Document:

Exhibit 10.10

 

LABOR
READY, INC.

INDEMNIFICATION

AGREEMENT

This Agreement is made as of the       day of                 ,
2006, by and between LABOR READY, INC., a Washington corporation (the “Company”), and                                      
(“Indemnitee”).

RECITALS

A.                                   The Company desires to attract and retain
qualified directors and officers, and to provide them with protection against
liability and expenses incurred while acting in that capacity.

B.                                     The Company’s articles of incorporation (the “Articles of Incorporation”) and its bylaws (the “Bylaws”) contain provisions for indemnifying directors and
officers of the Company, and the Articles of Incorporation, Bylaws and Title
23B of the Revised Code of Washington (the “Washington
Business Corporation Act”) contemplate that separate contracts may
be entered into between the Company and its directors and officers with respect
to their indemnification by the Company, which contracts may provide greater
protection than is afforded by the Articles of Incorporation and Bylaws.

C.                                     The Company recognizes that Indemnitee has
reservations about serving or continuing to serve the Company without adequate
protection against personal liability arising from such service, and that it is
also of critical importance to Indemnitee that adequate provision be made for
advancing costs and expenses of legal defense.

D.                                    The Board of Directors of the Company has
approved as being in the best interests of the Company indemnity agreements
substantially in the form of this Agreement for directors and certain officers
of the Company.

NOW, THEREFORE, in consideration of the promises, conditions,
representations and warranties set forth herein, including the Indemnitee’s continued
service to the Company, the Company and Indemnitee hereby agree as follows:

1.                                      Definitions.  The
following terms, as used herein, shall have the following respective meanings;
other terms not specifically defined herein have the meanings provided in the Washington
Business Corporation Act, as hereafter defined, or the Bylaws:

“Covered Amount” means all losses,
claims, damages, liabilities, expenses (including attorneys’ fees), judgments,
fines, ERISA excise taxes or penalties, amounts paid in settlement (if such
settlement is approved in advance by the Company, which approval shall not be
unreasonably withheld) actually and reasonably incurred by Indemnitee in
connection with a Proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in, or at least not opposed to, the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee’s conduct was
unlawful.

“final judgment” or “finally adjudged” shall mean that a court having jurisdiction
has issued a decision, order or judgment that disposes of the action and such
action is not subject to appeal.

“Proceeding” means any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, whether formal or informal, in which
Indemnitee is, was or becomes involved as a party or otherwise, by reason of
the fact that Indemnitee is or was a director, officer, employee or agent of
the Company or that, being or having been such a director, officer, employee or
agent, Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, whether the basis of such proceeding is
alleged action (or inaction) by Indemnitee in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent; provided, however, that, except with
respect to an action to enforce the provisions of this Agreement, Proceeding
shall not include any action, suit, claim or proceeding instituted by or at the
direction of Indemnitee unless such action, suit, claim or proceeding is or was
authorized by the Company’s board of directors.

2.                                      Indemnification.

(a)                                  Scope.  The Company agrees to hold
harmless and indemnify Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by
this Agreement, the Articles of Incorporation, the Bylaws, the Washington
Business Corporation Act or otherwise. 
In the event of any change, after the date of this Agreement, in any
applicable law, statute or rule regarding the right of a Washington corporation
to indemnify a member of its board of directors or an officer, such changes, to
the extent that they would expand Indemnitee’s rights hereunder, shall be
within the purview of Indemnitee’s rights and the Company’s obligations
hereunder, and, to the extent that they would narrow Indemnitee’s rights
hereunder, shall be excluded from this Agreement; provided, however, that any
change that is required by applicable laws, statutes or rules to be applied to
this Agreement shall be so applied regardless of whether the effect of such
change is to narrow Indemnitee’s rights hereunder.

(b)                                 Additional Indemnification.  If
Indemnitee was or is made a party, or is threatened to be made a party, to or
is otherwise involved (including, without limitation, as a witness) in any
Proceeding, the Company shall hold harmless and indemnify Indemnitee from and
against any and all Covered Amounts.

