon as
reasonably practicable, but in no event later than the 15th day of the month
next following the month in which they would otherwise have been payable to the
Member in cash.  Salary Deferrals shall
be fully vested and nonforfeitable at all times.


 


For
Federal income tax purposes (and, wherever permitted, for state and local tax
purposes), Salary Deferrals shall be deemed to be employer contributions to the
Plan, and a Member’s election to commence or continue his membership in the
Plan shall constitute an election to have his taxable compensation reduced by
the amount of all of his Salary Deferrals.


 


On or
after February 1, 1983, no Member shall make any Member Contributions to
the Plan.  However, Member Contributions
made before February 1, 1983, shall remain credited to the Member’s
Employee Accounts until they are withdrawn or distributed pursuant to the
provisions of the Plan.


 


4.2           Involuntary
Reduction of Salary Deferral Rate


 


At any
time prior to or during a Plan Year, the Company (at its sole discretion) may
reduce the maximum rate at which any Member may contribute Salary Deferrals to
the Plan for such Plan Year or during the remainder of such Plan Year, or the
Company may require that any Member discontinue all Salary Deferrals for the remainder
of such Plan Year, for the purpose of meeting the special nondiscrimination rules under
the IRC.  Any reduction or discontinuance
of Salary Deferrals may be applied selectively to individual Members or to
particular classes of Members, as the Company may determine.  In addition to requiring a prospective
reduction or discontinuance of Salary Deferrals, the Company may distribute to
any Member such portion of the Salary Deferrals that he already contributed for
a Plan Year as it determines is necessary to meet the special nondiscrimination
rules under the IRC for such year, as provided in Sections 4.5, 4.9 and
15.3 below.


 


4.3           Voluntary
Change of Salary Deferral Rate


 


A
Member may elect at any time to change the rate of his Salary Deferrals
prospectively to any other percentage permitted under this Article 4.  Any election pursuant to this


 


13

















 


Section 4.3
shall be made in accordance with the Company’s written procedures applicable at
the time of the election.


 


4.4           Voluntary
Suspension of Salary Deferrals


 


A
Member may elect to suspend all Salary Deferrals at any time, thereby becoming
a Restricted Member pursuant to Section 3.4.  Any such election shall be made in accordance
with the Company’s written procedures. 
Any election to resume Salary Deferrals shall become effective as soon
as reasonably practical after it is received by the Company, but in no event
earlier than a) 180 days after the effective date of the election to suspend
Salary Deferrals or b) effective January 1, 2007, 90 days after the
effective date of the election to suspend Salary Deferrals.


 


When a
Member resumes Salary Deferrals following such suspension, he may make new
elections under this Article 4 regarding the amount and allocation
thereof; provided, however, that if he does not make such new elections, his
previous elections shall be applicable.


 


4.5           Return
of Excess Deferrals


 


Subject
to Section 4.15, the aggregate Salary Deferrals of any Member for any
calendar year, together with his or her elective deferrals under any other plan
or arrangement to which section 402(g) of the IRC applies and that is
maintained by PACCAR Inc or any Subsidiary (as defined in Section 2.1(nn)
without regard to the last sentence thereof), shall not exceed $15,000 (or such
larger amount as may be adopted by the Commissioner of Internal Revenue to
reflect a cost-of-living adjustment).  In
the event that such aggregate Salary Deferrals and elective deferrals of any
Member for any calendar year exceed $15,000 (or such larger amount as may be
adopted by the Commissioner of Internal Revenue to reflect a cost-of-living
adjustment), then such portion of the Excess Deferrals, and any income or loss
allocable to such portion, shall be refunded to the Member not later than the April 15
next following the close of such calendar year.


 


In the
event that a Member’s elective deferrals (within the meaning of
section 402(g)(3) of the IRC) for a calendar year exceed $15,000 (or
such larger amount as may be adopted by the Commissioner of Internal Revenue to
reflect a cost-of-living adjustment) solely because such Member participated in
this Plan and a plan or arrangement maintained by an employer other than PACCAR
Inc or any Subsidiary (as defined in Section 2.1(nn) without regard to the
last sentence thereof), then such Member may designate all or a portion of such
Excess Deferrals as attributable to this Plan and may request a refund of such
portion by notifying the Company in writing on or before the March 1 next
following the close of such calendar year. 
If timely notice is received, then such a Member’s Excess Deferrals, and
any income or loss allocable thereto, shall be refunded to the Member from this
Plan no later than the April 15 next following the close of such calendar
year.


 


Income
(and loss) allocable to Excess Deferrals for the calendar year, but not for the
period between the end of the calendar year and the date of distribution of
such Excess Deferrals, shall be determined pursuant to the provisions for allocating
income (and loss) to a Participant’s Accounts under Section 7.2 of the
Plan.


 


14

















 


4.6           Average
Deferral Percentage Limitation


 


The
Plan shall satisfy the average deferral percentage test provided in section 401(k)(3) of
the IRC and section 1.401(k)-1 of the Income Tax Regulations issued
thereunder.  Subject to the special rules described
in Section 4.11, the Aggregate 401(k) Contributions of Highly
Compensated Employees shall not exceed the limits described below:


 


(a)           An Actual
Deferral Percentage shall be determined for each Highly Compensated Employee
who, at any time during the Plan Year, is a member (including a suspended
Member) or is eligible to participate in the Plan, which Actual Deferral Percentage
shall be the ratio, computed to the nearest one-hundredth of one percent, of
the Highly Compensated Employee’s Aggregate 401(k) Contributions for the
Plan Year to the Highly Compensated Employee’s Section 414(s) Compensation
for the Plan Year;


 


(b)           An Actual
Deferral Percentage shall be determined for each Nonhighly Compensated Employee
who, at any time during the Plan Year, is a Member (including a suspended
Member) or is eligible to participate in the Plan, which Actual Deferral
Percentage shall be the ratio, computed to the nearest one-hundredth of one
percent, of the Nonhighly Compensated Employee’s Aggregate 401(k) Contributions
for the Plan Year to the Nonhighly Compensated Employee’s Section 414(s) Compensation
for the Plan Year;


 


(c)           The Actual
Deferral Percentages (including zero percentages) of Highly Compensated
Employees and Nonhighly Compensated Employees shall be separately averaged to
determine each group’s Average Deferral Percentage; and


 


(d)           The
Aggregate 401(k) Contributions of Highly Compensated Employees shall
constitute Excess Contributions and shall be reduced, pursuant to Sections 4.8
and 4.9, to the extent that the Average Deferral Percentage of Highly
Compensated Employees exceeds the greater of (1) 125 percent of the
Average Deferral Percentage of Nonhighly Compensated Employees or (2) the
lesser of (A) 200 percent of the Average Deferral Percentage of Nonhighly
Compensated Employees or (B) the Average Deferral Percentage of Nonhighly
Compensated Employees plus two percentage points.


 


4.7           Determination
of Maximum Actual Deferral Percentage and Dollar Amount of Excess Contributions


 


The
maximum Actual Deferral Percentage shall be determined by use of a leveling
process, whereby the Aggregate 401(k) Contributions of the Highly Compensated
Employee with the highest Actual Deferral Percentage are reduced to the extent
required to (a) eliminate all Excess Contributions or (b) cause such
Highly Compensated Employee’s Actual Deferral Percentage  to equal the Actual Deferral Percentage of
the Highly Compensated Employee with the next-highest Actual Deferral
Percentage.  Such leveling process shall
be repeated until the average deferral percentage test is satisfied.


 


15

















 


With
regard to each Highly Compensated Employee whose Actual Deferral Percentage is
in excess of the maximum permitted Actual Deferral Percentage, a dollar amount
of Excess Contributions shall then be determined by subtracting the product of
the maximum permitted Actual Deferral Percentage and the Highly Compensated
Employee’s Section 414(s) Compensation from the Highly Compensated
Employee’s Aggregate 401(k) Contributions. 
The amounts shall then be aggregated to determine the total dollar
amount of Excess Contributions.


 


4.8           Allocation
of Excess Contributions to Highly Compensated Employees


 


Any
Excess Contributions for a Plan Year shall be allocated to Highly Compensated
Employees by use of a leveling process, whereby the Aggregate 401(k) Contributions
of the Highly Compensated Employee with the highest dollar amount of Aggregate
401(k) Contributions are reduced to the extent required to (a) eliminate
all Excess Contributions or (b) cause such Highly Compensated Employee’s
Aggregate 401(k) Contributions to equal the Aggregate 401(k) Contributions
of the Highly Compensated Employee with the next-highest Aggregate 401(k) Contributions.  Such leveling process shall be repeated until
all Excess Contributions for such Plan Year are allocated to Highly Compensated
Employees.


 


4.9           Distribution
of Excess Contributions


 


Excess
Contributions allocated to Highly Compensated Employees for the Plan Year
pursuant to Section 4.8, together with any income or loss allocable to
such Excess Contributions, shall be distributed to such Highly Compensated
Employees not later than the March 15 next following the close of such
Plan Year, if possible, and in any event no later than 12 months following the
close of such Plan Year.  Any Salary
Deferrals distributed pursuant to this Section 4.9 shall not be included
in the Salary Deferrals that attract a Company Contribution under Section 5.2.  Notwithstanding the foregoing, to the extent
Excess Contributions allocated to a Highly Compensated Employee for the Plan
Year pursuant to Section 4.8 could otherwise constitute Age 50 Catch-Up
Deferrals pursuant to Section 4.15, such Excess Contributions shall be
recharacterized as Age 50 Catch-Up Deferrals for the Plan Year rather than be
distributed to the Highly Compensated Employee as described above.


 


4.10         Qualified
Company Contributions


 


The
Company, in its sole discretion, may include all or a portion of the Company
Contributions for a Plan Year in Aggregate 401(k) Contributions taken into
account in applying the Average Deferral Percentage limitation described in Section 4.6
for such Plan Year, provided that the requirements of
section 1.401(k)-2(a)(6) of the Income Tax Regulations are satisfied.


 


4.11         Special
Rules


 


The
following special rules shall apply for purposes of this Article 4:


 


(a)           The
amount of Excess Deferrals to be distributed to a Member for a calendar year
pursuant to Section 4.5 shall be reduced by the amount of any Excess
Contributions


 


16

















 


previously
distributed to such Member for the Plan Year ending within such calendar year;


 


(b)           The
amount of Excess Contributions to be distributed to a Member for a Plan Year
pursuant to Section 4.8 shall be reduced by the amount of any Excess
Deferrals previously distributed to such Member for the calendar year ending
with such Plan Year;


 


(c)           For
purposes of applying the limitation described in Section 4.6, the Actual
Deferral Percentage of any Highly Compensated Employee who is eligible to make
Salary Deferrals and to make elective deferrals (within the meaning of
section 402(g)(3) of the IRC) under any other plans, contracts or
arrangements maintained by PACCAR Inc or any Subsidiary (as defined in Section 2.1(nn)
without regard to the last sentence thereof) shall be determined as if all such
Salary Deferrals and elective deferrals were made under a single arrangement
(other than those plans that may not be permissively aggregated); provided,
however, that if such plans have different plan years, the plans are aggregated
with respect to contributions made within this Plan’s Plan Year only;


 


(d)           In the
event that this Plan is aggregated with one or more other plans in order to
satisfy the requirements of IRC section 401(a)(4), 401(k) or 410(b),
then all such aggregated plans, including the Plan, shall be treated as a
single plan for all purposes under all such IRC sections (except for purposes
of the average benefit percentage provisions of IRC
section 410(b)(2)(A)(ii));


 


(e)           In the
event that the mandatory disaggregation rules of Treasury Regulation
section 1.401(k)-1(b) apply to the Plan, or to the Plan and other
plans with which it is aggregated as described in Subsection (d) above,
then the limitation described in Section 4.6 shall be applied as if each
mandatorily disaggregated portion of the Plan (or aggregated plans) were a
single arrangement


 


(f)            Provided
this limit is applied uniformly in determining the Average Deferral Percentage
limitation for the Plan Year, the Company may limit Section 414(s) Compensation
to the amount of such compensation paid to the Eligible Employee during the
portion of the Plan Year that such Member was an Eligible Employee;


 


(g)           If the
Plan permits participation in the 401(k) portion of the Plan prior to an
Eligible Employee’s satisfaction of the minimum age and service requirements of
section 410(a)(1)(A) of the IRC and if section 410(b)(4)(B) of
the IRC is applied in determining whether the 401(k) portion of the Plan
meets the requirements of section 410(b) of the IRC, then for
purposes of performing the average deferral percentage test, the test may be
performed separately with regard to Eligible Employees who have not met the
minimum age and service requirements of section 410(a)(1)(A) of the
IRC or, alternatively, Eligible Employees who have not met the minimum age and
service requirements of section 410(a)(1)(A) of the IRC may instead
be excluded in the determination of the Average Deferral Percentage for
Nonhighly Compensated Employees, but not in the determination of the Average
Deferral Percentage for Highly Compensated Employees; and


 


17

















 


(h)           Income
(and loss) allocable to Excess Contributions for the Plan Year shall be
determined in accordance with Treasury Regulation section
1.401(k)-2(b)(2)(iv)(C), and shall be determined for the period between the end
of the Plan Year and the date of distribution of such Excess Contributions in
accordance with Treasury Regulation section 1.401(k)-2(b)(2)(iv)(D).


