PENSKE AUTOMOTIVE GROUP 401(k) SAVINGS AND RETIREMENT PLAN

Employee Benefits Plan Agreement

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PENSKE AUTOMOTIVE GROUP, INC

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Title: PENSKE AUTOMOTIVE GROUP 401(k) SAVINGS AND RETIREMENT PLAN
Governing Law: Delaware Date: 3/11/2009
Industry: Retail (Specialty) Sector: Services

Exhibit 10.26

PENSKE AUTOMOTIVE GROUP 401(k) SAVINGS AND RETIREMENT PLAN

As Amended and Restated Effective January 1, 2009

Table of Contents


Section Contents	Page

1 DEFINITIONS		1
1.1 Accrued Benefit		1
1.2 Acquired Employee		1
1.3 Acquired Company		1
1.4 Additional Pre-Tax Contribution		1
1.5 Adjustment Factor		1
1.6 Affiliated Company		2
1.7 Affiliated Employer		2
1.8 After-Tax Contribution Account		2
1.9 Annual Addition		2
1.10 Beneficiary		2
1.11 Board		2
1.12 Break in Service		2
1.13 Business Day		3
1.14 Code		3
1.15 Company		3
1.16 Compensation		3
1.17 Disability		5
1.18 Eligible Employee		5
1.19 Employee		5
1.20 Employer		6
1.21 Employer Matching Contribution		6
1.22 Employer Matching Contribution Account		6
1.23 Entry Date		6
1.24 ERISA		6
1.25 Fiscal Year		6
1.26 Fund		6
1.27 Highly Compensated Employee		6
1.28 Hour of Service		7
1.29 Leave of Absence		8
1.30 Limitation Year		8
1.31 Member		8
1.32 Non-Highly Compensated Employee		8
1.33 Normal Retirement Date		8
1.34 Period of Service		8
1.35 Plan		8
1.36 Plan Administrator		9
1.37 Plan Sponsor		9
1.38 Plan Year		9
1.39 Pre-Tax Contribution		9
1.40 Pre-Tax Contribution Account		9
1.41 Prior Plan		9
1.42 Retirement		9


Section Contents	Page

1.43 Rollover Contribution		9
1.44 Rollover Account		9
1.45 Spouse		9
1.46 Top-Heavy Contribution		9
1.47 Top-Heavy Contribution Account		9
1.48 Transfer Pre-Tax Contribution Account		9
1.49 Transfer Employer Contribution Account		9
1.50 Trust		9
1.51 Trustee		9
1.52 Valuation Date		10
1.53 Year of Service		10

2 MEMBERSHIP IN THE PLAN		10
2.1 Current Employees		10
2.2 New Employees or Re-employed Members		10
2.3 Changes in Category		10

3 CONTRIBUTIONS		11
3.1 Pre-Tax Contributions		11
3.2 Employer Matching Contributions		11
3.3 Adjustments to Contributions		12
3.4 Distribution of “Excess Deferral Amounts”		12
3.5 Overall Limits on Contributions		14
3.6 Permitted Employer Refunds		15
3.7 Timing of Deposits		15

4 MEMBER ACCOUNTS		15
4.1 Establishment of Accounts		15
4.2 Valuation of Accounts		15
4.3 Adjustment to Accounts		16
4.4 Directed Investments		16
4.5 Administration of Investments		16
4.6 Investments For Terminated Members		16
4.7 Special Rules Applicable to Penske Automotive Common Stock Fund		17
4.8 Special Rules Applicable to Investment in Penske Automotive Common Stock Fund		18
4.9 Compliance With Employer Securities Diversification Requirements		18

5 VESTING		19
5.1 Vesting		19
5.2 Forfeitures		20
5.3 Change in Vesting Schedule		21
5.4 Lost Members		21

6 DISTRIBUTIONS		21
6.1 Distribution of Benefit		21


Section Contents	Page

6.2 Election of Benefits		22
6.3 Rehire Prior To Incurring Five Consecutive Breaks in Service		22
6.4 Death Prior to Total Distribution		23
6.5 Distribution Limitation		23
6.6 Mandatory Distributions		23
6.7 Earnings on Undistributed Benefits		23
6.8 Rollovers Into the Plan		23
6.9 Transfers Into the Plan		23
6.10 Evidence in Writing		23
6.11 Hardship Withdrawal		24
6.12 Withdrawals Permitted After Age 59- ¹ / 2		25
6.13 Withdrawal of After-Tax Contributions; Rollover Contributions		25
6.14 Conditions For Withdrawals		26
6.15 Direct Rollover		26
6.16 Withholding of Income Tax		27
6.17 Manner of Payment of Benefits		28
6.18 Assets Transferred From Money Purchase Plans		29
6.19 Small Benefit Cash Outs		29

7 ACTUAL DEFERRAL AND ACTUAL CONTRIBUTION PERCENTAGE TESTING		30
7.1 Limitations on Allocations of Pre-Tax Contributions		30
7.2 Limitations on Allocations of Employer Matching Contributions		32
7.3 Definitions		34

8 TOP-HEAVY PROVISIONS		35
8.1 Top-Heavy Pre-emption		35
8.2 Determination of Top-Heavy Status		35
8.3 Top-Heavy Vesting Schedule		37
8.4 Top-Heavy Restrictions		38
8.5 Top-Heavy Definitions		39

9 DESIGNATION OF BENEFICIARY		40
9.1 Named Beneficiary		40
9.2 No Named Beneficiary		40

10 MANAGEMENT OF THE FUND		40
10.1 Contributions Deposited To Trust		40
10.2 No Reversion to Employer		40

11 DISCONTINUANCE AND LIABILITIES		40
11.1 Termination		40
11.2 No Liability For Employer		41
11.3 Administrative Expenses :		41
11.4 Non-forfeitability Due to Termination(s)		41
11.5 Exclusive Benefit Rule		41
11.6 Mergers		41

iii


Section Contents	Page

11.7 Non-allocated Trust Assets		41

12 ADMINISTRATION		42
12.1 Establishment of the Benefits Committee		42
12.2 Organization of the Committee		42
12.3 Powers of the Committee		42
12.4 Reliance on Professionals		43
12.5 Liability and Indemnification		43
12.6 Fiduciary Insurance		43
12.7 Claims Procedure		43
12.8 Trustee Has Authority to Invest		45
12.9 Removal For Personal Involvement		45

