Document:

REGISTRATION RIGHTS AGREEMENT

                          dated as of November 28, 2000

                                      among

                            IMPAX LABORATORIES, INC.

                                       and

                           THE INVESTORS NAMED HEREIN

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                                TABLE OF CONTENTS

SECTION 1.DEFINITIONS....................................................1

1.1.       Defined Terms.................................................1
1.2.       General Interpretive Principles...............................3

SECTION 2.REGISTRATION RIGHTS............................................3

2.1.       Shelf Registration............................................3

2.2.       Black-out Periods.............................................4

2.3.       Registration Procedures.......................................5

2.4.       Underwritten Offerings........................................9

2.5.       No Inconsistent Agreements; Additional Rights.................9

2.6.       Registration Expenses.........................................9

2.7.       Indemnification..............................................10

2.8.       Rules 144 and 144a...........................................13

SECTION 3.MISCELLANEOUS.................................................13

3.1.       Term.........................................................13

3.2.       Injunctive Relief............................................13

3.3.       Attorneys' Fees..............................................13

3.4.       Notices......................................................14

3.5.       Successors, Assigns and Transferees..........................14

3.6.       Governing Law; Service of Process; Consent to Jurisdiction...15

3.7.       Headings.....................................................15

3.8.       Severability.................................................15

3.9.       Amendment; Waiver............................................15

3.10.      Counterparts.................................................16

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                          REGISTRATION RIGHTS AGREEMENT

            REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
November 28, 2000 by and among IMPAX LABORATORIES, INC., a Delaware corporation
(the "ISSUER") and the persons named on the signature pages hereto (the
"INVESTORS").

                                    RECITALS

            WHEREAS, the Issuer and the Investors have entered into various
stock purchase agreements, (the "STOCK PURCHASE AGREEMENTS") pursuant to which
the Investors have purchased shares of the common stock, par value $.01 per
share of the Issuer; and

            WHEREAS, as an inducement to the Investors to enter into the Stock
Purchase Agreements, the Issuer has agreed to provide the registration rights
set forth in this Agreement;

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, covenants and agreements of the parties hereto, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

            SECTION 1. DEFINITIONS

            1.1. DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:

            "ADVERSE DISCLOSURE" means public disclosure of material non-public
information, which disclosure in the good faith judgment of the Board of
Directors of the Issuer after consultation with counsel to the Issuer (i) would
be required to be made in any Registration Statement so that such Registration
Statement would not be materially misleading, (ii) would not be required to be
made at such time but for the filing of such Registration Statement and (iii)
would have a material adverse effect on the Company or its business or on the
Company's ability to effect a material acquisition, disposition or financing.

            "AGREEMENT" has the meaning set forth in the preamble hereto.

            "ISSUER" has the meaning set forth in the preamble and shall include
the Issuer's successors by merger, acquisition, reorganization or otherwise.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any successor thereto, and any rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time.

            "HOLDER" or "HOLDERS" means any holder or holders of Registrable
Securities who is a party hereto or who otherwise agrees in writing to be bound
by the provisions of this Agreement pursuant to Section 3.5.

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            "INVESTOR" has the meaning set forth in the preamble hereto.

            "LOSS" has the meaning set forth in Section 2.7(a).

            "NASD" means the National Association of Securities Dealers, Inc.

            "PERSON" means any individual, firm, limited liability company or
partnership, joint venture, corporation, joint stock company, trust or
unincorporated organization, incorporated or unincorporated association,
government (or any department, agency or political subdivision thereof) or other
entity of any kind.

            "PROSPECTUS" means the prospectus included in any Registration
Statement, all amendments and supplements to such prospectus and all material
incorporated by reference in such prospectus.

            "REGISTRABLE SECURITIES" means the securities of the Issuer issued
to the Investors pursuant to the Stock Purchase Agreements, and any securities
that may be issued or distributed or be issuable in respect thereof by way of
stock dividend, stock split or other distribution, merger, consolidation,
exchange offer, recapitalization or reclassification or similar transaction or
exercise or conversion of any of the foregoing; PROVIDED, HOWEVER, that any of
the foregoing securities shall cease to be "Registrable Securities" to the
extent (i) a Registration Statement with respect to their sale has been declared
effective under the Securities Act and they have been disposed of pursuant to
such Registration Statement, (ii) they have been distributed pursuant to Rule
144 (or any similar provision then in force) under the Securities Act or (iii)
they shall have been otherwise transferred and (A) new certificates for them not
bearing a legend restricting transfer under the Securities Act shall have been
delivered by the Issuer and (B) may be publicly resold (without volume or method
of sale restrictions) without registration under the Securities Act. For
purposes of this Agreement, a "percentage" (or a "majority") of the Registrable
Securities (or, where applicable, of any other securities) shall be determined
(x) based on the number of shares of such securities, in the case of Registrable
Securities which are equity securities, and (y) based on the principal amount of
such securities, in the case of Registrable Securities which are debt
securities.

            "REGISTRATION" means a registration of the Issuer's securities for
sale to the public under a Registration Statement.

            "REGISTRATION STATEMENT" means any registration statement of the
Issuer filed with, or to be filed with, the SEC under the rules and regulations
promulgated under the Securities Act, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
and all exhibits and all material incorporated by reference in such registration
statement.

            "SEC" means the Securities and Exchange Commission.

            "SECURITIES ACT" means the Securities Act of 1933, as amended, and
any successor thereto, and any rules and regulations promulgated thereunder, all
as the same shall be in effect from time to time.

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            "SHELF REGISTRATION" means a registration effected pursuant to
Section 2.1.

            "SHELF REGISTRATION STATEMENT" means a Registration Statement of the
Issuer filed with the SEC on Form S-3 (or any successor form or other
appropriate form under the Securities Act) for an offering to be made on a
continuous or delayed basis pursuant to Rule 415 under the Act (or any similar
rule that may be adopted by the SEC) covering the Registrable Securities.

            "STOCK PURCHASE AGREEMENTS" has the meaning set forth in the
recitals hereto.

            "UNDERWRITTEN OFFERING" means a registration in which securities of
the Issuer are sold to an underwriter or underwriters on a firm commitment basis
for reoffering to the public.

            1.2. GENERAL INTERPRETIVE PRINCIPLES. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. The name assigned this Agreement
and the section captions used herein are for convenience of reference only and
shall not be construed to affect the meaning, construction or effect hereof.
Unless otherwise specified, the terms "hereof," "herein," "hereunder" and
similar terms refer to this Agreement as a whole (including the schedules
hereto), and references herein to Sections refer to Sections of this Agreement.

                         SECTION 2. REGISTRATION RIGHTS

            2.1. SHELF REGISTRATION.
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            (a) FILING. Subject to Section 2.1(c), the Issuer shall file with
the SEC on or before the twentieth day following the date hereof a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the holders thereof from time to time in accordance with the
methods of distribution elected by such holders and shall use its reasonable
best efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act.

            (b) CONTINUED EFFECTIVENESS. Subject to Section 2.1(c), the Issuer
shall use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming a part thereof
to be usable by the holders during the term of this Agreement. The Issuer shall
not be deemed to have used its reasonable best efforts to keep the Shelf
Registration Statement effective if the Issuer voluntarily takes any action or
omits to take any action that would result in the inability of any holder of
Registrable Securities covered by such Registration Statement to be able to
offer and sell any such Registrable Securities during the term of this
Agreement, unless such action or omission is required by applicable law.

            (c) SUSPENSION OF REGISTRATION. If the filing, initial effectiveness
or continued use of the Shelf Registration Statement at any time would require
the Issuer to make an Adverse Disclosure, the Issuer may, upon giving prompt
written notice of such action to the holders, delay the filing or initial
effectiveness of, or suspend use of, the Shelf Registration Statement; PROVIDED,
HOWEVER, that the Issuer shall not be permitted to do so (A) more than two times
during any six month period, (B) for a period exceeding thirty days on any one
occasion or (C) for a period exceeding sixty days in any 12 month period. In the
event the Issuer exercises its rights under the preceding sentence, the holders
agree to suspend, immediately upon their receipt of the notice referred to

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above, their use of the Prospectus relating to the Shelf Registration in
connection with any sale or offer to sell Registrable Securities. The Issuer
shall immediately notify the holders upon the expiration of any period during
which it exercised its rights under this Section 2.1(c). The Issuer represents
that it has no knowledge of any circumstance that would reasonably be expected
to cause the Issuer to exercise its rights under this Section 2.1(c).

            (d) UNDERWRITTEN OFFERING. If the holders of not less than a
majority of the Registrable Securities included in any offering pursuant to the
Shelf Registration Statement so elect, such offering shall be in the form of an
Underwritten Offering and the Issuer, if necessary, shall amend or supplement
the Shelf Registration Statement for such purpose. The holders of a majority of
the Registrable Securities included in such Underwritten Offering shall, after
consulting with the Issuer, have the right to select the managing underwriter or
underwriters for the offering.

            2.2. BLACK-OUT PERIODS

            (a) BLACK-OUT PERIODS FOR HOLDERS. In the event of a registration by
the Issuer, the holders of Registrable Securities agree, if requested by the
Issuer (or, in the case of an Underwritten Offering, by the managing underwriter
or underwriters), not to effect any public sale or distribution (excluding any
sale pursuant to Rule 144 under the Securities Act) of any securities (except,
in each case, as part of the applicable registration, if permitted) which
securities are the same as or similar to those being registered in connection
with such registration, or which are convertible into or exchangeable or
exercisable for such securities, during the period beginning seven days before,
and ending 90 days (or such lesser period as may be permitted by the Issuer or
such managing underwriter or underwriters) after, the effective date of the
Registration Statement filed in connection with such registration, to the extent
such holders are timely notified in writing by the Issuer or the managing
underwriter or underwriters.

            (b) BLACK-OUT PERIOD FOR THE ISSUER AND OTHERS. (i) In the case of a
registration of Registrable Securities pursuant to Section 2.1 involving the
offering and sale of equity securities or securities convertible into or
exchangeable for equity securities, the Issuer agrees, if requested by the
holders of a majority of such Registrable Securities to be sold pursuant to the
such registration (or, in the case of an Underwritten Offering, by the managing
underwriter or underwriters in such Underwritten Offering), not to effect (or
register for sale) any public sale or distribution of any securities which are
the same as or similar to those being registered, or which are convertible into
or exchangeable or exercisable for such securities, during the period beginning
seven days before, and ending 90 days (or such lesser period as may be permitted
by such holders or such underwriter or underwriters) after, the effective date
of the Registration Statement filed in connection with such registration (or, in
the case of an Underwritten Offering under the Shelf Registration, the date of
the closing under the underwriting agreement in connection therewith), to the
extent the Issuer is timely notified in writing by a holder of Registrable
Securities covered by such Registration Statement or the managing underwriter or
underwriters. Notwithstanding the foregoing, the Issuer may effect a public sale
or distribution of securities of the type described above and during the periods
described above if the same (A) is made pursuant to registrations on Forms S-4
or S-8 or any successor form to such forms, or (B) as part of any registration
of securities for offering and sale to employees or directors of the Issuer
pursuant to any employee stock plan or other employee benefit plan arrangement.

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            (ii) Subject to Section 2.5, if after the date hereof the Issuer
grants any Person (other than a holder of Registrable Securities) any rights to
demand or participate in a registration, any agreement with respect thereto
shall include such Person's agreement not to effect any public sale or
distribution of such securities (other than securities purchased in a public
offering), during any period referred to in this Section 2.2(b) except as part
of any such registration if permitted.

