Document:

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                                                                   EXHIBIT 10.13

                     AMENDED AND RESTATED GUARANTY AGREEMENT

         This AMENDED AND RESTATED GUARANTY AGREEMENT (as the same may be
amended, supplemented, or otherwise modified from time to time, this "Guaranty")
dated as of July 1, 2003, is made by Orion Power Holdings, Inc., a Delaware
corporation (the "Limited Guarantor"), in favor of the Secured Parties, as
defined in the Collateral Trust Agreement dated as of even date herewith (as the
same may be amended, supplemented, or otherwise modified from time to time, the
Collateral Trust Agreement), among Reliant Resources, Inc. ("RRI"), the
subsidiaries of RRI parties thereto, including the Limited Guarantor, and
Wachovia Bank, National Association, in its capacity as collateral trustee
(together with its successors in such capacity the "Collateral Trustee") for the
Secured Parties. Capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms by the Collateral Trust Agreement.

                                    RECITALS

         1.       RRI, the other Credit Parties referred to therein, the Lenders
referred to therein, Bank of America, N.A., as Administrative Agent and
Collateral Agent, Citibank, N.A., as Tranche A Collateral Agent, and the other
Agents referred to therein are party to an Amended and Restated Credit and
Guaranty Agreement dated as of March 28, 2003 (as amended, modified,
supplemented, amended and restated, refinanced or replaced from time to time,
the "Credit Agreement"), under which such Lenders have provided Tranche A Loans
(as defined therein), Term Loans (as defined therein), Revolving Credit
Commitments (as defined therein), and commitments for Senior Priority Loans, as
defined therein.

         2.       The Obligations (as defined therein) under the Credit
Agreement are guaranteed by the subsidiaries of RRI that are Credit Parties (as
defined therein) thereunder, including the Limited Guarantor and the Orion Bank
Guarantors. The guaranties of the Limited Guarantor and the Orion Bank
Guarantors are set forth in Article 8 of the Credit Agreement and are limited to
an amount determined as set forth in Schedule 8.4 to the Credit Agreement.

         3.       RRI intends to issue 9-1/4% Senior Secured Notes due 2010 in
the original principal amount of $550,000,000 and 9-1/2% Senior Secured Notes
due 2013 in the original principal amount of $550,000,000 (collectively, the
"Senior Secured Notes") pursuant to the respective Senior Secured Note
Indentures, each dated as of July 1, 2003, by and among RRI, the Guarantors
parties thereto and Wilmington Trust Company, as Trustee, for the purpose of
refinancing a portion of the Tranche A Loans and Term Loans outstanding under
the Credit Agreement. Pursuant to such Senior Secured Note Indentures, the
Guarantors, excluding the Orion Bank Guarantors, but including the Limited
Guarantor, will guarantee payment of the Senior Secured Notes and all other Note
Obligations.

         4.       RRI contemplates issuing or incurring Parity Secured Debt in
the future which would be guaranteed by some or all of the Grantors, including
the Limited Guarantor.

         5.       In connection with the issuance of the Senior Secured Notes
and the required guarantees thereof, and in contemplation of the future issuance
of Parity Secured Debt and the

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required guarantees thereof, the provisions contained in Article 8 of the Credit
Agreement as applicable to the Limited Guarantor are being removed and amended
and restated hereby to facilitate the ratable sharing among the Secured Parties
of the limited amount permitted to be guaranteed thereunder.

         6.       The Limited Guarantor is executing and delivering this
Guaranty in amendment and restatement of the existing guaranty as set forth in
the Credit Agreement to induce the current and future holders of Secured
Obligations to extend credit to RRI. The Limited Guarantor has concluded that it
will derive substantial benefit from such transactions.

         NOW, THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Limited Guarantor agrees for the benefit of the Secured
Parties as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01 Certain Defined Terms. (a) As used in this Guaranty, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

         "Applicable Law" means all provisions of statutes, rules, regulations
and orders of the United States, any state thereof or municipality therein, or
of any foreign governmental body, or of any regulatory agency, in each case,
applicable to the Person in question or any assets of such Person, and all
orders and decrees of all courts and arbitrators in proceedings or actions in
which the Person in question is a party or by which such Person or any asset of
such Person is bound.

         "Guaranteed Obligations" means all Secured Obligations as defined in
the Collateral Trust Agreement.

         "Mortgaged Real Property Assets" means those (i) parcels of real
property, owned or leased at such time directly or indirectly by any Grantor,
together with in each case, all buildings, improvements, appurtenant fixtures,
easements and other property and rights of any Grantor or any Subsidiary of a
Grantor incidental to the ownership or lease (as applicable) of such parcel of
real property or any of the foregoing and (ii) rights of way, easements and all
other similar rights granted to any of the Grantors (excluding leases) for the
right to use and/or have access to and through real property that are or should
be evidenced by instruments recorded in the appropriate real property records
office of each of the counties where such real property is located , in each
case, on which a Lien has been granted by the applicable Grantor to the
Collateral Trustee (for the benefit of the Secured Parties).

         "Person" means any natural person, corporation, division of a
corporation, partnership, limited liability partnership, limited liability
company, trust, joint venture, association, company, estate, unincorporated
organization or government or any agency or political subdivision thereof.

         "Post-Petition Interest" means interest accruing after the filing of
any petition in bankruptcy, or the commencement of any case, proceeding or
action relating to the bankruptcy, reorganization or

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insolvency of RRI or any other Grantor under any Secured Debt Document (or
interest that would accrue but for the operation of applicable bankruptcy,
reorganization or insolvency laws), whether or not a claim for post-filing or
post-petition interest is allowed or allowable as a claim in any such case,
proceeding or action.

         "Termination Date" means the date on which (a) the Bank Credit
Termination Date (as defined in the Credit Agreement) shall have occurred and
(b) all of the Guaranteed Obligations shall have been indefeasibly paid in full
in cash.

         Section 1.02 Other Defined Terms. Other capitalized terms used herein,
but not defined herein, shall unless otherwise provided herein or the context
otherwise requires, have the respective meanings ascribed to such terms in the
Collateral Trust Agreement.

         Section 1.03 Miscellaneous. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Guaranty shall refer
to this Guaranty as a whole and not to any particular provision of this
Guaranty, and Article and Section references are to Articles and Sections of
this Guaranty, unless otherwise specified. The words "include," "includes," and
"including" shall be deemed to be followed by the phrase "without limitation."

                                   ARTICLE II

                                    GUARANTY

         Section 2.01 Guaranty.

         (a)      The Limited Guarantor unconditionally and irrevocably
guarantees to the Secured Parties the due and punctual payment by, and
performance of, the Guaranteed Obligations (including Post-Petition Interest).
The Limited Guarantor further agrees that the Guaranteed Obligations may be
increased, extended or renewed, in whole or in part, without notice or further
assent from it (except as may be otherwise required herein), and it will remain
bound upon this Guaranty notwithstanding any increase, extension or renewal of
any Guaranteed Obligation.

         (b)      The Limited Guarantor waives acceptance hereof, presentation
to, demand for payment from and protest to, as the case may be, any Grantor or
any other guarantor of any of the Guaranteed Obligations, and also waives notice
of protest for nonpayment, notice of acceleration, notice of intent to
accelerate and any other notice not expressly provided for herein. The
obligations of the Limited Guarantor hereunder shall not be released, discharged
or otherwise affected by (i) the failure of the Collateral Trustee, any
sub-agent thereof, any Representative, or any Secured Party (as appropriate) to
assert any claim or demand or to enforce any right or remedy against RRI, any
other Grantor or any other guarantor or obligor under the provisions of the
Secured Debt Documents or any other agreement or otherwise; (ii) any extension
or renewal of any provision hereof or thereof; (iii) the failure of any Secured
Party to obtain the consent of the Limited Guarantor with respect to any
rescission, waiver, compromise, acceleration, supplement, amendment or
modification of any of the terms or provisions of any Secured Debt Document or
any other agreement; (iv) the release, exchange, waiver, foreclosure,
impairment, non-perfection or invalidity of any security held by the Collateral
Trustee or any sub-agent thereof or any Secured Party, or any guarantee or other
liability of any third party, for the Guaranteed Obligations or any of them; (v)
the failure or inability of the Collateral Trustee, any sub-agent thereof, any
Representative, or any Secured Party (as appropriate)

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to exercise any right or remedy against any other Grantor or any other guarantor
of the Guaranteed Obligations; (vi) the release or substitution of any Grantor
or guarantor; (vii) any change in the corporate existence, structure or
ownership of RRI, any Grantor or other guarantor or any obligor under the
Secured Debt Documents, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any such Person or its respective assets, or any
resulting release or discharge of any obligation of any such Person contained in
any Secured Debt Document; (viii) the existence of any claim, set-off or other
rights which any Grantor may have at any time against RRI, any other Grantor,
any obligor under the Secured Debt Documents, the Collateral Trustee, any
Representative, any Secured Party or any other Person, whether or not arising in
connection herewith or any unrelated transaction (provided that nothing herein
shall prevent the assertion of any such claim by separate suit or compulsory
counterclaim); or (ix) any provision of Applicable Law or regulation purporting
to prohibit the payment by RRI or any other Grantor of any amount payable by it
under any Secured Debt Document.

         (c)      The Limited Guarantor further agrees that this Guaranty
constitutes a guaranty of performance and of payment when due, and not just of
collection, and waives any right to require that any resort be had by the
Collateral Trustee, any sub-agent thereof, any Representative, or any other
Secured Party (as appropriate) to any security held for payment of the
Guaranteed Obligations or to any balance of any deposit, account or credit on
the books of the Collateral Trustee, any sub-agent thereof, any Representative,
or any other Secured Party in favor of RRI or any other Grantor, or to any other
Person.

         (d)      The Limited Guarantor hereby expressly assumes all
responsibilities to remain informed of the financial condition of each of the
other Grantors and any other guarantors, any circumstances affecting the
Collateral or the Mortgaged Real Property Assets, and the ability of RRI and the
other Grantors to perform under the Secured Debt Documents.

         (e)      The Limited Guarantor's obligations under this Guaranty shall
not be released, discharged or otherwise affected by the genuineness, validity,
regularity or enforceability of the Guaranteed Obligations, any instrument
evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, or extent of any Lien on any Collateral or Mortgaged
Real Property Asset securing any Guaranteed Obligation or by any other
circumstance relating to the Guaranteed Obligations or otherwise which might
otherwise constitute a defense to this Guaranty. The Limited Guarantor
acknowledges that none of the Collateral Trustee, any sub-agent thereof, any
Representative, or any other Secured Party makes any representation or warranty
with respect to any such circumstances or have any duty or responsibility
whatsoever to the Limited Guarantor in respect to the management and maintenance
of the Guaranteed Obligations or any collateral security for the Guaranteed
Obligations.

         Section 2.02 No Impairment of Guaranty. The obligations of the Limited
Guarantor under this Guaranty shall not be subject to any reduction, limitation,
impairment or termination for any reason (except the indefeasible payment and
performance in full in cash of the applicable Guaranteed Obligations or the
release of this Guaranty pursuant to the terms of the Secured Debt Documents),
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Guaranteed Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of the Limited
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Collateral

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Trustee, any sub-agent thereof, any Representative, or any other Secured Party
to assert any claim or demand or to enforce any right or remedy under this
Guaranty, any Secured Debt Document or any other agreement, by any waiver or
modification of any provision hereof or thereof, by any default, failure or
delay, willful or otherwise, in the performance of any of the Guaranteed
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Limited Guarantor or would otherwise operate as a discharge of the Limited
Guarantor as a matter of law, unless and until the Termination Date has
occurred.

         Section 2.03 Continuation and Reinstatement.

         (a)      The Limited Guarantor further agrees that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by any Secured Party upon the
bankruptcy or reorganization of RRI or any Grantor, or otherwise. In furtherance
of the provisions hereof, and not in limitation of any other right which any
Secured Party may have at law or in equity against RRI, any other Grantor or any
other Person by virtue hereof, upon failure of RRI or any other Grantor which is
a borrower under any Secured Debt Document to pay any Secured Obligation when
and as the same shall become due, whether at maturity, by acceleration, after
notice or otherwise, the Limited Guarantor hereby promises to and will, upon
receipt of written demand by the Collateral Trustee pursuant to an Act of
Secured Debtholders, forthwith pay or cause to be paid to the Collateral Trustee
for the benefit of the Secured Parties, in cash, an amount equal to the unpaid
amount of such Secured Obligation, subject to the limitations of Section 2.04,
including interest thereon at the rate provided in the applicable Secured Debt
Document (including any applicable default rate of interest). All payments made
hereunder shall be subject to distribution as provided in Section 2.06.

         (b)      Upon any payment as provided above, the applicable
Representative shall assign, without recourse and without representation or
warranty of any kind, such Secured Obligation, and the Collateral Trustee shall,
without recourse and without representation or warranty of any kind, to assign
all security interests, if any, then held by the Collateral Trustee, in respect
of such Secured Obligation, to the Limited Guarantor; such assignment to be
subordinate and junior to the rights of the Collateral Trustee or the Tranche A
Collateral Agent on behalf of the Secured Parties or the Lenders owed the
Adjusted Tranche A Obligations (as defined in the Citibank Intercreditor
Agreement), as applicable, with regard to amounts payable by RRI or any other
Grantor in connection with the remaining unpaid Secured Obligations (including
Post-Petition Interest) and to be pro tanto to the extent to which the Secured
Obligation in question was discharged by the Limited Guarantor.

         (c)      All rights of the Limited Guarantor against any Grantor which
is a borrower under any Secured Debt Document, arising as a result of the
payment by the Limited Guarantor of any sums to the a Representative for the
benefit of any Secured Parties hereunder, to the Tranche A Agent for the benefit
of the Tranche A Lenders (as defined in the Credit Agreement), or directly to
any Secured Party hereunder by way of right of subrogation or otherwise, shall
in all respects be subordinated and junior in right of payment to, and shall not
be exercised by, the Limited Guarantor until and unless, the occurrence of the
Termination Date. If any amount shall be paid to the Limited Guarantor for the
account of RRI or any other Grantor which is a borrower under any Secured Debt
Document, such amount shall be held in trust for the benefit of the Secured
Parties, segregated from

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the Limited Guarantor's own assets, and shall forthwith be paid to the
Collateral Trustee on behalf of the applicable Secured Parties to be credited
and applied to the Guaranteed Obligations, whether matured or unmatured.

         Section 2.04 Limitation on Guaranteed Amount; Subordination.

         (a)      Notwithstanding any other provision of any Secured Debt
Document, the amount guaranteed by the Limited Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations hereunder shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or to being
set aside or annulled under any Applicable Law relating to fraud on creditors.
In determining the limitations, if any, on the amount of the Limited Guarantor's
obligations hereunder pursuant to the preceding sentence, it is the intention of
the Limited Guarantor and the beneficiaries hereof that any rights of
subrogation or contribution which the Limited Guarantor may have under any
agreement (including the Contribution Agreement dated of March 28, 2003, among
the Grantors, as amended) or Applicable Law shall be taken into account.

         (b)      Notwithstanding anything to the contrary contained in this
Guaranty (but subject to the terms and provisions of Section 2.04(a) above), the
total amount guaranteed by the Limited Guarantor hereunder shall be (i) limited
to an amount calculated as described in Schedule 2.04 hereto, and (ii)
subordinated to the extent described in Schedule 2.04(a) and Schedule 2.04(b)
hereto; provided, however, that the foregoing shall cease to apply to the
Limited Guarantor on the date on which the contractual obligation (or
replacement thereof to the extent permitted by the terms of the Secured Debt
Documents) that prohibited the Limited Guarantor from guaranteeing the
Guaranteed Obligations in full or prohibited it from guaranteeing the Guaranteed
Obligations on a non-subordinated basis, as applicable, shall no longer be in
effect.

         Section 2.05 Stay of Acceleration. If acceleration of the time for
payment of any amount payable by RRI or another Grantor under any Secured Debt
Document is stayed upon the insolvency, bankruptcy or reorganization of RRI or
such other Grantor, all such amounts otherwise subject to acceleration under the
terms of such Secured Debt Document shall nonetheless be payable by the Limited
Guarantor (unless it is the Grantor whose payment is so stayed) under this
Guaranty forthwith on demand by the Collateral Trustee pursuant to an Act of
Secured Debtholders.

         Section 2.06 Distribution of Payments. Any amounts received by the
Collateral Trustee hereunder shall be deposited in the Collateral Account and
shall, to the extent available for distribution, be distributed by the
Collateral Trustee in accordance with the provisions of Article V of the
Collateral Trust Agreement.

                                   ARTICLE III

                           REPRESENTATIONS, WARRANTIES

         Section 3.01 Representations and Warranties. The Limited Guarantor
hereby represents and warrants to the Secured Parties as follows:

                  (a)      The Limited Guarantor is duly organized or validly
formed and is validly existing under the laws of its jurisdiction of
incorporation or formation.

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                  (b)      The execution, delivery and performance by the
Limited Guarantor of this Guaranty are within the Limited Guarantor's legal
powers and have been duly authorized by all necessary legal action of the
Limited Guarantor.

                  (c)      This Guaranty has been duly executed and delivered by
the Limited Guarantor and is the legal, valid and binding obligation of the
Limited Guarantor enforceable against the Limited Guarantor in accordance with
its terms, except as the enforceability hereof may be limited by the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and by general principles of equity.

                                   ARTICLE IV

                                  MISCELLANEOUS

         Section 4.01 Notice. Any demand, notice, request, instruction,
correspondence or other document to be given hereunder by the Limited Guarantor
to the Collateral Trustee or any Secured Parties or by the Collateral Trustee or
any Secured Parties to the Limited Guarantor or any other Secured Parties shall
be in writing and delivered as provided in Section 9.03 of the Collateral Trust
Agreement.

         Section 4.02 Amendment or Waiver. No amendment, waiver, supplement or
other modification of any provision of this Guaranty shall be effective unless
the same shall be in writing and signed by the Limited Guarantor and consented
to in writing by the Collateral Trustee pursuant to an Act of Secured
Debtholders and then such amendment, waiver, supplement or other modification
shall be effective only in the specific instance and for the specific purpose
for which given.

         Section 4.03 Successors and Assigns. This Guaranty shall be binding
upon the Limited Guarantor and its successors and assigns, shall inure to the
benefit of each Secured Parties and their respective successors and permitted
assigns and transferees pursuant to the Secured Documents, and shall be
enforceable by the Secured Parties through their respective Representatives;
provided that the Limited Guarantor may not assign or transfer any of its rights
or obligations under this Guaranty without the prior written consent of the
Collateral Trustee pursuant to an Act of Secured Debtholders.

         Section 4.04 Severability. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall not invalidate the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         Section 4.05 Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

         Section 4.06 Headings. Section, subsection, and other headings used in
this Guaranty are for convenience only, and shall not affect the construction of
this Guaranty.

         Section 4.07 Beneficiaries. All present and future Secured Parties are
express third party beneficiaries of this Guaranty. This Guaranty shall be
deemed accepted by each Secured Party and

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its Representative on the date on which such Person becomes a Secured Party or
Representative, as applicable.

         IN WITNESS WHEREOF, the Limited Guarantor has caused its duly
authorized officer to execute and deliver this Guaranty as of the date first
above written.

                                 ORION POWER HOLDINGS, INC.

                                 By: /s/ William S. Waller, Jr.
                                    --------------------------------------
                                 Name:  William S. Waller, Jr.
                                 Title: Vice President and Treasurer

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                                  SCHEDULE 2.04

                 LIMITATIONS APPLICABLE TO THE LIMITED GUARANTOR

Notwithstanding anything to the contrary contained in this Guaranty (but subject
to the terms and provisions of Section 2.04(a) and the provisions contained in
Section 2.04(b)), the amount guaranteed by the Limited Guarantor hereunder is
limited.

As required by the Indenture dated April 27, 2000 pursuant to which the Limited
Guarantor issued its 12% Senior Notes due 2010 ("Indenture"), the amount
guaranteed hereunder by the Limited Guarantor must meet each of the conditions
listed below.