13 PARTICIPATION BY EMPLOYERS OTHER THAN COMPANY		46
13.1 Adoption by Eligible Employers		46
13.2 Rights and Obligations; Agency		46
13.3 Termination of the Plan by the Company		46
13.4 Withdrawal of an Affiliated Employer		46

14 AMENDMENTS		46
14.1 Amendment Restrictions		46
14.2 Amending the Plan		47
14.3 Retroactive Amendments		47

15 LOANS		47
15.1 Permitted Loans		47
15.2 Collateral Required		48
15.3 Repayment		48
15.4 Interest Charges		48
15.5 Failure to Make Timely Payment		48
15.6 Termination of Employment		49
15.7 Loans to Non-Employees		49
15.8 Order of Accounts Reduced		49
15.9 Segregated Investment		49
15.10 General Administration		49
15.11 Termination of Employment Resulting From Corporate Transaction		49

16 SPECIAL PROVISIONS APPLICABLE TO PRIOR PLANS		49
16.1 Form of Distribution		49
16.2 Vesting		50
16.3 Loans		50
16.4 Elimination of Optional Benefit Forms		50

17 MISCELLANEOUS		50
17.1 “Spendthrift” Provision		50
17.2 QDRO Exception		51


Section Contents	Page

17.3 No Guarantee of Employment		51
17.4 Uniformed Services Employment and Reemployment Rights Act of 1994		51
17.5 Controlling Law		51

18 MINIMUM DISTRIBUTION REQUIREMENTS		52
18.1 Required Minimum Distributions		52
18.2 Definitions		54

PREAMBLE

The Penske Automotive Group 401(k) Savings and Retirement Plan (the “Plan”) was originally effective as of September 1, 1998. Subsequent to that date, the Plan was amended from time to time. This document amends and restates the Plan, effective as of January 1, 2009 (or as of such other dates as may be specified in the Plan).

The purpose of the Plan is to provide employees of Penske Automotive Group, Inc. and certain of its affiliates with an opportunity to accumulate retirement savings. The Plan is intended to qualify as a profit sharing plan with a cash or deferred arrangement under sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended.

Employees who terminated their employment before the effective date of this amendment and restatement will, unless otherwise specified in this document, be subject to the terms of the Plan as in effect on the date of their Termination of employment.

SECTION 1

DEFINITIONS

The following words and phrases as used herein shall have the following meanings, unless a different meaning is plainly required by the context; and the following rules of interpretation shall apply in reading this instrument. Pronouns shall be interpreted so that the masculine pronoun shall include the feminine and the singular shall include the plural. The words “hereof,” “herein” and other singular compounds shall refer to the Plan in its entirety and not to any particular provision or section, unless so limited by the text. All references herein to specific sections shall mean sections of this document unless otherwise qualified.

1.1		Accrued Benefit means the sum of the balance in the Member’s Pre-Tax Contribution Account, Top-Heavy Contribution Account, Employer Matching Contribution Account, After-Tax Contribution Account, Transfer Pre-Tax Contribution Account, Transfer Employer Contribution Account, and Rollover Account.

1.2		Acquired Employee means any employee of an Acquired Company who is classified as an Employee.

1.3		Acquired Company means any entity of which the stock, business or assets have been bought by an Employer or which has become part of an Employer.

1.4		Additional Pre-Tax Contribution means a “qualified nonelective contribution” that consists of any Employer contributions (other than Employer Matching Contributions) with respect to which the Member may not elect to receive cash in lieu of such contributions being made to the Plan, that are nonforfeitable (i.e., vested) when made, and that are subject to all of the restrictions on distributions applicable to Pre-Tax Contributions.

1.5		Adjustment Factor means the dollar limitation under Code section 402(g) in effect at the beginning of the taxable year.

1.6

Affiliated Company means

	A.		any corporation which is a member of a controlled group of corporations including those within the meaning of Code section 1563(a), determined without regard to Code sections 1563(a)(4) and (e)(3)(C), including the Employer;

	B.		any organization under common control with the Employer within the meaning of Code section 414(c);

	C.		any organization which is included with the Employer in an affiliated service group within the meaning of Code section 414(m); or

	D.		any other entity required to be aggregated with the Employer pursuant to regulations under Code section 414(o).

1.7

Affiliated Employer means any organization designated by the Committee as eligible to participate as an Employer in the Plan.

1.8

After-Tax Contribution Account means an account established and maintained by the Employer on behalf of a Member to which his After-Tax Contributions made under a Prior Plan are held.

1.9

Annual Addition means, with respect to any Participant for any Limitation Year, the sum of:

That part of any Employer Contributions, Pre-Tax Contributions or Employer Matching Contributions allocated to the Member’s Plan account with respect to that Limitation Year.

The forfeitures, if any, allocated to the Member’s Account with respect to that Limitation Year.

The total amount of any employee contributions made by the Member to the Plan or to any other tax-qualified plan maintained by the group consisting of the Employer and the Affiliated Companies, except that, for the purposes of this Section, “more than 50%” shall be substituted for “at least 80%” each place it appears in Code section 1563(a)(1) (the “Employer Group”), if any, for that Limitation Year.

Amounts allocated on behalf of the Member during the Limitation Year to an individual medical account, within the meaning of Code section 415( l )(2), which is part of a pension or annuity plan of the Employer Group.

If the Member is or ever has been a Key Employee, amounts allocated to any separate account (within the meaning of Code section 419A(d)(1)) in a welfare benefit fund (within the meaning of Code section 419(e)) during the Limitation Year for provision of post-retirement medical benefits for the Member.

1.10

Beneficiary means the person, persons, or trust designated by written, revocable designation filed with the Plan Administrator by the Member to receive payments in the event of such Member’s death.

1.11

Board means the Board of Directors of Penske Automotive Group, Inc.

1.12

Break in Service means a Plan Year during which an Employee has not completed more than 500 Hours of Service with the Employer or an Affiliated Company.