            2.3. REGISTRATION PROCEDURES.

            (a) In connection with the Issuer's registration obligations in this
Agreement, the Issuer will, subject to the limitations set forth herein, use its
reasonable best efforts to effect any such registration so as to permit the sale
of the applicable Registrable Securities in accordance with the intended method
or methods of distribution thereof as expeditiously as reasonably practicable,
and in connection therewith the Issuer will:

            (i) before filing a Registration Statement or Prospectus, or any
amendments or supplements thereto and in connection therewith, furnish to the
underwriter or underwriters, if any, and to one representative of the holders of
each class of the Registrable Securities covered by such Registration Statement,
copies of all documents prepared to be filed, which documents will be subject to
the review of such underwriters and such holders and their respective counsel
and, not file any Registration Statement or Prospectus or amendments or
supplements thereto to which the holders of a majority of the class of
Registrable Securities covered by the same or the underwriter or underwriters,
if any, shall reasonably object;

            (ii) prepare and file with the SEC such amendments or supplements to
the applicable Registration Statement or Prospectus as may be (A) reasonably
requested by any participating holder (to the extent such request relates to
information relating to such holder), (B) necessary to keep such registration
effective for the period of time required by this Agreement or (C) reasonably
requested by the holders of a majority of any class of the participating
Registrable Securities;

            (iii) notify the selling holders of Registrable Securities and the
managing underwriter or underwriters, if any, and (if requested) confirm such
advice in writing, as soon as reasonably practicable after notice thereof is
received by the Issuer (A) when the applicable Registration Statement or any
amendment thereto has been filed or becomes effective and when the applicable
Prospectus or any amendment or supplement thereto has been filed, (B) of any
written comments by the SEC or any request by the SEC or any other federal or
state governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information, (C) of the issuance by
the SEC of any stop order suspending the effectiveness of such Registration
Statement or any order preventing or suspending the use of any preliminary or
final Prospectus or the initiation or threat of any proceedings for such
purposes and (D) of the receipt by the Issuer of any notification with respect
to the suspension of the qualification of the Registrable Securities for
offering or sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose;

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            (iv) promptly notify each selling holder of Registrable Securities
and the managing underwriter or underwriters, if any, when the Issuer becomes
aware of the happening of any event as a result of which the applicable
Registration Statement or Prospectus (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein (in the case of the Prospectus and any preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading or, if for any other reason it shall be necessary to amend or
supplement such Registration Statement or Prospectus in order to comply with the
Securities Act and, in either case as promptly as reasonably practicable
thereafter, prepare and file with the SEC an amendment or supplement to such
Registration Statement or Prospectus which will correct such statement or
omission or effect such compliance;

            (v) make every reasonable effort to prevent or obtain at the
earliest possible moment the withdrawal of any stop order with respect to the
applicable Registration Statement or other order suspending the use of any
preliminary or final Prospectus;

            (vi) promptly incorporate in a Prospectus supplement or
post-effective amendment to the applicable Registration Statement such
information as the managing underwriter or underwriters, if any, or the holders
of a majority of the Registrable Securities of the class being sold agree should
be included therein relating to the plan of distribution with respect to such
Registrable Securities; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably practicable after
being notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;

            (vii) furnish to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, as many conformed copies as
such holder or managing underwriter may reasonably request of the applicable
Registration Statement;

            (vii) deliver to each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, as many copies of the
applicable Prospectus (including each preliminary Prospectus) as such holder or
managing underwriter may reasonably request (it being understood that the Issuer
consents to the use of the Prospectus by each of the selling holders of
Registrable Securities and the underwriter or underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus) and such other documents as such selling holder or managing
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities by such holder or underwriter;

            (ix) on or prior to the date on which the applicable Registration
Statement is declared effective, use its reasonable best efforts to register or
qualify such Registrable Securities for offer and sale under the securities or
"Blue Sky" laws of each state and other jurisdiction of the United States, as
any such selling holder or underwriter, if any, or their respective counsel
reasonably requests in writing, and do any and all other acts or things
reasonably necessary or advisable to keep such registration or qualification in
effect so as to permit the commencement and continuance of sales and dealings in
such jurisdictions for as long as may be necessary to complete the distribution
of the Registrable Securities covered by the Registration Statement; PROVIDED

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that the Issuer will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to taxation or general service of process in any such jurisdiction
where it is not then so subject;

            (x) cooperate with the selling holders of Registrable Securities and
the managing underwriter, underwriters or agent, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends;

            (xi) not later than the effective date of the applicable
Registration Statement, provide a CUSIP number for all Registrable Securities
and provide the applicable transfer agent with printed certificates for the
Registrable Securities which certificates shall be in a form eligible for
deposit with The Depository Trust Company;

            (xii) obtain for delivery to the holders of each class of
Registrable Securities being registered and to the underwriter or underwriters,
if any, an opinion or opinions from counsel for the Issuer dated the effective
date of the Registration Statement or, in the event of an Underwritten Offering,
the date of the closing under the underwriting agreement, in customary form,
scope and substance, which counsel and opinions shall be reasonably satisfactory
to a majority of the holders of each such class and underwriter or underwriters,
if any, and their respective counsel;

            (xiii) in the case of an Underwritten Offering, obtain for delivery
to the Issuer and the underwriter or underwriters, if any, with copies to the
holders of Registrable Securities included in such registration, a cold comfort
letter from the Issuer's independent certified public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters as the managing underwriter or underwriters reasonably request, dated
the date of execution of the underwriting agreement and brought down to the
closing under the underwriting agreement;

            (xiv) cooperate with each seller of Registrable Securities and each
underwriter or agent, if any, participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD;

            (xv) use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its security
holders, as soon as reasonably practicable (but not more than 15 months) after
the effective date of the applicable Registration Statement, an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act and
the rules and regulations promulgated thereunder;

            (xvi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by the applicable Registration
Statement from and after a date not later than the effective date of such
Registration Statement;

            (xvii) cause all Registrable Securities of a class covered by the
applicable Registration Statement to be listed on each securities exchange on
which any of the Issuer's securities of such class are then listed or quoted and
on each inter-dealer quotation system on which any of the Issuer's securities of
such class are then quoted;

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            (xviii) make available upon reasonable notice at reasonable times
and for reasonable periods for inspection by a representative appointed by the
holders of a majority of the Registrable Securities of each class covered by the
applicable Registration Statement, by any managing underwriter or underwriters
participating in any disposition to be effected pursuant to such Registration
Statement and by any attorney, accountant or other agent retained by such
sellers or any such managing underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Issuer, and cause
all of the Issuer's officers, directors and employees and the independent public
accountants who have certified its financial statements to make themselves
available to discuss the business of the Issuer and to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement as shall be necessary to
enable them to exercise their due diligence responsibility (subject to the entry
by each party referred to in this clause (xix) into customary confidentiality
agreements in a form reasonably acceptable to the Issuer);

            (xix) in the case of an Underwritten Offering, cause the senior
executive officers of the Issuer to participate in the customary "road show"
presentations that may be reasonably requested by the managing underwriter in
any such Underwritten Offering and otherwise to facilitate, cooperate with, and
participate in each proposed offering contemplated herein and customary selling
efforts related thereto; and

            (xx) promptly after the issuance of an earnings release or upon the
request of any holder, prepare a current report on Form 8-K with respect to such
earnings release or a matter of disclosure as requested by such holder and file
such Form 8-K with the SEC.

            (b) The Issuer may require each selling holder of Registrable
Securities as to which any registration is being effected to furnish to the
Issuer such information regarding the distribution of such Securities and such
other information relating to such holder and its ownership of the applicable
Registrable Securities as the Issuer may from time to time reasonably request.
Each holder of Registrable Securities agrees to furnish such information to the
Issuer and to cooperate with the Issuer as necessary to enable the Issuer to
comply with the provisions of this Agreement. The Issuer shall have the right to
exclude any holder that does not comply with the preceding sentence from the
applicable registration.

            (c) Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Issuer of
the happening of any event of the kind described in Section 2.5(a)(iv), such
holder will discontinue disposition of its Registrable Securities pursuant to
such Registration Statement until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.5(a)(iv), or until
such holder is advised in writing by the Issuer that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus and, if so directed
by the Issuer, such holder will deliver to the Issuer (at the Issuer's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities which are current at the
time of the receipt of such notice.

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            2.4. UNDERWRITTEN OFFERINGS.

            (a) UNDERWRITING AGREEMENTS. If requested by the underwriters for
any Underwritten Offering, the Issuer and the holders of Registrable Securities
to be included therein shall enter into an underwriting agreement with such
underwriters, such agreement to be reasonably satisfactory in substance and form
to the Issuer, the holders of a majority of each class of the Registrable
Securities to be included in such Underwritten Offering and the underwriters,
and to contain such terms and conditions as are generally prevailing in
agreements of that type, including, without limitation, indemnities no less
favorable to the recipient thereof than those provided in Section 2.7. All of
the representations and warranties by, and the other agreements on the part of,
the Issuer to and for the benefit of such underwriters included in each such
underwriting agreement shall also be made to and for the benefit of such holders
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders. No holder shall be required in any such
underwriting agreement to make any representations or warranties to or
agreements with the Issuer or the underwriters other than representations,
warranties or agreements regarding such holder, such holders Registrable
Securities, such holder's intended method of distribution and any other
representations required by law.

            (b) PRICE AND UNDERWRITING DISCOUNTS. In the case of an Underwritten
Offering, the price, underwriting discount and other financial terms for each
class of Registrable Securities of the related underwriting agreement shall be
determined by the holders of a majority of such class of Registrable Securities.

            (c) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person may
participate in an Underwritten Offering unless such Person (i) agrees to sell
such Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

            2.5. NO INCONSISTENT AGREEMENTS; ADDITIONAL RIGHTS. The Issuer will
not enter into, and is not currently a party to, any agreement which is, or
could be, inconsistent with the rights granted to the holders of Registrable
Securities by this Agreement.

            2.6. REGISTRATION EXPENSES. (a) The Issuer shall pay all of the
expenses set forth in this paragraph (a) in connection with a registration under
this Agreement of Registrable Securities. Such expenses are (i) all registration
and filing fees, and any other fees and expenses associated with filings
required to be made with the SEC or the NASD, (ii) all fees and expenses of
compliance with state securities or "Blue Sky" laws, (iii) all printing,
duplicating, word processing, messenger, telephone, facsimile and delivery
expenses (including expenses of printing certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses), (iv) all fees and disbursements of counsel for the
Issuer and of all independent certified public accountants of the Issuer, (v)
Securities Act liability insurance or similar insurance if the Issuer so desires
or the underwriter or underwriters, if any, so require in accordance with
then-customary underwriting practice, (vi) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange or the quotation of the Registrable Securities on any inter-dealer

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quotation system and (vii) all applicable rating agency fees with respect to any
applicable Registrable Securities. In addition, in all cases the Issuer shall
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any audit and the fees and expenses of any Person, including
special experts, retained by the Issuer. In addition, the Issuer shall pay up to
$15,000 of one law firm or other counsel selected by the holders of a majority
of the Registrable Securities being registered, not to include any fees and
expenses of any other advisers to the holders of the Registrable Securities
being registered or brokerage fees and commissions incurred by holders of the
Registrable Securities being registered.