(c)                                  Determination of Entitlement.  In
the event that a determination of Indemnitee’s entitlement to indemnification
is required pursuant to Section 23B.08.550 of the Washington Business
Corporation Act or any successor thereto or pursuant to other applicable law,
the appropriate decision-maker shall make such determination; provided,
however, that Indemnitee shall initially be presumed in all cases to be
entitled to indemnification, unless the Company shall deliver to Indemnitee
written notice of a determination that Indemnitee is not entitled to
indemnification within sixty (60) calendar days of the final disposition of the
Proceeding under which such Indemnitee is seeking indemnification, such
determination shall conclusively be deemed to have been made in favor of the
Company’s provision of indemnification and the Company hereby agrees not to
assert otherwise.

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(d)                                 Survival.  The indemnification provided
under this Agreement shall apply to any and all Proceedings, notwithstanding
that Indemnitee has ceased to be a director, officer, employee or agent of the
Company.

3.                                      Notification and Defense of Claim.

(a)                                  Notification. Promptly after receipt by Indemnitee of
notice of the commencement of any Proceeding, Indemnitee will, if a claim in
respect thereof is to be made against the Company under this Agreement, notify
the Company in writing of the commencement thereof; but the omission to notify
the Company will not relieve the Company from any liability which it may have
to Indemnitee under this Agreement unless and only to the extent that such
omission can be shown to have prejudiced the Company’s ability to defend the
Proceeding.

(b)                                 Defense of Claim. With respect to any such Proceeding as to which
Indemnitee notifies the Company of the commencement thereof:

(i)                                     The Company may participate therein at its
own expense;

(ii)                                  The Company, jointly with any other
indemnifying party similarly notified, may assume the defense thereof, with
counsel satisfactory to Indemnitee (Indemnitee’s consent to such counsel may
not be unreasonably withheld).  After
notice from the Company to Indemnitee of its election to assume the defense
thereof, the Company shall not be liable to Indemnitee under this Agreement for
any legal or other expenses subsequently incurred by Indemnitee in connection
with the defense thereof unless (A) the employment of counsel by Indemnitee has
been authorized by the Company, (B) Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in
the conduct of the defense of such action, or (C) the Company shall not in fact
have employed counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be at the expense of the Company. The
Company shall not be entitled to assume the defense of any action, suit or proceeding
brought by or on behalf of the Company or as to which Indemnitee shall have
made the conclusion provided for in 3(b)(ii)(B) above;

(iii)                               The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any
Proceeding effected without its written consent;

(iv)                              The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee’s written consent; and

(v)                                 Neither the Company nor Indemnitee will
unreasonably withhold its, his or her consent to any proposed settlement.

(c)                                  Notice to Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 3(a) hereof, the Company has director and officer liability
insurance in effect, the Company shall give prompt notice of the commencement
of such proceeding to the insurers in accordance with the procedures set forth
in the respective policies.  The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

 3
 

4.                                      Expense Advances.

(a)                                  Expense Advances. The right to indemnification of Covered Amounts
conferred hereby shall include the right to have the Company pay Indemnitee’s
expenses in any Proceeding as such expenses are incurred and in advance of such
Proceeding’s final disposition (such right is referred to hereinafter as an “Expense Advance”). Any Expense Advance to be made under this
Agreement shall be paid by the Company to Indemnitee within twenty (20) calendar
days following delivery of a written request therefor by Indemnitee to the
Company.

(b)                                 Conditions to Expense Advance. The Company’s obligation to provide an
Expense Advance is subject to the following conditions:

(i)                                     Indemnitee shall submit to the Company a
written undertaking, constituting an unlimited general obligation of the
Indemnitee, to repay any and all of the Expense Advance if it is ultimately
determined that the Indemnitee did not meet the required standard of conduct;

(ii)                                  Indemnitee shall submit to the Company a written
affirmation of the Indemnitee’s good faith belief that the Indemnitee has met
the standard of conduct required to be eligible for indemnification; and

(iii)                               Indemnitee shall give the Company such
information and cooperation as it may reasonably request and as shall be within
Indemnitee’s power.