1.13

Business Day means each day the New York Stock Exchange is open for business; provided, however, that for purposes of Section 1.52 only, the term “Business Day” shall not include any day on which the Plan’s record keeper is closed.

1.14

Code means the Internal Revenue Code of 1986, and the same as may be amended from time to time.

1.15

Company means Penske Automotive Group, Inc.

1.16

Compensation, except as hereafter specified, means W-2 gross earnings, including the Pre-Tax Contributions made hereunder during the Plan Year and contributions made by an Employee to a Code section 125 plan, but excluding nonmonetary awards or benefits and any payments in the nature of severance pay and any reimbursed moving expenses.

For purposes of the nondiscrimination tests set forth in Section 7, and except as provided in Code section 414(s), Compensation means any income received by the Employee from the Employer in accordance with Code section 415(c)(3), including deferrals made pursuant to Code section 414(s)(2), for the Plan Year for which compliance with the tests is being measured.

For purposes of measuring the limits set forth in Code section 415, Compensation shall mean all amounts paid during the Limitation Year or other relevant period to an individual by the Employer (as determined for Code section 415 purposes under the “Annual Addition” definition in Section 1.9), before the individual’s severance from employment with the group consisting of the Employer and Affiliated Companies (the “Employer Group”) (except to the extent otherwise provided below), for services actually performed that includes all wages, salaries, fees for professional services and other amounts for personal services actually rendered in the course of employment with any member of the Employer Group (including, but not limited to, commissions paid salesmen, commissions, tips, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in Treasury Regulations section 1.62-2), but excluding:

(1)

contributions made by any member of the Employer Group to a plan of deferred compensation to the extent that, before the application of the limits of Code section 415, the contributions are not includible in the gross income of the individual for the taxable year in which contributed;

(2)

contributions made by any member of the Employer Group on behalf of the individual to a simplified employee pension plan described in Code section 408(k) to the extent the contributions are excludable from the individual’s gross income;

(3)

distributions from a plan of deferred compensation maintained by any member of the Employer Group regardless of whether the amounts are includible in the gross income of the individual when distributed (except amounts received pursuant to an unfunded non-qualified plan to the extent the amounts are includible in the gross income of the individual);

(4)

amounts realized from the exercise of a non-qualified stock option or when restricted stock (or property) held by the individual either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

(5)

amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and

(6)

other amounts that receive special tax benefits, such as premiums for group term life insurance (but only to the extent that the premiums are not includible in the gross income of the individual).

Compensation shall include amounts paid to a terminated Member by the later of two and one-half months after the Member’s severance from employment or the end of the Limitation Year in which the termination occurs, provided that such amounts would have been payable to the Member had he continued in employment with the Employer Group and are regular compensation for services during the Member’s regular working hours, compensation for services outside regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar compensation; are payments for unused accrued bona fide sick, vacation or other leave, but only if the Member would have been able to use the leave if employment had continued; or are received by the Member pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been made to the Member had he continued in employment with the Employer Group and only to the extent that the payment is includible in the Member’s gross income.

Compensation taken into account shall be limited to the amount set forth in Code section 401(a)(17) ($245,000 for 2009), or such other amount as may be established by the Commissioner of Internal Revenue as a result of adjustments to account for the cost of living in accordance with Code section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (the “Determination Period”) beginning with or within such calendar year. If a Determination Period consists of fewer than 12 months, the limit will be multiplied by a fraction, the numerator of which is the number of months in the Determination Period, and the denominator of which is 12.

For purposes of applying the limitations described in Section 3.5 of the Plan, Compensation paid or made available during such Limitation Years shall include elective amounts for qualified transportation fringe benefits that are not includible in the gross income of the Member by reason of Code section 132(f)(4). This amendment shall also apply to the definition of Compensation for purposes of Section 1.27.G and the discrimination tests under Section 7 of the Plan for Plan Years.

For purposes of the definition of Compensation under this Section 1.16, amounts under Code section 125 include any amounts not available to a Member in cash in lieu of group health coverage because the Member is unable to certify that he has other health coverage. An amount will be treated as an amount under Code section 125 only if the Employer does not request or collect information regarding the Member’s other health coverage as part of the enrollment process for the health plan.

1.17

Disability means that the Member has applied and qualifies for disability benefits under the Social Security Act of 1935, as amended.

1.18

Eligible Employee means any Employee of the Employer who satisfies all of the following conditions:

he is not a leased employee within the meaning of Code section 414(n)(2);

he is not a union employee, other than a union employee for whom benefits under this Plan are specifically provided for as a result of good faith bargaining;

he is not employed by the Employer on a part-time or temporary basis. A part-time employee is an employee who is not regularly scheduled to complete 1,000 Hours of Service in a Plan Year;

he is not an Acquired Employee, unless eligibility to participate in the Plan is otherwise provided for in an agreement consented to by the Company, such as an Appendix to the Plan;

he is not a non-resident alien who received no earned income (within the meaning of Code section 911(d)(2)) from the Employer which constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)); and

he is not a person whose status as an Employee is solely the result of a judicial or administrative determination.

The above notwithstanding, any part-time or temporary Employee who would otherwise be eligible to participate in the Plan shall become eligible to participate in the Plan if he is credited with at least 1,000 Hours of Service in the 12 consecutive month period beginning with such Employee’s date of hire, or is credited with at least 1,000 Hours of Service in any 12 consecutive month period beginning on the anniversary thereof, as of the first Entry Date following the end of such 12 consecutive month period.

1.19

Employee means an individual who is a common-law employee of the Employer and shall include leased employees within the meaning of Code section 414(n)(2), except as provided below. The term “leased employee” means any person (other than an Employee of the Employer) who pursuant to an agreement between the Employer and any other person (“leasing organization”) has performed services for the Employer (or for the Employer and related persons determined in accordance with Code section 414(n)(6)) on a substantially full time basis for a period of at least one year, and such services are under the primary direction and control of the Employer. Contributions or benefits provided a leased employee by the leasing organization which are attributable to services performed for the Employer shall be treated as provided by the Employer. The term “Employee” shall not include any individuals classified by the Employer as independent contractors even if such individuals would be classified as employees of the Employer under common law.