            (b) The Issuer shall not be required to pay any other costs or
expenses in the course of the transactions contemplated hereby, including
underwriting discounts and commissions and transfer taxes attributable to the
sale of Registrable Securities and the fees and expenses of counsel to the
underwriters other than pursuant to clause (ii) of paragraph (a) above.

            2.7. INDEMNIFICATION.
                 ---------------

            (a) INDEMNIFICATION BY THE ISSUER. The Issuer agrees to indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities and their respective officers, directors, advisors and
agents and employees and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) such Persons from and against any and all
losses, claims, damages, liabilities (or actions or proceedings in respect
thereof, whether or not such indemnified party is a party thereto) and expenses
(including reasonable costs of investigation and legal expenses), joint or
several (each, a "LOSS" and collectively "LOSSES"), arising out of or based upon
(i) any untrue or alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act (including any final, preliminary or summary Prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein) or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading; PROVIDED, HOWEVER, that the Issuer shall not be liable to
any indemnified party in any such case to the extent that any such Loss arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any such Registration Statement in reliance
upon and in conformity with written information furnished to the Issuer by such
holder expressly for use in the preparation thereof. This indemnity shall be in
addition to any liability Issuer may otherwise have. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such holder or any indemnified party and shall survive the transfer of such
securities by such holder. The Issuer will also indemnify, if applicable and if
requested, underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution pursuant hereto, their
officers and directors and each Person who controls such Persons (within the
meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Indemnified Persons.

                                       10

<PAGE>

            (b) INDEMNIFICATION BY THE HOLDERS. Each selling holder of
Registrable Securities agrees (severally and not jointly) to indemnify and hold
harmless, to the full extent permitted by law, the Issuer, its directors and
officers and each Person who controls the Issuer (within the meaning of the
Securities Act and the Exchange Act) from and against any Losses resulting from
any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement under which such Registrable
Securities were registered under the Securities Act (including any final,
preliminary or summary Prospectus contained therein or any amendment thereof or
supplement thereto or any documents incorporated by reference therein), or
necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission had been contained in any information furnished in writing
by such selling holder to the Issuer specifically for inclusion in such
Registration Statement. This indemnity shall be in addition to any liability
such holder may otherwise have. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Issuer or any
indemnified party. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such holder under the sale of the Registrable
Securities giving rise to such indemnification obligation. The Issuer shall be
entitled to receive indemnities from, if applicable and if requested,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above (with appropriate modification) with respect to information so furnished
in writing by such Persons specifically for inclusion in any Prospectus or
Registration Statement. Each holder also shall indemnify any underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the Issuer.

            (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(PROVIDED, that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
PROVIDED, HOWEVER, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party has agreed in writing
to pay such fees or expenses, (B) the indemnifying party shall have failed to
assume the defense of such claim within a reasonable time after having received
notice of such claim from the Person entitled to indemnification hereunder and
to employ counsel reasonably satisfactory to such Person, (C) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims or (D) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party (in which case, if the Person notifies the indemnifying
party in writing that such Person elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the

                                       11

<PAGE>

right to assume the defense of such claim on behalf of such Person). If such
defense is not assumed by the indemnifying party, the indemnifying party will
not be subject to any liability for any settlement made without its consent, but
such consent may not be unreasonably withheld; PROVIDED, that an indemnifying
party shall not be required to consent to any settlement involving the
imposition of equitable remedies or involving the imposition of any material
obligations on such indemnifying party other than financial obligations for
which such indemnified party will be indemnified hereunder. If the indemnifying
party assumes the defense, the indemnifying party shall have the right to settle
such action without the consent of the indemnified party; PROVIDED, that the
indemnifying party shall be required to obtain such consent (which consent shall
not be unreasonably withheld) if the settlement includes any admission of
wrongdoing on the part of the indemnified party or any restriction on the
indemnified party or its officers or directors. No indemnifying party shall
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to each indemnified party of an unconditional release from all liability in
respect to such claim or litigation. The indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm (together with one firm of local counsel) at any
one time from all such indemnified party or parties unless (x) the employment of
more than one counsel has been authorized in writing by the indemnifying party
or parties, (y) a conflict or potential conflict exists or may exist (based on
advice of counsel to an indemnified party) between such indemnified party and
the other indemnified parties or (z) an indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal defenses
available to it that are different from or in addition to those available to the
other indemnified parties, in each of which cases the indemnifying party shall
be obligated to pay the reasonable fees and expenses of such additional counsel
or counsels.

            (d) CONTRIBUTION. If for any reason the indemnification provided for
in the paragraphs (a) and (b) of this Section 2.7 is unavailable to an
indemnified party or insufficient to hold it harmless as contemplated by
paragraphs (a) and (b) of this Section 2.7, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such Loss in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and the indemnified party on the other.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. Notwithstanding anything in this
Section 2.7(d) to the contrary, no indemnifying party (other than the Issuer)
shall be required pursuant to this Section 2.7(d) to contribute any amount in
excess of the amount by which the net proceeds received by such indemnifying
party from the sale of Registrable Securities in the offering to which the
Losses of the indemnified parties relate exceeds the amount of any damages which
such indemnifying party has otherwise been required to pay by reason of such
untrue statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 2.7(d) were determined by
PRO RATA allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. If

                                       12

<PAGE>

indemnification is available under this Section 2.7, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Sections
2.7(a) and 2.7(b) hereof without regard to the relative fault of said
indemnifying parties or indemnified party.

            2.8. RULES 144 AND 144A. The Issuer covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Issuer
is not required to file such reports, it will, upon the request of any holder of
Registrable Securities after the transfer date, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 or 144A
under the Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 or 144A or Regulation S under the Securities Act, as
such Rules may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Issuer will deliver to such holder a written
statement as to whether it has complied with such requirements and, if not, the
specifics thereof.

                            SECTION 3. MISCELLANEOUS

            3.1. TERM. This Agreement shall terminate upon termination of the
Stock Purchase Agreements and if the transactions contemplated by the Stock
Purchase Agreements are completed, upon the earlier of (i) the second
anniversary of the date of this Agreement or (ii) the date as of which (A) all
of the Registrable Securities have been sold pursuant to a Registration
Statement (but in no event prior to the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder) or (B) the holders are
permitted to sell their Registrable Securities under Rule 144(k) under the
Securities Act (or any similar provision then in force permitting the sale of
restricted securities without limitation on the amount of securities sold or the
manner of sale). The provisions of Section 2.7 and Section 2.8 shall survive any
termination.

            3.2. INJUNCTIVE RELIEF. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved Person will be irreparably
damaged and will not have an adequate remedy at law. Any such Person shall,
therefore, be entitled (in addition to any other remedy to which it may be
entitled in law or in equity) to injunctive relief, including, without
limitation, specific performance, to enforce such obligations, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.

            3.3. ATTORNEYS' FEES. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall, to the extent permitted by
applicable law, be entitled to recover reasonable attorneys' fees in addition to
any other available remedy.

                                       13

<PAGE>

            3.4. NOTICES. All notices, other communications or documents
provided for or permitted to be given hereunder, shall be made in writing and
shall be given either personally by hand-delivery, by facsimile transmission, by
mailing the same in a sealed envelope, registered first-class mail, postage
prepaid, return receipt requested, or by air courier guaranteeing overnight
delivery:

                     (a)       if to the Issuer to:

           IMPAX LABORATORIES, INC.
           3735 Castor Avenue
           Philadelphia, PA, 19124

           Attention:          Barry R. Edwards, Co-Chief Executive
           Fax:......          (215) 289-5932

           with copies to:

           Blank Rome Comisky & McCauley LLP
           One Logan Square
           Philadelphia, PA,  19103-6998

           Attention:          Sol B. Genauer
           Fax:......          (215) 569-5628

           (b).......if to the Investors to the addresses set forth on Schedule
1 hereto, with copies to their attorneys, set forth on Schedule 1 hereto.

            Each holder, by written notice given to the Issuer in accordance
with this Section 3.4 may change the address to which notices, other
communications or documents are to be sent to such holder. All notices, other
communications or documents shall be deemed to have been duly given: (i) at the
time delivered by hand, if personally delivered; (ii) when receipt is
acknowledged in writing by addressee, if by facsimile transmission; (iii) five
business days after having been deposited in the mail, postage prepaid, if
mailed by first class mail; and (iv) on the first business day with respect to
which a reputable air courier guarantees delivery; PROVIDED, HOWEVER, that
notices of a change of address shall be effective only upon receipt.

            3.5. SUCCESSORS, ASSIGNS AND TRANSFEREES. (a) The registration
rights of any holder under this Agreement with respect to any Registrable
Securities may be transferred and assigned, PROVIDED that no such assignment
shall be binding upon or obligate the Issuer to any such assignee unless and
until the Issuer shall have received notice of such assignment as herein
provided and a written agreement of the assignee to be bound by the provisions
of this Agreement. Any transfer or assignment made other than as provided in the
first sentence of this Section 3.5 shall be null and void.

                                       14
<PAGE>

            (b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.

            3.6. GOVERNING LAW; SERVICE OF PROCESS; CONSENT TO JURISDICTION. (a)
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN
THE STATE.

            (b) To the fullest extent permitted by applicable law, each party
hereto (i) agrees that any claim, action or proceeding by such party seeking any
relief whatsoever arising out of, or in connection with, this Agreement or the
transactions contemplated hereby shall be brought only in the United States
District Court for the Southern District of New York and in any New York State
court located in the Borough of Manhattan and not in any other State or Federal
court in the United States of America or any court in any other country, (ii)
agrees to submit to the exclusive jurisdiction of such courts located in the
State of New York for purposes of all legal proceedings arising out of, or in
connection with, this Agreement or the transactions contemplated hereby and
(iii) irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.

            3.7. HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

            3.8. SEVERABILITY. Whenever possible, each provision or portion of
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
therein.

            3.9. AMENDMENT; WAIVER.

            (a) This Agreement may not be amended or modified and waivers and
consents to departures from the provisions hereof may not be given, except by an
instrument or instruments in writing making specific reference to this Agreement
and signed by the Issuer, the holders of a majority of Registrable Securities of
each class then outstanding. Each holder of any Registrable Securities at the
time or thereafter outstanding shall be bound by any amendment, modification,
waiver or consent authorized by this Section 3.9(a), whether or not such
Registrable Securities shall have been marked accordingly.

            (b) The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. Except
as otherwise expressly provided herein, no failure on the part of any party to

                                       15

<PAGE>

exercise, and no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

            3.10. COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts and by the parties hereto in separate counterparts each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.

                                       16

<PAGE>

                     IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the date first
written above.

                            IMPAX LABORATORIES, INC.

                            By:
                               ----------------------------------------
                                  Name:
                                  Title:

                            CHARLES HSIAO

                              ----------------------------------------

                            ANVIL INVESTMENT ASSOCIATES, L.P.

                            By: Anvil Management Co. LLC
                                  Its general partner

                            By:
                               ----------------------------------------
                                  Name: Theodore H. Ashford
                                  Title: Member

                            ASHFORD CAPITAL PARTNERS, L.P.

                            By: Ashcap Corp.
                                  Its general partner

                            By:
                               ----------------------------------------
                                  Name: Theodore H. Ashford
                                  Title: President

                            NARRAGANSETT I, L.P.

                            By:
                                  -------------------------------------
                                  Name:  Joseph Dowling III
                                  Title: Managing Member

                                       17

<PAGE>

                            NARRAGANSETT OFFSHORE LTD.