 


4.12         Allocation
of Salary Deferrals


 


A
Member shall elect to allocate his Salary Deferrals among the Investment
Options designated by the Company.  Each
Eligible Employee shall elect, when he enrolls in the Plan, to allocate Salary
Deferrals to one or more Investment Options in any whole percentage
increment.  A Member who is an Employee
may elect to change the relative amounts of future Salary Deferrals being
allocated to one or more Investment Options in any whole percentage increment.


 


4.13         Diversification
of Salary Deferral Account or Employee Account


 


Any
Member may elect to transfer any whole percentage of the amount of the Member’s
Salary Deferral Account or Employee Account then invested in one Investment
Option to another Investment Option as permitted by the Company’s written
procedures.


 


An
election under this Section 4.13 may be made at any time to be effective
as soon as reasonably practicable after it is received by the Company.  Any election under this Section 4.13
shall be made in accordance with the Company’s written procedures.


 


4.14         Rollover
Contributions


 


With
the Company’s prior written approval, any Eligible Employee may make one or
more Rollover Contributions to the Plan. 
An Eligible Employee who makes a Rollover Contribution at a time when he
or she is not a Member for other purposes shall become a Restricted Member.  A Rollover Contribution shall be permitted
only if it meets all of the following conditions:


 


(a)           The
contribution must be made entirely in the form of U.S. dollars;


 


(b)           The
Eligible Employee must demonstrate to the Company’s satisfaction that the contribution
is attributable to the Eligible Employee’s participation (or the participation
of the Eligible Employee’s deceased spouse, or the participation of the
Eligible Employee’s former spouse and the Eligible Employee is an alternate
payee as to such former spouse under such other plan pursuant to a qualified
domestic relations order under section 414(p) of the IRC) in another
employer’s retirement plan, or in an individual retirement account or annuity
described in section 408(a) or 408(b) of the IRC, and that the
contribution qualifies as a rollover distribution from a plan that meets the
requirements of section 401(a) or 403(a) of the IRC, an annuity
contract described in section 403(b) of the IRC, an eligible plan under
section 457(b) of the IRC which is maintained by a state, political
subdivision of a state or any agency or instrumentality of a state or political
subdivision of a state, or an individual retirement account or annuity
described in section 408(a) or 408(b) of the IRC; and


 


18

















 


(c)           The
contribution is not attributable to employee after-tax contributions.


 


A
Rollover Contribution shall be paid to the Company in a lump sum in cash.  Each approved Rollover Contribution shall be
transferred to the Trustee as soon as reasonably practicable after it was paid
to the Company.  The Rollover
Contribution shall be allocated among one or more Investment Options in any
whole percentage increment as the Member may elect.  Such election shall be made in accordance
with the Company’s written procedures.


 


4.15         Age 50
Catch-Up Rules


 


Eligible
Members (as defined in Section 4.15(a) below) may make additional
Salary Deferrals (“Age 50 Catch-Up Deferrals”) up to the amounts specified in Section 4.15(b) below.


 


(a)           For
purposes of this Section 4.15, “Eligible Member” means a Member who meets
the following requirements:


 


(1)           The
Member has attained the age of 50 before the close of the Plan Year.


 


(2)           The
Member may make no other Salary Deferrals due to the limit described in Section 4.5
or the limits imposed under Section 4.1 or Section 15.


 


(b)           The
maximum amount of Age 50 Catch-Up Deferrals an Eligible Member may make during
a Plan Year shall not exceed the lesser of:


 


(1)           the Age 50 Catch-Up
Amount; or


 


(2)           the excess,
if any, of (i) the Eligible Member’s Compensation for the Plan Year, over (ii) any
other Salary Deferrals made on behalf of the Eligible Member for such Plan Year
without regard to this Section 4.15.


 


(c)           The “Age
50 Catch-Up Amount” for each Plan Year shall be the amount set forth in section
414(v)(2)(B)(i) of the IRC.  For
Plan Years beginning after 2006, the Age 50 Catch-Up Amount specified in this Section 4.15(c) shall
be adjusted as provided in section 414(v)(2)(C) of the IRC.


 


Age 50 Catch-Up Deferrals
made pursuant to this Section 4.15 shall not be taken into account for
purposes of the provisions of the Plan implementing the limitations of section
402(g) and section 415 of the IRC. 
The Plan shall not be treated as failing to satisfy the provisions of
the Plan implementing the requirements of sections 401(k)(3), 401(k)(11),
401(k)(12), 410(b) or 416 of the IRC by reason of such Age 50 Catch-Up
Deferrals.


 


19

















 


ARTICLE 5


 


COMPANY CONTRIBUTIONS


 


5.1           Amount
of Company Contributions


 


The
Company shall make one or more Company Contributions during each Plan Year with
respect to Members’ Salary Deferrals (other than Age 50 Catch-Up
Deferrals).  Company Contributions
initially may be paid to a suspense account maintained by the Trustee as part
of the Plan.  The aggregate amount of
Company Contributions for each Plan Year shall be equal to the sum of the
amounts allocated for such Plan Year to Members pursuant to Section 5.2.


 


5.2           Allocation
of Company Contributions


 


Company
Contributions, determined under Section 5.1, shall be allocated as of the
last day of each Plan Year to the Company Contributions Account of each Member
who has completed a 12-month Period of Service on or before the last day of
such Plan Year and who is an Employee on such date or who terminated employment
during such Plan Year due to:


 


(a)           Death;


 


(b)           Total
Disability;


 


(c)           Entry
into the armed forces of the United States;


 


(d)           Layoff;


 


(e)           Retirement
(as defined in Section 2.1(hh)); or


 


(f)            The
Company’s decision to relocate the Member’s spouse who is also an Employee of
the Company, if the Member relocates with the spouse and is not offered a job
with the Company at the new location,


 


if the
Member defers distribution of his Plan Benefit to a date later than the last
day of the Plan Year in which he separates from service.


 


The
allocation shall be in an amount equal to the lesser of (1) 100 percent of
the aggregate Salary Deferrals (other than Age 50 Catch-Up Deferrals) made by
him during the Plan Year, not including Salary Deferrals returned to the Member
pursuant to Sections 4.5, 4.9 or 15.3, or (2) five percent of Compensation
received during the portion of the Plan Year that the individual is an Eligible
Employee, a Member (including a Restricted Member) and has completed a 12-month
Period of Service (in the current or a prior Plan Year).  Company Contributions shall be allocated in
the form of PACCAR Stock which shall be valued for allocation purposes on the
basis of the average price per share of all shares of PACCAR Stock paid to the
Plan as part of the Company Contributions and acquired with suspense-account
funds during the Plan Year pursuant to Section 5.1.


 


20

















 


5.3           Average
Contribution Percentage Limitation


 


The
Plan shall satisfy the average contribution percentage test provided in
section 401(m)(2) of the IRC and section 1.401(m)-1 of the
regulations issued thereunder.  Subject
to the special rules described in Section 5.8, the Aggregate 401(m) Contributions
of Highly Compensated Employees shall not exceed the limits described below:


 


(a)           An Actual
Contribution Percentage shall be determined for each Highly Compensated
Employee who is eligible to receive an allocation of Company Contributions
under Section 5.2 (assuming, for this purpose, that Salary Deferrals have
been allocated to such individual’s Accounts), which Actual Contribution
Percentage shall be the ratio, computed to the nearest one-hundredth of one
percent, of the Highly Compensated Employee’s Aggregate 401(m) Contributions
for the Plan Year to the Highly Compensated Employee’s Section 414(s) Compensation
for the Plan Year;


 


(b)           An Actual
Contribution Percentage shall be determined for each Nonhighly Compensated
Employee who, at any time during the Plan Year, is a Member (including a
suspended Member) or is eligible to participate in the Plan, which Actual
Contribution Percentage shall be the ratio, computed to the nearest
one-hundredth of one percent, of the Nonhighly Compensated Employee’s Aggregate
401(m) Contributions for the Plan Year to the Nonhighly Compensated
Employee’s Section 414(s) Compensation for the Plan Year;


 


(c)           The
Actual Contribution Percentages (including zero percentages) of Highly
Compensated Employees and Nonhighly Compensated Employees shall be separately
averaged to determine each group’s Average Contribution Percentage; and


 


(d)           The
Aggregate 401(m) Contributions of Highly Compensated Employees shall
constitute Excess Aggregate Contributions and shall be reduced, pursuant to
Sections 5.5 and 5.6, to the extent that the Average Contribution Percentage of
Highly Compensated Employees exceeds the greater of (1) 125 percent of the
Average Contribution Percentage of Nonhighly Compensated Employees or (2) the
lesser of (A) 200 percent of the Average Contribution Percentage of
Nonhighly Compensated Employees or (B) the Average Contribution Percentage
of Nonhighly Compensated Employees plus two percentage points.


 


5.4           Determination
of Maximum Actual Contribution Percentage and Dollar Amount of Excess Aggregate
Contributions


 


The maximum Actual
Contribution Percentage shall be determined by use of a leveling process,
whereby the Aggregate 401(m) Contributions of the Highly Compensated
Employee with the highest Actual Contribution Percentage are reduced to the
extent required to (a) eliminate all Excess Aggregate Contributions or (b) cause
such Highly Compensated Employee’s Actual Contribution Percentage to equal the
Actual Contribution Percentage  of the
Highly Compensated Employee with the next-highest Actual Contribution
Percentage.  Such leveling process shall
be repeated until the average contribution percentage test is satisfied.


 


21

















 


With regard to each Highly
Compensated Employee whose Actual Contribution Percentage is in excess of the
maximum permitted Actual Contribution Percentage, a dollar amount of Excess
Aggregate Contributions shall then be determined by subtracting the product of
the maximum permitted Actual Contribution Percentage and the Highly Compensated
Employee’s Section 414(s) Compensation from the Highly Compensated
Employee’s Aggregate 401(m) Contributions. 
The amounts shall then be aggregated to determine the total dollar
amount of Excess Aggregate Contributions.