A leased employee shall not be considered an Employee of the Employer if; (i) such individual is covered by a money purchase pension plan providing: (1) a non-integrated employer contribution rate of at least 10 percent of compensation, as defined in Code section 415(c)(3), but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the leased employee’s gross income under Code sections 125, 402(h)(1)(B) or 403(b), or employer contributions on behalf of the leased employee to a trust which is part of a qualified cash or deferred arrangement (as defined in Code section 401(k)(2)); (2) immediate participation; and (3) full and immediate vesting; and (ii) leased employees do not constitute more than 20% of the Employer’s Non-Highly Compensated Employee workforce.

Notwithstanding the foregoing, an Acquired Employee of an Acquired Company shall be not deemed an Employee of an Employer as of the date such Acquired Company was bought by an Employer, except as otherwise provided in an Appendix applicable to such Acquired Employees.

Notwithstanding the foregoing, an employee of an Affiliated Employer that had adopted the Plan but ceases being an Affiliated Company shall no longer be considered an Employee as of the first date the Affiliated Employer is no longer an Affiliated Company.

1.20

Employer means the Company and any other business organization that succeeds to its business and elects to continue this Plan, and any Affiliated Employer that adopts the Plan in accordance with Section 13 of the Plan. Notwithstanding the foregoing, an Affiliated Employer that had adopted the Plan but ceases being an Affiliated Company shall cease to be an Employer as of the first date the Affiliated Employer is no longer an Affiliated Company.

1.21

Employer Matching Contribution means a contribution made on behalf of a Member pursuant to Section 3.2 of the Plan.

1.22

Employer Matching Contribution Account means an account established and maintained on behalf of a Member to which his Employer Matching Contributions are allocated.

1.23

Entry Date means the first Business Day of each month.

1.24

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

1.25

Fiscal Year means the period from January 1 through December 31.

1.26

Fund means all assets of the Trust.

1.27

Highly Compensated Employee means any active or former Employee, who performs service during the determination year and is described in one or more of the following groups:

an Employee who is a 5% owner, as defined in Code section 416(i)(1)(B)(i), at any time during the determination year or the look-back year; or

an Employee who receives Compensation in excess of $105,000 (for 2009 Plan Year determinations, and as may be adjusted for future years) during the look-back year.

The terms “determination year” and “look-back year” shall mean, respectively, the Plan Year and the twelve-month period immediately preceding the determination year.

The $105,000 amount set forth in paragraph B. shall be indexed for changes in the cost of living in accordance with Code section 415(d).

A Highly Compensated Former Employee includes any Employee who separated or was deemed to have separated from service prior to the determination year, performs no service for the Employer during the determination year, and was a Highly Compensated active Employee for either the separation year or any determination year ending on or after the Employee’s 55th birthday.

The determination of who is a Highly Compensated Employee shall be made in accordance with Code section 414(q) and the regulations thereunder, except that the top paid group rule, as defined in Code section 414(q)(3) shall not apply.

“Compensation” shall mean, for the purpose of this Section 1.27, Code section 415(c)(3) compensation.

1.28

Hour of Service means each hour for which an Employee is directly or indirectly paid or entitled to be paid by the Employer or an Affiliated Company regardless of whether employment duties are performed, and each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer or Affiliated Company. These hours shall be credited to an Employee for the computation period during which his employment duties were performed; but in the event a payment is made or due for a reason other than the performance of duties, hours shall be credited for the computation period during which the absence from work occurred or to which a back pay agreement or award pertains. However, no Employee shall be credited with duplicate Hours of Service as a result of a back pay agreement or award. Hours of Service shall also include each hour (credited on the basis of the Employee’s customary workday) during which an Employee is on an uncompensated excused Leave of Absence, provided that such Employee shall be credited with no more than an Hour of Service for each complete Plan Year during which the uncompensated Leave of Absence is in effect.

For purposes of determining the number of Hours of Service completed in any applicable computation period, the Employer may maintain accurate records of actual hours completed for all Employees. The number of Hours of Service to be credited to an Employee for periods during which no employment duties are performed shall be determined in accordance with Department of Labor Regulations sections 2530.200b-2(b) and 2530.200b-2(c).

In instances where actual Hours of Service are not maintained, an Employee shall be credited with 45 Hours of Service for each week in which such Employee would otherwise be credited with at least one Hour of Service.

Notwithstanding A. and B. above and solely for the purpose of preventing a Break in Service, an Employee shall be credited with Hours of Service during an absence by reason of:

	(1)		the pregnancy of the Employee;

	(2)		the birth of a child of the Employee;

(3)

the placement of the child with the Employee in connection with the adoption of such child by the Employee; or

(4)

for purposes of caring for the child beginning immediately after such birth or placement;

provided the Employee shall, during the period of his absence, be credited with the number of Hours of Service which would have been credited to him at his normal work rate but for such absence, or, if the number of Hours of Service based on a normal rate is indeterminable, the Employee shall be credited with 8 Hours of Service per day of such absence. The “Severance from Service” date of an Employee/Member who is absent from work due to “maternity or paternity leave” reasons for more than one year is the second anniversary of the first date of such absence. The period between the first and second anniversary of the first date of such absence is neither a Period of Service nor a period of severance.

In instances where actual Hours of Service are maintained, the maternity/paternity leave described in C. above shall be credited to the computation period in which the absence began if necessary to avoid a Break in Service or, if not necessary, then to the following computation period.

Service with any of the following companies, regardless of whether such company is an Affiliated Company, shall be taken into account in determining any Employee’s Hours of Service:

	(1)		any affiliate of Penske Automotive Group, Inc.; or

	(2)		Penske Corporation or any affiliate.

1.29

Leave of Absence means any temporary absence from employment authorized by the Employer based on its normal practices. An Employee’s Period of Service shall continue uninterrupted during such leave.

1.30

Limitation Year shall be the Plan Year.

1.31

Member means any Eligible Employee included in the membership of the Plan as provided in Section 2 hereof. A Member shall continue to be a Member as long as he has an Accrued Benefit hereunder.

1.32

Non-Highly Compensated Employee means any Employee who is not a Highly Compensated Employee.