5.                                      Enforcement.

(a)                                  Enforcement.  In the event that a claim for
indemnification, an Expense Advance or otherwise is made hereunder and is not
paid within sixty (60) calendar days of the final disposition of the Proceeding
under which an Indemnitee is seeking indemnification (twenty days for an
Expense Advance), provided that written notice of such final disposition is promptly
delivered to the Company, Indemnitee may, but need not, at any time thereafter
bring suit against the Company to recover the unpaid amount of the claim (an “Enforcement Action”).

(b)                                 Presumptions in Enforcement Action.  In
any Enforcement Action the following presumptions (and limitation on presumptions)
shall apply:

(i)                                     The Company shall conclusively be presumed to
have entered into this Agreement and assumed the obligations imposed on it
hereunder in order to induce Indemnitee to continue as an officer and/or
director, as the case may be, of the Company;

(ii)                                  Neither (i) the failure of the Company
(including the Company’s board of directors, independent or special legal
counsel or the Company’s shareholders) to have made a determination prior to
the commencement of the Enforcement Action that indemnification of Indemnitee
is proper in the circumstances nor (ii) an actual determination by the Company,
its board of directors, independent or special legal counsel or shareholders
that Indemnitee is not entitled to indemnification shall preclude the bringing
of an Enforcement Action.; and

(iii)                               If Indemnitee is or was serving as a
director, officer, employee or agent of a corporation of which a majority of
the shares entitled to vote in the election of its directors is held by the
Company or in an executive or management capacity in a partnership, joint
venture, trust or other

 4
 

enterprise
of which the Company or a wholly-owned subsidiary of the Company is a general
partner or has a majority ownership, then Indemnitee shall conclusively be
deemed to be serving such entity at the request of the Company.

(c)                                  Attorneys’ Fees and Expenses for Enforcement
Action. In the event
Indemnitee is required to bring an Enforcement Action, the Company shall indemnify
and hold harmless Indemnitee against all of Indemnitee’s fees and expenses in
bringing and pursuing the Enforcement Action (including attorneys’ fees at any
stage, including on appeal); provided, however, that the Company shall not be
required to provide such indemnification for such attorneys’ fees or expenses if
it is finally adjudicated that each of the material assertions made by
Indemnitee in such Enforcement Action was not made in good faith or was
frivolous.

6.                                      Limitations on Indemnification;
Mutual Acknowledgment.

(a)                                  Limitation on Indemnification. No indemnification pursuant to this
Agreement shall be provided by the Company:

(i)                                     On account of any suit in which a final
judgment is rendered against Indemnitee for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company in violation of
the provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto;

(ii)                                  For Covered Amounts that have been paid
directly to Indemnitee by an insurance carrier under a policy of officers’ and
directors’ liability insurance maintained by the Company;

(iii)                               On account of Indemnitee’s conduct which is
finally adjudged to have been intentional misconduct, a knowing violation of
law or RCW 23B.08.310 or any successor provision of the Washington Business
Corporation Act, or a transaction from which Indemnitee derived benefit in
money, property or services to which Indemnitee is not legally entitled, unless
and only to the extent that a court shall in a final judgment determine upon
application that, despite the adjudication of liability but in view of all the
circumstances fo the case, the Indemnitee is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper; or

(iv)                              If a final judgment by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful.

(b)                                 Mutual Acknowledgment. The Company and Indemnitee acknowledge
that, in certain instances, federal law or public policy may override
applicable state law and prohibit the Company from indemnifying Indemnitee
under this Agreement or otherwise. For example, the Company and Indemnitee
acknowledge that the Securities and Exchange Commission (the “SEC”) has taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws, and
federal legislation prohibits indemnification for certain ERISA violations.  Furthermore, Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future
to undertake with the SEC to submit the question of indemnification to a court
in certain circumstances for a determination of the Company’s right under
public policy to indemnify Indemnitee.