 


5.5           Allocation
of Excess Aggregate Contributions to Highly Compensated Employees


 


Any
Excess Aggregate Contributions for a Plan Year shall be allocated to Highly
Compensated Employees by use of a leveling process, whereby the Aggregate 401(m) Contributions
of the Highly Compensated Employee with the highest Aggregate 401(m) Contributions
are reduced to the extent required to (a) eliminate all Excess Aggregate
Contributions or (b) cause such Highly Compensated Employee’s Aggregate
401(m) Contributions to equal the Aggregate 401(m) Contributions of
the Highly Compensated Employee with the next-highest Aggregate 401(m) Contributions.  Such leveling process shall be repeated until
all Excess Aggregate Contributions for such Plan Year are allocated to Highly
Compensated Employees.


 


5.6           Distribution
of Excess Aggregate Contributions


 


Excess
Aggregate Contributions allocated to Highly Compensated Employees for the Plan
Year pursuant to Section 5.5, together with any income or loss allocable to
such Excess Aggregate Contributions, shall be distributed to such Highly
Compensated Employees not later than the March 15 next following the close
of such Plan Year, if possible, and in any event no later than 12 months
following the close of such Plan Year.


 


5.7           Use of
Salary Deferrals


 


The
Company, in its sole discretion, may include all or a portion of the Salary
Deferrals (other than Age 50 Catch-Up Deferrals) for a Plan Year in Aggregate
401(m) Contributions taken into account in applying the Average
Contribution Percentage limitation described in Section 5.3 for such Plan
Year, provided that the requirements of section 1.401(m)-2(b)(6) of
the Income Tax Regulations are satisfied.


 


5.8           Special
Rules


 


The
following special rules shall apply for purposes of this Article 5:


 


(a)                                  For
purposes of applying the limitation described in Section 5.3, the Actual
Contribution Percentage of any Highly Compensated Employee who is eligible to
participate in the Plan and to make employee contributions or receive an allocation
of matching contributions (within the meaning of section 401(m)(4)(A) of
the IRC) under any other plans, contracts or arrangements maintained by PACCAR
Inc or any Subsidiary (as defined in Section 2.1(nn) without regard to the
last sentence thereof) shall be determined as if Company Contributions
allocated to such Highly Compensated Employee’s Accounts and all such employee
contributions and matching contributions were made under a single arrangement
(other than those 


 


22

















 


plans that may not
be permissively aggregated); provided, however, that if such plans have
different plan years, the plans are aggregated with respect to contributions
made within this Plan’s Plan Year only;


 


(b)           In the
event that this Plan is aggregated with one or more other plans in order to
satisfy the requirements of IRC section 401(a)(4), 401(m) or 410(b),
then all such aggregated plans, including the Plan, shall be treated as a
single plan for all purposes under all such IRC sections (except for purposes
of the average benefit percentage provisions of IRC
section 410(b)(2)(A)(ii));


 


(c)           In the
event that the mandatory disaggregation rules of Treasury Regulation
section 1.401(m)-1(b) apply to the Plan, or to the Plan and other plans
with which it is aggregated as described in Subsection (b) above,
then the limitation described in Section 5.3 shall be applied as if each
mandatorily disaggregated portion of the Plan (or aggregated plans) were a
single arrangement;


 


(d)           Provided
this limit is applied uniformly in determining the Actual Contribution
Percentage limitation for the Plan Year, the Company may limit Section 414(s) Compensation
to the amount of such compensation paid to the Eligible Employee during the
portion of the Plan Year that such Member was an Eligible Employee; and


 


(e)           If the
Plan permits participation in the 401(m) portion of the Plan prior to an
Eligible Employee’s satisfaction of the minimum age and service requirements of
section 410(a)(1)(A) of the IRC and if section 410(b)(4)(B) of
the IRC is applied in determining whether the 401(m) portion of the Plan
meets the requirements of section 410(b) of the IRC, then for
purposes of performing the average contribution percentage test, the test may
be performed separately with regard to Eligible Employees who have not met the
minimum age and service requirements of section 410(a)(1)(A) of the
IRC or, alternatively, Eligible Employees who have not met the minimum age and
service requirements of section 410(a)(1)(A) of the IRC may instead
be excluded in the determination of the Average Contribution Percentage for
Nonhighly Compensated Employees, but not in the determination of the Average
Contribution Percentage for Highly Compensated Employees; and


 


(f)            Income
(and loss) allocable to Excess Aggregate Contributions for the Plan Year shall
be determined in accordance with Treasury Regulation section
1.401(m)-2(b)(2)(iii)(C), and shall be determined for the period between the
end of the Plan Year and the date of distribution of such Excess Aggregate
Contributions in accordance with Treasury Regulation section
1.401(m)-2(b)(2)(iii)(D).


 


23

















 


5.9           Company
Contributions Paid From Earnings and Profits; Other Limitations on Company Contributions


 


(a)           Company
Contributions Paid From Earnings and Profits


 


Section 5.1
notwithstanding, Company Contributions, whether paid in cash or other property,
shall be paid only out of the Current or Accumulated Earnings and Profits of
any corporation participating in the Plan.


 


(b)           Suspension or
Reduction of Company Contributions


 


Section 5.1
and (a) above notwithstanding, if for any fiscal year of PACCAR Inc it is
determined that Earnings for such year are less than eight percent of the
Capital Base, then Company Contributions may be suspended in whole or in part
for a period of up to 12 months.  For
purposes of this Subsection (b), “Earnings” for any fiscal year is defined
as the sum of (1) total income before taxes of PACCAR Inc and consolidated
subsidiaries and (2) interest expense on manufacturing long-term debt and
Company Contributions to the Plan; and “Capital Base” means the sum of (1) stockholders’
equity and (2) manufacturing long-term debt of PACCAR Inc and consolidated
subsidiaries (determined as of the end of the fiscal year preceding the fiscal
year for which Earnings are measured); in each case as such amounts are
determined from the annual audited financial statements (or related supporting
documentation) for PACCAR Inc and subsidiaries for such fiscal year.


 


(c)           Effect of Suspension
or Reduction on Salary


 


If the
Company suspends or reduces Company Contributions pursuant to this Section 5.9,
it shall notify the Trustee and all Members. 
Each Member shall then have the right, by giving notice to the Company
on the prescribed form within the notice period prescribed by the Company, to
suspend his Salary Deferrals for the period with respect to which Company
Contributions are reduced or suspended. 
A suspension under such circumstances and for such period shall not be
treated as a voluntary suspension of Salary Deferrals under Section 4.4.  A Member may also continue to contribute
Salary Deferrals to the Plan, notwithstanding a reduction or suspension of
Company Contributions by reason of this Section 5.9.  Company Contributions made with respect to
any Plan Year in a reduced amount shall be allocated to Members in proportion
to their Salary Deferrals for such Plan Year.


 


(d)           Effect of Suspension
or Reduction on Future Company Contributions


 


If the
Company suspends or reduces Company Contributions to the Plan pursuant to this Section 5.9,
the Company shall be under no obligation at any future date to make additional
Company Contributions with respect to any period of suspended or reduced
Company Contributions, whether or not any Members have elected to continue
their Salary Deferrals during such period of suspension or reduction of Company
Contributions.


 


24
















 


5.10         Company
Contributions in PACCAR Stock


 


The
Company may elect to pay all or part of any Company Contribution in the form of
PACCAR Stock.  For purposes of
determining the amount of the Company’s deduction under section 404 of the
IRC, shares of PACCAR Stock so contributed shall be valued at the
last-transaction price quoted by the National Market System of the National
Association of Securities Dealers and reported by The Wall Street Journal with
respect to the date on which such shares are paid to the Plan.


 


5.11         Diversification
of Company Contributions Account


 


Each
Member who (a) is age 50 or older and who has completed a Period of
Service of five years or more; or (b) effective January 1, 2007, has
completed three or more years of service (as defined below), may elect at any
time to transfer any whole percentage of the amount of the Member’s Company
Contributions Account then invested in one Investment Option (including the
PACCAR Stock Fund) to another Investment Option (including the PACCAR Stock Fund)
in accordance with the Company’s written procedures.  Any future Company Contributions allocated to
such Member shall continue to be allocated to the Member’s Company
Contributions Account in the form of PACCAR Stock.


 


Effective
January 1, 2007, the Beneficiary of a deceased Member (whether or not the
Member has completed three or more years of service) shall have the same
investment rights as herein described.


 


For
purposes of this Section 5.11, the date on which a Member completes three
years of service is the third anniversary of the Member’s date of hire.


 


5.12         Return
of Company Contributions


 


Any
other provision of the Plan notwithstanding, each Company Contribution under Section 5.1
is expressly conditioned upon the deductibility of such contribution under Section 404
of the IRC.  If the deductibility of a
Company Contribution is denied, then the amount for which a deduction is
disallowed (reduced by any losses incurred with respect to such amount) shall
be returned to the Company within 12 months after the date of the
disallowance.  In addition, if all or
part of a Company Contribution is attributable to a mistake of fact, then the
excess of such Company Contribution over the amount which would have been contributed
in the absence of the mistake of fact (reduced by any losses incurred with
respect to such excess) shall be returned to the Company within 12 months after
the date of such Company Contribution.


 


ARTICLE 6


 


THE TRUSTEE AND THE TRUST FUND


 


6.1           The
Trustee and Investment Managers


 


The
exclusive authority and discretion to manage and control the Trust Fund shall
be vested in the Trustee, except to the extent that the Trust Agreement
provides that the Trustee is subject to the directions of the Company or an
Investment Manager appointed by the 


 


25

















 


Company.  Accordingly, subject to the provisions of the
Plan, the Company shall enter into one or more Trust Agreements in such form
and containing such provisions as the Company may deem appropriate, including
(without limitation) constraints on the investment of the Trust Fund and the
power and authority of the Trustee to amend the Trust Agreement or to terminate
the trust.  All Salary Deferrals,
Rollover Contributions and Company Contributions under the Plan shall be paid
by the Company to the Trustee to be held, invested and distributed subject to
the terms and conditions of the Plan and the Trust Agreement.


 


The
Company from time to time may appoint one or more Investment Managers with
respect to all or any portion of the Trust Fund and may enter into an
investment management agreement with any Investment Manager so appointed.  Each Investment Manager so appointed shall
have the exclusive authority and discretion to manage and control the assets of
the Trust Fund assigned to him (it), except to the extent that the applicable
investment management agreement provides that such Investment Manager is
subject to the directions of the Company or a Trustee.


 


6.2           Investment
Funds


 


The
Trust Fund shall consist of the PACCAR Stock Fund and one or more Investment
Options selected by the Company.  For
purposes of investment, the Trustee may divide any part of the Trust Fund into
one or more sub-funds.  The Trustee may
physically segregate the assets of any sub-fund, invest the assets of such
sub-fund separately, and account separately for the income, gains, expenses and
losses of such sub-fund.


 


The “PACCAR
Stock Fund” shall be invested in PACCAR Stock. 
The PACCAR Stock Fund shall consist of all PACCAR Stock held by the
Trustee, and all cash held by the Trustee which is derived from dividends on
PACCAR Stock, Company Contributions to be invested in PACCAR Stock, Salary
Deferrals by Members that are to be invested in PACCAR Stock, Member
Contributions that are to be invested in PACCAR Stock, Rollover Contributions
that are to be invested in PACCAR Stock, and proceeds from sales of PACCAR
Stock (except while such cash may be otherwise invested as provided under the
Trust Agreement).  All dividends on
PACCAR Stock and all proceeds from the sale of PACCAR Stock shall be invested
in the PACCAR Stock Fund, except as otherwise provided in the Plan.