1.33

Normal Retirement Date means the Member’s 65th birthday.

1.34

Period of Service means the period between an Employee’s date of hire or rehire, as applicable, and the date on which he ceases to be an Employee.

1.35

Plan means the Penske Automotive Group 401(k) Savings and Retirement Plan.

1.36

Plan Administrator is the Committee provided for in Section 12 hereof; provided, however, that in the absence of a duly constituted Committee, the Company shall be the Plan Administrator.

1.37

Plan Sponsor means Penske Automotive Group, Inc. or its successor.

1.38

Plan Year means the period from January 1 through December 31.

1.39

Pre-Tax Contribution means an elective deferral made by a Member pursuant to Section 3.1 of the Plan.

1.40

Pre-Tax Contribution Account means an account established and maintained on behalf of a Member to which his Pre-Tax Contributions are allocated.

1.41

Prior Plan means any tax-qualified plan maintained by an Affiliated Employer that has adopted the Plan, if the assets of such plan have been, or are intended to be, transferred to this Plan.

1.42

Retirement means the termination of a Member’s employment with the Employer on or after his Normal Retirement Date.

1.43 Rollover Contribution means the amount contributed to the Plan pursuant to Section 6.8.

1.44

Rollover Account means the account established and maintained pursuant to Section 6.8 of the Plan.

1.45

Spouse means the husband or wife of a Member on the date benefits under the Plan commence. However, if the Member should die prior to the date benefits under the Plan would have commenced to him, then the Spouse shall be the husband or wife to whom the Member had been married throughout the one-year period preceding the date of his death.

1.46

Top-Heavy Contribution means a contribution made by an Employer pursuant to Section 8 of the Plan.

1.47

Top-Heavy Contribution Account means an account established and maintained on behalf of a Member to which Top-Heavy Contributions, if any, are allocated.

1.49

Transfer Pre-Tax Contribution Account means the account established and maintained on behalf of a member to which his Pre-Tax Contribution to a Prior Plan were allocated, and which are transferred to this Plan pursuant to Section 6.9.

1.49

Transfer Employer Contribution Account means the account established and maintained on behalf of a member to which Employer Contributions to a Prior Plan were allocated, and which are transferred to this Plan pursuant to Section 6.9.

1.50

Trust means a trust, intended to qualify under Code section 501(a), constituting the legal agreement between the Plan Sponsor and the Trustee, fixing the rights and liabilities with respect to managing and controlling the Fund for the purposes of the Plan.

1.51

Trustee means the individual or entity designated by the Plan Sponsor as trustee(s) or any successor trustee(s) of the Trust.

1.52

Valuation Date means every Business Day, unless the Plan Administrator selects another date or dates for the valuation of Plan assets.

1.53

Year of Service means a Plan Year during which the Employee completes 1,000 Hours of Service. An Employee’s Years of Service shall include Years of Service for an Employer prior to the effective date of the Employer’s participation in the Plan. Any Hours of Service with an Acquired Company or a company listed in Section 1.28.E of the Plan shall be deemed Hours of Service for an Employer in determining Years of Service for purposes of becoming a member of the Plan under Section 2 and for purposes of vesting under Section 5.1.

SECTION 2

MEMBERSHIP IN THE PLAN

2.1

Current Employees. Each Employee who is an Eligible Employee and has completed a 60-day Period of Service shall become a Member of the Plan on the first day of the month thereafter.

2.2

New Employees or Re-employed Members. Each other Employee shall become a Member on the Entry Date coincident with or next following the date he qualifies as an Eligible Employee and completes a 60-day Period of Service. A reemployed Eligible Employee shall become a Member on his date of reemployment if he had been a Member of the Plan during his prior period of employment. Otherwise, a reemployed Eligible Employee shall become a Member of the Plan as of the Entry Date following his completion of a 60-day Period of Service (including any Period of Service prior to his reemployment).

2.3

Changes in Category. If an Employee’s status changes either from a category of ineligibility to a category of eligibility, or from a category of eligibility to a category of ineligibility, his Years of Service during the period of ineligibility shall be considered as Years of Service for vesting purposes hereunder. For purposes of Section 3, only Compensation earned from the Employer during a period in which the Employee is both an Eligible Employee and a Member shall be considered in determining the amount of the contribution made to the Trust on behalf of the Employee.

If a Member’s status changes to a category of ineligibility, he shall become a Member immediately upon returning to an eligible class of Employees. If an ineligible Employee’s status changes to an Eligible Employee, he shall become a Member immediately if he has otherwise satisfied the requirements of Section 2.2.

SECTION 3

CONTRIBUTIONS

3.1

Pre-Tax Contributions.

Each Member may authorize the Employer to reduce his Compensation through regular payroll reductions and to have the Employer make Pre-Tax Contributions to the Plan in the amount of such payroll reduction. The Pre-Tax Contribution may be any whole percentage between zero percent (0%) and twenty percent (20%) of such Compensation, but in no event shall it exceed the appropriate Adjustment Factor plus, when applicable, the amount provided under Code section 414(v) and permitted under Section 3.1.B. The Pre-Tax Contribution of a Highly Compensated Employee may not exceed 7% of his or her Compensation, and in no event shall it exceed the appropriate Adjustment Factor. Compensation, for purposes of this Section, shall mean the Compensation earned by an Employee from the Employer for the Plan Year for which the contributions are being made.

Such amount shall be deposited as Pre-Tax Contributions hereunder to the Member’s Pre-Tax Contribution Account. Prior to the date that he becomes a Member, each Eligible Employee shall, by following the administrative procedures established by the Plan Administrator, consent and agree to payroll reductions, authorize the Employer to make such reductions, and designate the percentage of such contributions to be allocated to the available investment funds. The election of the Member shall become effective for the first pay period following the date the election is received by the Plan Administrator and will remain in effect until the Member makes a new election.