7.                                      D&O Insurance.  The
Company hereby covenants and agrees that, so long as Indemnitee shall continue
to serve as an officer or director of the Company and thereafter so long as
Indemnitee shall

 5
 

be
subject to any Proceeding, the Company shall maintain in full force and effect
a policy or policies of insurance with reputable insurance companies providing
the officers and directors of the Company with coverage for losses from
wrongful acts.  In all policies of
director and officer liability insurance, Indemnitee shall be named as an
insured in such a manner as to provide Indemnitee the same rights and benefits
as are accorded to the most favorably insured of the Company’s directors, if
Indemnitee is a director, or of the Company’s officers, if Indemnitee is not a
director of the Company but is an officer. 
Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such insurance if the Company’s board of directors
determines in good faith that such insurance is not reasonably available, if
the premium costs for such insurance are disproportionate to the amount of
coverage provided, if the coverage provided by such insurance is limited by
exclusions so as to provide an insufficient benefit, or if Indemnitee is
covered by similar insurance maintained by a parent or subsidiary of the
Company; provided however that such decision shall not adversely affect
coverage of director and officer liability insurance for periods prior to such
decision without the unanimous vote of all directors.

8.                                      Rights Not Exclusive.  The
rights provided hereunder shall not be deemed exclusive by any other rights to
which the Indemnitee may be entitled under the Washington Business Corporation
Act, Articles of Incorporation, Bylaws or any agreement, vote of shareholders
or of disinterested directors or otherwise, both as to action in Indemnitee’s
official capacity and as to action in any other capacity by holding such
office, and shall continue after the Indemnitee ceases to serve the Company as
a Indemnitee.

9.                                      Notices.  Any
notice, demand or request required or permitted to be given under this Agreement
shall be in writing and shall be deemed given when actually received (either
through delivery in person or by telex or facsimile transmission) or two
business days after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be
notified.

10                                  No Employment Rights. 
Nothing contained in this Agreement is intended to create in Indemnitee
any right to continued or future employment.

11.                               Severability.  In
the event that any provision of this Agreement is determined by a court to
require the Company to do or to fail to do an act which is in violation of the Washington
Business Corporation Act or other applicable law, such provision shall be
limited or modified in its application to the minimum extent necessary to avoid
a violation of law, and, as so limited or modified, such provision and the
balance of this Agreement shall be enforceable in accordance with their terms.

12.                               Choice of Law.  This
Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Washington.

13.                               Consent to Jurisdiction.  The
Company and the Indemnitee each hereby irrevocably consent to the jurisdiction
of the state and federal courts located in King County, Washington for all
purposes in connection with any action or proceeding which arises out of or
relates to this Agreement.

14.                               Entire Agreement; Enforcement of  Rights.  This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them. No modification, amendment or termination of this Agreement, nor any
waiver of any rights under this Agreement, shall be effective unless in writing
signed by the parties to

 6
 

this
Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

15                                  Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.

16.                               Successor and Assigns.  This
Agreement shall be (i) binding upon all successors and assigns of the Company
(including any transferee of all or substantially all of its assets and any
successor by merger or otherwise by operation of law) and (ii) shall be binding
on and inure to the benefit of the heirs, personal representatives and estate
of Indemnitee.

17.                               Amendment.  No
amendment, modification, termination or cancellation of this Agreement shall be
effective unless made in a writing signed by each of the parties hereto.

[remainder of page left intentionally blank]

 7
 

IN WITNESS WHEREOF, the Company and Indemnitee have executed this
Agreement as of the day and year first above written.

	
  

  	
  LABOR READY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
                           ,
  Indemnitee

  
					

 

 8EXHIBIT 10(l)

PACCAR INC SAVINGS
INVESTMENT PLAN

Amendment and Restatement Effective January 1, 2006

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”

  	
  2

  
	
   

  	
  (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

  

 

 i
 

 

	
  

  	
   

  	
  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

  

 

 ii
 

 

	
  

  	
   

  	
  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

  	
  Allocation of Excess Contributions to Highly
  Compensated Employees

  	
  16

  
	
  4.8

  	
  Distribution of Excess Contributions

  	
  16

  
	
  4.9

  	
  Qualified Company Contributions

  	
  16

  
	
  4.10

  	
  Special Rules

  	
  16

  
	
  4.11

  	
  Allocation of Salary Deferrals

  	
  18

  
	