1) The fixed charge ratio of 2:1 (calculated in accordance with Section 4.09 of
the Indenture) is satisfied for the Limited Guarantor's most recently ended four
full fiscal quarters, treating the amount guaranteed by the Orion Bank
Guarantors under the Credit Agreement and by the Limited Guarantor under the
Guaranty as indebtedness and giving effect to such Guaranty as if it had been
incurred at the beginning of such four quarter period, which amount is
calculated as of March 28, 2003, to be $1,154,594,000 as of December 31, 2002,
and

2) Either:

         a.       the guaranteed amount hereunder, collectively with the amount
                  guaranteed by the Orion Bank Guarantors, does not exceed 5% of
                  the Limited Guarantor's consolidated tangible assets
                  (collectively with the Limited Guarantor's investments in
                  Liberty Electric Power, LLC., and any other investments
                  relying upon the "permitted investment" exemption under the
                  Indenture), which consolidated tangible assets are calculated
                  as of March 28, 2003, to be $3,942,483,000 as of December 31,
                  2002 (5% of which is $197,124,000); or

         b.       (i) at the time the Limited Guarantor entered into the
                  Guaranty, and after giving pro forma effect thereto and to the
                  guaranties of the Orion Bank Guarantors, the Limited Guarantor
                  would have been permitted to incur at least $1.00 of
                  additional indebtedness (treating the Guaranty and the
                  guaranties of the Orion Bank Guarantors as indebtedness)
                  pursuant to the fixed charge ratio described above; and

                  (ii) the Guaranty, collectively with the guaranties of the
                  Orion Bank Guarantors, satisfies the restricted payment
                  ceiling test in Section 4.07 of the Indenture for the payment
                  of dividends (such restricted payment ceiling being,
                  generally, the sum of 50% of the aggregate consolidated net
                  income for the Limited Guarantor plus 100% of any
                  contributions to common equity from the sale of common stock),
                  which restricted payment ceiling is calculated as of March 28,
                  2003, to be $1,100,450,000 as of December 31, 2002.

Furthermore, because the Orion Bank Guarantors are separately guaranteeing the
Guaranteed Obligations, the amount guaranteed hereunder shall be reduced by any
amounts paid by the Orion Bank Guarantors pursuant to their guaranties of the
Guaranteed Obligations.

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                                SCHEDULE 2.04(a)

         SUBORDINATION PROVISIONS RELATING TO ORION POWER HOLDINGS, INC.
                                    AS TO THE
               OPMW CREDIT AGREEMENT AND THE OPNY CREDIT AGREEMENT

         Reference is made to the AMENDED AND RESTATED GUARANTY AGREEMENT (as
the same may be amended, supplemented, or otherwise modified from time to time,
the "Guaranty") dated as of July 1, 2003, made by Orion Power Holdings, Inc., a
Delaware corporation ("OPH"), in favor of the Secured Parties, as defined in the
Collateral Trust Agreement dated as of even date therewith (as the same may be
amended, supplemented, or otherwise modified from time to time, the "Collateral
Trust Agreement"), among Reliant Resources, Inc. ("RRI"), the subsidiaries of
RRI parties thereto, including OPH, and Wachovia Bank, National Association, in
its capacity as collateral trustee (together with its successors in such
capacity the "Collateral Trustee") for the Secured Parties.

         The amounts guaranteed by OPH under the Guaranty are subordinated to
the extent hereinafter set forth in this Schedule 2.04(a). The Subordinated
Creditors (as defined below), by their acceptance of the execution and delivery
by OPH of the Guaranty, and the Lead Arrangers and Senior Creditors (as defined
below), by their acceptance of the benefits of this Schedule 2.04(a), each
agrees to be bound hereby.

         SECTION 1. Definitions.

                  1.01. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:

         "Commitments" means and includes the "Commitments" under and as such
term is defined as of the date hereof in the OPMW Credit Agreement and the
"Commitments" under and as such term is defined as of the date hereof in the
OPNY Credit Agreement.

         "Credit Party" means and includes a "Credit Party" under and as such
term is defined as of the date hereof in the OPMW Credit Agreement and a "Credit
Party" under and as such term is defined as of the date hereof in the OPNY
Credit Agreement, in each case, other than OPH.

         "Obligations" means the "Obligations" under and as defined as of the
date hereof in the OPMW Credit Agreement and the "Obligations" under and as
defined as of the date hereof in the OPNY Credit Agreement other than, and the
term "Obligations" hereunder shall not include, loans made after the date hereof
except pursuant to the Commitments in effect on the date hereof or advanced by
any one or more Senior Creditors under a Senior Credit Agreement (or related
collateral documents) in order to preserve Collateral (as such term is defined
as of the date hereof in the Senior Credit Agreements).

         "OPH Lead Arrangers" means Banc of America Securities LLC and BNP
Paribas, as lead arrangers under the Senior Credit Agreements, and their
successors or assigns as such lead arrangers.

         "OPMW Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated as of October 28, 2002, among Orion Power MidWest, L.P., as
borrower, Bank of America,

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N.A., as administrative agent, Banc of America Securities LLC and BNP Paribas,
as Lead Arrangers, the issuing bank, BNP Paribas, as syndication agent, The Bank
of Nova Scotia, Mizuho Corporate Bank, Ltd. and Bayerische Hypo-Und Vereinsbank
AG, New York Branch, as documentation agents and the lenders named on the
signature page thereto, as such agreement may be amended, amended and restated,
modified, renewed, refunded, replaced or refinanced from time to time in any
manner that does not increase the principal amount of Senior Indebtedness.

         "OPNY Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of October 28, 2002, among Orion Power New York, L.P., as
borrower, Bank of America, N.A., as administrative agent, Banc of America
Subordinated Indebtedness LLC and BNP Paribas, as Lead Arrangers and joint book
runners, the issuing bank, BNP Paribas, as syndication agent, Union Bank of
California, N.A., CoBank, ACB and Deutsche Bank AG New York and/or Cayman Island
Branch, as documentation agents and the lenders named on the signature pages
thereto, as such agreement may be amended, amended and restated, modified,
renewed, refunded, replaced or refinanced from time to time in any manner that
does not increase the principal amount of Senior Indebtedness.

         "OPH Pledge Agreement" means the Membership Interest Pledge Agreement,
dated as of October 28, 2002, between OPH and Bank of America, N.A., as such
agreement may be amended, amended and restated, modified, renewed, refunded,
replaced or refinanced from time to time in any manner that does not increase
the principal amount of Senior Indebtedness.

         "Senior Credit Agreements" means the OPMW Credit Agreement and the OPNY
Credit Agreement.

         "Senior Creditors" means the "Secured Parties" as defined as of the
date hereof in the Senior Credit Agreements and their respective successors and
assigns.

         "Senior Indebtedness" means all present and future Obligations.

         "Subordinated Creditors" means each of the "Secured Parties" as defined
as of the date hereof in the Collateral Trust Agreement, and their respective
successors and assigns.

         "Subordinated Indebtedness" means all present and future obligations,
liabilities and indebtedness of OPH to the Subordinated Creditors pursuant to
the Guaranty.

         SECTION 2. Subordination. OPH and each Subordinated Creditor, for the
benefit of the OPH Lead Arrangers and the Senior Creditors, agrees as follows:

                  2.01. Agreement to Subordinate. The Subordinated Indebtedness
is subordinated in right of payment, to the extent and in the manner provided in
this Section 2, to the Senior Indebtedness, and that such subordination is for
the benefit of and enforceable by the OPH Lead Arrangers for the benefit of the
Senior Creditors.

                  2.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of OPH to creditors upon a total or partial
liquidation or a total or partial dissolution of OPH or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to OPH
or its properties: (1) the Senior Creditors shall be entitled to receive payment
in full of all Senior Indebtedness before the Subordinated Creditors shall be
entitled to receive any payment of

                                      -11-

<PAGE>

principal of or interest on or other amounts with respect to the Subordinated
Indebtedness; and (2) until all Senior Indebtedness is paid in full, any
distribution to which the Subordinated Creditors would be entitled but for this
Section 2 shall be made to the OPH Lead Arrangers for the benefit of the Senior
Creditors as their interests may appear.

                  2.03. Default on Senior Indebtedness. If a default in payment
of any Senior Indebtedness occurs, and the Collateral Trustee has received
written notice from the OPH Lead Arrangers of (i) the occurrence and existence
of such payment default and (ii) the dollar amount of Senior Indebtedness
outstanding at such time, OPH may not pay any amounts with respect to the
Subordinated Indebtedness unless theretofore or concurrently therewith, the OPH
Lead Arrangers, for the benefit of the Senior Creditors, shall have received
payment in full, from OPH or from another Person for OPH's account, of such
dollar amount of outstanding Senior Indebtedness.

                  2.04. When Distributions Must Be Paid Over. In the event that
the Collateral Trustee or any Subordinated Creditor receives any payment of any
Subordinated Indebtedness at a time when such payment is required by this
Section 2 to be paid first to the OPH Lead Arrangers for the benefit of the
Senior Creditors, such payment shall be held by the Collateral Trustee or such
Subordinated Creditor, in trust for the benefit of, and shall be paid forthwith
over and delivered, upon proper written request, to the OPH Lead Arrangers, for
the benefit of the Senior Creditors, as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid and
required by this Section 2 to be paid before payment of Subordinated
Indebtedness, to the extent necessary to pay such amount of Senior Indebtedness
in full in accordance with its terms after giving effect to any concurrent
payment or distribution to or for the Senior Creditors.

                  2.05. Subrogation. After all Senior Indebtedness is paid in
full and until the Subordinated Indebtedness is paid in full, the Subordinated
Creditors shall be subrogated to the rights of the OPH Lead Arrangers for the
benefit of the Senior Creditors to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the
Subordinated Creditors have been applied to payment of Senior Indebtedness. A
distribution made under this Section 2 to the OPH Lead Arrangers for the benefit
of the Senior Creditors which otherwise would have been made to the Subordinated
Creditors is not, as between OPH and the Subordinated Creditors, a payment by
OPH on Senior Indebtedness.

                  2.06. Substantive Consolidation In the event that in any
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to OPH or its properties, there shall occur a substantive consolidation
of OPH and any Credit Party (whether or not RRI is also substantively
consolidated in any such proceeding), neither the Collateral Trustee nor any
Secured Party shall have or assert any claim in respect of the "Guaranteed
Obligations" (as defined in the Guaranty) against any assets of any Credit Party
until the earlier of (i) such time as the Senior Indebtedness shall have been
paid in full or (ii) until such time as the Senior Creditors shall have received
an amount equal to the guaranty amount calculated for OPH under Schedule 2.04
(as in effect on the date hereof) to the Guaranty in respect of the Senior
Indebtedness in any such proceeding.

                  2.07. Reliance The OPH Lead Arrangers, in executing and
delivering a letter indicating confirmation of the compliance of the
Subordinated Indebtedness with certain of the terms of Section 7.16 of the OPMW
Credit Agreement and Section 7.17 of the OPNY Credit Agreement, are relying on
the terms and conditions of the subordination provisions contained herein.

                                      -12-

<PAGE>

                  2.08. Collateral Trustee Not Fiduciary for Senior Creditors.
The Collateral Trustee shall not be deemed to owe any fiduciary duty to the OPH
Lead Arrangers or the Senior Creditors and shall not be liable to the OPH Lead
Arrangers or any Senior Creditor if it shall mistakenly pay over or distribute
to the Subordinated Creditors, OPH, or any other Person, money or assets to
which OPH Lead Arrangers or any Senior Creditor shall be entitled by virtue of
this Section 2 or otherwise, except if such payment was made as a result of the
willful misconduct or gross negligence of the Collateral Trustee.

         SECTION 3. Further Assurances. The Collateral Trustee and the Lead
Arrangers, at any time and from time to time upon the written request of the
other, will promptly execute and deliver such further instruments and documents
and take such further actions as the other may reasonably request for the
purposes of obtaining or preserving the full benefits of this Schedule 2.04(a)
and of the rights, priorities and powers herein granted.

         SECTION 4. Relative Rights. This Schedule 2.04(a) defines the relative
rights of the Subordinated Creditors and the Senior Creditors, who are express
third-party beneficiaries hereof. Nothing in this Schedule 2.04(a) shall: (1)
impair, as between OPH and the Subordinated Creditors, the obligation of OPH,
which is absolute and unconditional, to pay amounts owing in respect of the
Subordinated Indebtedness in accordance with its terms; or (2) prevent the
Collateral Trustee or any Subordinated Creditor (or any agent or trustee
thereof) from exercising its available remedies upon an actionable default,
subject to the rights of the Senior Creditors to receive distributions otherwise
payable to the Subordinated Creditors. No other Person shall have any right,
benefit or other interest under this Schedule 2.04(a).

         SECTION 5. Miscellaneous.

                  5.01. Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand, overnight
courier, certified or registered mail or sent by facsimile addressed as follows:

         If to the Collateral Trustee, to it at:

                  Wachovia Bank, National Association
                  5847 San Felipe, Suite 1050
                  Houston, Texas 77057

                  Attention: Corporate Trust Department
                  Facsimile No.: (713) 278-4329

         If to the Lead Arrangers, to them at their respective address
         for notice set forth in Annex II to the Senior Credit
         Agreements.

                                      -13-

<PAGE>

         If to OPH, to it at:

                  Orion Power Holdings, Inc.
                  1111 Louisiana
                  Houston, Texas 77002

                  Attention: Rex Clevenger
                             Senior Vice President
                  Facsimile No.: (713) 497-0988

         with a courtesy copy to:

                  Reliant Resources, Inc.
                  1111 Louisiana
                  Houston, Texas 77002

                  Attention: General Counsel
                  Facsimile No.: (713) 497-0116

or such other address as such Person may from time to time designate by giving
written notice to the other Persons hereunder. Any failure of any Person giving
notice pursuant to this Section 5.01 to provide a courtesy copy to another
Person as provided herein shall not affect the validity of such notice. All
notices and other communications given to any Person hereto in accordance with
the provisions of this Section 5.01 shall be deemed to have been given (x) on
the fifth Business Day after the date when sent, postage prepaid, return receipt
requested, if by certified or registered mail, (y) when delivered, if delivered
by hand or overnight courier service, or (z) when receipt is acknowledged, if by
facsimile, in each case addressed to such party as provided in this Section 5.01
or in accordance with the latest unrevoked written direction from such Person.

                  5.02. GOVERNING LAW. THIS SCHEDULE 2.04(A) SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  5.03. WAIVER OF JURY TRIAL. OPH, THE COLLATERAL TRUSTEE, THE
SUBORDINATED CREDITORS, THE OPH LEAD ARRANGERS, THE LEAD ARRANGERS AND THE
SENIOR CREDITORS EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY LITIGATION OR DISPUTE DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SCHEDULE 2.04(A),
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, OPH, THE COLLATERAL TRUSTEE, THE OPH
LEAD ARRANGERS, THE SUBORDINATED CREDITORS, THE LEAD ARRANGERS AND THE SENIOR
CREDITORS EACH HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION OR DISPUTE REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES.

                  5.04. Headings. The headings of each Section of this Schedule
2.04(a) are for convenience only and shall not define or limit the provisions
thereof.

                                      -14-

<PAGE>

                  5.05. Severability. In the event any one or more of the
provisions contained in this Schedule 2.04(a) should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction).

                  5.06. No Amendments. Neither this Schedule 2.04(a) nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by each of OPH, the Collateral
Trustee and the Lead Arrangers.

                  5.07. No Impairment of Sponsor Indebtedness. Notwithstanding
anything to the contrary that may be set forth in the Guaranty or this Schedule
2.04(a), nothing in the Guaranty or this Schedule 2.04(a) is intended to, or
shall, in any way limit or restrict the Lenders (as that term is defined in the
Senior Credit Agreements) in exercising their rights and remedies under the
Senior Credit Agreements and under the other Financing Documents (as that term
is defined in the Senior Credit Agreements).

                                      -15-

<PAGE>

                                SCHEDULE 2.04(b)

         SUBORDINATION PROVISIONS RELATING TO ORION POWER HOLDINGS, INC.
                                       AND
                                  OPH INDENTURE

         Reference is made to the AMENDED AND RESTATED GUARANTY AGREEMENT (as
the same may be amended, supplemented, or otherwise modified from time to time,
the "Guaranty") dated as of July 1, 2003, made by Orion Power Holdings, Inc., a
Delaware corporation ("OPH"), in favor of the Secured Parties, as defined in the
Collateral Trust Agreement dated as of even date therewith (as the same may be
amended, supplemented, or otherwise modified from time to time, the "Collateral
Trust Agreement"), among Reliant Resources, Inc. ("RRI"), the subsidiaries of
RRI parties thereto, including OPH, and Wachovia Bank, National Association, in
its capacity as collateral trustee (together with its successors in such
capacity the "Collateral Trustee") for the Secured Parties. Reference is also
made to Schedule 2.04(a) to the Guaranty (as the same may be amended, amended
and restated, modified, or replaced from time to time, "Schedule 2.04(a)").

         The amounts guaranteed by OPH under the Guaranty have been subordinated
to the "Obligations" (as such term is defined in Schedule 2.04(a), such
Obligations, as defined therein, the "Project Obligations") to the extent set
forth in Schedule 2.04(a).

         The Project Obligations are secured by a lien on assets of OPH pursuant
to the OPH Pledge Agreement (as defined below), and consequently, for so long as
the Project Obligations are secured by such assets of OPH, or any other property
of OPH, the Project Obligations constitute "Indebtedness" (as defined in the
Indenture defined below) of OPH.

         Section 4.09 of the Indenture provides that OPH shall not incur
Indebtedness that is contractually subordinated to other Indebtedness of OPH
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes pursuant to terms no less favorable to the Holders of the Notes (as
such terms are defined below).

         OPH, having entered into the Guaranty and having subordinated the
Indebtedness thereunder to the Project Obligations is, as contemplated by
Section 4.09 of the Indenture, providing this subordination for the benefit of
the Holders of the Notes.

         The Subordinated Creditors (as defined below), by their acceptance of
the benefits of the Guaranty, and the Trustee and the Holders (as defined
below), by their acceptance of the benefits of this Schedule 2.04(b), each
agrees to be bound hereby.

         SECTION 1. Definitions.

              1.01.     Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:

         "Holder" has the meaning assigned to such term in the Indenture.

         "Indebtedness" has the meaning assigned to such term in the Indenture
as in effect on the date hereof.

                                      -16-

<PAGE>

         "Indenture" means the Indenture dated as of April 27, 2000, between OPH
and the Trustee, together with any amendments or supplements thereto that do not
increase the principal outstanding amount of the Obligations under the Notes or
such Indenture.

         "Obligations" has the meaning assigned to such term in the Indenture.

         "Notes" means the 12% Senior Notes due 2010 issued by OPH pursuant to
the Indenture.

         "OPH Pledge Agreement" has the meaning assigned to such term in
Schedule 2.04(a).

         "Senior Bank Indebtedness" means the "Senior Indebtedness" as that term
is defined in Schedule 2.04(a).

         "Senior Indebtedness" means all present and future Obligations of OPH
to the Holders under the Notes outstanding on the date hereof and under any
replacement Notes issued pursuant to Section 2.07 of the Indenture.

         "Subordinated Creditors" means each of the Secured Parties, and their
successors and assigns.

         "Subordinated Indebtedness" means all present and future obligations,
liabilities and indebtedness of OPH to the Subordinated Creditors pursuant to
the Guaranty.

         "Trustee" means Wilmington Trust Company, as indenture trustee for the
Holders, and its successors or assigns as such indenture trustee.

         SECTION 2. Subordination. OPH and each Subordinated Creditor agrees as
follows:

                  2.01. Agreement to Subordinate. OPH and each Subordinated
Creditor agrees that so long as the Senior Bank Indebtedness constitutes
"Indebtedness of the Company" within the meaning of Section 4.09 of the
Indenture (as in effect on the date hereof), the Subordinated Indebtedness is
subordinated in right of payment, to the extent and in the manner provided in
this Section 2, to the Senior Indebtedness, and that such subordination is for
the benefit of and enforceable by the Trustee for the benefit of the Holders.

                  2.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of OPH to creditors upon a total or partial
liquidation or a total or partial dissolution of OPH or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to OPH
or its properties: (1) the Holders shall be entitled to receive payment in full
of all Senior Indebtedness before the Subordinated Creditors shall be entitled
to receive any payment of principal of or interest on or other amounts with
respect to the Subordinated Indebtedness; and (2) until all Senior Indebtedness
is paid in full, any distribution to which the Subordinated Creditors would be
entitled but for this Section 2 shall be made to the Trustee for the benefit of
the Holders as their interests may appear.