Notwithstanding the limitations described in Section 3.1.A, Section 7 (relating to limitations on allocations of Pre-Tax Contributions), and Sections 3.4 and 3.5 (relating to Excess Deferral Amounts and maximum Annual Additions), a Member who, by the end of the taxable year, will have attained age 50 shall be permitted to make additional Pre-Tax Contributions (“Catch Up Contributions”), by means of Compensation reductions pursuant to the payroll reduction procedures set forth in Section 3.2.A, in an amount not to exceed the limit described in Code section 414(v) ($5,500 for 2009), as adjusted from time to time in accordance with Code section 414(v). Catch-Up Contributions that do not exceed the applicable limitation established in Code section 414(v) for the relevant Plan Year, as adjusted in the manner described in Code section 414(v) shall not be taken into account for purposes of implementing the limitations under Code sections 402(g), 415, 401(k)(3), 410(b), and 416.

3.2

Employer Matching Contributions.

There is no existing Employer Matching Contribution. Employer Matching Contributions shall be made for any future period if the Committee or Plan Sponsor reinstates a discretionary Employer Matching Contribution as provided in paragraph B of this Section 3.2.

The Plan Sponsor or the Committee may, in its discretion, specify that each Employer contribute a percentage of a Member’s Pre-Tax Contributions to the Employer Matching Accounts of Eligible Members as an Employer Matching Contribution. The Plan Sponsor or the Committee shall determine the percentage each year; provided, however, that the Plan Sponsor or the Committee may, in its discretion, at any time in the year, modify the previously specified percentage as to any Employer Matching Contribution that has not yet accrued to Eligible Members. Notwithstanding the preceding provisions of this paragraph B, no Employer Matching Contribution shall be made with respect to an Eligible Member’s Pre-Tax Contributions in excess of 4% of such Eligible Member’s Compensation for the Plan Year, or such other percentage of such Eligible Member’s Compensation for the Plan Year as the Plan Sponsor or Committee may otherwise specify for a prospective measuring period. All Employer Matching Contributions shall be calculated based on the Member’s Pre-Tax Contributions made during the entire Plan Year, but shall not include the Member’s contributions, if any, made as catch-up contributions pursuant to Code section 414(v). Employer Matching Contributions shall be credited to the Eligible Member’s Employer Matching Contribution Account on a quarterly basis (unless the Employer elects to make such contributions on a more frequent basis). For purposes of receiving Employer Matching Contributions under this Section 3.2, an Eligible Member is each Member who (i) makes any Pre-Tax Contributions during the Plan Year and (ii) is employed by the Employer on the last day of the calendar quarter for which contributions are made. Compensation, for purposes of this Section 3.2, shall mean the Compensation earned by an Employee from the Employer for the Plan Year for which the contributions are being made.

Notwithstanding paragraph B of this Section 3.2, Members who are members of Local 355 of the United Service Workers Union of OCT Partnership (d/b/a Gateway Toyota) or Local 259 UAW, AFL-CIO of Westbury Superstore, Ltd. (d/b/a Westbury Toyota) shall not be eligible to receive any Employer Matching Contribution.

3.3

Adjustments to Contributions. A Member may increase or decrease the rate of Pre-Tax Contributions effective as of any payroll period by notifying the Plan Administrator in accordance with the administrative procedures established by the Plan Administrator. A Member may suspend Pre-Tax Contributions at any time by notifying the Plan Administrator in accordance with the administrative procedures established by the Plan Administrator. Suspensions during the Plan Year shall be effective as soon as practicable after notification of the Plan Administrator in accordance with the administrative procedures established by the Plan Administrator. A Member may recommence Pre-Tax Contributions to the Plan effective as of any payroll period by submitting a new election to the Plan Administrator in accordance with administrative procedures established by the Plan Administrator, prior to such payroll period. Notwithstanding the foregoing, an individual who is on lay off status and returns to the employ of the Employer may recommence Pre-Tax Contributions to the Plan effective as of the next payroll period. Additionally, notwithstanding any other provision of this Plan to the Contrary, the Plan Administrator shall have the discretion to determine, in a uniform nondiscriminatory manner, when Member elections to commence, modify, or terminate Pre-Tax Contributions shall take effect.

3.4

Distribution of “Excess Deferral Amounts”. Notwithstanding any other provision of the Plan, Excess Deferral Amounts as adjusted for income or losses thereon shall be distributed to Members who claim such Excess Deferral Amounts for the preceding taxable year.

For purposes of this Section 3.4, the following definitions shall have the following meanings:

(1)

“Elective Deferrals” shall mean any Employer contributions made to the Plan at the election of the Member, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a Member’s Elective Deferral is the sum of all Employer contributions made on behalf of such Member pursuant to an election to defer under any qualified CODA as described in Code section 401(k), any simplified employee pension cash or deferred arrangement as described in Code section 402(h)(1)(B), any eligible deferred compensation plan under Code section 457, any plan as described under Code section 501(c)(18), and any Employer contributions made on the behalf of a Member for the purchase of an annuity contract under Code section 403(b) pursuant to a salary reduction agreement.

(2)

“Excess Deferral Amounts” shall mean those Elective Deferrals that are includible in a Member’s gross income under Code section 402(g), to the extent such Member’s Elective Deferrals for a taxable year exceed the Adjustment Factor. Excess Deferral Amounts shall be treated as Annual Additions under the Plan except to the extent distributed pursuant to this Section 3.4.

A Member may assign to the Plan any Excess Deferral Amounts made during the taxable year of the Member by filing a claim in writing with the Plan Administrator no later than March 1 following the year in which the Excess Deferral Amounts were made. Said claim shall specify the Member’s Excess Deferral Amount for the preceding calendar year; and shall be accompanied by the Member’s written statement that if such amounts are not distributed, such Excess Deferral Amount, when added to amounts deferred under other plans or arrangements described in Code sections 401(k), 408(k), 457, 501(c)(18) or 403(b) shall exceed the appropriate Adjustment Factor for the year in which the deferral occurred.

A Member who has an Excess Deferral Amount during a taxable year may receive a corrective distribution during the same taxable year. Such a corrective distribution shall be made if:

(1)

the Member designates the distribution as an Excess Deferral Amount;

(2)

the corrective distribution is made after the date on which the Plan received the Excess Deferral Amount; and

(3)

the Plan Administrator designates the distribution as a distribution of an Excess Deferral Amount.