                            By: Leo Holdings LLC,
                                  Investment Manager

                            By:
                               ----------------------------------------
                                  Name: Joseph L. Dowling III
                                  Title:  Managing Member

                            SDS MERCHANT FUND, L.P.

                            By:
                                  -------------------------------------
                                  Name: Steve Derby
                                  Title: General Partner

                            S/G MEDSCIENCE FUND, L.P.

                            By:
                                  ----------------------------------------------
                                  Name: David Saks
                                  Title:

                            ROBERT FLEMING NOMINEES LIMITED

                            By:
                                  ----------------------------------------------
                                  Name:
                                  Title:

                                       18
<PAGE>

                            FLEMING US DISCOVERY FUND III, L.P.

                           By:  FLEMING US DISCOVERY PARTNERS, L.P., its general
                                partner

                           By:  FLEMING US DISCOVERY, LLC, its general partner

                            By:
                                  ----------------------------------------------
                          Name:  Robert L. Burr
                          Title:    Member

                            FLEMING US DISCOVERY OFFSHORE FUND III, L.P.

                           By:  FLEMING US DISCOVERY PARTNERS, L.P., its general
                                partner

                           By:  FLEMING US DISCOVERY, LLC, its general partner

                           By:
                                -----------------------------------------------
                                Name:  Robert L. Burr
                                Title: Member

<PAGE>

<TABLE>
<CAPTION>

                                   SCHEDULE 1

------------------------------------ -------------------------------------------------------- ------------------------------------
INVESTOR                             ADDRESS FOR NOTICES                                      COPY TO:
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
<S>                              <C>                                                   <C>
Charles Hsiao                        Charles Hsiao, Chairman
                                     and Co-CEO
                                     Impax Laboratories
                                     30831 Huntwood Avenue
                                     Hayward, CA 94544
                                     (510) 471-1595 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Fleming US Discovery Fund III, L.P.  David Edwards
                                     and Christopher Jones
                                     Chase Fleming Asset Management
                                     320 Park Avenue, 11th Floor
                                     New York, NY 10022
                                     (212) 508-3928 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Fleming US Discovery Offshore Fund   David Edwards
III, L.P.                            and Christopher Jones
                                     Chase Fleming Asset Management
                                     320 Park Avenue, 11th Floor
                                     New York, NY 10022
                                     (212) 508-3928 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Robert Fleming Nominees Limited      David Edwards
                                     and Christopher Jones
                                     Chase Fleming Asset Management
                                     320 Park Avenue, 11th Floor
                                     New York, NY 10022
                                     (212) 508-3928 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Anvil Investment Associates, L.P.    Joseph Petko
                                     Ashford Capital Management
                                     3801 Kennett Pike, B 107
                                     Wilmington, DE 19807
                                     (302) 655-8690 (fax)]
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Ashford Capital Partners, L.P.       Joseph Petko
                                     Ashford Capital Management
                                     3801 Kennett Pike, B 107
                                     Wilmington, DE 19807
                                     (302) 655-8690 (fax)]
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Narragansett I, L.P.                 Joseph Dowling
                                     Narragansett I, L.P.
                                     153 E. 53rd, 26th Floor,
                                      New York, New York 10022
                                     (212) 521-5029 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
Narragansett Offshore Ltd.           Joseph Dowling
                                     Narragansett Offshore Ltd.
                                     153 E. 53rd, 26th Floor,
                                      New York, New York 10022
                                     (212) 521-5029 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
SDS Merchant Fund, L.P.              Steve Derby                                              SDS Merchant Fund, LP
                                     SDS Merchant Fund, L.P.                                  1 Sound Shore Drive
                                     1 Sound Shore Drive, 2d Floor                            Greenwich, CT 06830
                                     Greenwich, CT 06830                                      Attn: General Counsel
                                     (203) 629-0345 (fax)
------------------------------------ -------------------------------------------------------- ------------------------------------
------------------------------------ -------------------------------------------------------- ------------------------------------
S/G MedScience Fund, L.P.            David Saks
                                     Saks Gruntal Medical Science Fund
                                     1 Liberty Plaza
                                     New York, NY 10006
                                     (212) 820-8077
------------------------------------ -------------------------------------------------------- ------------------------------------
</TABLE>

                                       20Prepared by MERRILL CORPORATION www.edgaradvantage.com

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Exhibit 4.1  

 
 

PACCAR Inc Savings Investment Plan    
  

 
 

PACCAR INC SAVINGS INVESTMENT PLAN
  
    (As Amended and Restated Effective January 1, 1994)    
  

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	Page

	ARTICLE 1	 	PURPOSE AND SCOPE	 	2
	1.1	 	Purpose of Plan	 	2
	1.2	 	Scope of Plan	 	2
	1.3	 	PACCAR Inc Administers for Participating Subsidiaries; Allocation of Cost	 	2
	ARTICLE 2	 	DEFINITIONS AND CONSTRUCTION	 	3
	2.1	 	General Definitions	 	3
	 	 	(a)	 	"Accounts"	 	3
	 	 	(b)	 	"Aggregate 401(k) Contributions"	 	3
	 	 	(c)	 	"Aggregate 401(m) Contributions"	 	3
	 	 	(d)	 	"Beneficiary"	 	3
	 	 	(e)	 	"Benefit"	 	3
	 	 	(f)	 	"Company"	 	3
	 	 	(g)	 	"Company Contributions"	 	3
	 	 	(h)	 	"Compensation"	 	3
	 	 	(i)	 	"Current or Accumulated Earnings and Profits"	 	4
	 	 	(j)	 	"Eligible Employee"	 	4
	 	 	(k)	 	"Employee"	 	4
	 	 	(l)	 	"Employee Accounts"	 	4
	 	 	(m)	 	"ERISA"	 	4
	 	 	(n)	 	"Excess Aggregate Contributions"	 	5
	 	 	(o)	 	"Excess Contributions"	 	5
	 	 	(p)	 	"Excess Deferrals"	 	5
	 	 	(q)	 	"Family Member"	 	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
	 	 	(z)	 	"Nonhighly Compensated Employee"	 	6
	 	 	(aa)	 	"Normal Retirement Age"	 	7
	 	 	(ab)	 	"PACCAR Stock"	 	7
	 	 	(ac)	 	"PACCAR Stock Account"	 	7
	 	 	(ad)	 	"PACCAR Stock Fund"	 	7
	 	 	(ae)	 	"Plan"	 	7
	 	 	(af)	 	"Plan Year"	 	7
	 	 	(ag)	 	"Restricted Member"	 	7
	 	 	(ah)	 	"Retirement"	 	7
	 	 	(ai)	 	"Retirement Plan"	 	7
	 	 	(aj)	 	"Rollover Contributions"	 	7
	 	 	(ak)	 	"Salary Deferrals"	 	7
	 	 	(al)	 	"Salary Deferral Account"	 	7
	 	 	(am)	 	"Section 414(s) Compensation"	 	7
	 	 	(an)	 	"Subsidiary"	 	8
	 	 	(ao)	 	"Top-Paid Group"	 	8

i

 

	 	 	(ap)	 	"Total Compensation"	 	9
	 	 	(aq)	 	"Totally Disabled" or "Total Disability"	 	9
	 	 	(ar)	 	"Trust Agreement"	 	9
	 	 	(as)	 	"Trust Fund"	 	9
	 	 	(at)	 	"Trustee"	 	9
	 	 	(au)	 	"Valuation Date"	 	9
	2.2	 	Construction	 	9
	ARTICLE 3	 	ELIGIBILITY AND MEMBERSHIP	 	9
	3.1	 	Commencement of Membership	 	9
	3.2	 	Reemployment and Transfers	 	9
	3.3	 	Enrollment Procedures	 	10
	3.4	 	Termination of Membership	 	10
	3.5	 	Restricted Membership	 	10
	 	 	(a)	 	Status as Restricted Member	 	10
	 	 	(b)	 	Effect of Restricted Membership	 	10
	3.6	 	Period of Service	 	11
	 	 	(a)	 	Bridging Rule	 	11
	 	 	(b)	 	Aggregation Method	 	11
	 	 	(c)	 	Service Records; Additional Credit	 	11
	 	 	(d)	 	Definitions	 	11
	 	 	 	 	(1)  "Employment Date"	 	11
	 	 	 	 	(2)  "Reemployment Date"	 	11
	ARTICLE 4	 	SALARY DEFERRALS AND ROLLOVER CONTRIBUTIONS	 	12
	4.1	 	Amount of Salary Deferrals	 	12
	4.2	 	Involuntary Reduction of Salary Deferral Rate	 	12
	4.3	 	Voluntary Change of Salary Deferral Rate	 	12
	4.4	 	Voluntary Suspension of Salary Deferrals	 	12
	4.5	 	Return of Excess Deferrals	 	13
	4.6	 	Average Deferral Percentage Limitation	 	13
	4.7	 	Allocation of Excess Contributions to Highly Compensated Employees	 	14
	4.8	 	Distribution of Excess Contributions	 	14
	4.9	 	Qualified Company Contributions	 	14
	4.10	 	Special Rules	 	14
	4.11	 	Allocation of Salary Deferrals	 	15
	4.12	 	Allocation Changes and Transfers Between Accounts	 	15
	4.13	 	Transfer of PACCAR Stock Account Balance After Age 50	 	15
	4.14	 	Rollover Contributions	 	16
	ARTICLE 5	 	COMPANY CONTRIBUTIONS	 	16
	5.1	 	Amount of Company Contributions	 	16
	5.2	 	Allocation of Company Contributions	 	16
	5.3	 	Average Contribution Percentage Limitation	 	17
	5.4	 	Allocation of Excess Aggregate Contributions to Highly Compensated Employees	 	17
	5.5	 	Distribution of Excess Aggregate Contributions	 	17
	5.6	 	Use of Salary Deferrals	 	17
	5.7	 	Special Rules	 	18
	5.8	 	Applicability of the Multiple-Use Limitation	 	18
	5.9	 	Multiple-Use Limitation	 	19
	5.10	 	Correction of Multiple-Use Limitation	 	19

ii

 