  4.12

  	
  Diversification of Salary Deferral Account or
  Employee Account

  	
  18

  
	
  4.13

  	
  Rollover Contributions

  	
  18

  
	
  4.14

  	
  Age 50 Catch-Up Rules

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  COMPANY
  CONTRIBUTIONS

  	
  19

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Amount of Company Contributions

  	
  19

  
	
  5.2

  	
  Allocation of Company Contributions

  	
  20

  
	
  5.3

  	
  Average Contribution Percentage Limitation

  	
  20

  
	
  5.4

  	
  Allocation of Excess Aggregate Contributions to
  Highly Compensated Employees

  	
  21

  
	
  5.5

  	
  Distribution of Excess Aggregate Contributions

  	
  22

  
	
  5.6

  	
  Use of Salary Deferrals

  	
  22

  
	
  5.7

  	
  Special Rules

  	
  22

  
	
  5.8

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

  	
  23

  
	
  5.9

  	
  Company Contributions in PACCAR Stock

  	
  24

  
	
  5.10

  	
  Diversification of Company Contributions Account

  	
  24

  
	
  5.11

  	
  Return of Company Contributions

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  THE TRUSTEE AND
  THE TRUST FUND

  	
  25

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  The Trustee and Investment Managers

  	
  25

  
	
  6.2

  	
  Investment Funds

  	
  25

  
	
  6.3

  	
  Voting of PACCAR Stock

  	
  26

  

 

 iii
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Other Instructions by Members

  	
  26

  
	
  6.5

  	
  Trust Fund Investment Losses: Interest in Trust Fund

  	
  26

  
	
  6.6

  	
  ERISA 404(c) Requirements

  	
  27

  
	
  6.7

  	
  Expenses of Plan and Trust

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  ACCOUNTS AND
  VALUATIONS

  	
  28

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Types of Accounts

  	
  28

  
	
  7.2

  	
  Valuation of Accounts

  	
  29

  
	
  7.3

  	
  Statements for Members

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  AMOUNT AND
  DISTRIBUTION OF BENEFITS

  	
  30

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Vesting and Amount of Benefits

  	
  30

  
	
  8.2

  	
  Normal Time of Distribution

  	
  30

  
	
  8.3

  	
  Time of Distribution

  	
  31

  
	
  8.4

  	
  Special Rules Regarding Distribution

  	
  31

  
	
  8.5

  	
  Reemployment

  	
  31

  
	
  8.6

  	
  Available Forms of Distribution

  	
  32

  
	
  8.7

  	
  Election of a Form of Distribution

  	
  32

  
	
  8.8

  	
  Small Benefits

  	
  32

  
	
  8.9

  	
  Survivors’ Benefits

  	
  33

  
	
  8.10

  	
  No Alienation of Benefits; Qualified Domestic
  Relations Order

  	
  34

  
	
  8.11

  	
  Facility of Payment

  	
  34

  
	
  8.12

  	
  Unclaimed Benefits

  	
  35

  
	
  8.13

  	
  Payments Discharge Plan; Adverse Claims

  	
  35

  
	
  8.14

  	
  Direct Rollovers

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  LOANS

  	
  37

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Amount of Loans

  	
  37

  
	
  9.2

  	
  Aggregate Loan Limitation

  	
  37

  
	
  9.3

  	
  Terms of Loans

  	
  37

  
	
  9.4

  	
  Company Consent

  	
  38

  
	
  9.5

  	
  Source of Loans

  	
  39

  
	
  9.6

  	
  Disbursement of Loans

  	
  39

  
	
  9.7

  	
  Valuation Date

  	
  39

  

 

 iv
 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Loan Fees

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  WITHDRAWALS

  	
  39

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Regular Withdrawals

  	
  39

  
	
  10.2

  	
  Source of Withdrawals

  	
  39

  
	
  10.3

  	
  Application for Withdrawals: Time and Form of
  Distribution

  	
  40

  
	
  10.4

  	
  Limitations on Withdrawals

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  SALE OF STOCK TO
  TRUSTEE

  	
  40

  
	
   