                  2.03. Default on Senior Indebtedness. If a default in payment
of any Senior Indebtedness occurs, and the Collateral Trustee has received
written notice from the Trustee of (i) the occurrence and existence of such
payment default and (ii) the dollar amount of Senior

                                      -17-

<PAGE>

Indebtedness outstanding at such time, OPH may not pay any amounts with respect
to the Subordinated Indebtedness unless theretofore or concurrently therewith,
the Trustee, for the benefit of the Holders, shall have received payment in
full, from OPH or from another Person for OPH's account, of a dollar amount of
Senior Indebtedness equal to the dollar amount of Senior Indebtedness
outstanding at such time.

                  2.04. When Distributions Must Be Paid Over. In the event that
the Collateral Trustee or any Subordinated Creditor receives any payment of any
Subordinated Indebtedness at a time when such payment is required by this
Section 2 to be paid first to the Trustee for the benefit of the Holders, such
payment shall be held by the Collateral Trustee or such Subordinated Creditor,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon proper written request, to the Trustee, for the benefit of the Holders, as
their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid and required by this Section 2 to be paid
before payment of Subordinated Indebtedness, to the extent necessary to pay such
amount of Senior Indebtedness in full in accordance with its terms after giving
effect to any concurrent payment or distribution to or for the Holders.

                  2.05. Subrogation. After all Senior Indebtedness that is
required by this Section 2 to be paid before Subordinated Indebtedness may be
paid is paid in full and until the Subordinated Indebtedness is paid in full,
the Subordinated Creditors shall be subrogated to the rights of the Holders to
receive distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the Subordinated Creditors have been applied
to payment of Senior Indebtedness. A distribution made under this Section 2 to
the Trustee, for the benefit of the Holders, which otherwise would have been
made to the Subordinated Creditors is not, as between OPH and the Subordinated
Creditors, a payment by OPH on Senior Indebtedness.

                  2.06. Collateral Trustee Not Fiduciary for Holders. The
Collateral Trustee shall not be deemed to owe any fiduciary duty to the Trustee
or the Holders and shall not be liable to the Trustee or any Holder if it shall
mistakenly pay over or distribute to the Subordinated Creditors, OPH, or any
other Person, money or assets to which the Trustee or any Holder shall be
entitled by virtue of this Section 2 or otherwise, except if such payment was
made as a result of the willful misconduct or gross negligence of the Collateral
Trustee.

         SECTION 3. Further Assurances. The Collateral Trustee and the Trustee,
at any time and from tune to time upon the written request of the other, will
promptly execute and deliver such further instruments and documents and take
such further actions as the other may reasonably request for the purposes of
obtaining or preserving the full benefits of this Schedule 2.04(b) and of the
rights, priorities and powers herein granted.

         SECTION 4. Relative Rights. This Schedule 2.04(b) defines the relative
rights of the Subordinated Creditors and the Holders, who are express
third-party beneficiaries hereof. Nothing in this Schedule 2.04(b) shall: (1)
impair, as between OPH and the Subordinated Creditors, the obligation of OPH,
which is absolute and unconditional, to pay amounts owing in respect of the
Subordinated Indebtedness in accordance with its terms; or (2) prevent the
Collateral Trustee or any Subordinated Creditor (or any agent or trustee
thereof) from exercising its available remedies upon an actionable default,
subject to the rights of the Trustee, for the benefit of the Holders, to receive
distributions otherwise payable to the Subordinated Creditors. No other Person
shall have any right, benefit or other interest under this Schedule 2.04(b).

                                      -18-

<PAGE>

         SECTION 5. Miscellaneous.

                  5.01. Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand, overnight
courier, certified or registered mail or sent by facsimile addressed as follows:

         If to the Collateral Trustee, to it at:

                  Wachovia Bank, National Association
                  5847 San Felipe, Suite 1050
                  Houston, Texas 77057

                  Attention: Corporate Trust Department
                  Facsimile No.: (713) 278-4329

         If to the Trustee, to it at its address for notice set forth in Section
         11.02 of the Indenture.

         If to OPH, to it at:

                  Orion Power Holdings, Inc.
                  1111 Louisiana
                  Houston, Texas 77002

                  Attention: Rex Clevenger
                             Senior Vice President
                  Facsimile No.: (713) 497-0988

         with a courtesy copy to:

                  Reliant Resources, Inc.
                  1111 Louisiana
                  Houston, Texas 77002

                  Attention: General Counsel
                  Facsimile No.: (713) 497-0116

or such other address as such Person may from time to time designate by giving
written notice to the other Persons hereunder. Any failure of any Person giving
notice pursuant to this Section 5.01 to provide a courtesy copy to another
Person as provided herein shall not affect the validity of such notice. All
notices and other communications given to any Person hereto in accordance with
the provisions of this Section 5.01 shall be deemed to have been given (x) on
the fifth Business Day after the date when sent, postage prepaid, return receipt
requested, if by certified or registered mail, (y) when delivered, if delivered
by hand or overnight courier service, or (z) when receipt is acknowledged, if by
facsimile, in each case addressed to such party as provided in this Section 5.01
or in accordance with the latest unrevoked written direction from such Person.

                  5.02. GOVERNING LAW. THIS SCHEDULE 2.04(B) SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                                      -19-

<PAGE>

                  5.03. WAIVER OF JURY TRIAL. OPH, THE COLLATERAL TRUSTEE, THE
SUBORDINATED CREDITORS, THE TRUSTEE AND THE HOLDERS EACH HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
LITIGATION OR DISPUTE DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS SCHEDULE 2.04(B), ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW,
OPH, THE COLLATERAL TRUSTEE, THE SUBORDINATED CREDITORS, THE TRUSTEE AND THE
HOLDERS EACH HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION OR DISPUTE REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES.

                  5.04. Headings. The headings of each Section of this Schedule
2.04(b) are for convenience only and shall not define or limit the provisions
thereof.

                  5.05. Severability. In the event any one or more of the
provisions contained in this Schedule 2.04(b) should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction).

                  5.06. Termination. The terms and provisions of this Schedule
2.04(b) shall terminate and no longer be of any force or effect from and after
the date, if any, that the Senior Bank Indebtedness ceases to be "Indebtedness
of the Company" within the meaning of Section 4.09 of the Indenture (as in
effect on the date hereof).

                  5.07. Amendments. This Schedule 2.04(b) and any provision
hereof may be waived, rescinded, amended or modified by an agreement or
agreements in writing entered into solely by OPH and the Collateral Trustee.

                                      -20-exv4w5

 

Exhibit 4.5

GROUP 1 AUTOMOTIVE, INC.

401(k) SAVINGS PLAN

As Restated Effective September 1, 2001

 

 

GROUP 1 AUTOMOTIVE, INC.

401(k) SAVINGS PLAN

W I T N E S S E T H :

     WHEREAS, GROUP 1 AUTOMOTIVE, INC. (the “Company”) has heretofore adopted
the GROUP 1 AUTOMOTIVE, INC. 401(K) SAVINGS PLAN, hereinafter referred to as
the “Plan,” for the benefit of its employees; and

     WHEREAS, the Plan has been amended on numerous occasions; and

     WHEREAS, the Company desires to restate the Plan to include all prior
amendments;

     NOW THEREFORE, the Plan is hereby restated in its entirety as follows with
no interruption in time, effective as of September 1, 2001, except as otherwise
indicated herein:

(i)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	PAGE

	I.	 	Definitions and Construction	 	 	I-1	 
	 	 	1.1	 	Definitions	 	 	I-1	 
	 
	 	 	 	(1)	 	Account(s)	 	 	I-1	 
	 
	 	 	 	(2)	 	Act	 	 	I-1	 
	 
	 	 	 	(3)	 	Before-Tax Account	 	 	I-1	 
	 
	 	 	 	(4)	 	Before-Tax Contributions	 	 	I-1	 
	 
	 	 	 	(5)	 	Benefit Commencement Date	 	 	I-1	 
	 
	 	 	 	(6)	 	Business Unit	 	 	I-1	 
	 
	 	 	 	(7)	 	CEO	 	 	I-1	 
	 
	 	 	 	(8)	 	Code	 	 	I-1	 
	 
	 	 	 	(9)	 	Committee	 	 	I-1	 
	 
	 	 	 	(10)	 	Company	 	 	I-1	 
	 
	 	 	 	(11)	 	Company Stock	 	 	I-1	 
	 
	 	 	 	(12)	 	Compensation	 	 	I-1	 
	 
	 	 	 	(13)	 	Controlled Entity	 	 	I-2	 
	 
	 	 	 	(14)	 	Direct Rollover	 	 	I-3	 
	 
	 	 	 	(15)	 	Directors	 	 	I-3	 
	 
	 	 	 	(16)	 	Distributee	 	 	I-3	 
	 
	 	 	 	(17)	 	Effective Date	 	 	I-3	 
	 
	 	 	 	(18)	 	Eligible Employee	 	 	I-3	 
	 
	 	 	 	(19)	 	Eligible Retirement Plan	 	 	I-3	 
	 
	 	 	 	(20)	 	Eligible Rollover Distribution	 	 	I-3	 
	 
	 	 	 	(21)	 	Employee	 	 	I-4	 
	 
	 	 	 	(22)	 	Employer	 	 	I-4	 
	 
	 	 	 	(23)	 	Employer Contribution Account	 	 	I-4	 
	 
	 	 	 	(24)	 	Employer Contributions	 	 	I-4	 
	 
	 	 	 	(25)	 	Employer Matching Contributions	 	 	I-4	 
	 
	 	 	 	(26)	 	Employer Safe Harbor Contributions	 	 	I-4	 
	 
	 	 	 	(27)	 	Employment Commencement Date	 	 	I-4	 
	 
	 	 	 	(28)	 	Highly Compensated Employee	 	 	I-4	 
	 
	 	 	 	(29)	 	Hour of Service	 	 	I-5	 
	 
	 	 	 	(30)	 	Investment Fund	 	 	I-5	 
	 
	 	 	 	(31)	 	Leased Employee	 	 	I-5	 
	 
	 	 	 	(32)	 	Member	 	 	I-5	 
	 
	 	 	 	(33)	 	Normal Retirement Date	 	 	I-5	 
	 
	 	 	 	(34)	 	Participation Service	 	 	I-6	 
	 
	 	 	 	(35)	 	Period of Service	 	 	I-6	 
	 
	 	 	 	(36)	 	Period of Severance	 	 	I-6	 
	 
	 	 	 	(37)	 	Plan	 	 	I-6	 
	 
	 	 	 	(38)	 	Plan Year	 	 	I-6	 
	 
	 	 	 	(39)	 	Reemployment Commencement Date	 	 	I-6	 

(ii)

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	PAGE

	 
	 	 	 	(40)	 	Rollover Contribution Account	 	 	I-6	 
	 
	 	 	 	(41)	 	Rollover Contributions	 	 	I-6	 
	 
	 	 	 	(42)	 	Service	 	 	I-6	 
	 
	 	 	 	(43)	 	Severance from Service Date	 	 	I-6	 
	 
	 	 	 	(44)	 	Trust	 	 	I-9	 
	 
	 	 	 	(45)	 	Trust Agreement	 	 	I-9	 
	 
	 	 	 	(46)	 	Trust Fund	 	 	I-9	 
	 
	 	 	 	(47)	 	Trustee	 	 	I-9	 
	 
	 	 	 	(48)	 	Vested Interest	 	 	I-9	 
	 
	 	 	 	(49)	 	Vesting Service	 	 	I-9	 
	 	 	1.2	 	Number and Gender	 	 	I-9	 
	 	 	1.3	 	Headings	 	 	I-9	 
	 	 	1.4	 	Construction	 	 	I-9	 
	II.
	 	Participation	 	II-1
	 
	 	2.1	 	Eligibility	 	II-1
	 
	 	2.2	 	Participation Service	 	II-1
	III.
	 	Contributions	 	III-1
	 
	 	3.1	 	Before-Tax Contributions	 	III-1
	 
	 	3.2	 	Employer Matching Contributions	 	III-2
	 
	 	3.3	 	Employer Safe Harbor Contributions	 	III-2
	 
	 	3.4	 	Restrictions on Employer Matching Contributions	 	III-3
	 
	 	3.5	 	Return of Contributions	 	III-3
	 
	 	3.6	 	Disposition of Excess Deferrals and Excess Contributions	 	III-3
	 
	 	3.7	 	Rollover Contributions	 	III-5
	 
	 	3.8	 	Minimum Before-Tax and Employer Matching Contributions	 	III-5
	IV.
	 	Allocations and Limitations	 	IV-1
	 
	 	4.1	 	Suspended Amounts	 	IV-1
	 
	 	4.2	 	Allocation of Contributions	 	IV-1
	 
	 	4.3	 	Application of Forfeitures	 	IV-2
	 
	 	4.4	 	Valuation of Accounts	 	IV-2
	 
	 	4.5	 	Limitations and Corrections	 	IV-2
	V.	 	Investment of Accounts	 	 	V-1	 
	 	 	5.1	 	Investment of Accounts	 	 	V-1	 
	VI.
	 	Retirement Benefits	 	VI-1
	 
	 	6.1	 	Retirement Benefits	 	VI-1
	VII.
	 	Disability Benefits	 	VII-1
	 
	 	7.1	 	Disability Benefits	 	VII-1
	 
	 	7.2	 	Total and Permanent Disability Determined	 	VII-1
	VIII.
	 	Severance Benefits and Determination of Vested Interest	 	VIII-1
	 
	 	8.1	 	No Benefits Unless Herein Set Forth	 	VIII-1

(iii)

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	PAGE

	 
	 	8.2	 	Severance Benefit	 	VIII-1
	 
	 	8.3	 	Determination of Vested Interest	 	VIII-1
	 
	 	8.4	 	Crediting of Vesting Service	 	VIII-2
	 
	 	8.5	 	Forfeiture of Vesting Service	 	VIII-2
	 
	 	8.6	 	Forfeitures of Nonvested Account Balance	 	VIII-2
	 
	 	8.7	 	Restoration of Forfeited Account Balance	 	VIII-3
	 
	 	8.8	 	Special Formula for Determining Vested Interest for Partial Accounts	 	VIII-3
	IX.
	 	Death Benefits	 	IX-1
	 
	 	9.1	 	Death Benefits	 	IX-1
	 
	 	9.2	 	Designation of Beneficiaries	 	IX-1
	X.	 	Time and Form of Payment of Benefits	 	 	X-1	 
	 	 	10.1	 	Determination of Benefit Commencement Date	 	 	X-1	 
	 	 	10.2	 	Form of Payment and Payee	 	 	X-2	 
	 	 	10.3	 	Direct Rollover Election	 	 	X-2	 
	 	 	10.4	 	Unclaimed Benefits	 	 	X-2	 
	 	 	10.5	 	Claims Review	 	 	X-2	 
	XI.
	 	In-Service Withdrawals	 	XI-1
	 
	 	11.1	 	In-Service Withdrawals	 	XI-1
	 
	 	11.2	 	Restriction on In-Service Withdrawals	 	XI-2
	XII.
	 	Loans	 	XII-1
	 
	 	12.1	 	Eligibility for Loan	 	XII-1
	 
	 	12.2	 	Maximum Loan	 	XII-1
	XIII.
	 	Administration of the Plan	 	XIII-1
	 
	 	13.1	 	Appointment of Committee	 	XIII-1
	 
	 	13.2	 	Term, Vacancies, Resignation, and Removal	 	XIII-1
	 
	 	13.3	 	Officers, Records, and Procedures	 	XIII-1
	 
	 	13.4	 	Meetings	 	XIII-1
	 
	 	13.5	 	Self-Interest of Members	 	XIII-1
	 
	 	13.6	 	Compensation and Bonding	 	XIII-2
	 
	 	13.7	 	Committee Powers and Duties	 	XIII-2
	 
	 	13.8	 	Employer to Supply Information	 	XIII-3
	 
	 	13.9	 	Temporary Restrictions	 	XIII-3
	 
	 	13.10	 	Indemnification	 	XIII-3
	XIV.
	 	Trustee and Administration of Trust Fund	 	XIV-1
	 
	 	14.1	 	Appointment, Resignation, Removal, and Replacement of Trustee	 	XIV-1
	 
	 	14.2	 	Trust Agreement	 	XIV-1
	 
	 	14.3	 	Payment of Expenses	 	XIV-1
	 
	 	14.4	 	Trust Fund Property	 	XIV-1
	 
	 	14.5	 	Distributions from Members’ Accounts	 	XIV-2
	 
	 	14.6	 	Payments Solely from Trust Fund	 	XIV-2
	 
	 	14.7	 	No Benefits to the Employer	 	XIV-2

(iv)

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	PAGE

	XV.
	 	Fiduciary Provisions	 	XV-1
	 
	 	15.1	 	Article Controls	 	XV-1
	 
	 	15.2	 	General Allocation of Fiduciary Duties	 	XV-1
	 
	 	15.3	 	Fiduciary Duty	 	XV-1
	 
	 	15.4	 	Delegation of Fiduciary Duties	 	XV-1
	 
	 	15.5	 	Investment Manager	 	XV-2
	XVI.
	 	Amendments	 	XVI-1
	 
	 	16.1	 	Right to Amend	 	XVI-1
	 
	 	16.2	 	Limitation on Amendments	 	XVI-1
	XVII.
	 	Discontinuance of Contributions, Termination, Partial
Termination, and Merger or Consolidation	 	XVII-1
	 
	 	17.1	 	Right to Discontinue Contributions, Terminate, or
Partially Terminate	 	XVII-1
	 
	 	17.2	 	Procedure in the Event of Discontinuance of Contributions,
Termination, or Partial Termination	 	XVII-1
	 
	 	17.3	 	Merger, Consolidation, or Transfer	 	XVII-1
	XVIII.
	 	Participating Employers	 	XVIII-1
	 
	 	18.1	 	Designation of Other Employers	 	XVIII-1
	 
	 	18.2	 	Single Plan	 	XVIII-1
	XIX.
	 	Miscellaneous Provisions	 	XIX-1
	 
	 	19.1	 	Not Contract of Employment	 	XIX-1
	 
	 	19.2	 	Alienation of Interest Forbidden	 	XIX-1
	 
	 	19.3	 	Uniformed Services Employment and Reemployment Rights Act
Requirements	 	XIX-1
	 
	 	19.4	 	Payments to Minors and Incompetents	 	XIX-1
	 
	 	19.5	 	Acquisition and Holding of Company Stock	 	XIX-1
	 
	 	19.6	 	Member’s and Beneficiary’s Addresses	 	XIX-2
	 
	 	19.7	 	Incorrect Information, Fraud, Concealment, or Error	 	XIX-2
	 
	 	19.8	 	Severability	 	XIX-2
	 
	 	19.9	 	Jurisdiction	 	XIX-2
	XX.
	 	Top-Heavy Status	 	XX-1
	 
	 	20.1	 	Article Controls	 	XX-1
	 
	 	20.2	 	Definitions	 	XX-1
	 
	 	20.3	 	Top-Heavy Status	 	XX-2
	 
	 	20.4	 	Termination of Top-Heavy Status	 	XX-3
	 
	 	20.5	 	Effect of Article	 	XX-3
	APPENDIX A
	 	 	 	 	 	 	 	 	 	 
	APPENDIX B
	 	 	 	 	 	 	 	 	 	 

(v)

 

 

I.

Definitions and Construction

     1.1 Definitions. Where the following words and phrases appear in the Plan,
they shall have the respective meanings set forth below, unless their context
clearly indicates to the contrary.

	(1)	 	Account(s): A Member’s Before-Tax Account, Employer Contribution
Account, and/or Rollover Contribution Account, including the amounts
credited thereto.
	 
	(2)	 	Act: The Employee Retirement Income Security Act of 1974, as amended.
	 
	(3)	 	Before-Tax Account: An individual account for each Member, which is
credited with the Before-Tax Contributions made by the Employer on such
Member’s behalf and the Employer Safe Harbor Contributions, if any, made
on such Member’s behalf pursuant to Section 3.3 to satisfy the
restrictions set forth in Section 3.1(e) and which is credited with (or
debited for) such account’s allocation of net income (or net loss) and
changes in value of the Trust Fund.
	 
	(4)	 	Before-Tax Contributions: Contributions made to the Plan by the Employer
on a Member’s behalf in accordance with the Member’s elections to defer
Compensation under the Plan’s qualified cash or deferred arrangement as
described in Section 3.1.
	 
	(5)	 	Benefit Commencement Date: With respect to each Member or beneficiary,
the date such Member’s or beneficiary’s benefit is paid to him from the
Trust Fund.
	 
	(6)	 	Business Unit: An operating unit of the Employer’s business, whether or
not separately incorporated, as determined by the Directors.
	 
	(7)	 	CEO: The Chief Executive Officer of the Company.
	 