	5.11	 	Company Contributions Paid From Earnings and Profits; Other Limitations on Company Contributions	 	19
	 	 	(a)	 	Company Contributions Paid From Earnings and Profits	 	19
	 	 	(b)	 	Suspension or Reduction of Company Contributions	 	19
	 	 	(c)	 	Effect of Suspension or Reduction on Salary	 	20
	 	 	(d)	 	Effect of Suspension or Reduction on Future Company Contributions	 	20
	5.12	 	Company Contributions in PACCAR Stock	 	20
	5.13	 	Expenses of Plan and Trust	 	20
	5.14	 	Return of Company Contributions	 	20
	ARTICLE 6	 	THE TRUSTEE AND THE TRUST FUND	 	21
	6.1	 	The Trustee and Investment Managers	 	21
	6.2	 	Investment Funds	 	21
	6.3	 	Voting of PACCAR Stock	 	21
	6.4	 	Other Instructions by Members	 	22
	6.5	 	Trust Fund Treatment Losses; Interest in Trust Fund	 	22
	6.6	 	ERISA 404(c) Requirements	 	22
	 	 	(a)	 	Choice of Broad Range of Investment Alternatives	 	22
	 	 	(b)	 	Frequency of Investment Instructions	 	22
	 	 	(c)	 	Provision of Sufficient Information to Member or Beneficiary	 	23
	ARTICLE 7	 	ACCOUNTS AND VALUATIONS	 	24
	7.1	 	Types of Accounts	 	24
	 	 	(a)	 	PACCAR Stock Account	 	24
	 	 	(b)	 	Salary Deferral Accounts	 	24
	 	 	(c)	 	Employee Accounts	 	24
	7.2	 	Valuation of Accounts	 	24
	 	 	(a)	 	Valuation of Trust Fund	 	24
	 	 	(b)	 	Contributions Credited	 	24
	 	 	(c)	 	Charges Against Accounts	 	25
	7.3	 	Statements for Members	 	25
	ARTICLE 8	 	AMOUNT AND DISTRIBUTION OF BENEFITS	 	25
	8.1	 	Vesting and Amount of Benefits	 	25
	8.2	 	Normal Time of Distribution	 	25
	8.3	 	Earliest Time of Distribution	 	25
	8.4	 	Latest Time of Distribution	 	25
	8.5	 	Reemployment	 	26
	8.6	 	Available Forms of Distribution	 	26
	8.7	 	Election of a Form of Distribution	 	26
	 	 	(a)	 	General Rule	 	26
	 	 	(b)	 	Members Whose Employment Continues Into 701/2 Year	 	26
	 	 	(c)	 	Members Whose Employment Continues After the 701/2 Year	 	27
	8.8	 	Small Benefits	 	27
	8.9	 	Survivors' Benefits	 	27
	 	 	(a)	 	Member Dies After Installments Commence	 	27
	 	 	(b)	 	Member Dies Before Benefit Distribution	 	27
	 	 	(c)	 	Designating a Beneficiary	 	28
	8.10	 	No Alienation of Benefits; Qualified Domestic Relations Order	 	28
	8.11	 	Facility of Payment	 	28
	8.12	 	Unclaimed Benefits	 	29
	8.13	 	Payments Discharge Plan; Adverse Claims	 	29
	8.14	 	Direct Rollovers	 	29

iii

 

	ARTICLE 9	 	LOANS	 	31
	9.1	 	Amount of Loans	 	31
	9.2	 	Aggregate Loan Limitation	 	31
	9.3	 	Terms of Loans	 	31
	9.4	 	Company Consent	 	32
	9.5	 	Source of Loans	 	32
	9.6	 	Disbursement of Loans	 	32
	9.7	 	Valuation Date	 	32
	9.8	 	Loan Fees	 	32
	ARTICLE 10	 	WITHDRAWALS	 	33
	10.1	 	Regular Withdrawals	 	33
	10.2	 	Source of Withdrawals	 	33
	10.3	 	Application for Withdrawals; Time and Form of Distribution	 	33
	10.4	 	Limitation on Withdrawals	 	33
	ARTICLE 11	 	SALE OF STOCK TO TRUSTEE	 	33
	ARTICLE 12	 	PLAN ADMINISTRATION	 	34
	12.1	 	Company as Plan Administrator	 	34
	12.2	 	Carrying out Fiduciary Duties	 	34
	12.3	 	Appointment of Public Accountant	 	34
	12.4	 	Reliance on Plan Records; Member's Duty to Notify	 	34
	ARTICLE 13	 	CLAIMS AND REVIEW PROCEDURES	 	35
	13.1	 	Applications for Benefits	 	35
	13.2	 	Denial of Applications	 	35
	13.3	 	Requests for Review	 	35
	13.4	 	Decision on Review	 	36
	13.5	 	Exhaustion of Administrative Remedies; Limitations	 	36
	ARTICLE 14	 	GENERAL PROVISIONS	 	37
	14.1	 	Information and Reports to Members	 	37
	14.2	 	Applicable Law	 	37
	14.3	 	No Employment Rights Conferred	 	37
	14.4	 	Service Upon Plan; Limitations on Actions Against Plan	 	37
	14.5	 	Plan Office; Records	 	37
	14.6	 	Form of Applications, Elections and Other Communications	 	37
	14.7	 	Spousal Consents	 	38
	14.8	 	Merger, Consolidation and Transfer of Assets or Liabilities	 	38
	ARTICLE 15	 	CONTRIBUTION LIMITATIONS	 	38
	15.1	 	Basic Limitation	 	38
	15.2	 	Effect on Future Contributions	 	38
	15.3	 	Effect on Prior Contributions	 	38
	15.4	 	Defined-Benefit Plans	 	39
	15.5	 	Definitions	 	39
	 	 	(a)	 	"Affiliate"	 	39
	 	 	(b)	 	"Annual Addition"	 	39
	 	 	(c)	 	"Compensation"	 	39
	 	 	(d)	 	"Contribution Limitation"	 	39
	ARTICLE 16	 	AMENDMENT OR TERMINATION OF PLAN	 	40
	16.1	 	Plan May Be Amended or Terminated	 	40
	16.2	 	Amendments Cannot Reduce Accrued Benefits	 	40
	16.3	 	Procedure Upon Plan Terminations	 	40

iv

 

	16.4	 	Partial Terminations	 	40
	16.5	 	Intent to Comply With ERISA	 	40
	16.6	 	Fiduciary Powers Continue Until Distribution Complete	 	40
	ARTICLE 17	 	PRIOR PROFIT SHARING PLAN	 	41
	17.1	 	No Reduction of Accrued Benefit	 	41
	17.2	 	Full Vesting	 	41
	17.3	 	Continuing Distributions	 	41
	17.4	 	Beneficiary Designations	 	41
	17.5	 	Company Contributions	 	41
	17.6	 	Effective Date	 	41
	ARTICLE 18	 	SPECIAL TOP-HEAVINESS RULES	 	41
	18.1	 	Determination of Top-Heavy Status	 	41
	18.2	 	Minimum Allocations	 	42
	18.3	 	Impact on Contribution Limitations	 	42
	18.4	 	Definitions	 	42
	 	 	(a)	 	"Aggregation Group"	 	42
	 	 	(b)	 	"Determination Date"	 	42
	 	 	(c)	 	"Key Employee"	 	42
	 	 	(d)	 	"Permissive Aggregation Group"	 	42
	 	 	(e)	 	"Required Aggregation Group"	 	42
	 	 	(f)	 	"Top-Heavy Ratio"	 	42
	 	 	(g)	 	"Wages"	 	42
	ARTICLE 19  EXECUTION	 	43
	APPENDIX I  PLAN INVESTMENT IN CONFEDERATION LIFE GIC	 	 

v

  

 
 

PACCAR INC SAVINGS INVESTMENT PLAN
  
    (As Amended and Restated Effective January 1, 1994)    
  

    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 January 1, 1994, PACCAR Inc further amended and
restated the Plan to read as set forth herein. Certain provisions, which are specifically identified, have a different effective date. 

    The
Pacific Car and Foundry Company Profit Sharing Trust, which was established by Trust Agreement effective January 1, 1955, and replaced by Trust Agreement dated
December 30, 1972, was amended and restated as of July 1, 1978, and is intended to implement this amended and restated Plan. 

1

 
 
 

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. 

    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, 1994. 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. 

2

 

 
 

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 PACCAR Stock 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 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(an) 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 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) 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)
	"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 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 or section 402(a)(8) of the IRC and made to a plan maintained by the
Company, including amounts contributed to the Plan as Salary Deferrals; 

3

 

	(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 and amounts realized from the exercise, sale, exchange or other disposition of a stock option or stock appreciation right; and

	(4)
	By
excluding amounts in excess of $150,000, 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. 

	 	 	For purposes of applying the limitation on Compensation described in Paragraph (4), the Compensation of any of the 10 most highly compensated Highly Compensated Employees or any five-percent owner shall be determined
by combining the Compensation of such top-10 Highly Compensated Employee or five-percent owner with the Compensation of any Employees who are family members of such top-10 Highly Compensated Employee or five-percent owner. (For purposes of this
Section 2.1(h) only, "family member" means an individual's spouse and any lineal descendants who have not attained age 19 prior to the end of the Plan Year.) If, as a result of the application of such family-aggregation rules, the limitation is
exceeded, then the limitation shall be prorated among the individuals in each family-aggregation group in proportion to each such individual's Compensation, determined without regard to the application of the family-aggregation rules or the
limitation itself.

	(i)
	"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.

	(j)
	"Eligible Employee" means any Employee of the Company who is receiving Compensation, as defined in Section 2.1(h). "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 and
(4) any "leased employee" (within the meaning of section 414(n) of the IRC) of the Company.

	(k)
	"Employee" means any individual who (1) is employed by 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).

	(l)
	"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.

	(m)
	"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 

4

 

include
such section and any comparable section of any future legislation amending, supplementing or superseding such section. 

	(n)
	"Excess Aggregate Contributions" means the amount by which the Aggregate 401(m) Contributions of Highly Compensated Employees are
reduced pursuant to Section 5.5

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

	(p)
	"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) that exceed the limits set forth in Section 4.5.

	(q)
	"Family Member" means an individual's spouse, lineal ascendants and descendants, and the spouses of such lineal ascendants and
descendants.

	(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" for any Plan Year means any active Employee who, during the look-back year

	(1)
	Received
Total Compensation of more than $75,000 (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);

	(2)
	Received
Total Compensation of more than $50,000 (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 was a member of the Top-Paid Group; or

	(3)
	Was
an officer of PACCAR Inc or any Subsidiary (as defined in Section 2.1(an) without regard to the final sentence thereof) and received Total Compensation of more than
50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the IRC. 

	 	 	The term "Highly Compensated Employee" also includes: (1) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is
one of the 100 Employees who received the most Total Compensation from PACCAR Inc and any Subsidiaries (as defined in Section 2.1(as) without regard to the final sentence thereof) during the determination year; and (2) Employees who are
five-percent owners at any time during the look-back year or determination year. If no officer has satisfied the Total Compensation requirement of (3) above during either a determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee.

	

 	
 	

If an Employee is, during a determination year or look-back year, a Family Member of either a five-percent owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the
basis of Total Compensation paid during such year, then the Family Member and the five-percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the Family Member and the five-percent owner or top-ten Highly Compensated
Employee shall be treated as a single Employee receiving Total Compensation and Plan contributions and benefits of the Family Member and five-percent owner or top-ten Highly Compensated Employee.

5

 

	

 	
 	

For purposes of this Section 2.1(s), for a calendar Plan Year the determination year shall be such Plan Year and the look-back year shall be the preceding calendar year. For a noncalendar Plan Year, the determination year shall be the portion of
the Plan Year that extends beyond the preceding calendar year and the look-back year shall be such calendar year. For purposes of determining whether an individual is a Highly Compensated Employee, the dollar values set forth in this Section 2.1
(s) shall be prorated if the determination year is less than a full year.
	

 	
 	

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(an) 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.
	

 	
 	

The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the Top-Paid Group, the top 100 Employees, the number of Employees treated as officers and the Total Compensation that
is considered, 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. 

6

 

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

	(aa)
	"Normal Retirement Age" means age 65.

	(ab)
	"PACCAR Stock" means the common stock of PACCAR Inc and warrants or rights with respect thereto.

	(ac)
	"PACCAR Stock 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.

	(ad)
	"PACCAR Stock Fund" is described in Section 6.2.

	(ae)
	"Plan" means this PACCAR Inc Savings Investment Plan, as amended from time to time.

	(af)
	"Plan Year" means the calendar year.

	(ag)
	"Restricted Member" means a Member who has limited membership rights under the Plan, as further described in Section 3.5.

	(ah)
	"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.

	(ai)
	"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.