  	
   

  	
   

  
	
  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

  	
  41

  
	
  12.4

  	
  Reliance on Plan Records; Member’s Duty to Notify

  	
  41

  
	
   

  	
   

  	
   

  
	
  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

  	
  43

  
	
  13.5

  	
  Exhaustion of Administrative Remedies; Limitations

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  GENERAL
  PROVISIONS

  	
  44

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Information and Reports to Members

  	
  44

  
	
  14.2

  	
  Compliance With USERRA

  	
  44

  
	
  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

  	
  45

  
	
  14.7

  	
  Form of Applications, Elections and Other
  Communications

  	
  45

  
	
  14.8

  	
  Spousal Consents

  	
  46

  
	
  14.9

  	
  Merger, Consolidation and Transfer of Assets or
  Liabilities

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  CONTRIBUTION
  LIMITATIONS

  	
  46

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Basic Limitation

  	
  46

  
	
  15.2

  	
  Effect on Future Contributions

  	
  46

  

 

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  Page

  
	
   

  	
   

  	
   

  
	
  15.3

  	
  Effect on Prior Contributions

  	
  46

  
	
  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

  	
  48

  
	
  16.3

  	
  Procedure Upon Plan Terminations

  	
  48

  
	
  16.4

  	
  Partial Terminations

  	
  48

  
	
  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

  	
  49

  
	
  17.2

  	
  Full Vesting

  	
  49

  
	
  17.3

  	
  Continuing Distributions

  	
  49

  
	
  17.4

  	
  Beneficiary Designations

  	
  49

  
	
  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

  	
  50

  
	
  18.3

  	
  Definitions

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  EXECUTION

  	
  51

  

 

 vi

PACCAR INC SAVINGS INVESTMENT PLAN

(As Amended and Restated Effective January 1, 2006)

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 further amended and restated the Plan to comply with final
regulations under IRC section 401(k) and to make certain other amendments as
set forth herein.   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.

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

 1
 

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, 2006. 
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 4.9.  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).

(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

 2
 

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 5.6.

(d)           “Beneficiary”
means a person designated pursuant to Section 8.9(c) 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 Incentive Plan or any similar plan and amounts
realized from the exercise,

 3
 

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 5.5.

(p)           “Excess
Contributions” means the amount by which the Aggregate 401(k) Contributions
of Highly Compensated Employees are reduced pursuant to Section 4.8.

(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 and warrants or rights with respect
thereto.

(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 4.13.

(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 4.14 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, 4.8 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 4.14, 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 4.10, 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)           If the Company elects
(in accordance with applicable law) to apply this Subsection (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)           Provided the Company
has not elected (in accordance with applicable law) to apply
Subsection (b) rather than this Subsection (c), an Actual Deferral
Percentage shall be determined for each Nonhighly Compensated Employee who, at
any time during the preceding Plan Year, was a member (including a suspended
Member) or who was eligible to participate in the Plan, which Actual Deferral
Percentage shall be the ratio, calculated to the nearest one-hundredth of one
percent, of the Nonhighly Compensated Employee’s Aggregate 401(k) Contributions
for the preceding Plan Year to the Nonhighly Compensated Employee’s
Section 414(s) Compensation for the preceding Plan Year;

(d)           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

(e)           The Aggregate 401(k)
Contributions of Highly Compensated Employees shall constitute Excess
Contributions and shall be reduced, pursuant to Sections 4.7 and 4.8, 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.

 15

4.7           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.

4.8           Distribution of
Excess Contributions

Excess Contributions allocated to Highly Compensated Employees for the
Plan Year pursuant to Section 4.7, 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 4.8 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 4.7 could otherwise
constitute Age 50 Catch-Up Deferrals pursuant to Section 4.14, 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.

4.9           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.

4.10         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
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;

 16
 

(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

(h)           Income (and loss)
allocable to Excess Contributions for the Plan Year, and for the period between
the end of the Plan Year and the date of distribution of such Excess
Contributions, shall be determined pursuant to Section 7.2.

 17
 

4.11         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.

4.12         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 4.12 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 4.12 shall be made in accordance with the Company’s written
procedures.