 


6.3           Voting
of PACCAR Stock


 


Trust
Fund assets invested in PACCAR Stock may be registered in the name of the
Trustee or any nominee; provided that the Trustee’s records evidence the
interest of the Trust Fund therein.  Each
Member shall be entitled to vote the whole number of shares of PACCAR Stock
credited to him in his Company Contributions Account, Salary Deferral Account, and
Employee Account as of the most recent practicable Valuation Date prior to the
record date for each meeting of shareholders of PACCAR Inc.  Each Member, prior to such meeting, shall be
furnished with the proxy statement for such meeting, together with a form to be
sent to the Trustee on which may be set forth the Member’s instructions as to
the manner of voting such shares of PACCAR Stock.  Upon receipt of such instructions (which the
Trustee shall hold in confidence), the Trustee shall vote such shares in
accordance therewith.  The 


 


26

















 


Trustee
shall vote all shares of PACCAR Stock held by it upon any matter as to which no
instructions were given by Members within such reasonable period of time prior
to any shareholder meeting as may be specified by the Trustee, or which cannot
be voted pursuant to Members’ instructions, in direct proportion to the shares
of PACCAR Stock with respect to which it has received timely voting
instructions by Members.


 


6.4           Other
Instructions by Members


 


In the
event that any person or group of persons makes a tender offer subject to
section 14(d) of the Securities Exchange Act of 1934 to acquire all
or part of the outstanding shares of PACCAR Stock, including the PACCAR Stock
held in the Trust Fund (“Acquisition Offer”), each Member shall be entitled to
direct the Trustee confidentially to tender all or part of those shares of
PACCAR Stock that would then be subject to such Member’s voting instructions
under Section 6.3.  If the Trustee
receives an instruction by the date communicated by the Company to Members, the
Trustee shall tender such shares in accordance with such instruction.  Any PACCAR Stock as to which the Trustee does
not receive timely instructions shall not be tendered by the Trustee.  The Company shall distribute to each Member
all appropriate materials pertaining to the Acquisition Offer, including the
statement of the position of the Company with respect to such offer issued pursuant
to Rule 14e-2 under the Securities Exchange Act of 1934, as soon as
practicable after such materials are issued; provided, however, that if the
Company fails to issue such statement within five business days after the
commencement of such offer, the Company shall distribute such materials to each
Member without the statement by the Company and shall separately distribute
such statement as soon as practicable after it is issued.


 


6.5           Trust
Fund Investment Losses:  Interest in
Trust Fund


 


All
payments of Benefits shall be made solely from the assets of the Trust
Fund.  No Fiduciary guarantees the Trust
Fund or any Company Contributions, Salary Deferrals, Rollover Contributions or
Member Contributions in any manner against investment loss or depreciation in
asset value.  Except only as expressly
provided by the Plan, and then only to the extent of his Benefit payable under
the Plan from the assets of the Trust Fund, no person shall have any right to,
or interest in, any assets of the Trust Fund.


 


6.6           ERISA
404(c) Requirements


 


The
Plan is intended to comply with section 404(c) of ERISA with respect
to Salary Deferral Accounts. 
Accordingly, with respect to the investment of such Accounts, the Plan
shall satisfy, among other requirements, Subsections (a), (b) and (c) below.


 


(a)           Choice
of Broad Range of Investment Alternatives. 
The Member shall be able to choose from at least three “core” investment
alternatives.  Each core investment
alternative shall be diversified, shall demonstrate materially different risk
and return characteristics from each other core investment alternative and
shall, when combined with other Investment Options, tend to minimize through
diversification the overall risk of the Member’s portfolio.  In the aggregate, the three core investment
alternatives shall constitute a broad range of alternatives such that, by
choosing 


 


27

















 


among them, a
Member may achieve a portfolio with risk and return characteristics at any
point within the range normally appropriate to the Member’s portfolio.


 


(b)           Frequency
of Investment Instructions.  The
Member shall be able to give investment instructions to a person designated by
the Company as an agent for this purpose. 
The person shall be obligated to comply with the instructions of the
Member, except as otherwise permitted by law. 
The Member shall be able to give investment instructions for each
investment alternative as frequently as is appropriate given the volatility of
the investment, but no less frequently than once within every three-month
period.


 


(c)           Provision
of Sufficient Information to Member or Beneficiary.  The Member shall be provided information
sufficient to make informed decisions regarding the Plan’s Investment
Options.  Such information shall include:


 


(1)           An
explanation that the Plan is intended to be in compliance with ERISA
section 404(c) and that Plan fiduciaries may be relieved of liability
for losses that arise from the Member’s investment choices;


 


(2)           A
description of all Investment Options, including a general description of the
investment objectives of each and the level of diversification in each;


 


(3)           An
explanation that Members and Beneficiaries may review any prospectuses or
similar materials made available to the Plan for each Investment Option;


 


(4)           The
identification of any designated investment manager;


 


(5)           An
explanation of the circumstances under which a Member may give investment
instructions, together with any limitations on those instructions;


 


(6)           A
description of any transaction fees, charges or expenses to a Member’s Account
in connection with the purchase or sale of any Investment Option;


 


(7)           The name,
address and telephone number of the Plan fiduciary responsible for providing
information on request with a description of such information available upon
request;


 


(8)           An
explanation of the established procedures designed to provide for the
confidentiality of information concerning the purchase, holding or sale of
PACCAR Stock;


 


(9)           A copy of
the most recent prospectus in the case of an initial purchase in an Investment
Option subject to the Securities Act of 1933; and


 


(10)         Any
materials provided to the Plan that relate to the exercise of voting, tender or
similar rights passed through to Members and Beneficiaries.


 


Information
that must be provided on request in accordance with Department of Labor
Regulation 2550.404c-1(b)(2) includes certain information relating to
financial 


 


28

















 


reports
of Investment Options, operating expenses of the portfolio assets of the
Investment Options, overall investment performance of the Investment Options
and information relating to the shares of an investment in the requesting
Members’ Account.  Additional information
may be available upon request.


 


The
Beneficiary of a Member shall have the same investment rights as herein
described where such Beneficiary becomes entitled to a Member’s Salary Deferral
Account under the Plan.


 


6.7           Expenses
of Plan and Trust


 


The
fees of the Trustee and any Investment Manager, and the expenses of
administering the Trust Fund and the Plan, shall be paid by the Trustee out of
the Trust Fund pursuant to the terms of the Trust Agreement, except such
expenses as are paid by the Company.


 


ARTICLE 7


 


ACCOUNTS AND VALUATIONS


 


7.1           Types
of Accounts


 


The Company
shall establish and maintain Accounts for each Member which reflect his
interest in contributions made under the Plan and the investment experience
thereof.  A Member’s interest in the Plan
shall consist of one or more of the following Accounts:


 


(a)           Company
Contributions Account


 


A
Company Contributions Account, reflecting Company Contributions made on behalf
of a Member with respect to periods after June 30, 1978 and earnings,
losses and expenses attributable to such Company Contributions.


 


(b)           Salary Deferral
Accounts


 


A
Salary Deferral Account, reflecting Salary Deferrals (including Age 50 Catch-Up
Deferrals) and Rollover Contributions made by a Member to the Plan and
earnings, losses and expenses attributable to such Salary Deferrals (including
Age 50 Catch-Up Deferrals) and Rollover Contributions.  A Salary Deferral Account may also include
amounts transferred from a Prior Profit Sharing Account effective July 1,
1987, and earnings, losses and expenses attributable to such amounts.


 


(c)           Employee Accounts


 


An
Employee Account, reflecting Member Contributions made by a Member to the Plan
prior to February 1, 1983 and earnings, losses and expenses attributable
to such Member Contributions.


 


Such
separate Accounts are maintained for accounting purposes and shall not require
a segregation of Trust Fund assets to each Account.


 


29

















 


7.2           Valuation
of Accounts


 


As of
each Valuation Date, the Company shall determine the fair market value and
balance of each Member’s Accounts, as provided in (a), (b), (c) and (d) below.  The Company may use any lawful procedure for
determining the fair market value and balance of Accounts; provided that such
procedure is consistent with this Section 7.2.


 


(a)           Valuation of Trust Fund


 


The
Company shall ascertain from the Trustee the fair market value of the assets of
each portion of the Trust Fund as of the valuation Date.  The fair market value of PACCAR Stock shall
be the last-transaction price quoted by the National Market System of the
National Association of Securities Dealers and reported by The Wall Street
Journal with respect to the Valuation Date.


 


(b)           Contributions
Credited


 


The
Company shall credit to each Member’s Company Contributions Account the amount
of any Company Contributions allocated as of the last day of the Plan
Year.  The Company shall credit to each
Member’s Salary Deferral Accounts the amount of Salary Deferrals withheld,
transfers from Company Contributions Accounts received and Rollover
Contributions received in such calendar month.


 


30

















 


(c)           Charges
Against Accounts


 


The Company shall charge
against each Member’s Company Contributions, Salary Deferral and Employee
Accounts, as applicable, the amount of any transfers, withdrawals, loans and
distributions of Benefits effected during the calendar month ending with the
Valuation Date.


 


(d)           Allocation
of Dividends


 


Notwithstanding
any other provision of the Plan, a Member may, in accordance with procedures
established by the Company, elect to have any cash dividends paid on PACCAR
Stock that is held in the Member’s Company Contributions Account, Salary
Deferral Account or Employee Account, as applicable, paid directly to such
Member in cash or allocated to the Member’s Account(s) and re-invested in
PACCAR Stock.  In the absence of a proper
election by the Member, any such cash dividend shall be allocated to the Member’s
Account(s) and re-invested in PACCAR Stock.


 


7.3           Statements
for Members


 


A
statement for each Member shall be prepared and distributed to the Member
annually or more frequently, as determined by the Company.  Such statement shall reflect the status
(including the fair market value) of the Member’s Accounts and shall contain
such other information as the Company may determine.


 


ARTICLE 8


 


AMOUNT AND DISTRIBUTION OF BENEFITS


 


8.1           Vesting
and Amount of Benefits


 


Each
Member’s interest in his Accounts is 100 percent vested at all times.  In the case of a reemployed Member who
previously incurred a forfeiture from his Company Contributions Account under
the Plan as in effect prior to January 1, 1989, any such forfeiture may be
restored to the Member’s Company Contributions Account if the Member satisfies
the requirements of the Plan as in effect prior to January 1, 1989,
concerning the repayment of prior forfeitures. 
Benefits to which a Member is entitled are distributable to such Member
or his Beneficiary, as the case may be, as further provided in this Article 8.  The amount distributable to the Member shall
be determined as of the later of (a) the Valuation Date coinciding with or
immediately following the date of the Member’s termination of employment or (b) the
Valuation Date coinciding with or immediately preceding the distribution date
elected by the Member under Section 8.2.


 


8.2           Normal
Time of Distribution


 


Subject
to Sections 8.3, 8.4 and 8.8, a Member’s Benefit shall be distributed to him on
(or as soon as reasonably practicable after) the date that he has elected.  The distribution election shall be made in
accordance with the Company’s written procedures, and where applicable, 


 


31

















 


such
procedures shall require the consent (written, if necessary) of the Member to
the distribution of his Benefit before he attains age 65.


 


8.3           Time
of Distribution


 


A
Member who is Totally Disabled may elect to receive his Plan Benefit in
accordance with the Company’s written procedures.  In the case of a Member who is not Totally
Disabled, the Benefit shall not be distributed before the later of the
following dates:


 


(a)           The date
when the Member ceases to be an Employee; or


 


(b)           The date
when the Company receives the election.


 


Notwithstanding
the preceding provisions of this Section 8.3 and subject to Section 8.4,
a Member’s Benefit shall be paid or commenced by his Required Beginning
Date.  If the Member fails to file a
timely distribution election form, Section 8.7 shall apply and Section 8.12
(relating to unclaimed Benefits) may apply.