	(aj)
	"Rollover Contributions" means any amounts contributed to the Plan by an Eligible Employee under Section 4.14.

	(ak)
	"Salary Deferrals" means amounts paid to the Plan by the Company on a Member's behalf pursuant to Section 4.1.

	(al)
	"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.

	(am)
	"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(an) without regard to the last sentence thereof):

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

	(2)
	"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)(23) of the IRC);

	(3)
	"Wages"
as defined in section 3121(a) of the IRC for purposes of calculating social security taxes, but determined without regard to the wage base limitation in
section 3121(a)(1) of the IRC, the special rules in section 3121(v) of the IRC (applicable to certain elective contributions and nonqualified deferred compensation), any rules
that limit covered employment based on the type or location of an 

7

 

employee's
employer and any rules that limit the remuneration included in wages based on familiar relationship or based on the nature or location of the employment or the services performed (such as
the exceptions to the definition of employment in Paragraphs (1) through (20) of section 3121(b) of the IRC; 

	(4)
	Any
of the definitions of Section 414(s) Compensation set forth in Paragraphs (1), (2) and (3) 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;

	(5)
	Any
of the definitions of Section 414(s) Compensation set forth in Paragraphs (1), (2), (3) and (4) 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, 402(a)(8), 402(h) or 403(b) of the IRC; or

	(6)
	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 $150,000 (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. In applying these limitations, the family aggregation rules of
section 414(q)(6) of the IRC shall apply, as modified by section 401(a)(17) of the IRC.

	(an)
	"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 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.

	(ao)
	"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(an) 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 who is not an Eligible Employee;

	(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. 

8

 

	(ap)
	"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. 

	(aq)
	"Totally Disabled" or "Total Disability" means a physical or mental disability which
permanently and wholly prevents the Member from performing the duties of his employment or other appropriate work made available to him by the Company and which causes the Member to be eligible to
receive benefits under the terms of the PACCAR Inc Long-Term Disability Plan or any other long-term disability plan maintained by PACCAR Inc or any of its Subsidiaries.

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

	(as)
	"Trust Fund" means the assets of the Plan held in trust by a Trustee pursuant to a Trust Agreement.

	(at)
	"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.

	(au)
	"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 for all purposes of the Plan at any time following his completion of a 12-month Period of Service, if he still is then an Eligible Employee. An Eligible Employee who does
not elect to become a Member for all purposes of the Plan when he is first eligible to do so may elect to become such a Member at any time thereafter. 

    3.2  Reemployment and Transfers  

Any
individual who becomes an Eligible Employee after completing a 12-month Period of Service may elect to become a Member at any time following the date when he becomes an 

9

 

Eligible
Employee. This Section 3.2 shall apply both with respect to a former Employee who is reemployed and who previously completed a 12-month Period of Service and with respect to an
Employee who is transferred to the status of an Eligible Employee after completing a 12-month Period of Service. 

    3.3  Enrollment Procedures  

An
Eligible Employee who wishes to become a Member for all purposes of the Plan shall apply for membership on the prescribed form within the time period 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. 

    3.4  Termination of Membership  

An
Eligible Employee, having become a Member for all purposes of the Plan, 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). 

    3.5  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 or Section 9.3(g), 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 PACCAR Stock Account; and

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

10

 

    3.6  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 for purposes of Section 3.1, the following rules shall apply: 

	(a)
	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). 

	(b)
	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. 

	(c)
	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 3.6, subject to such conditions and limitations as it may adopt. 

	(d)
	Definitions

As
used in this Section 3.6, the following words and phrases shall have the following meanings: 

	(1)
	"Employment Date" means the date on which the Employee's active employment as an Employee commences.

	(2)
	"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. 

11

  

 
 

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 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 not in excess of 16 percent of such Compensation. 

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 last day of the month next following the month in which they were withheld. Salary Deferrals shall be paid only out of the Current or Accumulated
Earnings and Profits of any corporation participating in the Plan. 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 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 3.5. 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 practicable after it is received by the Company, but in no event earlier than the date
180 days after the effective date of the election to suspend Salary Deferrals. 

12

 

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  

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(an) without regard to the last sentence thereof), shall not exceed $7,000 (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 $7,000 (or such larger amount as may be adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment), then the 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 by the Company, 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. If timely notice is not 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. 

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 $7,000 (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(an) 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;
provided, however, that no refund shall be made from the Plan in these circumstances unless the Member is an Employee on the earlier of such March 1 or the date such refund is to be made. 

    4.6  Average Deferral Percentage Limitation  

The
Plan shall satisfy the average deferral percentage test, as 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 individual 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 individual's Aggregate 401(k) Contributions for the Plan Year
to the individual's Section 414(s) Compensation for the Plan Year;

	(b)
	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

	(c)
	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 

13

 

that
the Average Deferral Percentage of Highly Compensated Employees (1) exceeds 125 percent of the Average Deferral Percentage of Nonhighly Compensated Employees or (2) exceeds
the lesser of (A) 200 percent of the Average Deferral Percentage of Nonhighly Compensated Employees or (B) the Average Deferral Percentage of Nonhighly Compensated Employees plus
two percentage points. 

    4.7  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 Actual Deferral Percentage of the Highly Compensated Employee with
the highest Actual Deferral Percentage is reduced to the extent required to (a) eliminate all Excess Contributions or (b) cause such Highly Compensated Employee's Actual Deferral
Percentage to equal the Actual Deferral Percentage of the Highly Compensated Employee with the next-highest Actual Deferral Percentage. Such leveling process shall be repeated until 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 14 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. 

    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)-1(b)(5) 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;

	(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(an) 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; provided, however,
that plans, contracts and arrangements shall not 

14

 

be
treated as a single arrangement to the extent that section 1.401(k)-1(b)(3)(ii)(B) of the Income Tax Regulations prohibits aggregation; 

	(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)
	The
Actual Deferral Percentage of any of the 10 most highly compensated Highly Compensated Employees or any five-percent owner shall be determined by combining the
Aggregate 401(k) Contributions and Section 414(s) Compensation of such top-10 Highly Compensated Employee or five-percent owner with the Aggregate 401(k) Contributions and
Section 414(s) Compensation of any Employees who are Family Members of such top-10 Highly Compensated Employee or five-percent owner;

	(f)
	Any
Excess Contributions of any of the 10 most highly compensated Highly Compensated Employees or five-percent owner affected by the family-aggregation rules described
in Subsection (e) of this Section 4.10 shall be allocated among the individuals in each family aggregation group in proportion to the Aggregate 401(k) Contributions of each such
individual; and

	(g)
	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. 

    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. 

    4.12  Allocation Changes and Transfers Between Accounts  

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. Any Member may
elect to transfer any whole percentage of the amount 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  Transfer of PACCAR Stock Account Balance After Age 50  

Each
Member who is an Employee, who is age 50 or older and who has completed a Period of Service of five years or more shall have a single opportunity to transfer to any one or more Investment Options
available under the Plan any whole percentage of the value of his PACCAR Stock Account. Any such election shall become effective as soon as reasonably practicable following the date that the election
is made in accordance with the Company's written procedures. The amount to be transferred shall be determined as of the Valuation Date coincident with or next following the date the election is
received by the Company. 

Any
future Company Contributions allocated to such Member shall continue to be credited to the Member's PACCAR Stock Account. 

15

 

    4.14  Rollover Contributions  

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

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

	(b)
	The
Eligible Employee must demonstrate to the Company's satisfaction that the contribution is attributable to the Eligible Employee's participation in a previous employer's
qualified retirement plan and qualifies as a rollover distribution from a qualified plan under IRC section 402(c)(4) or as a rollover contribution from a conduit IRA under IRC
section 408(d)(3). 

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

 
 

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. Company Contributions initially may be paid to a suspense account maintained
by the Trustee as part of the Plan. The aggregate amount of Company Contributions for each Plan Year shall be equal to the sum of the amounts allocated for such Plan Year to Members pursuant to
Section 5.2. 

    5.2  Allocation of Company Contributions  

Company
Contributions, determined under Section 5.1, shall be allocated as of the last day of each Plan Year to the PACCAR Stock Account of each Member: 

	(a)
	Who
is an Employee on such date; or

	(b)
	Who
terminated employment during such Plan Year due to

	(1)
	Death;

	(2)
	Total
Disability;

	(3)
	Entry
into the armed forces of the United States;

	(4)
	Layoff;
or

	(5)
	Retirement
(as defined in Section 2.1(ae)), 

	 	 	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.

16

 

	 	 	The allocation shall be in an amount equal to 100 percent of the aggregate Salary Deferrals made by him during the Plan Year; provided that Salary Deferrals (1) in excess of five percent of Compensation or (2)
 returned to the Member pursuant to Sections 4.5, 4.8 or 15.3 shall be disregarded. Company Contributions allocated in the form of PACCAR Stock 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, as 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 individual 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 individual's Aggregate 401(m) Contributions for the Plan Year to the individual's Section 414(s) Compensation for the Plan Year;

	(b)
	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

	(c)
	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 (1) exceeds 125 percent of the Average Contribution Percentage of Nonhighly Compensated Employees or
(2) exceeds 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 Actual Contribution Percentage of the Highly Compensated
Employee with the highest Actual Contribution Percentage is reduced to the extent required to (a) eliminate all Excess Aggregate Contributions or (b) cause such Highly Compensated
Employee's Actual Contribution Percentage to equal the Actual Contribution Percentage of the Highly Compensated Employee with the next-highest Actual Contribution Percentage. Such leveling
process shall be repeated until all Excess Aggregate Contributions for such Plan Year are allocated to Highly Compensated Employees. 

    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. 

17

 

    5.6  Use of Salary Deferrals  

The
Company, in its sole discretion, may include all or a portion of the Salary 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)-1(b)(4) 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(an) 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; provided, however, that plans, contracts and
arrangements shall not be treated as a single arrangement to the extent that section 1.401(m)-1(b)(3)(ii) of the Income Tax Regulations prohibits aggregation.

	(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)
	The
Actual Contribution Percentage of any of the 10 most highly compensated Highly Compensated Employees or any five-percent owner shall be determined by combining the
Aggregate 401(m)
Contributions and Section 414(s) Compensation of such top-10 Highly Compensated Employee or five-percent owner with the Aggregate 401(m) Contributions and Section 414(s)
Compensation of any Employees who are Family Members of such top-10 Highly Compensated Employee or five-percent owner;

	(d)
	Any
Excess Aggregate Contributions of any of the 10 most highly compensated Highly Compensated Employees or five-percent owner affected by the family-aggregation rules
described in Subsection (c) of this Section 5.7 shall be allocated among the individuals in each family aggregation group in proportion to the Aggregate 401(m) Contributions of each such
individual; and

	(e)
	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  Applicability of the Multiple-Use Limitation  

The
limitation described in this Section 5.8 shall apply only if, for a Plan Year, after the limitations of Sections 4.6, 4.7, 4.8, 5.3, 5.4 and 5.5 are applied: 

	(a)
	The
Average Deferral Percentage of Highly Compensated Employees (1) exceeds 125 percent of the Average Deferral Percentage of Nonhighly Compensated Employees, but
(2) does not exceed 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; and 

18

 

	(b)
	The
Average Contribution Percentage of Highly Compensated Employees (1) exceeds 125 percent of the Average Contribution Percentage of Nonhighly Compensated Employees,
but (2) does not exceed 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. 