4.13         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

(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

 18
 

may elect.  Such election shall
be made in accordance with the Company’s written procedures.

4.14         Age 50 Catch-Up Rules

Eligible Members (as defined in Section 4.14(a) below) may make
additional Salary Deferrals (“Age 50 Catch-Up Deferrals”) up to the amounts
specified in Section 4.14(b) below.

(a)           For purposes of this
Section 4.14, “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 4.14.

(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 4.14(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 4.14 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.

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.

 19
 

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, 4.8 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.

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 5.7, 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

 20
 

Plan Year to the Highly
Compensated Employee’s Section 414(s) Compensation for the Plan Year;

(b)           If the Company elects
(in accordance with applicable law) to apply this Subsection (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)           Provided the Company
has not elected (in accordance with applicable law) to apply
Subsection (b) rather than this Subsection (c), an Actual
Contribution Percentage shall be determined for each Nonhighly Compensated
Employee who, at any time during the preceding Plan Year, was a Member
(including a suspended Member) or who was eligible to participate in the Plan,
which Actual Contribution Percentage shall be the ratio, calculated to the
nearest one-hundredth of one percent, of the Nonhighly Compensated Employee’s
Aggregate 401(m) Contributions for the preceding Plan Year to the Nonhighly
Compensated Employee’s Section 414(s) Compensation for the preceding Plan
Year;

(d)           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

(e)           The Aggregate 401(m)
Contributions of Highly Compensated Employees shall constitute Excess Aggregate
Contributions and shall be reduced, pursuant to Sections 5.4 and 5.5, 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           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.

 21
 

5.5           Distribution of
Excess Aggregate Contributions

Excess Aggregate Contributions allocated to Highly Compensated
Employees for the Plan Year pursuant to Section 5.4, 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.

5.6           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.

5.7           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 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

 22
 

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, and for the
period between the end of the Plan Year and the date of distribution of such
Excess Aggregated Contributions shall be determined pursuant to
Section 7.2.

5.8           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 5.8, 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

 23
 

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 5.8.  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 5.8, 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.

5.9           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.

5.10         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 5.10, the date on which a Member
completes three years of service is the third anniversary of the Member’s date
of hire.

5.11         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

 24
 

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 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

 25
 

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 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

 26
 

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 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;

 27
 

(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 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.

 28
 

(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.

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.

 29
 

(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,

 30
 

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.

 31
 

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.

 32
 

8.9           Survivors’ Benefits

(a)           Member Dies After
Installments Commence

This Subsection (a) shall apply only in the event that a Member
elected to receive all or a portion of his Benefit in annual installments under
Section 8.6(c) and then dies after installment payments have commenced but
before such payments are completed.  The
remaining installments of such Member’s Benefit ordinarily shall be paid to his
Beneficiary in accordance with the predetermined distribution schedule
originally established for him by the Company. 
However, a Beneficiary may make a request, subject to the Company’s
consent, to accelerate the distribution of any or all unpaid installments to
which such Beneficiary is entitled.  The
request shall be made in accordance with the Company’s written procedures.

(b)           Member Dies Before
Benefit Distribution

This Subsection (b) shall apply in the event that a Member dies
before his Benefit is distributed and (a) above does not apply.  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.

(c)           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 (c) 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.

 33

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

(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.

 34
 

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.

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

 35
 

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 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.

 36
 

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.

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

 37
 

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
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.

 38
 

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.

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;

 39
 

(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 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.

 40
 

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.

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,

 41
 

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 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

 42
 

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:

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

 43
 

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 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

 44
 

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 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.

 45
 

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).

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:

 46
 

(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.

(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

 47
 

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.

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 5.11.

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 5.11.

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.

 48
 

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:

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(c).

 49
 

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.

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 5.8.

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.

 50
 

(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 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, 2006, 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 December 18, 2006.

PACCAR Inc

	
  

  	
  By

  	
  /s/ Mark Pigott

  
	
   

  	
   

  	
  Chairman and

  
	
   

  	
   

  	
  Chief Executive
  Officer

  

 

 51

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