 


8.4           Special
Rules Regarding Distribution


 


(a)           If a
Member other than a five-percent owner (as defined in section 416 of the
IRC and taking into account any modifications under section 401(a)(9) of
the IRC) is still an Employee as of his Required Beginning Date, he may elect
(in the manner specified under the Company’s written procedures) to defer
payment or commencement of his Benefit to the date he ceases to be an Employee,
in which case the Company shall pay or commence his Benefit as soon as
reasonably practicable thereafter, but not later than April 1 of the
calendar year following the calendar year in which he ceases to be an Employee.


 


(b)           All
distributions under the Plan shall be made in accordance with the Income Tax
Regulations under Section 401(a)(9) of the IRC, including Income Tax
Regulation Section 1.401(a)(9)-2 or its successor.  Such regulations are incorporated in the Plan
by reference and shall override any inconsistent provisions of the Plan.  For purposes of Section 401(a)(9), life
expectancy(ies) under this Plan shall not be recalculated.


 


8.5           Reemployment


 


In the
event that a Member is reemployed and becomes a Member of the Plan prior to the
distribution of his entire Benefit relating to his earlier period of
employment, then (a) any election of a deferred distribution date under Section 8.2
shall be disregarded; (b) any installment payments in process shall be
discontinued, and the undistributed portion of the Member’s Accounts which
formerly had been in his PACCAR Stock Fund (if any) shall be retransferred to
his PACCAR Stock Fund; and (c) the Member’s entire Benefit, including the
Benefit relating to the period following his reemployment, shall be distributed
in accordance with the latest distribution election form filed by the Member,
after his reemployment, pursuant to Section 8.2.


 


32
















 


8.6           Available
Forms of Distribution


 


A
Member whose employment as an Employee terminates may elect to have his Benefit
distributed in one of the following forms:


 


(a)                                  A
lump sum consisting of the whole shares of PACCAR Stock held in the Member’s
Company Contributions Account, Salary Deferral Account and Employee Account as
of the Valuation Date coincident with or immediately preceding distribution of
the Member’s Benefit, and cash equal to the balance of the Member’s Benefit; or


 


(b)           A lump
sum consisting entirely of cash.


 


8.7           Election
of a Form of Distribution


 


(a)           General Rule


 


A
Member entitled to a Benefit shall elect a form of distribution under Section 8.6
in accordance with the Company’s written procedures.  Such election shall include such information
as the Company may reasonably require and, if the distribution is to be made
prior to the Member’s attainment of age 65, the election shall be made no more
than 90 days prior to the distribution date elected by the Member.


 


(b)           Member Who Fails to
Elect Payment Form


 


If a
Member’s Benefit must be paid after he ceases to be an Employee on account of
his Required Beginning Date, he shall elect a form of distribution under Section 8.6
for this Benefit.  If the Member fails to
elect any form of distribution for such benefit before his Required Beginning
Date, then such Benefit shall be distributed in the form of a lump sum
consisting entirely of cash.


 


8.8           Small
Benefits


 


Any
other provision of this Article 8 notwithstanding, effective for
distributions made on or after March 28, 2005, if the value of a Member’s
entire Benefit equals $1,000 or less before the first payment of such Benefit
is made, then the Benefit automatically shall be paid to such Member (or, in
the case of his termination as a result of his death, to his Beneficiary) in a
single lump sum in cash as soon as administratively practicable after the
Member’s termination and without his consent. 
The foregoing notwithstanding, (a) in the case of a Member who has
made the election described in Section 5.2, the determination of whether
the value of the Member’s entire Benefit equals $1,000 or less shall be made
immediately following the last day of the Plan Year in which such Member
terminated employment and (b) in the event of termination of a Member’s
employment due to a Layoff, payment shall be made as soon as administratively
practicable following the last day of the Plan Year following the Plan Year in
which the termination of employment occurred. 
If the value of a benefit payable to an alternate payee pursuant to a
qualified domestic relations order (as defined in section 414(p) of
the IRC) (“QDRO”) is not more than $1,000 and payment of such benefit has not
commenced, such benefit shall be paid automatically to such alternate payee in
a single lump sum in cash as soon as administratively practicable after the
QDRO is received by the Plan and without the alternate payee’s consent.


 


33

















 


8.9           Survivors’
Benefits


 


(a)           Member Dies Before
Benefit Distribution


 


This
Subsection (b) shall apply in the event that a Member dies before his
Benefit is distributed.  Such Member’s
Benefit ordinarily shall be paid to his Beneficiary in the form of a single
lump sum in cash, and the distribution ordinarily shall be made as soon as
reasonably practicable after the Member’s death.  A Beneficiary may, however, make request to
defer the distribution of the Benefit to which such Beneficiary is
entitled.  However, the distribution
shall in no event be made later than five years after the Member’s death.  A Beneficiary shall make the request to
receive the Benefit to which such Beneficiary is entitled or to defer receipt
in accordance with the Company’s written procedures.


 


(b)           Designating a
Beneficiary


 


Upon
commencement of membership, each Member shall name one or more persons as the
Beneficiary who will receive any distribution payable under the Plan in the
event of the Member’s death.  The
designation shall be registered with the Company in accordance with the Company’s
written procedures.  If the Member has
not made an effective designation of a Beneficiary or if none of the named
Beneficiaries is living when any distribution is to be made, then (1) the
spouse of the deceased Member shall be the Beneficiary or (2) if the
Member has no spouse living at the time of such distribution, then the living
children of the deceased Member shall be the Beneficiaries in equal shares or (3) if
the Member has neither spouse nor children living at the time of such payment,
the estate of the Member shall be the Beneficiary.  The Member may change his designation of a
Beneficiary from time to time in accordance with procedures established by the
Company.  Any other provision of this
Subsection (b) notwithstanding, in the case of a married Member, any
designation of a person other than his spouse as Beneficiary shall be effective
only if the spouse consents to the designation in writing and such written
consent is witnessed by a notary public.


 


8.10         No
Alienation of Benefits; Qualified Domestic Relations Order


 


No
benefit payable under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or involuntary,
prior to actually being received by the person entitled to such benefit under
the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of any right to a benefit
payable hereunder shall be void. 
However, neither of the following shall constitute a violation of this Section 8.10:


 


(a)           The
creation or recognition of a right in an alternate payee to any pension payable
with respect to a Member pursuant to a qualified domestic relations order (as
defined in IRC Section 414(p)), as determined in accordance with
procedures established by the Company, and the payment of benefits in
accordance with the applicable requirements of such order; or


 


34

















 


(b)           The
Trustee’s compliance with instructions from the Company to reduce a Member’s
benefit by amounts the Member is ordered or required to pay the Plan, where
such order or requirement: (i) arises under a judgment of conviction for a
crime involving the Plan, under a civil judgment (including a consent order or
decree) entered by a court on or after August 5, 1997 in an action brought
in connection with a violation of part 4 of subtitle B of title I of ERISA or
under a settlement entered into on or after August 5, 1997 with the
Department of Labor asserting a violation of part 4 of subtitle B of title I of
ERISA; and (ii) the judgment, order, decree or settlement expressly
provides for the offset of all or part of the amount ordered or required to be
paid to the Plan against the Member’s benefits provided under the Plan.


 


Pursuant
to a qualified domestic relations order, the Plan may distribute any benefit
payable to an alternate payee in the form of a single lump sum in cash prior to
the earliest date upon which the Member could receive his Benefit.  To the extent that a qualified domestic
relations order creates, assigns, or recognizes the right of an alternate payee
to any portion of the Benefit otherwise payable to or with respect to a Member,
such portion shall not thereafter be taken into account in determining the
Benefit payable to or with respect to that Member under the Plan.


 


8.11         Facility
of Payment


 


Whenever,
in the Company’s opinion, a person entitled to receive any distribution of a
Benefit or installment thereof is under a legal disability or is physically or
mentally incapacitated in any way so as to be unable to manage his financial
affairs, the Company may direct the Trustee to make distribution to such person
or to his legal representative or to a relative or friend of such person for
his benefit; or the Company may direct the Trustee to apply the payment for the
benefit of such person in such manner as the Company considers advisable.


 


8.12         Unclaimed
Benefits


 


If any
Benefit, or a portion thereof, becomes distributable under the Plan and the
Company is unable to locate the Member or Beneficiary to whom the distribution
is payable for three consecutive Plan Years, then the Member’s Accounts shall
be closed after the third consecutive Plan Year during which such distribution
is payable but the Member or Beneficiary cannot be found.  The amount of the unpaid Benefit shall be
applied to reduce Company Contributions (unless mandatory provisions of
applicable escheat laws require other application, in which case such Benefit
shall be applied as such mandatory laws require), as determined by the
Company.  If, however, the Member or
Beneficiary subsequently makes a proper claim to the Company for any Benefit applied
to reduce Company Contributions, then such Benefit (without income, gains or
other adjustment) shall be restored to the Member’s Accounts from contributions
made by the Company for this purpose, without regard to Current or Accumulated
Earnings and Profits.  The Benefit shall
thereafter be distributable in accordance with the terms of the Plan.


 


35

















 


8.13         Payments
Discharge Plan; Adverse Claims


 


Any
payment or distribution made to any person in full compliance with the terms of
the Plan shall fully discharge the Company, the Plan and any Trustee or
insurance company making such payment from all adverse claims thereto
respecting which prior written notice has not been given to any such entity
making or directing the payment or distribution.  If the Company has received actual written
notice of any adverse claim to any payment or distribution not yet made, the
Company may suspend distribution and take such other action as it deems
necessary or advisable to protect the Plan or its Members and Beneficiaries,
until the respective rights of all interested persons have been determined to
the satisfaction of the Company.


 


8.14         Direct
Rollovers


 


(a)           Direct Rollover
Option


 


Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
Distributee’s election under this Section, a Distributee may elect, at the time
and in the manner prescribed by the Company, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.


 


(b)           Definition of
Eligible Rollover Distribution


 


An
Eligible Rollover Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee’s designated
beneficiary, or for a specified period of 10 years or more; any distribution to
the extent such distribution is required under section 401(a)(9) of
the IRC; the portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to employer securities), except to the extent that such portion is
directly rolled over to a qualified trust described in section 401(a) of
the IRC which is a defined contribution plan and which agrees to separately
account for the after-tax portion of the rolled over amount, or such portion is
rolled over to an individual retirement account or annuity described in section
408(a) or 408(b) of the IRC; and a distribution which is made upon
hardship of the Distributee.


 


(c)           Definition of
Eligible Retirement Plan


 


An
Eligible Retirement Plan is an individual retirement account described in
section 408(a) of the IRC; an individual retirement annuity described
in section 408(b) of the IRC; an annuity plan described in
section 403(a) of the IRC; an annuity contract described in Section 403(b) of
the IRC; an eligible plan under Section 457(b) of the IRC maintained
by a state, political subdivision of a state, or any agency or instrumentality
of a state or political subdivision of a state, that agrees 


 


36

















 


to
account separately for the Eligible Rollover Distribution; or a qualified
defined contribution plan described in section 401(a) of the IRC that
accepts the Distributee’s Eligible Rollover Distribution.  With respect to the portion of an Eligible
Rollover Distribution that is not includible in gross income (if it were paid
to the Distributee), an “Eligible Retirement Plan” is limited to an individual
retirement account or annuity described in section 408(a) or 408(b) of
the IRC, or a qualified defined contribution plan described in section 401(a) of
the Code that agrees to account separately for the portion which is includible
in gross income and the portion which is not so includible.