	(8)	 	Code: The Internal Revenue Code of 1986, as amended.
	 
	(9)	 	Committee: The administrative committee appointed by the CEO to
administer the Plan.
	 
	(10)	 	Company: Group 1 Automotive, Inc.
	 
	(11)	 	Company Stock: The common stock of Group 1 Automotive, Inc.
	 
	(12)	 	Compensation: The total of all wages, salaries, fees for professional
service and other amounts received in cash or in kind by a Member for
services actually rendered or labor performed for the Employer while a
Member and an Employee to the extent such amounts are includable in gross
income, subject to the following adjustments and limitations:

	(A)	 	The following shall be excluded:

I-1

 

 

	(i)	 	reimbursements and other expense allowances;
	 
	(ii)	 	cash and noncash fringe benefits;
	 
	(iii)	 	moving expenses;
	 
	(iv)	 	Employer contributions to or payments from this
or any other deferred compensation program, whether such
program is qualified under section 401(a) of the Code or
nonqualified;
	 
	(v)	 	welfare benefits;
	 
	(vi)	 	amounts realized from the receipt or exercise of
a stock option that is not an incentive stock option within
the meaning of section 422 of the Code;
	 
	(vii)	 	amounts realized at the time property described
in section 83 of the Code is freely transferable or no longer
subject to a substantial risk of forfeiture;
	 
	(viii)	 	amounts realized as a result of an election described in
section 83(b) of the Code;
	 
	(ix)	 	any amount realized as a result of a
disqualifying disposition within the meaning of section 421(a)
of the Code; and
	 
	(x)	 	any other amounts that receive special tax
benefits under the Code but are not hereinafter included.

	(B)	 	Elective contributions made on a Member’s behalf by the
Employer that are not includable in income under section 125 or
section 402(e)(3) of the Code and any amounts that are not
includable in the gross income of a Member under a salary reduction
agreement by reason of the application of section 132(f) of the Code
shall be included.
	 
	(C)	 	The Compensation of any Member taken into account for
purposes of the Plan shall be limited to $160,000 for any Plan Year
with such limitation to be:

	(i)	 	adjusted automatically to reflect any amendments
to section 401(a)(17) of the Code and any cost-of-living
increases authorized by section 401(a)(17) of the Code; and
	 
	(ii)	 	prorated for a Plan Year of less than twelve
months and to the extent otherwise required by applicable law.

	(13)	 	Controlled Entity: Each corporation that is a member of a controlled
group of corporations, within the meaning of section 1563(a) (determined
without regard to sections 1563(a)(4) and 1563(e)(3)(C)) of the Code, of
which the Employer is a member, each trade or business (whether or not
incorporated) with which the Employer is under

I-2

 

 

	 	 	common control, and each
member of an affiliated service group, within the meaning of section
414(m) of the Code, of which the Employer is a member.
	 
	(14)	 	Direct Rollover: A payment by the Plan to an Eligible Retirement Plan
designated by a Distributee.
	 
	(15)	 	Directors: The Compensation Committee of the Board of Directors of the
Company.
	 
	(16)	 	Distributee: Each (A) Member entitled to an Eligible Rollover
Distribution, (B) Member’s surviving spouse with respect to the interest
of such surviving spouse in an Eligible Rollover Distribution, and (C)
former spouse of a Member who is an alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the Code, with
regard to the interest of such former spouse in an Eligible Rollover
Distribution.
	 
	(17)	 	Effective Date: September 1, 2001; except that provisions of the Plan
required to have an earlier effective date by applicable statute and/or
regulation shall be effective as of the required effective date in such
statute and/or regulation as to any plan merged into this Plan.
	 
	(18)	 	Eligible Employee: Each Employee other than (A) an Employee whose terms and conditions of
employment are governed by a collective bargaining agreement, unless such
agreement provides for his coverage under the Plan, (B) a nonresident
alien who receives no earned income from the Employer that constitutes
income from sources within the United States, and (C) an Employee who is
a Leased Employee. Notwithstanding any provision of the Plan to the
contrary, no individual who is designated, compensated, or otherwise
classified or treated by the Employer as an independent contractor or
other non-common law employee shall be eligible to become a Member of the
Plan.
	 
	(19)	 	Eligible Retirement Plan: (A) With respect to a Distributee other than a
surviving spouse, 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 plan described in section 401(a) of the Code, which
under its provisions and applicable law may accept such Distributee’s
Eligible Rollover Distribution and (B) with respect to a Distributee who
is a surviving spouse, an individual retirement account described in
section 408(a) of the Code or an individual retirement annuity described
in section 408(b) of the Code.
	 
	(20)	 	Eligible Rollover Distribution: Any distribution of all or any portion
of the Accounts of a Distributee other than (A) a 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 ten
years or more, (B) a distribution to the extent such distribution is
required under section 401(a)(9) of the Code, (C) the portion of a
distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with

I-3

 

 

	 	 	respect to
employer securities), (D) a loan treated as a distribution under section
72(p) of the Code and not excepted by section 72(p)(2), (E) a loan in
default that is a deemed distribution, (F) any corrective distribution
provided in Sections 3.6 and 4.6(b), (G) a distribution pursuant to
Section 11.1(c) from the Before-Tax Account of a Member who has not
attained age 591⁄2, and (H) any other distribution so designated by the
Internal Revenue Service in revenue rulings, notices, and other guidance
of general applicability.
	 
	(21)	 	Employee: Each (A) individual employed by the Employer and (B) Leased
Employee.
	 
	(22)	 	Employer: The Company and each entity that has been designated to
participate in the Plan pursuant to the provisions of Article XVIII.
	 
	(23)	 	Employer Contribution Account: An individual account for each Member, which is credited with the sum
of (A) the Employer Matching Contributions made on such Member’s behalf,
and (B) the Employer Safe Harbor Contributions, if any, made on such
Member’s behalf pursuant to Section 3.3 to satisfy the restrictions set
forth in Section 3.4 and which is credited with (or debited for) such
account’s allocation of net income (or net loss) and changes in value of
the Trust Fund.
	 
	(24)	 	Employer Contributions: The total of Employer Matching Contributions and
Employer Safe Harbor Contributions.
	 
	(25)	 	Employer Matching Contributions: Contributions made to the Plan by the
Employer pursuant to Section 3.2.
	 
	(26)	 	Employer Safe Harbor Contributions: Contributions made to the Plan by
the Employer pursuant to Section 3.3.
	 
	(27)	 	Employment Commencement Date: The date on which an individual first
performs an Hour of Service.
	 
	(28)	 	Highly Compensated Employee: Each Employee who performs services during
the Plan Year for which the determination of who is highly compensated is
being made (the “Determination Year”) and who:

	(A)	 	is a five-percent owner of the Employer (within the meaning
of section 416(i)(1)(A)(iii) of the Code) at any time during the
Determination Year or the twelve-month period immediately preceding
the Determination Year (the “Look-Back Year”); or
	 
	(B)	 	For the Look-Back Year, receives compensation (within the
meaning of section 414(q)(4) of the Code; “compensation” for
purposes of this Paragraph) in excess of $80,000 (with such amount
to be adjusted automatically to reflect any cost-of-living
adjustments authorized by section 414(q)(1) of the Code) during the
Look-Back Year.

	 	 	For purposes of the preceding sentence, (i) all employers aggregated with
the Employer under section 414(b), (c), (m), or (o) of the Code shall be
treated as a single employer and

I-4

 

	 	 	(ii)  a former Employee who had a
separation year (generally, the Determination Year such Employee
separates from service) prior to the Determination Year and who was an
active Highly Compensated Employee for either such separation year or any
Determination Year ending on or after such Employee’s fifty-fifth
birthday shall be deemed to be a Highly Compensated Employee. To the
extent that the provisions of this Paragraph are inconsistent or conflict
with the definition of a “highly compensated employee” set forth in
section 414(q) of the Code and the Treasury regulations
thereunder, the relevant terms and provisions of section 414(q) of the
Code and the Treasury regulations thereunder shall govern and control.
	 
	(29)	 	Hour of Service: Each hour for which an individual is directly or
indirectly paid, or entitled to payment, by the Employer or a Controlled
Entity for the performance of duties or for reasons other than the
performance of duties; provided, however, that no more than 501 Hours of
Service shall be credited to an individual on account of any continuous
period during which he performs no duties. Such Hours of Service shall be
credited to the individual for the computation period in which such duties
were performed or in which occurred the period during which no duties were
performed. An Hour of Service also includes each hour, not credited
above, for which back pay, irrespective of mitigation of damages, has been
either awarded or agreed to by the Employer or a Controlled Entity. These
Hours of Service shall be credited to the individual for the computation
period to which the award or agreement pertains rather than the
computation period in which the award, agreement, or payment is made. The
number of Hours of Service to be credited to an individual for any
computation period shall be governed by 29 CFR §§ 2530.200b-2(b) and (c).
Hours of Service shall also include any hours required to be credited by
federal law other than the Act or the Code, but only under the conditions
and to the extent so required by such federal law.
	 
	(30)	 	Investment Fund: Investment funds made available from time to time for
the investment of plan assets as described in Article V.
	 
	(31)	 	Leased Employee: Each person who is not an employee of the Employer or a
Controlled Entity but who performs services for the Employer or a
Controlled Entity pursuant to an agreement (oral or written) between the
Employer or a Controlled Entity and any leasing organization, provided
that such person has performed such services for the Employer or a
Controlled Entity or for related persons (within the meaning of section
144(a)(3) of the Code) on a substantially full-time basis for a period of
at least one year and such services are performed under primary direction
or control by the Employer or a Controlled Entity.
	 
	(32)	 	Member: Each individual who (A) has met the eligibility requirements for
participation in the Plan and elected to participate in the Plan pursuant
to Article II or (B) has made a Rollover Contribution in accordance with
Section 3.7, but only to the extent provided in Section 3.7. For purposes
of Article V only, the beneficiary of a deceased Member and any alternate
payee under a qualified domestic relations order (as defined in Section
19.2) shall have the rights of a Member.
	 
	(33)	 	Normal Retirement Date: The date a Member attains the age of sixty-five.

I-5

 

 

	(34)	 	Participation Service: The measure of service used in determining an
Employee’s eligibility to participate in the Plan as determined pursuant
to Section 2.2.
	 
	(35)	 	Period of Service: Each period of an individual’s Service commencing on
his Employment Commencement Date or a Reemployment Commencement Date, if
applicable, and ending on a Severance from Service Date. Notwithstanding
the foregoing, a period during which an individual is absent from Service
by reason of the individual’s pregnancy, the birth of a child of the
individual, the placement of a child with the individual in connection
with the adoption of such child by the individual, or for the purposes of
caring for such child for the period immediately following such birth or
placement shall not constitute a Period of Service between the first and
second anniversary of the first date of such absence. A Period of Service
shall also include any period required to be credited as a Period of
Service by federal law other than the Act or the Code, but only under the
conditions and to the extent so required by such federal law.
	 
	(36)	 	Period of Severance: Each period of time commencing on an individual’s
Severance from Service Date and ending on a Reemployment Commencement
Date.
	 
	(37)	 	Plan: The Group 1 Automotive, Inc. 401(k) Savings Plan, as amended from
time to time.
	 
	(38)	 	Plan Year: The twelve-consecutive month period commencing January 1 of
each year except that the first Plan Year of the Plan shall commence July
1, 1999, and end December 31, 1999.
	 
	(39)	 	Reemployment Commencement Date: The first date upon which an individual
performs an Hour of Service following a Severance from Service Date.
	 
	(40)	 	Rollover Contribution Account: An individual account for a Member, which
is credited with the Rollover Contributions of such Member and which is
credited with (or debited for) such account’s allocation of net income (or
net loss) and changes in value of the Trust Fund.
	 
	(41)	 	Rollover Contributions: Contributions made by a Member pursuant to
Section 3.7.
	 
	(42)	 	Service: The period of an individual’s employment with the Employer or a
Controlled Entity. In addition, the Committee, in its discretion, may
credit individuals with Service for employment with any other entity, but
only if and when such individual becomes an Eligible Employee and only if
such crediting of Service (A) has a legitimate business reason, (B) does
not by design or operation discriminate significantly in favor of Highly
Compensated Employees, and (C) is applied to all similarly-situated
Eligible Employees.
	 
	(43)	 	Severance from Service Date: The first date on which an individual
terminates his Service following his Employment Commencement Date or a
Reemployment Commencement Date, if applicable. Notwithstanding the
foregoing, the Severance from Service Date of an individual who is absent
from Service by reason of the individual’s pregnancy, the birth of a child
of the individual, the placement of a child with the individual in
connection with the adoption of such child by the individual, or for
purposes

I-6

 

 

	 	 	of caring for such child for the period immediately following
such birth or placement shall be the second anniversary of the first date
of such absence.
	 
	(44)	 	Trust: The trust(s) established under the Trust Agreement(s) to hold and
invest contributions made under the Plan and income thereon, and from
which the Plan benefits are distributed.
	 
	(45)	 	Trust Agreement: The agreement(s) entered into between the Company and
the Trustee establishing the Trust, as such agreement(s) may be amended
from time to time.
	 
	(46)	 	Trust Fund: The funds and properties held pursuant to the provisions of
the Trust Agreement for the use and benefit of the Members, together with
all income, profits, and increments thereto.
	 
	(47)	 	Trustee: The trustee or trustees qualified and acting under the Trust
Agreement at any time.
	 
	(48)	 	Vested Interest: The portion of a Member’s Accounts which, pursuant to
the Plan, is nonforfeitable.
	 
	(49)	 	Vesting Service: The measure of service used in determining a Member’s
Vested Interest as determined pursuant to Sections 8.4 and 8.5.

     1.2 Number and Gender. Wherever appropriate herein, words used in the singular shall be considered
to include the plural and words used in the plural shall be considered to
include the singular. The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender.

     1.3 Headings. The headings of Articles and Sections herein are included solely
for convenience, and if there is any conflict between such headings and the
text of the Plan, the text shall control.

     1.4 Construction. It is intended that the Plan be qualified within the meaning
of section 401(a) of the Code and that the Trust be tax exempt under section
501(a) of the Code, and all provisions herein shall be construed in accordance
with such intent.

I-7

 

 

II.

Participation

     2.1 Eligibility. Each Eligible Employee shall become a Member upon the later
of the date on which such Eligible Employee completes six months of
Participation Service or the date on which such Eligible Employee attains the
age of eighteen. Notwithstanding the foregoing:

     (a) An Eligible Employee who was a Member of the Plan prior to a
termination of employment shall remain a Member upon his reemployment as
an Eligible Employee;

     (b) An Employee who has completed six months of Participation
Service and has attained the age of eighteen but who has not become a
Member of the Plan because he was not an Eligible Employee shall become a
Member of the Plan upon the date he becomes an Eligible Employee as a
result of a change in his employment status;

     (c) An Eligible Employee who had completed six months of
Participation Service but who had not attained the age of eighteen prior
to a termination of his employment shall become a Member upon the date of
his reemployment;

     (d) A Member who ceases to be an Eligible Employee but remains an
Employee shall continue to be a Member but, on and after the date he
ceases to be an Eligible Employee, he shall no longer be entitled to
defer Compensation hereunder or share in allocations of Employer
Contributions unless and until he shall again become an Eligible
Employee.

     2.2 Participation Service.

          (a) Subject to the remaining Paragraphs of this Section, an individual
shall be credited with Participation Service in an amount equal to his
aggregate Periods of Service whether or not such Periods of Service are
completed consecutively.

          (b) Paragraph (a) above notwithstanding, if an individual terminates his
Service (at a time other than during a leave of absence) and subsequently
resumes his Service, if his Reemployment Commencement Date is within twelve
months of his Severance from Service Date, such Period of Severance shall be
treated as a Period of Service for purposes of Paragraph (a) above.

          (c) Paragraph (a) above notwithstanding, if an individual terminates his
Service during a leave of absence and subsequently resumes his Service, if his
Reemployment
Commencement Date is within twelve months of the beginning of such leave
of absence, such Period of Severance shall be treated as a Period of Service
for purposes of Paragraph (a) above.

          (d) In the case of an individual who terminates employment at a time when
he does not have any Vested Interest in his Employer Contribution Account but
who then incurs a Period of Severance which equals or exceeds the greater of
(1) five years or (2) his Period of

II-1

 

 

Service prior to such Period of Severance,
such individual’s Period of Service completed before such Period of Severance
shall be disregarded in determining his Participation Service.

II-2

 

 

III.

Contributions

     3.1 Before-Tax Contributions.

          (a) A Member may elect to defer an integral percentage of from 1% to 15%
(or such lesser percentage as may be prescribed from time to time by the
Committee) of his Compensation for a Plan Year by having the Employer
contribute the amount so deferred to the Plan. Compensation for a Plan Year
not so deferred by such election shall be received by such Member in cash. A
Member’s election to defer an amount of his Compensation pursuant to this
Section shall be made by authorizing his Employer, in the manner prescribed by
the Committee, to reduce his Compensation in the elected amount and the
Employer, in consideration thereof, agrees to contribute an equal amount to the
Plan. The Compensation elected to be deferred by a Member pursuant to this
Section shall become a part of the Employer’s Before-Tax Contributions and
shall be allocated in accordance with Section 4.2(a). Compensation for a Plan
Year not so deferred by a Member shall be received by such Member in cash.

          (b) A Member’s deferral election shall remain in force and effect for all
periods following the effective date of such election (which shall be as soon
as administratively feasible after the election is made) until modified or
terminated or until such Member terminates his employment. A Member who has
elected to defer a portion of his Compensation may change his deferral election
percentage (within the percentage limits set forth in Paragraph (a) above) by
communicating such new deferral election percentage to his Employer in the
manner and within the time period prescribed by the Committee.

          (c) A Member may cancel his deferral election by communicating such
cancellation to his Employer in the manner and within the time period
prescribed by the Committee. A Member who so cancels his deferral election may
resume deferrals by communicating his new deferral election to his Employer in
the manner and within the time period prescribed by the Committee.

          (d) In restriction of the Members’ elections provided in Paragraphs (a),
(b), and (c) above, the Before-Tax Contributions and the elective deferrals
(within the meaning of section 402(g)(3) of the Code) under all other plans,
contracts, and arrangements of the Employer on behalf of any Member for any
calendar year shall not exceed $10,000 (with such amount to be adjusted
automatically to reflect any cost-of-living adjustments authorized by section
402(g)(5) of the Code).

          (e) In further restriction of the Members’ elections provided in
Paragraphs (a), (b), and (c) above, it is specifically provided that one of the
“actual deferral percentage” tests set forth in section 401(k)(3) of the Code
and the Treasury regulations thereunder must be met in each Plan Year with
respect to which the Plan does not satisfy the alternative method of satisfying
the nondiscrimination requirements as set forth in section 401(k)(12) of the
Code. Such testing shall utilize the prior year testing method as such term is
defined in Internal Revenue Service Notice 98-1. If multiple use of the
alternative limitation (within the meaning of section 401(m)(9) of the Code and
Treasury regulation § 1.401(m)-2(b)) occurs during a Plan

III-1

 

 

Year, such multiple
use shall be corrected in accordance with the provisions of Treasury regulation
§ 1.401(m)-2(c); provided, however, that if such multiple use is not eliminated
by making Employer Safe Harbor Contributions, then the “actual contribution
percentages” of all Highly Compensated Employees participating in the Plan
shall be reduced, and the excess contributions distributed, in accordance with
the provisions of Section 3.6(c) and applicable Treasury regulations, so that
there is no such multiple use.

          (f) If the restrictions set forth in Paragraph (d) or (e) above would not
otherwise be met for any Plan Year, the Compensation deferral elections made
pursuant to Paragraphs (a), (b), and (c) above of affected Members may be
reduced by the Committee on a temporary and prospective basis in such manner as
the Committee shall determine.

          (g) As soon as administratively feasible following the end of each payroll
period, but no later than the time required by applicable law, the Employer
shall contribute to the Trust, as Before-Tax Contributions with respect to each
Member, an amount equal to the amount of Compensation elected to be deferred,
pursuant to Paragraphs (a) and (b) above (as adjusted pursuant to Paragraph (f)
above), by such Member during such payroll period. Such contributions, as well
as the contributions made pursuant to Sections 3.2 and 3.3, shall be made
without regard to current or accumulated profits of the Employer.
Notwithstanding the foregoing, the Plan is intended to qualify as a profit
sharing plan for purposes of sections 401(a), 402, 412, and 417 of the Code.