    5.9  Multiple-Use Limitation  

The
sum of the Average Deferral Percentage and Average Contribution Percentage of Highly Compensated Employees shall not exceed the greater of (a) or (b) below. 

	(a)
	This
limit equals the sum of:

	(1)
	1.25
times the greater of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees; and

	(2)
	The
lesser of (A) 200 percent of the lesser of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees, or (B) the
lesser of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees plus two percentage points. 

	(b)
	This
limit equals the sum of:

	(1)
	1.25
times the lesser of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees; and

	(2)
	The
lesser of (A) 200 percent of the greater of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees, or
(B) the greater of the Average Deferral Percentage or Average Contribution Percentage of Nonhighly Compensated Employees plus two percentage points. 

    5.10  Correction of Multiple-Use Limitation  

To
the extent necessary, the limitation of Section 5.9 shall be satisfied by the distribution of Aggregate 401(m) Contributions (and income or loss allocable thereto) to Highly Compensated
Employees in the manner set forth in Sections 5.4 and 5.5, followed by the distribution of Aggregate 401(k) Contributions
(and income or loss allocable thereto) to Highly Compensated Employees in the manner set forth in Sections 4.7 and 4.8. 

    5.11  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 

19

 

(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. 

20

 

	(c)
	Effect of Suspension or Reduction on Salary

If
the Company suspends or reduces Company Contributions pursuant to this Section 5.11, it shall notify the Trustee and all Members. Each Member shall then have the right, by giving notice to
the Company on the prescribed form within the notice period prescribed by the Company, to suspend his Salary Deferrals for the period with respect to which Company Contributions are reduced or
suspended. A suspension under such circumstances and for such period shall not be treated as a voluntary suspension of Salary Deferrals under Section 4.4. A Member may also continue to
contribute Salary Deferrals to the Plan, notwithstanding a reduction or suspension of Company Contributions by reason of this Section 5.11. 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 5.11, 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. 

    5.12  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 the 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. 

    5.13  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. 

    5.14  Return of Company Contributions  

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

21

  

 
 

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 the PACCAR Stock Fund 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 his PACCAR Stock 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 

21

 

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 Treatment Losses: Interest in Trust Fund  

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

    6.6  ERISA 404(c) Requirements.  

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

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

22

 

	(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 may review any prospectuses or similar materials made available to the Plan for each Investment Option;

	(4)
	The
identification of any designated investment manager;

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

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

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

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

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

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

	 	 	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.

23

 
 
 

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)
	PACCAR Stock Account

A
PACCAR Stock Account, reflecting Company Contributions made on behalf of a Member with respect to periods after June 30, 1978. All PACCAR Stock Accounts shall be invested in the PACCAR Stock
Fund, and a Member's PACCAR Stock Account shall be adjusted to reflect earnings, losses and expenses attributable to his interest in the PACCAR Stock Fund. 

	(b)
	Salary Deferral Accounts

A
Salary Deferral Account, reflecting Salary Deferrals and Rollover Contributions made by a Member to the Plan and earnings, losses and expenses attributable to such Salary 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 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) and (c) 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 PACCAR Stock 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 PACCAR Stock Accounts received and Rollover Contributions received in such calendar month. 

24

 

	(c)
	Charges Against Accounts

The
Company shall charge against each Member's PACCAR Stock, 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. 

    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 PACCAR Stock Account under the Plan
as in
effect prior to January 1, 1989, any such forfeiture may be restored to the Member's PACCAR Stock 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, 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  Earliest Time of Distribution  

A
Member who is Totally Disabled may elect to receive his Plan Benefit in accordance with the Company's written procedures. Subject to Section 8.4, 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. 

    8.4  Latest Time of Distribution  

In
no event shall the distribution of a Member's Benefit occur or commence after the April 1 next following the close of the calendar year in which the Member attains age 701/2
(whether or not the Member ceased to be an Employee). 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. 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 

25

 

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. 

    8.6  Available Forms of Distribution  

A
Member whose employment as an Employee terminates on or after his 55th birthday 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 distributable from the Member's PACCAR Stock Account plus cash equal to the balance of the Member's Benefit;

	(b)
	A
lump sum consisting entirely of cash;

	(c)
	Annual
cash installments payable in accordance with a predetermined distribution schedule, over a period of time not exceeding the Member's life expectancy as of the date when
payments commence (as determined under actuarial tables adopted by the Company); or

	(d)
	Any
combination of the forms described in (b) and (c) above. 

A
Member whose employment as an Employee terminates prior to his 55th birthday may only elect to have his Benefit distributed in one of the forms described in (a) or (b) above. 

A
form of distribution under this Section 8.6 may be elected only if the actuarial present value of the payments expected to be made to the Member himself under such form, as of the date when
payments commence, is more than 50 percent of the actuarial present value of the total Benefit as of such date. 

    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)
	Members Whose Employment Continues Into 701/2 Year

If
a Member continues to be an Employee during the calendar year in which he attains age 701/2 (his "701/2 Year"), he shall elect a form of distribution under
Section 8.6 for the Benefit that he accrues through his 701/2 Year in accordance with the Company's written procedures on or before the last day of his 701/2 Year
or, if earlier, the date when the 

26

 

Member's
employment as an Employee terminates. An election of a form of distribution for such Benefit may be revoked and replaced with a new election at any time on or before such date. If any Member
fails to elect any form of distribution for such Benefit on or before the date prescribed by this Section 8.7(b), then such Benefit shall be distributed in the form of a lump sum consisting
entirely of cash. 

	(c)
	Members Whose Employment Continues After the 701/2 Year

If
a Member continues to be an Employee (or becomes an Employee) after his 701/2 Year, he shall elect a form of distribution under Section 8.6(a) or Section 8.6(b) for the
Benefit that he accrues during each calendar year following his 701/2 Year (determined as of the September Valuation Date of each such calendar year) in accordance with the Company's
written procedures on or before the last day of each such calendar year or, if earlier, the date when the Member's employment as an Employee terminates. An election of a form of distribution for such
Benefit may be revoked and replaced with a new election at any time on or before such date. If any Member fails to elect any form of distribution for such benefit before the date prescribed by this
Section 8.7(c), 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, if the value of a Member's entire Benefit equals $3,500 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, in the case of a Member who has made the election described in Section 5.2(b), the determination of whether the
value of the Member's entire Benefit equals $3,500 or less shall be made immediately following the last day of the Plan Year in which such Member terminated employment. 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 $3,500 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. 

    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 

27

 

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. 

    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, 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, shall not constitute a violation of this Section 8.10. 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. 

28

 

    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 Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities). 

	(c)
	Definition of Eligible Retirement Plan

An
Eligible Retirement Plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust 

29

 

described
in section 401(a) of the Code; provided that the plan accepts the Distributee's Eligible Rollover Distribution and that the plan is a defined contribution plan. However, in the case
of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. 

	(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 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. 

30

  

 
 

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. 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(an)) 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 9.6);

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

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

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

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

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

31

 

	(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. 

    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. 

32

 

 
 

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 PACCAR Stock Account as of the last Valuation Date in the 1988 Plan Year. 

    10.2  Source of Withdrawals  

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

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

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

	(c)
	Last,
from the Member's PACCAR Stock Account (to the extent that the PACCAR Stock 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 his PACCAR Stock 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 

33

 

Dealers and reported by The Wall Street Journal with respect to the trading day on which such offer was received by the Trustee at the address prescribed by it for this purpose. No commission shall be
paid in connection with any such purchase. 

 
 

ARTICLE 12
  
    PLAN ADMINISTRATION    
  

    12.1  Company as Plan Administrator  

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

    12.2  Carrying out Fiduciary Duties  

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

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

    12.3  Appointment of Public Accountant  

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

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

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

34

 

 
 

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 and an explanation of the Plan's review procedure. An application shall be granted,
or written notice of a denial shall be given to the applicant, within 90 days after the Company receives a proper application, unless special circumstances require an extension of time for
processing the application. In no event shall such an extension exceed a period of 90 days from the end of the initial 90-day period. If such an extension is required, written
notice thereof shall be furnished to the applicant before the end of the initial 90-day period. Such notice shall indicate the special circumstances requiring an extension of time and the
date by which the Company expects to render a decision. If an application is not granted, and a written notice of a denial is not given to the applicant within the time prescribed by this
Section 13.2, the application shall be deemed denied for purposes of Section 13.3. 

    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 six months after receiving written notice of the denial. The Company shall give the applicant or such representative an opportunity to review pertinent
documents (except legally privileged materials) in preparing such request for review and to submit issues and comments in writing. 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. 

35

 

    13.4  Decision on Review  

The
Company shall act upon each request for review within 60 days after receipt thereof, unless special circumstances require an extension of time for processing, but in no event shall the
decision on review be rendered more than 120 days 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. 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 and specific references to
the Plan provisions on which the decision is based. 

    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. Any such action may be brought only within 90 days after the claimant has been notified in writing that the
Company has affirmed the denial of the application following an independent review thereof, or, if the Company has failed to act on the claim within a time period prescribed by Sections 13.2 or 13.4,
within 90 days after the expiration of such time period. 

36

  

 
 

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  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. 

    14.3  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. 

    14.4  Service Upon Plan; Limitations on Actions Against Plan  

Valid service of any legal process upon the Secretary of PACCAR Inc shall constitute service of process upon the Plan. Any legal proceedings against the Plan: 

	(a)
	If
based upon any denial of a right claimed under the Plan, shall be commenced within the 90-day period prescribed by Section 13.5; or

	(b)
	If
based upon any other cause of action in respect of 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. 

    14.5  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. 

    14.6  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. 

37

 

    14.7  Spousal Consents  

This
Section 14.7 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. 

    14.8  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 15.5(b). Such reduction shall be made in accordance with Sections 15.2 and 15.3 (where applicable). 

    15.2  Effect on Future Contributions  

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

    15.3  Effect on Prior Contributions  

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

	(a)
	Excess
Annual Additions attributable to Salary Deferrals 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 

38

 

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 or Salary Deferrals shall be made as long as any amount remains in the suspense account. 

    15.4  Defined-Benefit Plans  

Except
as otherwise provided in ERISA, the Tax Equity and Fiscal Responsibility Act of 1982 and the Tax Reform Act of 1986, the sum of a Member's defined-contribution plan and defined-benefit plan
fractions with respect to any calendar year (as determined under IRC section 415(e) and, where applicable, IRC section 416(h)) shall in no event exceed one. In the event that the sum of
such fractions would exceed one, such Member's benefits under one or more qualified defined-benefit plans maintained by PACCAR Inc or any Affiliate shall be reduced to the extent required by the
foregoing limitation. 

    15.5  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 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).

	(d)
	"Contribution Limitation" with respect to any calendar year means the lesser of (1) 25 percent of the Member's
Compensation for such calendar year or (2) the dollar limitation for defined-contribution plans in effect as of January 1 of such calendar year, which shall be $30,000 or such other
amount adopted by the Commissioner of Internal Revenue to reflect a cost-of-living adjustment. 

39

 

 
 

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 5.14. 

    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 5.14. 

    16.4  Partial Terminations  

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

    16.5  Intent to Comply With ERISA  

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

    16.6  Fiduciary Powers Continue Until Distribution Complete  

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

40

 

 
 

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). 

    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-HEAVINESS 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 "TopHeavy 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. 

41

 

    18.2  Minimum Allocations  

For
any Plan Year during which the Plan is a Top-Heavy Plan, the Salary Deferrals and 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 5.11. 