 


(d)           Definition of
Distributee


 


A
Distributee includes an Employee or former Employee.  In addition, the Employee’s or former
Employee’s surviving spouse and the Employee’s or former Employee’s spouse or
former spouse who is the Alternate Payee under a qualified domestic relations
order are Distributees with regard to the interest of the spouse or former
spouse.


 


(e)           Definition of Direct
Rollover


 


A
Direct Rollover is a payment by the Plan directly to the Eligible Retirement
Plan specified by the Distributee.


 


(f)            Waiver of Waiting
Period


 


An
Eligible Rollover Distribution may commence less than 30 days after the notice
required under Income Tax Regulation section 1.411(a)-11(c) and
section 402 (f) is given; provided that (1) the Company clearly
informs the Member that the Member has the right to a period of at least 30
days after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, the particular distribution option),
and (2) the Member, after receiving the notice, affirmatively elects a
distribution.


 


ARTICLE 9


 


LOANS


 


9.1           Amount
of Loans


 


A
Member or Restricted Member who is an Employee, and an Employee who is not a
Member but who is a Restricted Member as a result of making one or more
Rollover Contributions to the Plan, may obtain a cash loan from his Employee
and Salary Deferral Accounts; provided, however, that (a) he or she shall
not be permitted to obtain a loan under the Plan if, at any time in the prior
12 months, he or she defaulted on a Plan loan (as determined by the Company),
and (b) he or she shall not be permitted to obtain more than two new loans
in any Plan Year.  The minimum amount of
the loan shall be $1,000.  The maximum
amount of the loan shall be subject to the limitations of Section 9.2.  All loan amounts not evenly divisible by $100
shall be rounded down to the nearest $100.


 


37

















 


9.2           Aggregate
Loan Limitation


 


No
loan shall be granted under the Plan if it would cause the aggregate balance of
all loans which a Member or Restricted Member thereafter has outstanding under
this Plan or under any other qualified plan maintained by any PACCAR Inc or any
of its Subsidiaries (determined without regard to the last sentence of Section 2.1(nn))
to exceed the least of the following:


 


(a)           $50,000,
less the highest outstanding loan balance during the period of 12 consecutive
months ending on the day before a new loan is made; or


 


(b)           One-half of
the value of the Member’s or Restricted Member’s Accounts (or such lesser
amount as may be required pursuant to Regulation 2550.408b-1(f) of the
Department of Labor).


 


9.3           Terms
of Loans


 


A loan
to a Member or Restricted Member shall be made on such terms and conditions as
the Company may determine, provided that the loan shall:


 


(a)           Be
evidenced by a promissory note signed by the Member or Restricted Member and
secured by one-half of the value of his Accounts (regardless of whether a
particular Account provided funds for the loan under Section 9.1);


 


(b)           Bear
interest at a fixed rate (determined by the Company) commensurate with the
interest rates charged for similar loans by commercial lenders;


 


(c)           Provide
for level amortization over its term with payments at monthly or more frequent
intervals, as determined by the Company;


 


(d)           Provide
for loan payments (1) to be withheld whenever possible through periodic
payroll deductions from the Member’s or Restricted Member’s compensation from
the Company or (2) to be paid by check or money order whenever payroll
withholding is not possible;


 


(e)           Provide
for repayment in full on or before the earlier of (1) the distribution
date elected by the Member pursuant to Section 8.2 or (2) the date
five years after the loan is made (or the date 15 years after the loan is made
if the loan is used to acquire a dwelling which, within a reasonable period of
time, is used as the principal residence of the Member);


 


(f)            Provide
that a Member or Restricted Member may not receive any distribution from any of
his Accounts under Article 8 until the loan obligation is repaid, except
to the extent that all or any part of such distribution is used to repay the
outstanding balance of the loan; and


 


(g)           Provide
that a Member’s or Restricted Member’s Accounts shall not be applied to the
satisfaction of the Member’s loan obligations before the Accounts become
distributable under Article 8, unless the Company determines that the loan



 


38

















 


obligations are in
default and takes such actions as the Company deems necessary or appropriate to
cause the Plan to realize on its security for the loan.  Such actions may include (without limitation)
an involuntary withdrawal from the Member’s Accounts, first to the extent
permitted under Section 10.1 and second from other amounts credited to the
Member’s Accounts; provided that (1) such an involuntary withdrawal
attributable to Company Contributions made with respect to those Plan Years
that ended less than 24 months prior to the date of the withdrawal (adjusted to
reflect any earnings, appreciation or losses attributable to such Company
Contributions) and from amounts credited to Salary Deferral Accounts shall be
permitted only to the extent that the hardship requirements of
section 401(k)(2)(B)(i)(IV) of the IRC and of sections 1.401 (k) -1
(d)(2)(ii) and 1.401(k)-1(d)(2)(iii)(A) of the Income Tax Regulations
are met, and (2) no such involuntary withdrawal shall be made from net
unwithdrawn investment income credited to a Member’s Salary Deferral Accounts
except to the extent of such net unwithdrawn investment income credited as of
the last Valuation Date in the 1988 Plan Year. 
If an involuntary withdrawal occurs, the Member shall not be permitted
to obtain a loan under the Plan for a period of 12 months, commencing as of the
last day of the payroll period in which the involuntary withdrawal occurs.  The consent of the Member’s spouse shall not
be required at the time of any action taken by the Company under this
Subsection (g).


 


9.4           Company
Consent


 


The
Company, based on the criteria set forth in this Article 9, may withhold
its consent to any loan or may consent only to the borrowing of a part of the
amount requested by the Member.  The
Company shall act upon requests for loans in a uniform and nondiscriminatory
manner, consistent with the requirements of section 401(a),
section 401(k), section 4975 and related provisions of the IRC.


 


9.5           Source
of Loans


 


If a
Member requests and is granted a loan, the amount of the loan shall be
disbursed from the Trust Fund.  The
promissory note executed by the Member shall be held by the Trustee or by the
Company as agent of the Trustee and the promissory note shall be treated as an
investment of the Trust Fund.


 


9.6           Disbursement
of Loans


 


A
Member may request a loan in accordance with the Company’s written
procedures.  A loan shall be disbursed as
soon as reasonably practicable after the date on which the Company receives the
prescribed loan request (subject to the Company’s consent).


 


9.7           Valuation
Date


 


For
purposes of this Article 9, the value of a Member’s Accounts shall be
determined as of the Valuation Date coinciding with or next following the
Company receives the prescribed loan request.


 


39

















 


9.8           Loan
Fees


 


A
Member who obtains a loan under this Article 9 shall be required to pay
such fees as the Company may impose in order to defray the cost of
administering loans from the Plan.


 


ARTICLE 10


 


WITHDRAWALS


 


10.1         Regular
Withdrawals


 


Any
Member who is an Employee may withdraw any amount not in excess of the sum of
the following:


 


(a)           The
previously unwithdrawn value of the Member’s Employee Accounts as of the last
Valuation Date in the 1988 Plan Year; and


 


(b)           The
previously unwithdrawn shares of PACCAR Stock allocated to the Member’s Company
Contributions Account as of the last Valuation Date in the 1988 Plan Year.


 


10.2         Source
of Withdrawals


 


Withdrawals
shall be paid from the available sources in the following sequence, as necessary,
until the full amount has been satisfied:


 


(a)           First,
from the Member’s Member Contributions which were not previously withdrawn;


 


(b)           Second,
from other amounts credited to the Member’s Employee Accounts (to the extent
that the balance in the Member’s Employee Accounts exceeds his unwithdrawn
Member Contributions and to the extent that such amounts are  available under Section 10.1(a)); and


 


(c)           Last,
from the Member’s Company Contributions Account (to the extent that the Company
Contributions Account is available under Section 10.1(b)).


 


Subject
to the preceding sentence and such other written ordering rules as the
Company may adopt, the withdrawal from a Member’s Member Account shall be taken
from the Investment Options in which such Account is invested on a pro rata
basis.


 


10.3         Application
for Withdrawals: Time and Form of Distribution


 


A
Member who wishes to make any withdrawal under this Article 10 shall
request a withdrawal in accordance with the Company’s written procedures.  The withdrawal distribution shall be paid as
soon as reasonably practicable after receipt of such request by the
Company.  Withdrawal distributions shall
be made only in cash.  The amount available
for withdrawal (including the value of any PACCAR Stock to be converted to
cash) shall be 


 


40

















 


determined
as of the Valuation Date coincident with or next following the date on which
the Company receives the withdrawal request form.


 


10.4         Limitations
on Withdrawals


 


The
total value of any withdrawal distribution shall not be less than $500, unless
the aggregate amount available for withdrawal is less than $500, in which event
only such aggregate amount may be withdrawn.


 


ARTICLE 11


 


SALE OF STOCK TO TRUSTEE


 


A
Member or his Beneficiary may offer to sell to the Trustee any shares of PACCAR
Stock distributed from the Member’s Company Contributions Account, Salary
Deferral Account, or Employee Account as a Benefit under Article 8.  Any such offer shall be made in writing on
the prescribed form.  To the extent that
the Trustee has cash available for investment in PACCAR Stock, it may purchase
pursuant to the Trust Agreement any shares of PACCAR Stock so offered at the
last-transaction price quoted by the National Market System of the National
Association of Securities Dealers and reported by The Wall Street Journal with
respect to the trading day on which such offer was received by the Trustee at
the address prescribed by it for this purpose. 
No commission shall be paid in connection with any such purchase.


 


ARTICLE 12


 


PLAN ADMINISTRATION


 


12.1         Company
as Plan Administrator


 


The
Company is the named Fiduciary which has the discretionary authority to control
and manage the operation and administration of the Plan, and it is the “administrator”
of the Plan (as such term is used in ERISA). 
The Company shall make such regulations, rules, interpretations,
procedures and computations, and shall take such other action to administer the
Plan, as it may deem appropriate.  Any
regulations, rules and interpretations adopted by the Company shall be
conclusive and binding on all persons. 
Any regulations, rules and procedures of general application
established by the Company for the administration or operation of the Plan
shall be consistent with any applicable requirements of ERISA and the IRC.  In administering the Plan, the Company shall
act in a nondiscriminatory manner to the extent required by section 401(a) and
related provisions of the IRC and shall at all times discharge its duties with
respect to the Plan in accordance with the standards set forth in
section 404(a)(1) of ERISA.


 


12.2         Carrying
out Fiduciary Duties


 


Any
person or group of persons may serve in more than one Fiduciary capacity with
respect to the Plan, and any Fiduciary may employ one or more persons to render
advice with regard to such Fiduciary’s responsibilities under the Plan.


 


41

















 


The
Company may designate, by written instrument signed by both parties, one or
more persons to carry out the Company’s Fiduciary responsibilities (other than
Trustee responsibilities) under the Plan. 
The Company’s duties and responsibilities as administrator and sponsor
of the Plan which have not been delegated to others pursuant to the preceding
sentence shall be carried out by its directors, officers and employees.  Such directors, officers and employees shall
act on behalf and in the name of the Company in their respective capacities as
directors, officers and employees and not as individual Fiduciaries.


 


12.3         Appointment
of Public Accountant


 


The
Company shall engage an independent qualified public accountant to conduct such
examinations and to express such opinions as may be required by
section 103(a)(3) of ERISA. 
The Company in its discretion may remove and discharge the person so
engaged, but in such case it shall appoint a successor independent qualified
public accountant to perform such examinations and to express such opinions.