     3.2 Employer Matching Contributions. For each Plan Year, the Employer may
contribute to the Trust, as Employer Matching Contributions, a discretionary
amount based upon the Before-Tax Contributions that were made pursuant to
Section 3.1 on behalf of each Member during such Plan Year. The Directors
shall determine whether Employer Matching Contributions will be made for the
Plan Year, the matching percentage, and the percentage of a Member’s
Compensation upon which the match shall be based. The Committee shall
determine the timing of such matching contributions. The Directors may make
different such determinations for different Business Units of the Employer.
The Employer may contribute Employer Matching Contributions in the form of cash
or shares of Company Stock or a combination thereof.

     3.3 Employer Safe Harbor Contributions. In addition to the Employer Matching
Contributions made pursuant to Section 3.2 for each Plan Year, the Employer, in
its discretion, may contribute to the Trust as a “safe harbor contribution” for
such Plan Year the amounts necessary to cause the Plan to satisfy the
restrictions set forth in Section 3.1(e) (with respect to certain restrictions
on Before-Tax Contributions) and Section 3.4 (with respect to certain
restrictions on Employer Matching Contributions. Amounts contributed in order
to satisfy the restrictions set forth in Section 3.1(e) shall be considered
“qualified matching contributions” (within the meaning of Treasury regulation §
1.401(k)-1(g)(13)) for purposes of such Section, and amounts contributed in
order to
satisfy the restrictions set forth in Section 3.4 shall be considered Employer
Matching Contributions for purposes of such Section. Any amounts contributed
pursuant to this Paragraph shall be allocated in accordance with the provisions
of Sections 4.2(d) and (e).

III-2

 

 

     3.4 Restrictions on Employer Matching Contributions. In restriction of the
Employer Matching Contributions hereunder, it is specifically provided that one
of the “actual contribution percentage” tests and/or alternative methods of
satisfying such tests set forth in section 401(m) of the Code and the Treasury
regulations thereunder must be met in each Plan Year. Such testing shall
utilize the prior year testing method as such term is defined in Internal
Revenue Service Notice 98-1. The Committee may elect, in accordance with
applicable Treasury regulations, to treat Before-Tax Contributions to the Plan
as Employer Matching Contributions for purposes of meeting this requirement.

     3.5 Return of Contributions. Anything to the contrary herein notwithstanding,
the establishment of the Plan and contributions made under the Plan are
contingent upon an initial determination by the Internal Revenue Service that
the Plan is, as of the Effective Date, a qualified Plan and Trust within the
meaning of sections 401(a) and 501(a) of the Code. If such a determination is
not received by the Employer after it has had an opportunity to amend the Plan
and Trust to so qualify, the Plan shall not be effective and the Employer’s
contributions to the Plan, adjusted for any net earnings or losses of the Trust
Fund attributable thereto, shall be returned to the Employer by the Trustee
within one year after the date of denial of qualification of the Plan.
Moreover, the Employer’s contributions to the Plan are contingent upon the
deductibility of such contributions under section 404 of the Code. To the
extent that a deduction for contributions is disallowed, such contributions
shall, upon the written demand of the Employer, be returned to the Employer by
the Trustee within one year after the date of disallowance, reduced by any net
losses of the Trust Fund attributable thereto but not increased by any net
earnings of the Trust Fund attributable thereto, which net earnings shall be
treated as a forfeiture in accordance with Section 4.3. Finally, if Employer
contributions are made under a mistake of fact, such contributions shall, upon
the written demand of the Employer, be returned to the Employer by the Trustee
within one year after the payment thereof, reduced by any net losses of the
Trust Fund attributable thereto but not increased by any net earnings of the
Trust Fund attributable thereto, which net earnings shall be treated as a
forfeiture in accordance with Section 4.3.

     3.6 Disposition of Excess Deferrals and Excess Contributions.

          (a) Anything to the contrary herein notwithstanding, any Before-Tax
Contributions to the Plan for a calendar year on behalf of a Member in excess
of the limitations set forth in Section 3.1(d) and any “excess deferrals” from
other plans allocated to the Plan by such Member no later than March 1 of the
next following calendar year within the meaning of, and pursuant to the
provisions of, section 402(g)(2) of the Code, shall be distributed to such
Member not later than April 15 of the next following calendar year.

          (b) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Before-Tax Contributions made by the Employer on behalf of
Highly Compensated Employees exceeds the maximum amount of Before-Tax
Contributions permitted on behalf of such Highly Compensated Employees pursuant
to Section 3.1(e), an excess amount shall be determined by reducing Before-Tax
Contributions made on behalf of Highly Compensated Employees in order of their
highest actual deferral percentages in accordance with section 401(k)(8)(B)(ii)
of the Code and the Treasury regulations thereunder. Once determined, such
excess shall be distributed to Highly Compensated Employees in order of the
highest dollar

III-3

 

amounts contributed on behalf of such Highly Compensated
Employees in accordance with section 401(k)(8)(C) of the Code and the Treasury
regulations thereunder before the end of the next following Plan Year.

          (c) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Employer Matching Contributions allocated to the Accounts
of Highly Compensated Employees exceeds the maximum amount of such Employer
Matching Contributions permitted on behalf of such Highly Compensated Employees
pursuant to Section 3.4 , an excess amount shall be determined by reducing
Employer Matching Contributions made on behalf of Highly Compensated Employees
in order of their highest contribution percentages in accordance with section
401(m)(6)(B)(ii) of the Code and Treasury regulations thereunder. Once
determined, such excess shall be distributed to Highly Compensated Employees in
order of the highest dollar amounts contributed on behalf of such Highly
Compensated Employees in accordance with section 401(m)(6)(C) of the Code and
the Treasury regulations thereunder (or, if such excess contributions are
forfeitable, they shall be forfeited) before the end of the next following Plan
Year. Employer Matching Contributions shall be forfeited pursuant to this
Paragraph only if distribution of all vested Employer Matching Contributions is
insufficient to meet the requirements of this Paragraph. If vested Employer
Matching Contributions are distributed to a Member and nonvested Employer
Matching Contributions remain credited to such Member’s Accounts, such
nonvested Employer Matching Contributions shall vest at the same rate as if
such distribution had not been made.

          (d) In coordinating the disposition of excess deferrals and excess
contributions pursuant to this Section, such excess deferrals and excess
contributions shall be disposed of in the following order:

          (1) First, Before-Tax Contributions that constitute excess deferrals
described in Paragraph (a) above that are not considered in determining
the amount of Employer Matching Contributions pursuant to Section 3.2
shall be distributed;

          (2) Next, excess Before-Tax Contributions that constitute excess
deferrals described in Paragraph (a) above that are considered in
determining the amount of Employer Matching Contributions pursuant to
Section 3.2 shall be distributed;

          (3) Next, excess Before-Tax Contributions described in Paragraph (b)
above that are not considered in determining the amount of Employer
Matching Contributions pursuant to Section 3.2 shall be distributed;

          (4) Next, excess Before-Tax Contributions described in Paragraph (b)
above that are considered in determining the amount of Employer Matching
Contributions pursuant to Section 3.2 shall be distributed;

          (5) Next, excess Employer Matching Contributions described in
Paragraph (c) above shall be distributed (or, if forfeitable, forfeited);
and

          (6) Finally, Employer Matching Contributions that relate to Before
Tax Contributions that have been distributed pursuant to the provisions
of Paragraph (2)

III-4

 

     or (4) above that were not distributed or forfeited
pursuant to the provisions of Paragraph (5) above shall be forfeited.

          (e) Any distribution or forfeiture of excess deferrals or excess
contributions pursuant to the provisions of this Section shall be adjusted for
income or loss allocated thereto in the manner determined by the Committee in
accordance with any method permissible under applicable Treasury regulations.
Any forfeiture pursuant to the provisions of this Section shall be considered
to have occurred on the date which is 21/2 months after the end of the Plan
Year.

     3.7 Rollover Contributions. Qualified Rollover Contributions may be made to
the Plan by any Member of amounts received by such Member from certain
individual retirement accounts or annuities or from an employees’ trust
described in section 401(a) of the Code, which is exempt from tax under section
501(a) of the Code, but only if any such Rollover Contribution is made pursuant
to and in accordance with applicable provisions of the Code and Treasury
regulations promulgated thereunder. A Rollover Contribution of amounts that
are “eligible rollover distributions” within the meaning of section
402(f)(2)(A) of the Code may be made to the Plan irrespective of whether such
eligible rollover distribution was paid to the Member or paid to the Plan as a
“direct” Rollover Contribution. A direct Rollover Contribution to the Plan
may be effectuated only by wire transfer directed to the Trustee or by issuance
of a check made payable to the Trustee, which is negotiable only by the Trustee
and which identifies the Member for whose benefit the Rollover Contribution is
being made. Any Member desiring to effect a Rollover Contribution to the Plan
must execute and file with the Committee the form prescribed by the Committee
for such purpose. The Committee may require as a condition to accepting any
Rollover Contribution that such Member furnish any evidence that the Committee
in its discretion deems satisfactory to establish that the proposed Rollover
Contribution is in fact eligible for rollover to the Plan and is made pursuant
to and in accordance with applicable provisions of the Code and Treasury
regulations. All Rollover Contributions to the Plan must be made in cash. A
Rollover Contribution shall be credited to the Rollover Contribution Account of
the Member for whose benefit such Rollover Contribution is being made as of the
last day of the month in which such Rollover Contribution is made.

     3.8 Minimum Before-Tax and Employer Matching Contributions.

          (a) With respect to each Plan Year, the Committee may, in its discretion
and at any time during such Plan Year, specify a specific dollar amount that
shall be a fixed
minimum contribution (the “Minimum Contribution”) to be made by the
Employer to the Plan for such Plan Year, with such contribution to be made in
one or more installments (without liability for interest) as determined by the
Employer (but no later than the time prescribed by the Code for the filing of
the Employer’s Federal income tax return (including extensions) for the taxable
year of the Employer that ends within such Plan Year). The Minimum
Contribution for a Plan Year shall be allocated solely to the individuals who,
as of the date specified by the Committee at the time the Committee establishes
the amount of the Minimum Contribution for such Plan Year, are Members of the
Plan pursuant to Article II (each such Member being individually referred to as
an “Eligible Member” for purposes of Paragraph (b) below).

          (b) The Minimum Contribution, if any, for a Plan Year shall be allocated
as follows: (1) first, the Minimum Contribution shall be used to fund the
Before-Tax Contributions

III-5

 

 

for the Eligible Members for such Plan Year and shall
be allocated to the Before-Tax Accounts of the Eligible Members pursuant to
Section 4.1(a); (2) second, the Minimum Contribution shall be used to fund the
Employer Matching Contributions for the Eligible Members for such Plan Year and
shall be allocated to the Employer Contribution Accounts of the Eligible
Members pursuant to Section 4.1(b); and (3) finally, if the Minimum
Contribution exceeds the aggregate amount of contributions allocated to the
Accounts of the Eligible Members pursuant to clauses (1) and (2) of this
sentence, then such excess shall be allocated to the Employer Contribution
Accounts of the Eligible Members, and the allocation to each such Account shall
be that portion of such excess which is in the same proportion that the
Employer Matching Contributions on behalf of such Eligible Member for such Plan
Year bears to the total of all Employer Matching Contributions on behalf of all
Eligible Members for such Plan Year. Notwithstanding the preceding sentence
and Section 4.5, if the allocation for a Plan Year to an Eligible Member as
provided in the preceding sentence would otherwise exceed the limitation set
forth in Section 4.5, then such excess shall be allocated to the Employer
Contribution Accounts of the other Eligible Members who have not reached such
limitation for such Plan Year in a manner similar to that specified in clause
(3) of the preceding sentence (except that, for purposes of such allocation,
the Employer Matching Contributions on behalf of the Eligible Members who have
reached the limitation set forth in Section 4.5 for such Plan Year shall be
disregarded), and this process shall be repeated until the entire Minimum
Contribution for such Plan Year has been allocated to the Eligible Members. In
the event of any conflict between the provisions of this Paragraph and Section
4.2, the provisions of this Paragraph shall control.

III-6

 

 

IV.

Allocations and Limitations

     4.1 Suspended Amounts. All contributions, forfeitures, and the net income (or
net loss) of the Trust Fund shall be held in suspense until allocated or
applied as provided herein.

     4.2 Allocation of Contributions.

          (a) Before-Tax Contributions made by the Employer on a Member’s behalf for
each payroll period pursuant to Section 3.1 shall be allocated to such Member’s
Before-Tax Account.

          (b) The Employer Matching Contributions for each Plan Year pursuant to
Section 3.2 shall be allocated to the Employer Contribution Accounts of the
Members for whom such contributions were made.

          (c) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.3 for a Plan Year in order to satisfy the restrictions set forth in
Section 3.1(e) shall be allocated to the Before-Tax Accounts of Members who (1)
received an allocation of Before-Tax Contributions for such Plan Year and (2)
were not Highly Compensated Employees for such Plan Year (each such Member
individually referred to as an “Eligible Member” for purposes of this
Paragraph). Such allocation shall be made, first, to the Before-Tax Account of
the Eligible Member who received the least amount of Compensation for such Plan
Year until the limitation set forth in Section 4.6 has been reached as to such
Eligible Member, then to the Before-Tax Account of the Eligible Member who
received the next smallest amount of Compensation for such Plan Year until the
limitation set forth in Section 4.6 has been reached as to such Eligible
Member, and continuing in such manner until the Employer Safe Harbor
Contribution for such Plan Year has been completely allocated or the limitation
set forth in Section 4.6 has been reached as to all Eligible Members. Any
remaining Employer Safe Harbor Contribution for such Plan Year shall be
allocated among the Before-Tax Accounts of all Members who were Eligible
Employees during such Plan Year, with the allocation to each such Member’s
Before-Tax Account being the portion of such remaining Employer Safe Harbor
Contribution which is in the same proportion that such Member’s Compensation
for such Plan Year bears to the total of all such Members’ Compensation for
such Plan Year.

          (d) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.3 for a Plan Year in order to satisfy the restrictions set forth in
Section 3.4 shall be allocated to the Employer Contribution Accounts of Members
who (1) received an allocation of Employer Matching Contributions for such Plan
Year and (2) were not Highly Compensated Employees for such Plan Year (each
such Member individually referred to as an “Eligible Member” for purposes of
this Paragraph). Such allocation shall be made, first, to the Employer
Contribution Account of the Eligible Member who received the least amount of
Compensation for such Plan Year until the limitation set forth in Section 4.5
has been reached as to such Eligible Member, then to the Employer Contribution
Account of the Eligible Member who received the next smallest amount of
Compensation for such Plan Year until the limitation set forth in Section 4.5
has been reached as to such Eligible Member, and continuing in such manner
until the Employer

IV-1

 

 

Safe Harbor Contribution for such Plan Year has been
completely allocated or the limitation set forth in Section 4.5 has been
reached as to all Eligible Members. Any remaining Employer Safe Harbor
Contribution for such Plan Year shall be allocated among the Employer
Contribution Accounts of all Members who were Eligible Employees during such
Plan Year, with the allocation to each such Member’s Employer Contribution
Account being the portion of such remaining Employer Safe Harbor Contribution
which is in the same proportion that such Member’s Compensation for such Plan
Year bears to the total of all such Members’ Compensation for such Plan Year.

          (e) If an Employer Safe Harbor Contribution is made in order to satisfy
the restrictions set forth in both Section 3.1(e) and Section 3.4 for the same
Plan Year, the Employer Safe Harbor Contribution made in order to satisfy the
restrictions set forth in Section 3.1(e) shall be allocated pursuant to
Paragraph (c) above prior to allocating the Employer Safe Harbor Contribution
made in order to satisfy the restrictions set forth in Section 3.4 (pursuant to
Paragraph (d) above). In determining the application of the limitations set
forth in Section 4.5 to the allocations of Employer Safe Harbor Contributions,
all Annual Additions (as such term is defined in Section 4.5) to a Member’s
Accounts other than Employer Safe Harbor Contributions shall be considered
allocated prior to Employer Safe Harbor Contributions.

          (f) All contributions to the Plan shall be considered allocated to
Members’ Accounts no later than the last day of the Plan Year for which they
were made, as determined pursuant to Article III, except that, for purposes of
Section 4.4, contributions shall be considered allocated to Members’ Accounts
when received by the Trustee.

     4.3 Application of Forfeitures. Any amounts that are forfeited under any
provision hereof during a Plan Year shall be applied in the manner determined
by the Committee to reduce Employer Matching Contributions and/or to pay
expenses incident to the administration of the Plan and Trust. Prior to such
application, forfeited amounts shall be invested in the Investment Fund(s)
determined by the Committee.

     4.4 Valuation of Accounts. All amounts contributed to the Trust Fund shall be
invested as soon as administratively feasible following their receipt by the
Trustee, and the balance of each Account shall reflect the result of daily
pricing of the assets in which such Account is invested from the time of
receipt by the Trustee until the time of distribution.

     4.5 Limitations and Corrections.

          (a) For purposes of this Section, the following terms and phrases shall
have these respective meanings:

          (1) “Annual Additions” of a Member for any Limitation Year shall
mean the total of (A) the Employer Contributions, Before-Tax
Contributions, and forfeitures, if any, allocated to such Member’s
Accounts for such year, (B) Member’s contributions, if any, (excluding
any Rollover Contributions) for such year, and (C) amounts referred to in
sections 415(l)(1) and 419A(d)(2) of the Code.

          (2) “415 Compensation” shall mean the total of all amounts paid by
the Employer to or for the benefit of a Member for services rendered or
labor performed

IV-2

 

for the Employer, which are required to be reported on
the Member’s federal income tax withholding statement or statements (Form
W-2 or its subsequent equivalent), subject to the following adjustments
and limitations:

                         (A) The following shall be included:

                    (i) elective deferrals (as defined in section 402(g)(3) of the
Code) from compensation to be paid by the Employer to the Member;
and

                    (ii) any amount which is contributed or deferred by the
Employer at the election of the Member and which is not includible
in the gross income of the Member by reason of section 125 of the
Code; and

                    (iii) Any amounts that are not includable in the gross income
of a Member under a salary reduction agreement by reason of the
application of section 132(f) of the Code.

                         (B) The 415 Compensation of any Member taken into account for
purposes of the Plan shall be limited to $160,000 for any Plan Year
with such limitation to be:

                    (i) adjusted automatically to reflect any amendments to
section 401(a)(17) of the Code and any cost-of-living increases
authorized by section 401(a)(17) of the Code; and

                    (ii) prorated for a Plan Year of less than twelve months and
to the extent otherwise required by applicable law.

          (3) “Limitation Year” shall mean the Plan Year.

          (4) “Maximum Annual Additions” of a Member for any Limitation Year
shall mean the lesser of (A) $30,000 (with such amount to be adjusted
automatically to reflect any cost-of-living adjustment authorized by
section 415(d) of the Code) or (B) 25% of such Member’s 415 Compensation
during such Limitation Year, except that the limitation in this Clause
(B) shall not apply to any contribution for medical benefits (within the
meaning of section 419A(f)(2) of the Code) after separation from service
with the Employer or a Controlled Entity which is otherwise treated as an
Annual Addition or
to any amount otherwise treated as an Annual Addition under section
415(l)(1) of the Code.

          (b) Contrary Plan provisions notwithstanding, in no event shall the Annual
Additions credited to a Member’s Accounts for any Limitation Year exceed the
Maximum Annual Additions for such Member for such year. If as a result of a
reasonable error in estimating a Member’s compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of section
402(g)(3) of the Code) that may be made with respect to any individual under
the limits of section 415 of the Code, or because of other limited facts and
circumstances, the Annual Additions that would be credited to a Member’s
Accounts for a Limitation Year would nonetheless exceed the Maximum Annual
Additions for such Member for

IV-3

 

 

such year, the excess Annual Additions which, but
for this Section, would have been allocated to such Member’s Accounts shall be
disposed of as follows:

          (1) First, by returning to such Member any such excess Annual
Additions in the form of Before-Tax Contributions on behalf of such
Member that would not have been considered in determining the amount of
Employer Matching Contributions pursuant to Section 3.2 shall be
distributed to such Member, adjusted for income or loss allocated
thereto;

          (2) Next, any such excess Annual Additions in the form of Before-Tax
Contributions on behalf of such Member that would have been considered in
determining the amount of Employer Matching Contributions pursuant to
Section 3.2 shall be distributed to such Member, adjusted for income or
loss allocated thereto, and the Employer Matching Contributions that
would have been allocated to such Member’s Accounts based upon such
distributed Before-Tax Contributions shall be treated as a forfeiture.