The Excess Deferral Amount distributed to a Member with respect to a taxable year shall be calculated after giving effect to income and losses pertaining to the Member’s Pre-Tax Contribution Account allocable to the Excess Deferral Amount.

The income or loss allocable to such Excess Deferral Amount shall be determined by multiplying the income or loss allocable to the Member’s Pre-Tax Contribution Account for the taxable year by a fraction, the numerator of which is the Excess Deferral Amount on behalf of the Member for the preceding taxable year and the denominator of which is the Member’s Pre-Tax Contribution Account balance on the last day of the taxable year, minus the income or plus the loss allocable to the Member’s Pre-Tax Contribution Account for the taxable year.

In the alternative, any other methods of allocating income or loss on the Excess Deferral Amount may be utilized in the manner provided by the Internal Revenue Service, i.e., the regulations set forth under Treasury Regulations section 1.402(g)-1.

Excess Deferral Amounts, as adjusted for income and losses, shall be distributed to a Member in the year following the taxable year in which such Excess Deferral was made, and no later than the April 15 deadline provided for under Code section 402(g)(2)(A).

Excess Deferral Amounts are includible in a Member’s gross income under Code section 402(g) to the extent that the Member’s Pre-Tax Contributions exceed the dollar limitation under such Code section. Excess Deferral Amounts shall be treated as Annual Additions under this Plan except to the extent distributed pursuant to this Section 3.4.

Effective January 1, 2009, and notwithstanding any other provision of the Plan to the contrary, no “gap period” (i.e., the period between the end of the taxable year in which the Excess Deferral Amounts accrued and the date on which the Excess Deferral Amounts are distributed) income shall be included in the distribution of the Excess Deferral Amounts, as permitted under Code section 402(g)(2)(A) as modified by section 109(b)(3) of the Workers Retiree and Employer Recovery Act of 2008.

3.5

Overall Limits on Contributions. Contributions made on behalf of any Member during any Limitation Year shall be subject to the follow rules:

Maximum Annual Addition. Except to the extent permitted under Section 3.1, including Section 3.1’s Catch Up Contributions provisions, the Annual Additions (or for purposes of applying subparagraph (2) below, the Annual Additions excluding amounts for provision of post-retirement medical and life insurance benefits) to a Member’s Account for any Limitation Year shall in no event exceed the lesser of:

(1)

$49,000 (for 2009), as adjusted from time to time as provided in Code section 415(d) for subsequent years, or

(2)

100% of the Member’s Compensation received from the group consisting of the Employer and the Affiliated Companies for that Limitation Year.

Treatment of Excess. Any Annual Additions that exceed the limitations set forth in Section 3.5.A shall be corrected as set forth in applicable Treasury Regulations and other correction guidance issued by the Treasury or Internal Revenue Service.

Coordination with Other Defined Contribution Plans. If a Member also participates in a defined contribution plan (within the meaning of Code section 415(k)) maintained by any member of the group consisting of the Employer and the Affiliated Companies, other than the Plan, the limitation set forth in Section 3.5.A shall apply to the aggregate of the Annual Additions to the Plan and to such other plan.

Compliance with Applicable Law. The limitations described in this Section 3.5 shall be determined and applied in accordance with the provisions of Code section 415 and regulations promulgated thereunder, which are incorporated into this Plan by this reference.

3.6

Permitted Employer Refunds. Employer contributions hereunder are made with the understanding that this Plan shall initially qualify under Code section 401, and that such contributions shall be deductible under Code section 404.

Any contribution that is disallowed as a deduction shall be refunded to the Employer within one year of such disallowance if the Employer has filed the application for the determination or qualification of this Plan with the IRS by the time prescribed by law for filing the Employer’s return for the taxable year in which this Plan was adopted, or by such later date as the Secretary of the Treasury may prescribe.

Any contribution made by the Employer due to a mistake of fact shall be refunded to the Employer within one year of such contribution.

Refunds of contributions due to a disallowance of deduction or mistake of fact shall be governed by the following requirements:

	(1)		earnings attributable to the amount being refunded shall remain in the Plan, but losses thereto must reduce the amount to be refunded; and

	(2)		in no event may a refund be made that would cause the Accrued Benefit of any Member to be reduced to less than that which the Member’s Accrued Benefit would have been had the mistaken amount not been contributed.

3.7

Timing of Deposits. Employer shall make payment of the Pre-Tax Contribution to the Trust under the terms hereof no later than the time period permitted by applicable law and regulations. All other Employer contributions under the Plan shall be deposited to the Trust prior to the due date for filing the Employer’s Federal Income Tax Return for the Fiscal Year in which the Plan Year ends, including any extension thereto. In no event shall the Employer Contributions be made in excess of the amount deductible under applicable Federal law now or hereafter in effect limiting the allowable deduction for contributions to profit sharing plans. The contributions to this Plan when taken together with all other contributions made by the Employer to other qualified retirement plans shall not exceed the maximum amount deductible under Code section 404(a).

SECTION 4

MEMBER ACCOUNTS

4.1

Establishment of Accounts. A Pre-Tax Contribution Account, Top-Heavy Contribution Account, Employer Matching Contribution Account, After-Tax Contribution Account, Pre-Tax Contribution Transfer Account and Transfer Employer Contribution Account, and Rollover Account shall be established for each Member in accordance with Sections 3, 6 and 8. All contributions by or on behalf of a Member shall be deposited to the appropriate account.

4.2

Valuation of Accounts. As of each Valuation Date, the accounts of each Member shall be adjusted to reflect any realized and unrealized gains or losses and income or expenses of the Fund which shall be allocated pro rata to each Member’s account based on the value thereof as of the preceding Valuation Date, adjusted in accordance with Section 4.3. The fair market value of the Fund shall be determined by the Trustee and communicated to the Plan Administrator as of the end of each calendar month in accordance with procedures established by the Plan Administrator. Each Member shall be furnished with a statement as soon as practicable after the end of each calendar quarter, setting forth the value of his Accrued Benefit as of the last Valuation Date in such calendar quarter. It shall represent the fair market value of all securities or other property held for each respective fund, plus cash and accrued earnings, less accrued expenses and proper charges against the fund as of such Valuation Date. The Trustee’s determination shall be final and conclusive for all purposes of this Plan. The valuation process shall be performed separately for each investment fund.