 


12.4         Reliance
on Plan Records; Member’s Duty to Notify


 


In
connection with the Company’s administration of the Plan, it is the
responsibility of any person having rights under the Plan to notify the Company
in writing of the current status of any matters affecting such rights,
including (without limitation) the designation of Beneficiaries, the exercise
of elections, facts relevant to employment and marital status, and the correct
address to which matters affecting such person shall be mailed or
delivered.  The Company may rely solely
on the records of the Plan, as modified by any such written notice, and on
information otherwise available to the Company, in its administration of the
Plan.  The Company in administering the
Plan may further rely on information or advice furnished by the Trustee,
actuaries, counsel or other persons retained to advise or assist the Plan.


 


ARTICLE 13


 


CLAIMS AND REVIEW PROCEDURES


 


13.1         Applications
for Benefits


 


Any
application for benefits under the Plan shall be submitted to the Company.  Any application shall be in writing on the
prescribed form and shall be addressed as follows:


 


Savings Investment Plan

PACCAR Inc

P.O. Box 1518

Bellevue, Washington 98009


 


13.2         Denial
of Applications


 


In the
event that any application for benefits is denied in whole or in part, the
Company shall notify the applicant in writing of his right to an independent
review of the denial.  Such written
notice shall set forth, in a manner calculated to be understood by the
applicant, specific reasons for the denial, specific references to the Plan
provisions on which the denial is based, a description of any information or
material necessary to perfect the application, an 


 


42

















 


explanation
of why such material is necessary, an explanation of the Plan’s review
procedure, (including an explanation of the applicant’s right to initiate a
lawsuit under section 502(a) of ERISA if the applicant’s appeal is
denied), and, in the case of a Disability Claim (defined below), each specific
internal rule, guideline, protocol or other similar criteria relied upon in
making such denial (or a statement that such criteria were relied upon and will
be provided free of charge to the applicant upon request), if any.  An application shall be granted, or written
notice of a denial shall be given to the applicant, within 90 days (45 days in
the case of a Disability Claim) after the Company receives a proper
application, unless special circumstances (which are matters beyond the control
of the Plan in the case of a Disability Claim) require an extension of time for
processing the application.  In no event
shall such an extension exceed a period of 90 days (30 days in the case of a
Disability Claim) from the end of the initial 90-day period (45-day period in
the case of a Disability Claim).  If such
an extension is required, written notice thereof shall be furnished to the
applicant before the end of the initial 90-day period (45-day period in the
case of a Disability Claim) indicating the circumstances requiring an extension
of time and the date by which the Company expects to render a decision.  If the Company determines that a decision on
a Disability Claim cannot be rendered within the initial 30-day extension
period due to matters beyond the control of the Plan, the period for making a
determination may be extended for an additional 30 days, provided that written
notice is furnished to the applicant before the end of the initial 30-day
extension period indicating the circumstances requiring an additional extension
of time and the date by which the Company expects to render a decision.  In the case of any extension with respect to
a Disability Claim, the notice of extension shall specifically explain the
standards on which benefit entitlement is based, the unresolved issues that
prevent a decision on the Disability Claim, the additional information needed
to resolve those issues and that the applicant shall have a period of 45 days
within which to provide the specified information.  For purposes of this Article 13, “Disability
Claim” shall mean a claim for benefits under the Plan based on an applicant’s
Total Disability pursuant to Section 2.1(qq)(3) of the Plan.


 


13.3         Requests
for Review


 


Any
person whose application for benefits is denied in whole or in part (or such
person’s duly authorized representative) may appeal from the denial by
submitting to the Company a request for an independent review of such
application within 60 days (180 days in the case of a Disability Claim) after
receiving written notice of the denial. 
Such independent review shall take into consideration all relevant
documents and other information submitted by the applicant, whether or not such
information was submitted in the initial benefit determination and, in the case
of a Disability Claim, shall be conducted without deference to the initial
determination.  The Company shall give
the applicant (or such applicant’s authorized representative), upon request and
free of charge, copies of and/or an opportunity to review pertinent documents
(except legally privileged materials) in preparing such request for review and
an opportunity to submit issues and comments in writing.  In the case of a Disability Claim, the
Company shall identify each medical or vocational expert whose advice was
obtained in connection with such denial, whether or not such advice was relied
upon in making the denial.  The request
for review shall be in writing and shall be addressed as follows:


 


43

















 


Savings Investment Plan

PACCAR Inc

P.O. Box 1518

Bellevue, Washington 98009


 


The
request for review shall set forth all of the grounds on which it is based, all
facts in support of the request and any other matters which the applicant deems
pertinent.  The Company may require the
applicant to submit such additional facts, documents or other material as it
may deem necessary or appropriate in making its review.  Any review of a denied application shall be
conducted in the name of the Company by a panel of three or more individuals
who did not take part in the initial processing of such application and, in the
case of a Disability Claim, who are not subordinate to any person who took part
in such initial processing.  The review
panel shall be the named fiduciary that has the authority to act with respect
to any appeal from a denial of a claim for benefits.  Any decision on appeal of a Disability Claim
that is based in whole or in part on a medical judgment shall be made in
consultation with an appropriate health care professional who did not take part
in the initial processing of such application and is not subordinate to any
person who took part in such initial processing.


 


13.4         Decision
on Review


 


The
Company shall act upon each request for review within 60 days (45 days in the
case of Disability Claim) after receipt thereof, unless special circumstances
require an extension of time for processing, but in no event shall the decision
on review be rendered more than 120 days (90 days in the case of a Disability
Claim) after the Company receives a proper request for review.  If such an extension is required, written
notice thereof shall be furnished to the applicant before the end of the
initial 60-day period (45-day period in the case of Disability Claim).  The Company shall give prompt, written notice
of its decision to the applicant.  In the
event that the Company confirms the denial of the application for benefits in
whole or in part, such notice shall set forth, in a manner calculated to be
understood by the applicant, the specific reasons for such denial, specific
references to the Plan provisions on which the decision is based, a statement
that the applicant (or the applicant’s duly authorized representative) has the
right, upon request and free of charge, to receive copies of and/or to review
all pertinent documents (other than legally privileged documents), an
explanation of the applicant’s right to initiate a lawsuit under section 502(a) of
ERISA, and, in the case of a Disability Claim, each specific internal rule,
guideline, protocol or other similar criteria relied upon in making such denial
(or a statement that such criteria were relied upon and will be provided free
of charge to the applicant upon request). 
In the case of a Disability Claim, such notice shall also include the
following statement:  “You and the Plan
may have other voluntary alternative dispute resolution options, such as
mediation.  One way to find out what may
be available is to contact the local U.S. Department of Labor Office and your
State insurance regulatory agency.”


 


13.5         Exhaustion
of Administrative Remedies; Limitations


 


No
legal or equitable action for benefits under the Plan shall be brought unless
and until the claimant (a) has submitted a written application for
benefits in accordance with Section 13.1, (b) has been notified that
the application is denied, (c) has filed a written request for an 


 


44

















 


independent
review of the application in accordance with Section 13.3 and (d) has
been notified in writing that the Company has affirmed the denial of the
application; provided, however, that such an action may be brought after the
Company has failed to act on the claim within a time period prescribed by
Sections 13.2 or 13.4.


 


ARTICLE 14


 


GENERAL PROVISIONS


 


14.1         Information
and Reports to Members


 


Each
Member shall be advised periodically of the general provisions and the
financial condition of the Plan and his Benefit hereunder, as required by
law.  In addition, the Company shall also
furnish to any Member or Beneficiary, upon written request, such information
respecting the Plan and such person’s Benefit hereunder as may be required by
law, but may require payment of a reasonable charge covering the cost of
providing such data, as permitted by law.


 


14.2         Compliance
With USERRA


 


Any
other provision of the Plan notwithstanding, effective October 13, 1996,
with regard to an Employee who after serving in the uniformed services is
reemployed on or after December 12, 1994, within the time required by
USERRA, contributions shall be made and benefits and service credit shall be
provided under the Plan with respect to his or her qualified military service
(as defined in section 414(u)(5) of the IRC) in accordance with
section 414(u) of the IRC. 
Furthermore, notwithstanding any provision of the Plan to the contrary,
Participant loan payments may be suspended during a period of qualified
military service.


 


14.3         Applicable
Law


 


The
Plan and the Trust Agreement are intended to establish a profit-sharing plan
and trust qualified under IRC sections 401(a), 401(k) and 501 and
maintained in conformity with said sections and regulations issued thereunder,
and in conformity with other applicable provisions of Federal law and
regulations governing profit-sharing plans and trusts.  Subject to the preceding sentence and to the
extent not preempted by Federal law, the Plan shall be governed and construed
in accordance with the laws of the State of Washington and shall be governed
thereby.


 


14.4         No
Employment Rights Conferred


 


Nothing
in the Plan shall be deemed to give any person any right to remain in the
employ of the Company.


 


14.5         Service
Upon Plan; Limitations on Actions Against Plan


 


Valid
service of any legal process upon the Company shall constitute service of
process upon the Plan.  Any legal
proceedings against the Plan shall be commenced within one year, or within any
greater period allowed by ERISA section 413, after the cause of action
arises, and 


 


45

















 


if not
commenced within the applicable period above described, shall be deemed
abandoned and forever barred.


 


14.6         Plan
Office; Records


 


The
records of the Plan shall be maintained on a Plan Year basis.  The principal office of the Plan, where all
Plan records shall be kept, shall be located at the principal office of PACCAR
Inc.  Copies of all documents
constituting a part of the Plan and any related documents shall also be made
available at other locations, as may be required by law.  The Company shall allow any Member or
Beneficiary reasonable access to any documents under which the Plan is
established or operated, if a request for such access is made in accordance
with the Company’s written procedure.


 


14.7         Form of
Applications, Elections and Other Communications


 


All
applications, authorizations, designations, elections, instructions or any
other communications required or permitted of any person under the Plan shall
be submitted to the Company in such form and manner and at such time as the
Company may require and, if the Company deems it necessary or advisable, shall include
the consent of such person’s spouse.


 


14.8         Spousal
Consents


 


This Section 14.8
shall apply whenever the consent of a Member’s spouse is required for an
election, waiver or designation made by such Member under the Plan.  Any spousal consent shall be in writing and
shall be witnessed by a Plan representative (if permitted by the Company) or by
a notary public.  The spousal consent
shall acknowledge the effect of the Member’s action and shall, if applicable,
specify the non-spouse Beneficiary being designated (including any class of
Beneficiaries or contingent Beneficiaries). 
The spousal consent shall be irrevocable.  Any other provision of the Plan
notwithstanding, no spousal consent shall be required if (a) it is
established to the satisfaction of the Company that there is no spouse or that
the spouse cannot be located or (b) the Member is legally separated or has
been abandoned (within the meaning of local law) and has an appropriate court
order, unless a qualified domestic relations order provides otherwise.  If the spouse is legally incompetent to give
consent, the spouse’s legal guardian (including the Member) may give consent.


 


14.9         Merger,
Consolidation and Transfer of Assets or Liabilities


 


The
Plan may not be merged or consolidated with any other plan, and no assets or
liabilities of the Trust Fund may be transferred to any other plan, unless each
Member would (if the Plan then terminated) receive a Benefit immediately after
the merger, consolidation or transfer which is equal to or greater than the
Benefit such Member would have been entitled to receive immediately before such
merger, consolidation or transfer (if the Plan had been terminated).


 


46
















 


ARTICLE 15


 


CONTRIBUTION LIMITATIONS


 


15.1         Basic
Limitation


 


A
Member’s Annual Addition with respect to any calendar year shall in no event
exceed his Contribution Limitation for such calendar year.  In the event that a Member’s Contribution
Limitation would be exceeded, his Annual Addition shall be reduced to an amount
equal to his Contribution Limitation by reducing the components of his Annual
Addition as necessary in the order in which they are listed in Section 15.4(b).  Such reduction shall be made in accordance
with Sections 15.2 and 15.3 (where applicable).