          (c) For purposes of determining whether the Annual Additions under this
Plan exceed the limitations herein provided, all defined contribution plans of
the Employer are to be treated as one defined contribution plan. In addition,
all defined contribution plans of Controlled Entities shall be aggregated for
this purpose. For purposes of this Section only, a “Controlled Entity” (other
than an affiliated service group member within the meaning of section 414(m) of
the Code) shall be determined by application of a more than 50% control
standard in lieu of an 80% control standard. If the Annual Additions credited
to a Member’s Accounts for any Limitation Year under this Plan plus the
additions credited on his behalf under other defined contribution plans
required to be aggregated pursuant to this Paragraph would exceed the Maximum
Annual Additions for such Member for such Limitation Year, the Annual Additions
under this Plan and the additions under such other plans shall be reduced on a
pro rata basis and allocated, reallocated, or returned in accordance with
applicable plan provisions regarding Annual Additions in excess of Maximum
Annual Additions.

          (d) In the case of a Member who also participated in a defined benefit
plan of the Employer or a Controlled Entity (as defined in Paragraph (d)
above), the Employer shall reduce the Annual Additions credited to the Accounts
of such Member under this Plan pursuant to the provisions of Paragraph (b) to
the extent necessary to prevent the limitation set forth in section 415(e) of
the Code from being exceeded. Notwithstanding the foregoing, the provisions
of this Paragraph shall apply only if such defined benefit plan does not
provide for a reduction of benefits thereunder to ensure that the limitation
set forth in section 415(e) of the Code is not exceeded. Further, this
Paragraph shall not apply for Limitation Years beginning after December 31,
1999.

          (e) If the limitations set forth in this Section would not otherwise be
met for any Limitation Year, the Compensation deferral elections pursuant to
Section 3.1 of affected Members may be reduced by the Committee on a temporary
and prospective basis in such manner as the Committee shall determine.

IV-4

 

 

V.

Investment of Accounts

     5.1 Investment of Accounts.

          (a) Each Member shall designate, in accordance with the procedures
established from time to time by the Committee, the manner in which the amounts
allocated to each of his Accounts shall be invested from among the Investment
Funds made available from time to time by the Committee. A Member may
designate one of such Investment Funds for all the amounts allocated to such
Account or he may split the investment of the amounts allocated to his Accounts
between such Investment Funds in such increments as the Committee may
prescribe. If a Member fails to make a designation, then his Accounts shall be
invested in the Investment Fund or Funds designated by the Committee from time
to time in a uniform and nondiscriminatory manner.

          (b) A Member may change his investment designation for future
contributions to be allocated to his Accounts. Any such change shall be made
in accordance with the procedures established by the Committee, and the
frequency of such changes may be limited by the Committee.

          (c) A Member may elect to convert his investment designation with respect
to the amounts already allocated to his Accounts. Any such conversion shall be
made in accordance with the procedures established by the Committee, and the
frequency of such conversions may be limited by the Committee.

V-1

 

 

VI.

Retirement Benefits

     6.1 Retirement Benefits. A Member who terminates his employment on or after
his Normal Retirement Date shall be entitled to a retirement benefit, payable
at the time and in the form provided in Article X, equal to the value of his
Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member’s Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively feasible
after the date that such contribution is paid to the Trust Fund.

VI-1

 

 

VII.

Disability Benefits

     7.1 Disability Benefits. In the event a Member’s employment is terminated, and
such Member is totally and permanently disabled, as determined pursuant to
Section 7.2, such Member shall be entitled to a disability benefit, payable at
the time and in the form provided in Article X, equal to the value of his
Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member’s Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively feasible
after the date that such contribution is paid to the Trust Fund.

     7.2 Total and Permanent Disability Determined. A Member shall be considered
totally and permanently disabled if the Committee determines, based on a
written medical opinion (unless waived by the Committee as unnecessary), that
such Member is permanently incapable of performing his job for physical or
mental reasons.

VII-1

 

 

VIII.

Severance Benefits and Determination of Vested Interest

     8.1 No Benefits Unless Herein Set Forth. Except as set forth in this Article,
upon termination of employment of a Member prior to his Normal Retirement Date
for any reason other than total and permanent disability (as defined in Section
7.2) or death, such Member shall acquire no right to any benefit from the Plan
or the Trust Fund.

     8.2 Severance Benefit. Each Member whose employment is terminated prior to his
Normal Retirement Date for any reason other than total and permanent disability
(as defined in Section 7.2) or death shall be entitled to a severance benefit,
payable at the time and in the form provided in Article X, equal to his Vested
Interest in the value of his Accounts on his Benefit Commencement Date. A
Member’s Vested Interest in any contribution allocable to his Accounts after
his Benefit Commencement Date shall be distributed, if his benefit was paid in
a lump sum, or used to increase his payments, if his benefit is being paid on a
periodic basis, as soon as administratively feasible after the date that such
contribution is paid to the Trust Fund.

     8.3 Determination of Vested Interest.

          (a) A Member shall have a 100% Vested Interest in his Before-Tax Account
and Rollover Contribution Account, if any, at all times.

          (b) A Member’s Vested Interest in his Employer Contribution Account shall
be determined by such Member’s years of Vesting Service in accordance with the
following schedule:

	 	 	 	 	 	 	 	 	 
	Years of Vesting Service
	 	Vested Interest

	Less than
	 	1	 	year	 	 	0	%
	 
	 	1	 	year	 	 	20	%
	 
	 	2	 	years	 	 	40	%
	 
	 	3	 	years	 	 	60	%
	 
	 	4	 	years	 	 	80	%
	 
	 	5	 	years or more	 	 	100	%

          (c) Paragraph (b) above notwithstanding, a Member shall have a 100% Vested
Interest in his Employer Contribution Account (1) upon the attainment of his
Normal Retirement Date while employed by the Employer or a Controlled Entity,
(2) upon the termination of his employment with the Employer at a time when he
is totally and permanently disabled (as defined in Section 7.2), (3) upon the death of such Member while an Employee, or
(4) if such Member is an affected Member, the occurrence of an event described
in, under the conditions set forth in, Section 17.2.

VIII-1

 

 

     8.4 Crediting of Vesting Service.

          (a) Subject to the remaining Paragraphs of this Section, an individual
shall be credited with Vesting Service in an amount equal to his aggregate
Periods of Service whether or not such Periods of Service are completed
consecutively.

          (b) Paragraph (a) above notwithstanding, if an individual terminates his
Service (at a time other than during a leave of absence) and subsequently
resumes his Service, if his Reemployment Commencement Date is within twelve
months of his Severance from Service Date, such Period of Severance shall be
treated as a Period of Service for purposes of Paragraph (a) above.

          (c) Paragraph (a) above notwithstanding, if an individual terminates his
Service during a leave of absence and subsequently resumes his Service, if his
Reemployment Commencement Date is within twelve months of the beginning of such
leave of absence, such Period of Severance shall be treated as a Period of
Service for purposes of Paragraph (a) above.

     8.5 Forfeiture of Vesting Service.

          (a) In the case of an individual who terminates employment at a time when
he has a 0% Vested Interest in his Employer Contribution Account and who then
incurs a Period of Severance that equals or exceeds the greater of five years
or his aggregate Period of Service completed before such Period of Severance,
such individual’s Period of Service completed before such Period of Severance
shall be forfeited and completely disregarded in determining his years of
Vesting Service.

          (b) In the case of a Member who terminates employment with the Employer at
a time when he has a Vested Interest of more than 0% but less than 100% and who
then incurs a Period of Severance of five consecutive years, such Member’s
years of Vesting Service completed after such Period of Severance shall be
disregarded for purposes of determining such Member’s Vested Interest in any
Plan benefits derived from Employer Contributions made on his behalf before
such Period of Severance, but his years of Vesting Service completed before
such Period of Severance shall not be disregarded in determining his Vested
Interest in any Plan benefits derived from Employer Contributions made on his
behalf after such Period of Severance.

          (c) A Member who terminates employment with the Employer at a time when he
has a 100% Vested Interest shall not forfeit any of his Vesting Service for
purposes of determining such Member’s Vested Interest in any Plan benefits
derived from Employer Contributions made on his behalf.

     8.6 Forfeitures of Nonvested Account Balance.

          (a) With respect to a Member who terminates employment with the Employer
with a Vested Interest in his Employer Contribution Account that is less than
100% and receives a distribution from the Plan of the balance of his Vested
Interest in his Accounts in the form of a lump sum distribution by the close of
the second Plan Year following the Plan Year in which his employment is
terminated, the nonvested portion of such terminated Member’s Employer

VIII-2

 

 

Contribution Account as of his Benefit Commencement Date shall become a
forfeiture as of his Benefit Commencement Date.

          (b) With respect to a Member who terminates employment with the Employer
with a Vested Interest in his Employer Contribution Account less than 100% and
who is not otherwise subject to the forfeiture provisions of Paragraph (a)
above (or Section 8.8 below), the nonvested portion of his Employer
Contribution Account shall be forfeited as of the earlier of (1) the date the
Member completes a Period of Severance of five consecutive years or (2) the
date of the terminated Member’s death.

     8.7 Restoration of Forfeited Account Balance. In the event that the nonvested
portion of a terminated Member’s Employer Contribution Account becomes a
forfeiture pursuant to Section 8.6, the terminated Member shall, upon
subsequent reemployment with the Employer prior to incurring a Period of
Severance of five consecutive years, have the forfeited amount restored to such
Member’s Employer Contribution Account, unadjusted by any subsequent gains or
losses of the Trust Fund; provided, however, that such restoration shall be
made only if such Member repays in cash an amount equal to the amount so
distributed to him pursuant to Section 8.6 within five years from the date the
Member is reemployed. Any such restoration shall be made as soon as
administratively feasible following the date of repayment. Notwithstanding
anything to the contrary in the Plan, forfeited amounts to be restored by the
Employer pursuant to this Section shall be charged against and deducted from
forfeitures for the Plan Year in which such amounts are restored that would
otherwise be available to reduce Employer Matching Contributions. If such
forfeitures otherwise available are not sufficient to provide such restoration,
the Employer shall make a special contribution to the Plan of the portion of
such restoration not provided by forfeitures (which special contribution shall
be made without regard to current or accumulated earnings and profits).

     8.8 Special Formula for Determining Vested Interest for Partial Accounts. With
respect to a Member whose Vested Interest in his Employer Contribution Account
is less than 100% and who makes a withdrawal from or receives a termination
distribution from his Employer Contribution Account other than a lump sum
distribution by the close of the second Plan Year following the Plan Year in
which his employment is terminated, any amount remaining in his Employer
Contribution Account shall continue to be maintained as a separate account. At
any relevant time, such Member’s nonforfeitable portion of his separate account
shall be determined in accordance with the following formula:

X=P(AB + (R x D)) — (R x D)

For purposes of applying the formula: X is the nonforfeitable portion of such
separate account at the relevant time; P is the Member’s Vested Interest in his
Employer Contribution Account at the relevant time; AB is the balance of such
separate account at the relevant time; R is the ratio of the balance of such
separate account at the relevant time to the balance of such separate account
after the withdrawal or distribution; and D is the amount of the withdrawal or
distribution. For all other purposes of the Plan, a Member’s separate account
shall be treated as an Employer Contribution Account. Upon his incurring a
Period of Severance of five consecutive years, the forfeitable portion of a
Member’s separate account and Employer Contribution Account shall be

VIII-3

 

 

forfeited as of the end of the Plan Year during which the Member completes such Period of Severance if not forfeited earlier pursuant to the provisions of Section 8.6.

VIII-4

 

 

IX.

Death Benefits

     9.1 Death Benefits. Upon the death of a Member while an Employee, the Member’s
designated beneficiary shall be entitled to a death benefit, payable at the
time and in the form provided in Article X, equal to the value of the Member’s
Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member’s Accounts after his Benefit Commencement Date shall be distributed, if
the death benefit was paid in a lump sum, or used to increase his payments, if
the death benefit is being paid on a periodic basis, as soon as
administratively feasible after the date that such contribution is paid to the
Trust Fund.

     9.2 Designation of Beneficiaries.

         (a) Each Member shall have the right to designate the beneficiary or
beneficiaries to receive payment of his benefit in the event of his death.
Each such designation shall be made by executing the beneficiary designation
form prescribed by the Committee and filing such form with the Committee. Any
such designation may be changed at any time by such Member by execution and
filing of a new designation in accordance with this Section. Notwithstanding
the foregoing, if a Member who is married on the date of his death has
designated an individual or entity other than his surviving spouse as his
beneficiary, such designation shall not be effective unless (1) such surviving
spouse has consented thereto in writing and such consent (A) acknowledges the
effect of such specific designation, (B) either consents to the specific
designated beneficiary (which designation may not subsequently be changed by
the Member without spousal consent) or expressly permits such designation by
the Member without the requirement of further consent by such spouse, and (C)
is witnessed by a Plan representative (other than the Member) or a notary
public or (2) the consent of such spouse cannot be obtained because such spouse
cannot be located or because of other circumstances described by applicable
Treasury regulations. Any such consent by such surviving spouse shall be
irrevocable.

         (b) If no beneficiary designation is on file with the Committee at the
time of the death of the Member or if such designation is not effective for any
reason as determined by the Committee, the designated beneficiary or
beneficiaries to receive such death benefit shall be as follows:

        (1) If a Member leaves a surviving spouse, his designated
beneficiary shall be such surviving spouse; and

        (2) If a Member leaves no surviving spouse, his designated
beneficiary shall be (A) such Member’s executor or administrator or (B)
his heirs at law if there is no administration of such Member’s estate.

         (c) Notwithstanding the preceding provisions of this Section and to the
extent not prohibited by state or federal law, if a Member is divorced from his
spouse and at the time of his death is not remarried to the person from whom he
was divorced, any designation of such divorced spouse as his beneficiary under
the Plan filed prior to the divorce shall be null and void

IX-1

 

unless the contrary
is expressly stated in writing filed with the Committee by the Member. The
interest of such divorced spouse failing hereunder shall vest in the persons
specified in Paragraph (b) above as if such divorced spouse did not survive the
Member.

IX-2

 

X.

Time and Form of Payment of Benefits

     10.1 Determination of Benefit Commencement Date.

         (a) Subject to the provisions of the remaining Paragraphs of this Section,
a Member’s Benefit Commencement Date shall be the date that is as soon as
administratively feasible after the date the Member or his beneficiary becomes
entitled to a benefit pursuant to Article VI, VII, VIII, or IX.

         (b) Unless (1) the Member has attained age sixty-five or died, (2) the
Member consents to a distribution pursuant to Paragraph (a) within the
ninety-day period ending on the date payment of his benefit hereunder is to
commence pursuant to Paragraph (a), or (3) the Member’s Vested Interest in his
Accounts is not in excess of $5,000, the Member’s Benefit Commencement Date
shall be deferred to the date which is as soon as administratively feasible
after the earlier of the date the Member attains age sixty-five or the Member’s
date of death, or such earlier date as the Member may elect by written notice
to the Committee prior to such date. No less than thirty days (unless such
thirty-day period is waived by an affirmative election in accordance with
applicable Treasury regulations) and no more than ninety days before his
Benefit Commencement Date, the Committee shall inform the Member of his right
to defer his Benefit Commencement Date and shall describe the Member’s Direct
Rollover election rights pursuant to Section 10.3 below.

         (c) A Member’s Benefit Commencement Date shall in no event be later than
the sixtieth day following the close of the Plan Year during which such Member
attains, or would have attained, his Normal Retirement Date or, if later,
terminates his employment with the Employer or a Controlled Entity.

         (d) A Member’s Benefit Commencement Date shall be in compliance with the
provisions of section 401(a)(9) of the Code and applicable Treasury regulations
thereunder and shall in no event be later than:

        (1) April 1 of the calendar year following the later of (A) the
calendar year in which such Member attains the age of seventy and
one-half or (B) the calendar year in which such Member terminates his
employment with the Employer (provided, however, that clause (B) of this
sentence shall not apply in the case of a Member who is a “five-percent
owner” (as defined in section 416 of the Code) with respect to the Plan
Year ending in the calendar year in which such Member attains the age of
seventy and one-half); and

        (2) In the case of a benefit payable pursuant to Article IX, the
last day of the five-year period following the death of such Member.

The provisions of this Section notwithstanding, a Member may not elect to defer
the receipt of his benefit hereunder to the extent that such deferral creates a
death benefit that is more than incidental within the meaning of section
401(a)(9)(G) of the Code and applicable Treasury regulations thereunder.

X-1

 

         (e) Subject to the provisions of Paragraph (d), a Member’s Benefit
Commencement Date shall not occur unless the Article VI, VII, VIII, or IX event
entitling the Member (or his beneficiary) to a benefit constitutes a
distributable event described in section 401(k)(2)(B) of the Code and shall not
occur while the Member is employed by the Employer or any Controlled Entity
(irrespective of whether the Member has become entitled to a distribution of
his benefit pursuant to Article VI, VII, VIII, or IX).

     10.2 Form of Payment and Payee.

         (a) Subject to the provisions of Paragraph (b) below, a Member’s benefit
shall be provided from the balance of such Member’s Accounts under the Plan and
shall be paid in cash in one lump sum on the Member’s Benefit Commencement
Date. Except as provided in Section 19.4, the Member’s benefit shall be paid
to the Member unless the Member has died prior to his Benefit Commencement
Date, in which case the Member’s benefit shall be paid to his beneficiary
designated in accordance with the provisions of Section 9.2.

         (b) Benefits shall be paid (or transferred pursuant to Section 10.3) in
cash except that a Member (or his designated beneficiary or legal
representative in the case of a deceased Member) may elect to have the portion
of his Accounts invested in Company Stock paid (or transferred pursuant to
Section 10.3) in full shares of Company Stock with any balance (including
fractional shares of Company Stock) to be paid or transferred in cash.
Conversions of Company Stock to cash and cash to Company Stock shall be based
upon the value of Company Stock on the Member’s Benefit Commencement Date.

     10.3 Direct Rollover Election. 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 Committee, to have all or any portion of an Eligible Rollover Distribution
(other than any portion attributable to the offset of an outstanding loan
balance of such Member pursuant to the Plan’s loan procedure) paid directly to
an Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
Prior to any Direct Rollover pursuant to this Section, the Committee may
require the Distributee to furnish the Committee with a statement from the
plan, account, or annuity to which the benefit is to be transferred verifying
that such plan, account, or annuity is, or is intended to be, an Eligible
Retirement Plan.

     10.4 Unclaimed Benefits. In the case of a benefit payable on behalf of a
Member, if the Committee is unable to locate the Member or beneficiary to whom
such benefit is payable, upon the Committee’s determination thereof, such
benefit shall be forfeited. Notwithstanding the foregoing, if subsequent to
any such
forfeiture the Member or beneficiary to whom such benefit is payable makes a
valid claim for such benefit, such forfeited benefit shall be restored to the
Plan in the manner provided in Section 8.7.

     10.5 Claims Review.

         (a) In any case in which a claim for Plan benefits of a Member or
beneficiary is denied or modified, the Committee shall furnish written notice
to the claimant within ninety days after receipt of such claim for Plan
benefits (or within 180 days if additional information requested by the
Committee necessitates an extension of the ninety-day period and the claimant

X-2

 

is informed of such extension in writing within the original ninety-day
period), which notice shall:

        (1) State the specific reason or reasons for the denial or
modification;

        (2) Provide specific reference to pertinent Plan provisions on which
the denial or modification is based;

        (3) Provide a description of any additional material or information
necessary for the Member, his beneficiary, or representative to perfect
the claim and an explanation of why such material or information is
necessary; and

        (4) Explain the Plan’s claim review procedure described in Paragraph
(b) below.

         (b) In the event a claim for Plan benefits is denied or modified, if the
Member, his beneficiary, or a representative of such Member or beneficiary
desires to have such denial or modification reviewed, he must, within sixty
days following receipt of the notice of such denial or modification, submit a
written request for review by the Committee of its initial decision. In
connection with such request, the Member, his beneficiary, or the
representative of such Member or beneficiary may review any pertinent documents
upon which such denial or modification was based and may submit issues and
comments in writing. Within sixty days following such request for review the
Committee shall, after providing a full and fair review, render its final
decision in writing to the Member, his beneficiary or the representative of
such Member or beneficiary stating specific reasons for such decision and
making specific references to pertinent Plan provisions upon which the decision
is based. If special circumstances require an extension of such sixty-day
period, the Committee’s decision shall be rendered as soon as possible, but not
later than 120 days after receipt of the request for review. If an extension
of time for review is required, written notice of the extension shall be
furnished to the Member, beneficiary, or the representative of such Member or
beneficiary prior to the commencement of the extension period.