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(an)). 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  Impact on Contribution Limitations  

For
any Plan Year during which the Plan is a Top-Heavy Plan, the number 111.011 shall be substituted for the number "1.25" wherever it appears in section 415(e)(2) and (3) of
the IRC. 

    18.4  Definitions  

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

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

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

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

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

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

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

	(g)
	"Wages"
means "wages" as defined in section 3401(a) of the IRC for purposes of income tax withholding at the source, but determined without regard to any rules that limit the
remuneration included in "wages" based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the IRC).
"Wages" does not include Salary Deferrals or amounts in excess of $150,000 (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 the preceding 

42

 

sentence,
the family aggregation rules of section 414(q)(6) of the IRC shall apply, as modified by section 401(a)(17) of the IRC.) 

 
 

ARTICLE 19
  
    EXECUTION    
  

To
record the amendment and restatement of the Plan to read as set forth herein, effective as of January 1, 1994, 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 13, 1994. 

	 	 	PACCAR INC.
	

 	
 	
By:	

/s/ C.M. PIGOTT   
Chairman and

Chief Executive Officer

43

 
 

APPENDIX I
  
    PLAN INVESTMENT IN CONFEDERATION LIFE GIC    
  

As
of August 12, 1994, approximately 18% of the assets held in the Income Fund Investment Option under the Plan were invested in GICs issued by Confederation Life, a Canadian corporation. On
that date, the Canadian government placed Confederation Life in receivership. Pending resolution of this receivership, effective on and after August 16, 1994, the Company has put a temporary
"freeze" on transactions involving the portion of the Income Fund invested in Confederation Life GICs. During the freeze period, no loans, withdrawals, distributions or investment transfers may be
made to the extent they would otherwise affect that portion of the Income Fund. 

 
 

AMENDMENT TO THE PACCAR SAVINGS INVESTMENT PLAN    
  

WHEREAS,
PACCAR Inc, a Delaware corporation (the "Company") has determined that it is desirable to amend the PACCAR Inc Savings Investment Plan (the "Plan"); 

NOW,
THEREFORE, the Company hereby amends the Plan as follows: 

Effective
January 1, 1995, Section 5.2(b) is amended to read as follows: 

(b)  Who
terminated employment during such plan year due to (1) death; (2) total Disability; (3) entry into the armed forces of the United States; (4) Layoff;
(5) Retirement (as defined in Section 2.1(ae)); or (6) The Company's decision to relocate a participant's spouse who is also a PACCAR employee and the participant relocates and is
not offered a job with the Company at the new location. 

Execution  

    To record the amendment of the Plan as set forth above, PACCAR Inc, by its Chairman, has executed this amendment on June 2, 1995. 

	 	 	PACCAR INC.
	

 	
 	

/s/ C.M. PIGOTT   
 C.M. Pigott
 Chairman and Chief Executive Officer

 
 

AMENDMENT NO. 2 TO THE PACCAR INC SAVINGS INVESTMENT PLAN
  
    (As Amended and Restated Effective January 1, 1994)    
  

WHEREAS,
PACCAR Inc, a Delaware corporation (the "Company") has determined that it is desirable to amend the PACCAR Inc Savings Plan (the "Plan") (1) to eliminate the
year-of-service requirement for an eligible employee to make contributions to the Plan (but not the year-of-service requirement to receive Company
contributions) and (2) to clarify that payments under the Company's Long Term Incentive Plan do not constitute benefits-bearing compensation under the Plan; 

NOW,
THEREFORE, the Company hereby amends the Plan as follows: 

	1.
	Effective
January 1, 1994, Paragraph (3) of Section 2.1(h) is amended to read in its entirety as follows:

	"(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 noncash), moving expenses, deferred compensation, payments received under an extended or longterm 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, sale, exchange or other disposition of a stock option or stock
appreciation right; and" 

	2.
	Effective
November 1, 1995, the definition of "Period of Service" that appears in Section 3.6 of the Plan is moved to Section 2.1, Definitions, and Section and
Subsection numbering and cross references in the Plan document are revised accordingly.

	3.
	Effective
November 1, 1995, Article 3 of the Plan is amended to read in its entirety as follows: 

 
 

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 on the prescribed form within the time period 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. 

    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 or Section 9.3(g), 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 PACCAR Stock Account; and

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

	4.
	Effective
November 1, 1995, Section 5.2 is amended to read in its entirety as follows: 

    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 PACCAR Stock 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(ai)); 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 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 allocated in the form of PACCAR Stock 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.
	Effective
November 1, 1995, Section 9.1 is amended to read in its entirety as follows: 

    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 he shall not be permitted to obtain a loan under the Plan if, at any time in the prior 12 months, he defaulted
on a Plan loan (as determined by the Company). 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. 

EXECUTION: To record the amendment of the Plan as set forth above, PACCAR Inc. by its Chairman has executed this amendment on the 6th day of
November, 1995. 

	 	 	PACCAR INC
	

 	
 	

/s/ C. M. PIGGOTT   
 C. M. Piggott
 Chairman and Chief Executive Officer

 
 

AMENDMENT NUMBER 3 TO THE PACCAR SAVINGS INVESTMENT PLAN    
  

    WHEREAS PACCAR Inc (the "Company") has determined to increase the maximum percentage of compensation that a member is permitted to defer under the PACCAR Inc
Savings Investment Plan (the "SIP"); pursuant to my authority to amend the Plan, I take the following action: 

Section 4.1
of the SIP is amended, effective January 1, 1998, by replacing the first paragraph thereof with the following: 

All
Members other than Restricted Members are permitted to make Salary Deferrals. Subject to 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 20% 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. 

	 	PACCAR INC
	

 	

/s/ M. C. PIGOTT   
 M. C. Pigott
 Chairman and Chief Executive Officer
	

 	

12-10-97
	 	
 Date

 
 

Amendment to Exclude Certain
  Employees from PACCAR Benefit Plans    
  

    Pursuant to my authority to amend employee benefit plans I take the following action: 

    The
PACCAR Short Term and Extended Disability Plans are hereby amended to exclude from participation any salaried employee who has an individual written contract of employment which
omits disability benefits. 

    The
PACCAR Retirement Plan Section 2.1 (h) definition of "Eligible Employee" is hereby amended to add: (4) any individual who has a written contract of employment
which omits retirement benefits. 

    The
PACCAR Savings Investment Plan Section 2.1 (j) definition of "Eligible Employee" is hereby amended to add: (5) any individual who has a written contract of
employment which omits retirement benefits. 

    Any
other benefit programs and plans including but not limited to the Separation Pay Plan, Vacation, Tuition Reimbursement, Life Insurance, and Holidays shall be amended to exclude
any individual from eligibility who has a written contract of employment if such contract omits those employee benefits. 

    The
above amendments are effective immediately. 

	 	 	PACCAR INC
	

 	
 	

By	
 	

Charles M. Pigott
Chairman and Chief Executive Officer
	

 	
 	

Date	
 	

/s/ CHARLES M. PIGOTT   

  

 
 

AMENDMENT NUMBER 5
  TO THE
  PACCAR INC SAVINGS INVESTMENT PLAN
  (As Amended and Restated Effective January 1, 1994)    
  

    WHEREAS, PACCAR Inc (the "Company") maintains the PACCAR Inc Savings Investment Plan (the "Plan"); and 

    WHEREAS, the Company previously has amended the Plan, and the Company now considers it desirable to further amend the Plan to provide
members of the Plan with the option to invest their salary deferrals in Company Stock, if the members so choose; 

    NOW, THEREFORE, by virtue of the power and authority reserved to the undersigned officer by Section 16.1 of the Plan, the Plan,
as previously amended, be and is hereby further amended, effective January 2, 2001, in the following particulars: 

    1.  By substituting the following for Sections 6.2 and 6.3 of the Plan: 

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

    6.3  Voting of PACCAR Stock  

Trust
Fund assets invested in PACCAR Stock may be registered in the name of the Trustee or any nominee; provided that the Trustee's records evidence the interest of the Trust Fund therein. Each Member
shall be entitled to vote the whole number of shares of PACCAR Stock credited to him in his PACCAR Stock 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. 

1

 

    2.  By substituting the following for Section 8.6(a) of the Plan:  

	"(a)
	A
lump sum consisting of (i) the whole shares of PACCAR Stock distributable from the Member's PACCAR Stock Account, (ii) the whole shares of PACCAR Stock held in the
Member's Salary Deferral Account and Employee Account as of the Valuation Date coincident with or immediately preceding distribution of the Member's Benefit, and (iii) cash equal to the balance
of the Member's Benefit;" 

    3.  By substituting the following for the first sentence of Article 11 of the Plan:  

"A
Member or his Beneficiary may offer to sell to the Trustee any shares of PACCAR Stock distributed from the Member's PACCAR Stock Account, Salary Deferral Account, or Employee Account as a Benefit
under Article 8." 

    IN
WITNESS WHEREOF, to record amendment of the Plan as set forth above, PACCAR Inc, by its Chairman, has executed this amendment on the 18th day of December, 2000. 

	 	 	PACCAR INC
	

 	
 	

/s/ M. C. PIGOTT   
 M.C. Pigott
 Chairman and Chief Executive Officer

2

QuickLinks

PACCAR Inc Savings Investment Plan

PACCAR INC SAVINGS INVESTMENT PLAN (As Amended and Restated Effective January 1, 1994)

TABLE OF CONTENTS

PACCAR INC SAVINGS INVESTMENT PLAN (As Amended and Restated Effective January 1, 1994)

ARTICLE 1 PURPOSE AND SCOPE

ARTICLE 2 DEFINITIONS AND CONSTRUCTION

ARTICLE 3 ELIGIBILITY AND MEMBERSHIP

ARTICLE 4 SALARY DEFERRALS AND ROLLOVER CONTRIBUTIONS

ARTICLE 5 COMPANY CONTRIBUTIONS

ARTICLE 6 THE TRUSTEE AND THE TRUST FUND

ARTICLE 7 ACCOUNTS AND VALUATIONS

ARTICLE 8 AMOUNT AND DISTRIBUTION OF BENEFITS

ARTICLE 9 LOANS

ARTICLE 10 WITHDRAWALS

ARTICLE 11 SALE OF STOCK TO TRUSTEE

ARTICLE 12 PLAN ADMINISTRATION

ARTICLE 13 CLAIMS AND REVIEW PROCEDURES

ARTICLE 14 GENERAL PROVISIONS

ARTICLE 15 CONTRIBUTION LIMITATIONS

ARTICLE 16 AMENDMENT OR TERMINATION OF PLAN

ARTICLE 17 PRIOR PROFIT SHARING PLAN

ARTICLE 18 SPECIAL TOP-HEAVINESS RULES

ARTICLE 19 EXECUTION

APPENDIX I PLAN INVESTMENT IN CONFEDERATION LIFE GIC

AMENDMENT TO THE PACCAR SAVINGS INVESTMENT PLAN

AMENDMENT NO. 2 TO THE PACCAR INC SAVINGS INVESTMENT PLAN (As Amended and Restated Effective January 1, 1994)

ARTICLE 3 ELIGIBILITY AND MEMBERSHIP

AMENDMENT NUMBER 3 TO THE PACCAR SAVINGS INVESTMENT PLAN

Amendment to Exclude Certain Employees from PACCAR Benefit Plans

AMENDMENT NUMBER 5 TO THE PACCAR INC SAVINGS INVESTMENT PLAN (As Amended and Restated Effective January 1, 1994)

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