 


15.2         Effect
on Future Contributions


 


Articles
4 and 5 notwithstanding, the Salary Deferrals which a Member is permitted to
contribute and his share of Company Contributions shall be reduced prospectively
to the extent required by Section 15.1. 
The aggregate amount of the Company Contributions that otherwise would
be made under Article 5 shall be reduced accordingly.


 


15.3         Effect
on Prior Contributions


 


If a
Member’s Annual Addition exceeds his Contribution Limitation, then such Excess
Annual Additions as are attributable to Salary Deferrals and Company
Contributions shall be eliminated as follows:


 


(a)                                  Excess
Annual Additions attributable to Salary Deferrals, including investment gains,
shall be distributed to the Member.


 


(b)           Excess Annual Additions
attributable to Company Contributions shall be transferred to a suspense
account.  Any earnings, appreciation or
losses attributable to the suspense account shall be allocated to such account.  All amounts credited to the suspense account
shall be applied to reduce Company Contributions for the next calendar year,
and for succeeding calendar years if necessary. 
Such amounts shall be allocated among Members pursuant to Section 5.1
until the suspense account is exhausted (subject to this Article 15).  No Company Contributions shall be made as
long as any amount remains in the suspense account.


 


15.4         Definitions


 


As
used in this Article 15, the following words and phrases shall have the
following meanings:


 


(a)           “Affiliate”
means any corporation which is a member of a “controlled group of corporations”
(within the meaning of IRC section 1563(a), determined without regard to
IRC sections 1563(a)(4) and 1563(e)(3)(C), and as modified by IRC
section 415(h)) of which group PACCAR Inc is also a member.


 


47

















 


(b)           “Annual
Addition” with respect to any calendar year means the sum of the following:


 


(1)           Employee
contributions made by the Member under all qualified defined-contribution or
defined-benefit plans maintained by PACCAR Inc or any Affiliate during such
calendar year;


 


(2)           Employer
contributions and forfeitures allocated to the Member under all qualified
defined-contribution plans maintained by PACCAR Inc or any Affiliate, other
than this Plan, as of any date within such calendar year;


 


(3)           Salary
Deferrals contributed by the Member under this Plan during such calendar year;
and


 


(4)           Company
Contributions allocated to the Member under this Plan as of any date within
such calendar year.


 


Rollover
Contributions shall not be included in Annual Additions.


 


(c)           “Compensation”
for purposes of this Article 15 only, means “wages” as defined in
section 3401(a) of the IRC for purposes of income tax withholding at
the source, but determined without regard to any rules that limit the
remuneration included in “wages” based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in section 3401(a)(2) of the IRC).  In addition, Compensation shall include
elective deferrals excludable from the Member’s gross income under
section 125 or section 402(e)(3) of the IRC and made to a plan
maintained by the Company including amounts contributed to the Plan as Salary
Deferrals, and shall include elective deferrals excludable from the Member’s
gross income under section 132(f)(4) of the IRC.


 


(d)           “Contribution
Limitation” with respect to any calendar year means the lesser of (1) 100
percent of the Member’s Compensation for such calendar year or (2) $40,000
(as adjusted by the Commissioner of the Internal Revenue to reflect increases
in the cost-of-living in accordance with section 415(d)(1)(C) of the
IRC).


 


ARTICLE 16


 


AMENDMENT OR TERMINATION OF PLAN


 


16.1         Plan May Be
Amended or Terminated


 


It is
the intention of the Company that the Plan will continue indefinitely, but the
Company may, at any time and for any reason, by action of its Board of
Directors, its Chairman and Chief Executive Officer or a committee or
individual(s) acting pursuant to a valid delegation of authority, amend
the Plan retroactively or prospectively, terminate the Plan, or discontinue
Company Contributions hereunder without terminating the Trust Agreement or the
other provisions of the Plan.  Any other
provision hereof notwithstanding, the Company shall have no obligation to
continue to make contributions to the Plan after the termination of the Plan.


 


48

















 


16.2         Amendments
Cannot Reduce Accrued Benefits


 


No
amendment of the Plan shall reduce the Benefit of any Member accrued under the
Plan prior to the date when the amendment is adopted, except to the extent that
a reduction in accrued benefits may be permitted by ERISA; and no amendment of
the Plan nor any other action taken by the Company shall divert any part of the
assets of the Trust Fund to purposes other than the exclusive purposes of
providing benefits to Members or Beneficiaries who have an interest in the Plan
and of defraying the reasonable expenses of administering the Plan and the
Trust Fund, except as provided in Section 5.12.


 


16.3         Procedure
Upon Plan Terminations


 


Upon
termination of the Plan, the Company shall perform the procedures which would
have been required pursuant to the Plan had the Plan termination date been a
Valuation Date.  Upon completion of such
procedures, the balances in each Member’s Accounts shall be distributed to such
Member (or his Beneficiary) as provided in Article 8.  Upon termination of the Plan, no part of the
Trust Fund shall revert to the Company, except as provided in Section 5.12.


 


16.4         Partial
Terminations


 


If any
partial termination (as determined by the Company in accordance with any
applicable IRC provisions) of the Plan occurs, then the balances in the
Accounts of those Members with respect to whom the Plan is so terminated shall
be distributed as provided in Section 16.3.


 


16.5         Intent
to Comply with ERISA


 


It is
the intent of Sections 16.3 and 16.4 that a termination or partial termination
of the Plan be accomplished in accordance with ERISA section 403.  In the event that the provisions of ERISA
section 403(d)(1) or regulations adopted thereunder require that the
assets of the Plan be allocated or distributed in a different manner upon any
termination of the Plan, then the assets of the Plan shall instead be allocated
or distributed as such provisions may require.


 


16.6         Fiduciary
Powers Continue Until Distribution Complete


 


Until
the final distribution of any Plan assets allocated on account of any
termination or partial termination of the Plan, the Trust Fund shall continue,
and the Company and the Trustee shall continue to have and may exercise all of
the powers conferred upon them by the Plan and the Trust Agreement.


 


ARTICLE 17


 


PRIOR PROFIT SHARING PLAN


 


The
Plan amends and restates the PACCAR Inc Profit Sharing Plan, as in effect on June 30,
1978.  The following rules apply
with respect to the rights and benefits of Members under the Plan on such date:


 


49

















 


17.1         No Reduction
of Accrued Benefit


 


No
provision of the amended and restated Plan is intended to reduce or limit any
benefit which accrued under the provisions of the Plan as in effect from time
to time prior to July 1, 1978.


 


17.2         Full
Vesting


 


The
balance in the Prior Profit Sharing Account of a Member who was an Employee on July 1,
1978 (plus the Member’s share of any Company Contributions or forfeitures made
or imposed with respect to periods prior to July 1, 1978, but allocated
thereafter), shall be fully vested and nonforfeitable, effective as of July 1,
1978.  Such balance shall remain fully
vested and nonforfeitable on and after July 1, 1987, upon transfer of the
Prior Profit Sharing Account balance to the Member’s Salary Deferral Accounts.


 


17.3         Continuing
Distributions


 


Amounts
being paid to a Member or Beneficiary in accordance with the provisions of the
Plan in effect from time to time prior to July 1, 1978, shall continue to
be paid in accordance with such provisions.


 


17.4         Beneficiary
Designations


 


Any
Beneficiary designation in effect as of June 30, 1978, under the prior
provisions of the Plan shall be treated as a Beneficiary designation filed with
the Company under Section 8.9 (c) of the Plan and shall be subject to
all of the provisions and restrictions of Section 8.9(b).


 


17.5         Company
Contributions


 


No
Company contribution shall be made to any Prior Profit Sharing Account with
respect to any period after June 30, 1978, but such a contribution may be
made after June 30, 1978, with respect to a prior period.


 


17.6         Effective
Date


 


With
respect to periods prior to July 1, 1978, the rights of any person
regarding a Prior Profit Sharing Account shall be determined and administered
exclusively under the provisions of the Plan as in effect at the applicable time.


 


ARTICLE 18


 


SPECIAL TOP-HEAVY RULES


 


18.1         Determination
of Top-Heavy Status


 


Any
other provision of the Plan notwithstanding, this Article 18 shall apply
to any Plan Year in which the Plan is a Top-Heavy Plan.  The Plan shall be considered a “Top-Heavy
Plan” for a Plan Year if, as of the Determination Date for such Plan Year, the
Top-Heavy Ratio for the Aggregation Group exceeds 60 percent.


 


50

















 


18.2         Minimum
Allocations


 


For
any Plan Year during which the Plan is a Top-Heavy Plan, Company Contributions
allocated to the Accounts of each Member who is not a Key Employee, but who is
an Employee on the last day of such Plan Year, shall not be less than the
lesser of (a) three percent of Wages or (b) the greatest allocation,
expressed as a percentage of Compensation made to any Member who is a Key
Employee.  To the extent required by this
Section 18.2, the Company shall make additional Company Contributions
without regard to the limitations of Section 5.9.


 


This Section 18.2
shall not apply to any Member for a Plan Year during which the Member received
a minimum accrued benefit described in section 416(c)(1) of the IRC
under a qualified defined-benefit plan maintained by PACCAR Inc or any of its
Subsidiaries (determined without regard to the last sentence of Section 2.1(nn)).  However, this Section 18.2 shall apply
to any Eligible Employee who could become a Member under Section 3.1 but
who has not elected to do so.


 


18.3         Definitions


 


For
purposes of this Article 18 only, the following definitions shall apply:


 


(a)           “Aggregation
Group” means either the Required Aggregation Group or any Permissive
Aggregation Group, as the Company may elect.


 


(b)           “Determination
Date” means the last day of the Plan Year prior to the applicable Plan
Year.


 


(c)           “Key
Employee” means a key employee, as defined in section 416(i) of
the IRC.


 


(d)           “Permissive
Aggregation Group” means a group of qualified plans which includes (1) the
Required Aggregation Group and (2) one or more plans of the Company or a
Subsidiary which are not part of the Required Aggregation Group.  A Permissive Aggregation Group, when viewed
as a single plan, must satisfy the requirements of sections 401(a)(4) and
410 of the IRC.


 


(e)           “Required
Aggregation Group” means a group of qualified plans which includes (1) each
plan of the Company or a Subsidiary in which a Key Employee participates and (2) each
other plan of the Company or a Subsidiary which enables any plan in which a Key
Employee participates to meet the requirements of sections 401(a)(4) or
410 of the IRC.


 


(f)            “Top-Heavy
Ratio” means a percentage determined pursuant to section 416(g) of
the IRC.  In applying section 416(g) of
the IRC, the valuation date shall be the Determination Date.


 


(g)           “Wages”
means “wages” as defined in section 3401(a) of the IRC for purposes
of income tax withholding at the source, but determined without regard to any rules that
limit the remuneration included in “wages” based on the nature or location of
the employment or the services performed (such as the exception for
agricultural 


 


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labor in
section 3401(a)(2) of the IRC). 
“Wages” does not include Salary Deferrals or amounts in excess of
$200,000 (as adjusted by the Commissioner of Internal Revenue to reflect
increases in the cost-of-living in accordance with section 401(a)(17)(B)).


 


ARTICLE 19


 


EXECUTION


 


To
record the amendment and restatement of the Plan to read as set forth herein,
effective as of January 1, 2007, but subject to approval by the Internal
Revenue Service and to any amendments necessary to obtain such approval and to
comply with Department of Labor regulations and applicable securities laws,
PACCAR Inc by its Chairman and Chief Executive Officer has executed this Plan
on January 20, 2009.


 


	
   

  	
  PACCAR Inc

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ M.C. Pigott

  
	
   

  	
      Chairman and

  
	
   

  	
  Chief Executive Officer

  



 


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