X-3

 

XI.

In-Service Withdrawals

     11.1 In-Service Withdrawals.

         (a) A Member may withdraw from his Rollover Contribution Account any or
all amounts held in such Account at any time.

         (b) A Member who has attained age fifty-nine and one-half may withdraw
from his Accounts an amount not exceeding his Vested Interest. Such withdrawal
shall come, first, from the Member’s Rollover Contribution Account, second,
from his Vested Interest in his Employer Contribution Account and, finally,
from his Before-Tax Account.

         (c) A Member who has a financial hardship, as determined by the Committee,
and who has made all available withdrawals pursuant to the Paragraphs above and
pursuant to the provisions of any other plans of the Employer and any
Controlled Entities of which he is a member and who has obtained all available
loans pursuant to Article XII and pursuant to the provisions of any other plans
of the Employer and any Controlled Entities of which he is a member may
withdraw from his Employer Contribution Account and his Before-Tax Account
amounts not to exceed the lesser of (1) such Member’s Vested Interest in such
Accounts or (2) the amount determined by the Committee as being available for
withdrawal pursuant to this Paragraph. Such withdrawal shall come, first, from
the Member’s Vested Interest in his Employer Contribution Account and, second,
from his Before-Tax Account. For purposes of this Paragraph, financial
hardship shall mean the immediate and heavy financial needs of the Member. A
withdrawal based upon financial hardship pursuant to this Paragraph shall not
exceed the amount required to meet the immediate financial need created by the
hardship and not reasonably available from other resources of the Member. The
amount required to meet the immediate financial need may include any amounts
necessary to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution. The determination of
the existence of a Member’s financial hardship and the amount required to be
distributed to meet the need created by the hardship shall be made by the
Committee. The decision of the Committee shall be final and binding, provided
that all Members similarly situated shall be treated in a uniform and
nondiscriminatory manner. A withdrawal shall be deemed to be made on account
of an immediate and heavy financial need of a Member if the withdrawal is for:

        (1) Expenses for medical care described in section 213(d) of the
Code previously incurred by the Member, the Member’s spouse, or any
dependents of the Member (as defined in section 152 of the Code) or
necessary for those persons to obtain medical care described in section
213(d) of the Code and not reimbursed or reimbursable by insurance;

        (2) Costs directly related to the purchase of a principal residence
of the Member (excluding mortgage payments);

XI-1

 

        (3) Payment of tuition and related educational fees, and room and
board expenses, for the next twelve months of post-secondary education
for the Member or the Member’s spouse, children, or dependents (as
defined in section 152 of the Code);

        (4) Payments necessary to prevent the eviction of the Member from
his principal residence or foreclosure on the mortgage of the Member’s
principal residence; or

        (5) Such other financial needs that the Commissioner of Internal
Revenue may deem to be immediate and heavy financial needs through the
publication of revenue rulings, notices, and other documents of general
applicability.

The above notwithstanding, (1) withdrawals under this Paragraph from a Member’s
Before-Tax Account shall be limited to the sum of the Member’s Before-Tax
Contributions to the Plan, less any previous withdrawals of such amounts, and
(2) Employer Contributions utilized to satisfy the restrictions in Section
3.1(e), and income allocable thereto, shall not be subject to withdrawal. A
Member who makes a withdrawal under this Paragraph may not make elective
contributions or employee contributions to the Plan or any other qualified or
nonqualified plan of the Employer or any Controlled Entity for a period of
twelve months following the date of such withdrawal. Further, such Member may
not make elective contributions under the Plan or any other plan maintained by
the Employer or any Controlled Entity for such Member’s taxable year
immediately following the taxable year of the withdrawal in excess of the
applicable limit set forth in Section 3.1(d) for such next taxable year less
the amount of such Member’s elective contributions for the taxable year of the
withdrawal.

     11.2 Restriction on In-Service Withdrawals.

         (a) Notwithstanding the provisions of this Article, not more than one
withdrawal pursuant to Section 11.1 (other than Paragraph (c) thereof) may be
made in any one Plan Year and no withdrawal shall be made from an Account to
the extent such Account has been pledged to secure a loan from the Plan.

         (b) If a Member’s Account from which a withdrawal is made is invested in
more than one Investment Fund, the Member shall designate which Investment
Fund, or combination of Investment Funds, from which the withdrawal shall be
made. In the absence of such designation, the withdrawal shall be made pro
rata from each Investment Fund in which such Account is invested.

         (c) All withdrawals under this Article shall be paid in cash.

         (d) Any withdrawal hereunder that constitutes an Eligible Rollover
Distribution shall be subject to the Direct Rollover election described in
Section 10.3.

         (e) This Article shall not be applicable to a Member following termination
of employment and the amounts in such Member’s Accounts shall be distributable
only in accordance with the provisions of Article X.

XI-2

 

XII.

Loans

     12.1 Eligibility for Loan. Upon application by (1) any Member who is an
Employee or (2) any Member no longer employed by the Employer, a beneficiary of
a deceased Member or an alternate payee under a qualified domestic relations
order, as defined in section 414(p)(8) of the Code, who retains an Account
balance under the Plan and who is a party-in-interest, as that term is defined
in section 3(14) of the Act, as to the Plan (an individual who is eligible to
apply for a loan under this Article being hereinafter referred to as a “Member”
for purposes of this Article), the Committee may in its discretion direct the
Trustee to make a loan or loans to such Member. Such loans shall be made
pursuant to the provisions of the Committee’s written loan procedure, which
procedure is hereby incorporated by reference as a part of the Plan.

     12.2 Maximum Loan.

         (a) A loan to a Member may not exceed 50% of the then value of such
Member’s Vested Interest in his Accounts.

         (b) Paragraph (a) above to the contrary notwithstanding, the amount of a
loan made to a Member under this Article shall not exceed an amount equal to
the difference between:

        (1) The lesser of $50,000 (reduced by the excess, if any, of (A) the
highest outstanding balance of loans from the Plan during the one-year
period ending on the day before the date on which the loan is made over
(B) the outstanding balance of loans from the Plan on the date on which
the loan is made) or one-half of the present value of the Member’s total
nonforfeitable accrued benefit under all qualified plans of the Employer
or a Controlled Entity; minus

        (2) The total outstanding loan balance of the Member under all other
loans from all qualified plans of the Employer or a Controlled Entity.

XII-1

 

XIII.

Administration of the Plan

     13.1 Appointment of Committee. The general administration of the Plan shall
be vested in the Committee which shall be appointed by the CEO and shall
consist of one or more persons. Any individual, whether or not an Employee, is
eligible to become a member of the Committee. Each member of the Committee
shall, before entering upon the performance of his duties, qualify by signing a
consent to serve as a member of the Committee under and pursuant to the Plan
and by filing such consent with the records of the Committee. For purposes of
the Act, the Committee shall be the Plan “administrator” and shall be the
“named fiduciary” with respect to the general administration of the Plan
(except as to the investment of the assets of the Trust Fund).

     13.2 Term, Vacancies, Resignation, and Removal. Each member of the Committee
shall serve until he resigns, dies, or is removed by the CEO. At any time
during his term of office, a member of the Committee may resign by giving
written notice to the CEO and the Committee, such resignation to become
effective upon the appointment of a substitute member or, if earlier, the lapse
of thirty days after such notice is given as herein provided. At any time
during his term of office, and for any reason, a member of the Committee may be
removed by the CEO with or without cause, and the CEO may in his discretion
fill any vacancy that may result therefrom. Any member of the Committee who is
an Employee shall automatically cease to be a member of the Committee as of the
date he ceases to be employed by the Employer or a Controlled Entity.

     13.3 Officers, Records, and Procedures. The Committee may select officers and
may appoint a secretary who need not be a member of the Committee. The
Committee shall keep appropriate records of its proceedings and the
administration of the Plan and shall make available for examination during
business hours to any Member or beneficiary such records as pertain to that
individual’s interest in the Plan. The Committee shall designate the person or
persons who shall be authorized to sign for the Committee and, upon such
designation, the signature of such person or persons shall bind the Committee.

     13.4 Meetings. The Committee shall hold meetings upon such notice and at such
time and place as it may from time to time determine. Notice to a member shall
not be required if waived in writing by that member. A majority of the members
of the Committee duly appointed shall constitute a quorum for the transaction
of business. All resolutions or other actions taken by the Committee at any
meeting where a quorum is present shall be by vote of a majority of those
present at such meeting and entitled to vote. Resolutions may be adopted or
other action taken without a meeting upon written consent signed by all of the
members of the Committee.

     13.5 Self-Interest of Members. No member of the Committee shall have any right
to vote or decide upon any matter relating solely to himself under the Plan or
to vote in any case in which his individual right to claim any benefit under
the Plan is particularly involved. In any case in which a Committee member is
so disqualified to act and the remaining members cannot agree, the CEO shall
appoint a temporary substitute member to exercise all the powers of the
disqualified member concerning the matter in which he is disqualified.

XIII-1

 

     13.6 Compensation and Bonding. The members of the Committee shall not receive
compensation with respect to their services for the Committee. To the extent
required by the Act or other applicable law, or required by the Company,
members of the Committee shall furnish bond or security for the performance of
their duties hereunder.

     13.7 Committee Powers and Duties. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and
provisions hereof and shall have all powers necessary to accomplish these
purposes, including, but not by way of limitation, the right, power, authority,
and duty:

        (a) To make rules, regulations, and bylaws for the administration of
the Plan that are not inconsistent with the terms and provisions hereof,
provided such rules, regulations, and bylaws are evidenced in writing and
copies thereof are delivered to the Trustee and to the Company, and to
enforce the terms of the Plan and the rules and regulations promulgated
thereunder by the Committee;

        (b) To construe in its discretion all terms, provisions, conditions,
and limitations of the Plan, and, in all cases, the construction
necessary for the Plan to qualify under the applicable provisions of the
Code shall control;

        (c) To correct any defect or to supply any omission or to reconcile
any inconsistency that may appear in the Plan in such manner and to such
extent as it shall deem expedient in its discretion to effectuate the
purposes of the Plan;

        (d) To employ and compensate such accountants, attorneys, investment
advisors, and other agents, employees, and independent contractors as the
Committee may deem necessary or advisable for the proper and efficient
administration of the Plan;

        (e) To determine in its discretion all questions relating to
eligibility;

        (f) To make a determination in its discretion as to the right of any
person to a benefit under the Plan and to prescribe procedures to be
followed by distributees in obtaining benefits hereunder;

        (g) To prepare, file, and distribute, in such manner as the
Committee determines to be appropriate, such information and material as
is required by the reporting and disclosure requirements of the Act;

        (h) To furnish the Employer any information necessary for the
preparation of such Employer’s tax return or other information that the
Committee determines in its discretion is necessary for a legitimate
purpose;

        (i) To require and obtain from the Employer and the Members any
information or data that the Committee determines is necessary for the
proper administration of the Plan;

        (j) To instruct the Trustee as to the loans to Members pursuant to
the provisions of Article XII;

XIII-2

 

        (k) To appoint investment managers pursuant to Section 15.5;

        (l) To receive and review reports from the Trustee and from
investment managers as to the financial condition of the Trust Fund,
including its receipts and disbursements;

        (m) To establish or designate Investment Funds as investment options
as provided in Article V; and

        (n) To direct the Trustee as to the exercise of rights or privileges
to acquire, convert, or exchange Company Stock pursuant to Section 5.4.

     13.8 Employer to Supply Information. The Employer shall supply full and timely
information to the Committee, including, but not limited to, information
relating to each Member’s Compensation, age, retirement, death, or other cause
of termination of employment and such other pertinent facts as the Committee
may require. The Employer shall advise the Trustee of such of the foregoing
facts as are deemed necessary for the Trustee to carry out the Trustee’s duties
under the Plan. When making a determination in connection with the Plan, the
Committee shall be entitled to rely upon the aforesaid information furnished by
the Employer.

     13.9 Temporary Restrictions. In order to ensure an orderly transition in the
transfer of assets to the Trust Fund from another trust fund maintained under
the Plan or from the trust fund of a plan that is merging into the Plan or
transferring assets to the Plan, the Committee may, in its discretion,
temporarily prohibit or restrict withdrawals, loans, changes to contribution
elections, changes of investment designation of future contributions, transfers
of amounts from one Investment Fund to another Investment Fund, or such other
activity as the Committee deems appropriate; provided that any such temporary
cessation or restriction of such activity shall be in compliance with all
applicable law.

     13.10 Indemnification. The Company shall indemnify and hold harmless each member of the Committee
and each Employee who is a delegate of the Committee against any and all
expenses and liabilities arising out of his administrative functions or
fiduciary responsibilities, including any expenses and liabilities that are
caused by or result from an act or omission constituting the negligence of such
individual in the performance of such functions or responsibilities, but
excluding expenses and liabilities that are caused by or result from such
individual’s own gross negligence or willful misconduct. Expenses against
which such individual shall be indemnified hereunder shall include, without
limitation, the amounts of any settlement or judgment, costs, counsel fees, and
related charges reasonably incurred in connection with a claim asserted or a
proceeding brought or settlement thereof.

XIII-3

 

XIV.

Trustee and Administration of Trust Fund

     14.1 Appointment, Resignation, Removal, and Replacement of Trustee.

             (a) The Trustee shall be appointed, removed, and replaced by and in the
sole discretion of the Committee. The Trustee shall be the “named fiduciary”
with respect to investment of the Trust Fund’s assets.

             (b) Any Trustee may resign at any time by giving at least thirty days’
written notice of such resignation to the Committee. Any Trustee may be
removed, with or without cause, by the Committee on written notice of such
removal to such Trustee. The Committee may appoint a successor Trustee by
authorizing the execution of a new Trust Agreement with the successor Trustee,
a copy of which shall be delivered to the former Trustee. If there would be no
other Trustee then acting, the actual appointment and qualification of a
successor Trustee to whom the Trust Fund may be transferred are conditions
which must be fulfilled before the resignation or removal of a Trustee shall
become effective. The Committee may by resolution increase or decrease the
number of Trustees at any time acting hereunder.

     14.2 Trust Agreement. As a means of administering the assets of the Plan, the
Company has entered into a Trust Agreement with Merrill Lynch Trust Company,
FSB as Trustee. The administration of the assets of the Plan and the duties,
obligations, and responsibilities of the Trustee shall be governed by the Trust
Agreement. The Trust Agreement may be amended from time to time as the Company
deems advisable in order to effectuate the purposes of the Plan. The Trust
Agreement is incorporated herein by reference and thereby made a part of the
Plan.

     14.3 Payment of Expenses. All expenses incident to the administration of the
Plan and Trust, including but not limited to, legal, accounting, Trustee fees,
direct expenses of the Employer and the Committee in the administration of the
Plan, and the cost of furnishing any bond or security required of the Committee
shall be paid by the Trustee from the Trust Fund, and, until paid, shall
constitute a claim against the Trust Fund which is paramount to the claims of
Members and beneficiaries; provided, however, that (a) the obligation of the
Trustee to pay such expenses from the Trust Fund shall cease to exist to the
extent such expenses are paid by the Employer and (b) in the event the
Trustee’s compensation is to be paid, pursuant to this Section, from the Trust
Fund, any individual serving as Trustee who already receives full-time pay from
an employer or an association of employers whose employees are participants in
the Plan, or from an employee organization whose members are participants in
the Plan, shall not receive any additional compensation for serving as Trustee.
This Section shall be deemed to be a part of any contract to
provide for expenses of Plan and Trust administration, whether or not the
signatory to such contract is, as a matter of convenience, the Employer.

     14.4 Trust Fund Property. All income, profits, recoveries, contributions,
forfeitures, and any and all moneys, securities, and properties of any kind at
any time received or held by the Trustee hereunder shall be held for investment
purposes as a commingled Trust Fund. The Committee shall maintain Accounts in
the name of each Member, but the maintenance of an

XIV-1

 

Account designated as the
Account of a Member shall not mean that such Member shall have a greater or
lesser interest than that due him by operation of the Plan and shall not be
considered as segregating any funds or property from any other funds or
property contained in the commingled fund. No Member shall have any title to
any specific asset in the Trust Fund.

     14.5 Distributions from Members’ Accounts. Distributions from a Member’s
Accounts shall be made by the Trustee only if, when, and in the amount and
manner directed in writing by the Committee. Any distribution made to a Member
or for his benefit shall be debited to such Member’s Account or Accounts. All
distributions hereunder shall be made in cash except as otherwise specifically
provided herein.

     14.6 Payments Solely from Trust Fund. All benefits payable under the Plan
shall be paid or provided for solely from the Trust Fund, and neither the
Employer nor the Trustee assumes any liability or responsibility for the
adequacy thereof. The Committee or the Trustee may require execution and
delivery of such instruments as are deemed necessary to assure proper payment
of any benefits.

     14.7 No Benefits to the Employer. No part of the corpus or income of the Trust
Fund shall be used for any purpose other than the exclusive purpose of
providing benefits for the Members and their beneficiaries and of defraying
reasonable expenses of administering the Plan. Anything to the contrary herein
notwithstanding, the Plan shall not be construed to vest any rights in the
Employer other than those specifically given hereunder.

XIV-2

 

XV.

Fiduciary Provisions

     15.1 Article Controls. This Article shall control over any contrary,
inconsistent or ambiguous provisions contained in the Plan.

     15.2 General Allocation of Fiduciary Duties. Each fiduciary with respect to
the Plan shall have only those specific powers, duties, responsibilities and
obligations as are specifically given him under the Plan. The CEO shall have
the sole authority to appoint and remove members of the Committee, and the
Committee shall have the sole authority to appoint and remove the Trustee. In
addition, except as otherwise specifically provided herein, the Committee shall
have the sole responsibility for the administration of the Plan, which
responsibility is specifically described herein. Except as otherwise
specifically provided herein and in the Trust Agreement, the Trustee shall have
the sole responsibility for the administration, investment, and management of
the assets held under the Plan. It is intended under the Plan that each
fiduciary shall be responsible for the proper exercise of his own powers,
duties, responsibilities, and obligations hereunder and shall not be
responsible for any act or failure to act of another fiduciary except to the
extent provided by law or as specifically provided herein.

     15.3 Fiduciary Duty. Each fiduciary under the Plan, including, but not limited
to, the Committee and the Trustee as “named fiduciaries,” shall discharge his
duties and responsibilities with respect to the Plan:

        (a) Solely in the interest of the Members, for the exclusive purpose
of providing benefits to Members and their beneficiaries and of defraying
reasonable expenses of administering the Plan and Trust;

        (b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;

        (c) By diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is prudent
not to do so; and

        (d) In accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent with
applicable law.

No fiduciary shall cause the Plan or Trust Fund to enter into a “prohibited
transaction” as provided in section 4975 of the Code or section 406 of the Act.

     15.4 Delegation of Fiduciary Duties. The Committee may appoint subcommittees,
individuals or any other agents as it deems advisable and may delegate to any
of such appointees any or all of the powers and duties of the Committee. Such
appointment and delegation must specify in writing the powers or duties being
delegated, and must be accepted in writing by the delegatee. Upon such
appointment, delegation and acceptance, the delegating Committee members shall
have no liability for the acts or omissions of any such delegatee, as long as
the

XV-1

 

delegating Committee members do not violate any fiduciary responsibility in
making or continuing such delegation.

     15.5 Investment Manager. The Committee may, in its sole discretion, appoint an
“investment manager,” with power to manage, acquire or dispose of any asset of
the Plan and to direct the Trustee in this regard, so long as:

        (a) The investment manager is (1) registered as an investment
adviser under the Investment Advisers Act of 1940, (2) not registered as
an investment adviser under such act by reason of paragraph (1) of
section 203A(a) of such act, is registered as an investment adviser under
the laws of the state (referred to in such paragraph (1)) in which it
maintains its principal office and place of business, and, at the time it
last filed the registration form most recently filed by it with such
state in order to maintain its registration under the laws of such state,
also filed a copy of such form with the Secretary of Labor, (3) a bank,
as defined in the Investment Advisers Act of 1940, or (4) an insurance
company qualified to do business under the laws of more than one state;
and

        (b) Such investment manager acknowledges in writing that he is a
fiduciary with respect to the Plan.

Upon such appointment, the Committee shall not be liable for the acts of the
investment manager, as long as the Committee members do not violate any
fiduciary responsibility in making or continuing such appointment. The Trustee
shall follow the directions of such investment manager and shall not be liable
for the acts or omissions of such investment manager. The investment manager
may be removed by the Committee at any time and within the Committee’s sole
discretion.

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XVI.

Amendments

     16.1 Right to Amend. Subject to Section 16.2 and any other limitations
contained in the Act or the Code, the Committee may from time to time amend, in
whole or in part, any or all of the provisions of the Plan on behalf of the
Company and all Employers.

     16.2 Limitation on Amendments. No amendment of the Plan shall be made that
would vest in the Employer, directly or indirectly, any interest in or control
of the Trust Fund. No amendment shall be made that would vary the Plan’s
exclusive purpose of providing benefits to Members and their beneficiaries and
of defraying reasonable expenses of administering the Plan or that would permit
the diversion of any part of the Trust Fund from that exclusive purpose. No
amendment shall be made that would reduce any then nonforfeitable interest of a
Member. No amendment shall increase the duties or responsibilities of the
Trustee unless the Trustee consents thereto in writing.

XVI-1

 

XVII.

Discontinuance of Contributions, Termination,

Partial Termination, and Merger or Consolidation

     17.1 Right to Discontinue Contributions, Terminate, or Partially Terminate.
The Employer has established the Plan with the bona fide intention and
expectation that from year to year it will be able to, and will deem it
advisable to, make its contributions as herein provided. However, the
Committee realizes that circumstances not now foreseen, or circumstances beyond
its control, may make it either impossible or inadvisable for the Employer to
continue to make its contributions to the Plan. Therefore, the Committee shall
have the power to discontinue contributions to the Plan, terminate the Plan, or
partially terminate the Plan at any time hereafter. The Trustee shall be
notified of such discontinuance, termination, or partial termination.

     17.2 Procedure in the Event of Discontinuance of Contributions, Termination, or
Partial Termination.

         (a) If the Plan is amended so as to permanently discontinue Employer
Contributions, or if Employer Contributions are in fact permanently
discontinued, the Vested Interest of each affected Member shall be 100%,
effective as of the date of discontinuance. In case of such discontinuance,
the Committee shall remain in existence and all other provisions of the Plan
that are necessary, in the opinion of the Committee, for equitable operation of
the Plan shall remain in force.

         (b) If the Plan is terminated or partially terminated, the Vested Interest
of each affected Member shall be 100%, effective as of the termination date or
partial termination date, as applicable. Unless the Plan is otherwise amended
prior to dissolution of the Company, the Plan shall terminate as of the date of
dissolution of the Company.

         (c) Upon discontinuance of contributions, termination, or partial
termination, any previously unallocated contributions, forfeitures, and net
income (or net loss) shall be allocated among the Accounts of the Members on
such date of discontinuance, termination, or partial termination according to
the provisions of Article IV. Thereafter, the net income (or net loss) shall
continue to be allocated to the Accounts of the Members until the balances of
the Accounts are distributed.

         (d) In the case of a termination or partial termination of the Plan, and
in the absence of a Plan amendment to the contrary, the Trustee shall pay the
balance of the Accounts of a Member for whom the Plan is so terminated, or who
is affected by such partial termination, to such Member, subject to the time of
payment, form of payment, and consent provisions of Article X.

     17.3 Merger, Consolidation, or Transfer. This Plan and Trust Fund may not merge or consolidate with, or transfer its
assets or liabilities to, any other plan, unless immediately thereafter each
Member would, in the event such other plan terminated, be entitled to a benefit
which is equal to or greater than the benefit to which he would have been
entitled if the Plan were terminated immediately before the merger,
consolidation, or transfer.

XVII-1

 

XVIII.

Participating Employers

     18.1 Designation of Other Employers.

         (a) The Committee may designate any entity or organization eligible by law
to participate in the Plan and the Trust as an Employer by written instrument
delivered to the Secretary of the Company, the Trustee, and the designated
Employer. Such written instrument shall specify the effective date of such
designated participation, may incorporate specific provisions relating to the
operation of the Plan that apply to the designated Employer only and shall
become, as to such designated Employer and its Employees, a part of the Plan
and the Trust Agreement.

         (b) Each designated Employer shall be conclusively presumed to have
consented to its designation and to have agreed to be bound by the terms of the
Plan and Trust Agreement and any and all amendments thereto upon its submission
of information to the Committee required by the terms of or with respect to the
Plan or upon making a contribution to the Trust Fund pursuant to the terms of
the Plan; provided, however, that the terms of the Plan may be modified so as
to increase the obligations of an Employer only with the consent of such
Employer, which consent shall be conclusively presumed to have been given by
such Employer upon its submission of any information to the Committee required
by the terms of or with respect to the Plan or upon making a contribution to
the Trust Fund pursuant to the terms of the Plan following notice of such
modification.

         (c) The provisions of the Plan and the Trust Agreement shall apply
separately and equally to each Employer and its Employees in the same manner as
is expressly provided for the Company and its Employees, except that (1) the
power to appoint or otherwise affect the Trustee and the power to amend or
terminate the Plan and Trust Agreement shall be exercised by the Committee
alone and (2) the power to appoint or otherwise affect the Committee shall be
exercised by the CEO alone.

         (d) Transfer of employment among Employers shall not be considered a
termination of employment hereunder, and Service with one shall be considered
as Service with all others.

         (e) Any Employer may, by appropriate action of its Board of Directors or
noncorporate counterpart that is communicated in writing to the Secretary of
the Company, the Trustee, and to the Committee, terminate its participation in
the Plan and the Trust. Moreover, the Committee may, in its discretion,
terminate an Employer’s Plan and Trust participation at any time by written
instrument delivered to the Secretary of the Company, the Trustee, and the
designated Employer.

     18.2 Single Plan. For purposes of the Code and the Act, the Plan as adopted by the Employers
shall constitute a single plan rather than a separate plan of each Employer.
All assets in the Trust Fund shall be available to pay benefits to all Members
and their beneficiaries.

XVIII-1

 

XIX.

Miscellaneous Provisions

     19.1 Not Contract of Employment. The adoption and maintenance of the Plan
shall not be deemed to be a contract between the Employer and any person or to
be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of
the Employer or to restrict the right of the Employer to discharge any person
at any time nor shall the Plan be deemed to give the Employer the right to
require any person to remain in the employ of the Employer or to restrict any
person’s right to terminate his employment at any time.

     19.2 Alienation of Interest Forbidden. Except as otherwise provided with
respect to “qualified domestic relations orders” and certain judgments and
settlements pursuant to section 206(d) of the Act and sections 401(a)(13) and
414(p) of the Code and except as otherwise provided under other applicable law,
no right or interest of any kind in any benefit shall be transferable or
assignable by any Member or any beneficiary or be subject to anticipation,
adjustment, alienation, encumbrance, garnishment, attachment, execution, or
levy of any kind. Plan provisions to the contrary notwithstanding, the
Committee shall comply with the terms and provisions of any “qualified domestic
relations order,” including an order that requires distributions to an
alternate payee prior to a Member’s “earliest retirement age” as such term is
defined in section 206(d)(3)(E)(ii) of the Act and section 414(p)(4)(B) of the
Code, and shall establish appropriate procedures to effect the same.

     19.3 Uniformed Services Employment and Reemployment Rights Act Requirements.
Notwithstanding any provision of the Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Code.

     19.4 Payments to Minors and Incompetents. If a Member or beneficiary entitled
to receive a benefit under the Plan is a minor or is determined by the
Committee in its discretion to be incompetent or is adjudged by a court of
competent jurisdiction to be legally incapable of giving valid receipt and
discharge for a benefit provided under the Plan, the Committee may pay such
benefit to the duly appointed guardian or conservator of such Member or
beneficiary for the account of such Member or beneficiary. If no guardian or
conservator has been appointed for such Member or beneficiary, the Committee
may pay such benefit to any third party who is determined by the Committee, in
its sole discretion, to be authorized to receive such benefit for the account
of such Member or beneficiary. Such payment shall operate as a full discharge
of all liabilities and obligations of the Committee, the Trustee, the Employer,
and any fiduciary of the Plan with respect to such benefit.

     19.5 Acquisition and Holding of Company Stock. The Plan is specifically
authorized to acquire and hold up to 100% of its assets in Company Stock so
long as Company Stock is a “qualifying employer security,” as such term is
defined in Section 407(d)(5) of the Act.

XIX-1

 

     19.6 Member’s and Beneficiary’s Addresses. It shall be the affirmative duty of
each Member to inform the Committee of, and to keep on file with the Committee,
his current mailing address and the current mailing address of his designated
beneficiary. If a Member fails to keep the Committee informed of his current
mailing address and the current mailing address of his designated beneficiary,
neither the Committee, the Trustee, the Employer, nor any fiduciary under the
Plan shall be responsible for any late or lost payment of a benefit or for
failure of any notice to be provided timely under the terms of the Plan.

     19.7 Incorrect Information, Fraud, Concealment, or Error. Any contrary
provisions of the Plan notwithstanding, if, because of a human or systems
error, or because of incorrect information provided by or correct information
failed to be provided by, fraud, misrepresentation, or concealment of any
relevant fact (as determined by the Committee) by any person the Plan enrolls
any individual, pays benefits under the Plan, incurs a liability or makes any
overpayment or erroneous payment, the Plan shall be entitled to recover from
such person the benefit paid or the liability incurred, together with all
expenses incidental to or necessary for such recovery.

     19.8 Severability. If any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof. In such case, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.

     19.9 Jurisdiction. The situs of the Plan hereby created is Texas. All
provisions of the Plan shall be construed in accordance with the laws of Texas
except to the extent preempted by federal law.

XIX-2

 

XX.

Top-Heavy Status

     20.1 Article Controls. Any Plan provisions to the contrary notwithstanding,
the provisions of this Article shall control to the extent required to cause
the Plan to comply with the requirements imposed under section 416 of the Code.

     20.2 Definitions. For purposes of this Article, the following terms and
phrases shall have these respective meanings:

         (a) Account Balance: As of any Valuation Date, the aggregate amount credited
to an individual’s account or accounts under a qualified defined contribution
plan maintained by the Employer or a Controlled Entity (excluding employee
contributions that were deductible within the meaning of section 219 of the
Code and rollover or transfer contributions made after December 31, 1983, by or
on behalf of such individual to such plan from another qualified plan sponsored
by an entity other than the Employer or a Controlled Entity), increased by (1)
the aggregate distributions made to such individual from such plan during a
five-year period ending on the Determination Date and (2) the amount of any
contributions due as of the Determination Date immediately following such
Valuation Date.

         (b) Accrued Benefit: As of any Valuation Date, the present value (computed on
the basis of the Assumptions) of the cumulative accrued benefit (excluding the
portion thereof that is attributable to employee contributions that were
deductible pursuant to section 219 of the Code, to rollover or transfer
contributions made after December 31, 1983, by or on behalf of such individual
to such plan from another qualified plan sponsored by an entity other than the
Employer or a Controlled Entity, to proportional subsidies or to ancillary
benefits) of an individual under a qualified defined benefit plan maintained by
the Employer or a Controlled Entity increased by (1) the aggregate
distributions made to such individual from such plan during a five-year period
ending on the Determination Date and (2) the estimated benefit accrued by such
individual between such Valuation Date and the Determination Date immediately
following such Valuation Date. Solely for the purpose of determining top-heavy
status, the Accrued Benefit of an individual shall be determined under (1) the
method, if any, that uniformly applies for accrual purposes under all qualified
defined benefit plans maintained by the Employer and the Controlled Entities or
(2) if there is no such method, as if such benefit accrued not more rapidly
than under the slowest accrual rate permitted under section 411(b)(1)(C) of the
Code.

         (c) Aggregation Group: The group of qualified plans maintained by the Employer and each Controlled
Entity consisting of (1) each plan in which a Key Employee participates and
each other plan that enables a plan in which a Key Employee participates to
meet the requirements of section 401(a)(4) or 410 of the Code or (2) each plan
in which a Key Employee participates, each other plan that enables a plan in
which a Key Employee participates to meet the requirements of section 401(a)(4)
or 410 of the Code and any other plan that the Employer elects to include as a
part of such group; provided, however, that the Employer may elect to include a
plan in such group only if the group will continue to meet the requirements of
sections 401(a)(4) and 410 of the Code with such plan being taken into account.

XX-1

 

         (d) Assumptions: The interest rate and mortality assumptions specified for
top-heavy status determination purposes in any defined benefit plan included in
the Aggregation Group which includes the Plan.

         (e) Determination Date: For the first Plan Year of any plan, the last day of
such Plan Year and for each subsequent Plan Year of such plan, the last day of
the preceding Plan Year.

         (f) Key Employee: A “key employee” as defined in section 416(i) of the Code
and the Treasury regulations thereunder.

         (g) Plan Year: With respect to any plan, the annual accounting period used by
such plan for annual reporting purposes.

         (h) Remuneration: 415 Compensation as defined in Section 4.5(a)(2).

         (i) Valuation Date: With respect to any Plan Year of any defined contribution
plan, the most recent date within the twelve-month period ending on a
Determination Date as of which the trust fund established under such plan was
valued and the net income (or loss) thereof allocated to participants’
accounts. With respect to any Plan Year of any defined benefit plan, the most
recent date within a twelve-month period ending on a Determination Date as of
which the plan assets were valued for purposes of computing plan costs for
purposes of the requirements imposed under section 412 of the Code.

     20.3 Top-Heavy Status.

         (a) The Plan shall be deemed to be top-heavy for a Plan Year if, as of the
Determination Date for such Plan Year, (1) the sum of Account Balances of
Members who are Key Employees exceeds 60% of the sum of Account Balances of all
Members unless an Aggregation Group including the Plan is not top-heavy or (2)
an Aggregation Group including the Plan is top-heavy. An Aggregation Group
shall be deemed to be top-heavy as of a Determination Date if the sum (computed
in accordance with section 416(g)(2)(B) of the Code and the Treasury
regulations promulgated thereunder) of (1) the Account Balances of Key
Employees under all defined contribution plans included in the Aggregation
Group and (2) the Accrued Benefits of Key Employees under all defined benefit
plans included in the Aggregation Group exceeds 60% of the sum of the Account
Balances and the Accrued Benefits of all individuals under such plans.
Notwithstanding the foregoing, the Account Balances and Accrued Benefits of
individuals who are not Key Employees in any Plan Year but who were Key
Employees in any prior Plan Year shall not be considered in determining the
top-heavy status of the Plan for such Plan Year. Further, notwithstanding the
foregoing, the Account Balances and Accrued Benefits of individuals who have
not performed services for the Employer or any Controlled Entity at any time
during the five-year period ending on the applicable Determination Date shall
not be considered.

         (b) If the Plan is determined to be top-heavy for a Plan Year, the
Employer shall contribute to the Plan for such Plan Year on behalf of each
Member who is not a Key Employee and who has not terminated his employment as
of the last day of such Plan Year an amount equal to:

XX-2

 

        (1) The lesser of (A) 3% of such Member’s Remuneration for such Plan
Year or (B) a percent of such Member’s Remuneration for such Plan Year
equal to the greatest percent determined by dividing for each Key
Employee the amounts allocated to such Key Employee’s Before-Tax Account
and Employer Contribution Account for such Plan Year by such Key
Employee’s Remuneration; reduced by

        (2) The amount of Employer Safe Harbor Contributions, if any,
allocated to such Member’s Accounts pursuant to Section 4.2(c) for such
Plan Year.

The minimum contribution required to be made for a Plan Year pursuant to this
Paragraph for a Member employed on the last day of such Plan Year shall be made
regardless of whether such Member is otherwise ineligible to receive an
allocation of the Employer’s contributions for such Plan Year. If such
forfeitures otherwise available are not sufficient to provide such restoration,
the Employer shall make a special contribution to the Plan of the portion of
such restoration not provided by forfeitures (which special contribution shall
be made without regard to current or accumulated earnings and profits).
Notwithstanding the foregoing, if the Plan is deemed to be top-heavy for a Plan
Year, the Employer’s contribution for such Plan Year pursuant to this Paragraph
shall be increased by substituting “4%” in lieu of “3%” in Clause (1) hereof to
the extent that the Committee determines to so increase such contribution to
comply with the provisions of section 416(h)(2) of the Code. Notwithstanding
the foregoing, no contribution shall be made pursuant to this Paragraph for a
Plan Year with respect to a Member who is a participant in another defined
contribution plan sponsored by the Employer or a Controlled Entity if such
Member receives under such other defined contribution plan (for the plan year
of such plan ending with or within the Plan Year of the Plan) a contribution
which is equal to or
greater than the minimum contribution required by section 416(c)(2) of the
Code. Notwithstanding the foregoing, no contribution shall be made pursuant to
this Paragraph for a Plan Year with respect to a Member who is a participant in
a defined benefit plan sponsored by the Employer or a Controlled Entity if such
Member accrues under such defined benefit plan (for the plan year of such plan
ending with or within the Plan Year of this Plan) a benefit that is at least
equal to the benefit described in section 416(c)(1) of the Code. If the
preceding sentence is not applicable, the requirements of this Paragraph shall
be met by providing a minimum benefit under such defined benefit plan which,
when considered with the benefit provided under the Plan as an offset, is at
least equal to the benefit described in section 416(c)(1) of the Code.

     20.4 Termination of Top-Heavy Status. If the Plan has been deemed to be
top-heavy for one or more Plan Years and thereafter ceases to be top-heavy, the
provisions of this Article shall cease to apply to the Plan effective as of the
Determination Date on which it is determined no longer to be top-heavy.

     20.5 Effect of Article. Notwithstanding anything contained herein to the
contrary, the provisions of this Article shall automatically become
inoperative and of no effect to the extent not required by the Code or the Act.

XX-3

 

EXECUTED this
             day of                         , 2001.

	 	 	 	 	 
	 	 	GROUP 1 AUTOMOTIVE, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

XX-4

 

APPENDIX A

     This Appendix A shall apply to the After-Tax Accounts of Members in lieu
of certain otherwise applicable provisions of the Plan. To the extent the
provisions of this Appendix A conflict with other provisions of the Plan, this
Appendix A shall control with respect to the After-Tax Accounts of Members.

1. Definitions. For purposes of this Appendix A, the following definitions
shall apply:

     (a) After-Tax Account: An individual account for a Member, which is
credited with amounts transferred to the Plan from a Transferor Plan that are
attributable to after-tax contributions to such Transferor Plan, and which is
credited with (or debited for) such account’s allocation of net income (or net
loss) and changes in value of the Trust Fund.

     (b) Transferor Plan: A plan that transfers assets to the Plan as a result
of the merger of such plan into the Plan or a spin off from such plan into the
Plan.

2. In-Service Withdrawals Applicable to After-Tax Accounts. In addition to the
in-service withdrawal rights set forth in Article XI of the Plan, a Member may
withdraw any or all amounts held in his After-Tax Account at any time, subject
to the provisions of Section 11.2 of the Plan except that the requirement in
Section 11.2(a) that only one withdrawal may be made in any Plan Year shall not
be applicable.

 

 

APPENDIX B

SPECIAL VESTING PROVISIONS

APPLICABLE TO FORMER PARTICIPANTS IN

KEY FORD, INC. NADART SALARY DEFERRAL

401K PROFIT SHARING PLAN

     The determination of the Vested Interest in his Employer Contribution
Account of a former participant in the Key Ford, Inc. NADART Salary Deferral
401K Profit Sharing Plan (such plan being hereinafter referred to as the “Key
Ford Plan” and such a former participant being hereinafter referred to as a
“Key Ford Plan Participant”) who had his account balance transferred to the
Plan from the Key Ford Plan in connection with the merger of the Key Ford Plan
into the Plan, effective March 1, 2000, shall be subject to the following
special provisions in lieu of, or in addition to, the provisions of Section
8.3(b) of the Plan:

1. Each Key Ford Plan Participant with three or more years of service as of
March 1, 2000 (as determined under the provisions of the Key Ford Plan without
regard to any exceptions permitted under Section 411(a)(4) of the Code) (an
“After-Tax Key Ford Plan Participant”) shall have at all times a 100% vested
and nonforfeitable interest in amounts credited to his Employer Contribution
Account.

2. Each Key Ford Plan Participant who is not an After-Tax Key Ford Plan
Participant shall have his Vested Interest in his Employer Contribution Account
determined in accordance with the provisions of Section 8.3 of the Plan;
provided, however, that in no case shall such Participant’s Vested Interest be
less than his vesting percentage under the Key Ford Plan on March 1, 2000.

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