The Plan Administrator shall, in its discretion, determine and apply in a uniform manner the method for determining the fair market value, as of any particular date, of any shares of Common Stock held under the Penske Automotive Common Stock Fund for purposes of the foregoing paragraph, or for purposes of any other provision of the Plan.

4.3

Adjustment to Accounts. When determining the value of Member accounts, any deposits due which have not been deposited to the fund on behalf of the Member shall be added to his accounts; and any withdrawals or distributions made which have not been paid out shall be subtracted from the accounts. Similarly, adjustment of accounts for appreciation or depreciation of an investment fund shall be deemed to have been made as of the Valuation Date on which the adjustment relates, notwithstanding that they are actually made as of a later date.

4.4

Directed Investments. A Member’s Accrued Benefit shall be invested as directed by each Member in such investment funds as the Plan Administrator shall determine. The investment funds available under the Plan shall be established pursuant to the Trust and shall be communicated to each Member. Such investment funds shall at all times include a “stable value fund” (or similar investment option) and a Penske Automotive Common Stock Fund, which shall invest primarily in the Common Stock of Penske Automotive Group, Inc. All such shares of Common Stock held under such fund shall be acquired exclusively through purchases on the open market. Dividends, if any, shall be used, as soon as practicable, to purchase additional such shares of Common Stock. A Member shall submit his investment selection to the Plan Administrator in accordance with the administrative procedures established by the Plan Administrator. The Member may select one or more investment funds in multiples of 1%.

4.5

Administration of Investments. Contributions made by or on behalf of a Member shall be invested in the investment fund or funds selected by the Member until the effective date of a new designation that has been properly submitted to the Plan Administrator.

If any Member fails to make an initial designation, he shall be deemed to have designated the default investment fund as may be determined from time to time by the Committee. A designation submitted by a Member changing his investment option shall apply to investment of future deposits and/or to amounts already accumulated in his accounts. A Member may change his investment option with respect to the investment of future deposits effective as of the first Valuation Date in the next succeeding payroll period by submitting his investment changes in accordance with the procedures established by the Plan Administrator. A Member may change his investment option with respect to the investment of amounts already accumulated in his accounts effective as of the next Valuation Date by submitting his investment changes in accordance with the procedures established by the Plan Administrator. The Plan Administrator may change or add Investment Funds from time to time. Each Member shall be notified of a change in Investment Funds at least 30 days prior to the Valuation Date on which the change is to occur.

4.6

Investments for Terminated Members. Any Member who ceases to be an Employee shall continue to have the authority to direct the investment of his accounts in accordance with the provisions of Sections 4.4 and 4.5.

4.7

Special Rules Applicable to Penske Automotive Common Stock Fund. Members that have any portion of their accounts invested in the Penske Automotive Common Stock Fund shall have the rights to decide tender offers and vote proxies and all other matters presented for vote as provided in subsections A and B of this Section 4.7.

Proxy Voting

The Trustee is responsible for voting as directed all shares of Common Stock of Penske Automotive Group, Inc. held under the Penske Automotive Common Stock Fund. When a decision to vote shares is required, Members who have any portion of their accounts allocated to the Penske Automotive Common Stock Fund as of the relevant record date will receive copies of all proxy statements otherwise distributed to holders of the Common Stock of Penske Automotive Group, Inc. Members’ proxy votes shall direct the Trustee’s vote. Members shall be considered a fiduciary for purposes of voting shares of Common Stock allocated to their account. A decision by the Member to not vote shall be respected by the Trustee so that the Trustee shall not vote any allocated shares for which no Member direction is received. The Committee shall direct the Trustee in voting shares of Common Stock that are not allocated to the account of any Member.

The Trustee shall have no discretion or authority to vote Common Stock held in the Trust by the Trustee except in accordance with timely directions provided to the Trustee that are made in accordance with the terms of the Plan and that are not contrary to ERISA.

Tender Offers

The Trustee is responsible for responding as directed to any tender offer with respect to all shares of Common Stock of Penske Automotive Group, Inc. held under the Penske Automotive Common Stock Fund. When a decision to tender shares is required, Members who have any portion of their accounts allocated to the Penske Automotive Common Stock Fund as of the relevant record date will receive copies of all tender materials otherwise distributed to holders of the Common Stock of Penske Automotive Group, Inc. Members’ tender instructions shall direct the Trustee’s decision as to whether or not to tender. Members shall be considered a fiduciary for purposes of deciding whether to tender shares of Common Stock allocated to their account. A decision by the Member to not respond to the tender offer shall be respected by the Trustee so that the Trustee shall not respond with respect to any allocated shares for which no Member direction is received. The Committee shall direct the Trustee in the tender of Common Stock that are not allocated to the account of any Member.

The Trustee shall have no discretion or authority to respond to a tender or exchange offer concerning Common Stock held in the Trust by the Trustee except in accordance with timely directions provided to the Trustee that are made in accordance with the terms of the Plan and that are not contrary to ERISA.

4.8

Special Rules Applicable to Investment in Penske Automotive Common Stock Fund.

Notwithstanding any other provision of the Plan to the contrary, during any period of time when (a) a registration statement covering the Plan, pursuant to the Securities Act of 1933, as amended, is not then in effect, (b) although in effect, information in the prospectus forming part of such registration statement does not, in the judgment of the Plan Administrator, meet the requirements of the Securities Act of 1933, as amended, or is not available for delivery, or (c) in the judgment of the Plan Administrator, a proceeding by the Securities and Exchange Commission for the issuance of a stop order suspending the effectiveness of such registration statement is threatened or contemplated, no future Pre-Tax Contributions or Employer Matching Contributions may be invested in, and no such prior contributions, or income earned thereon, may be transferred for investment in the Penske Automotive Common Stock Fund. In lieu thereof, the Trustee shall, upon written notification from the Plan Administrator, invest such amounts in such investment fund that shall be so specified by the Plan Administrator. At such time as (a) such a registration statement covering the Plan shall become effective, (b) the prospectus forming part of such a registration statement shall have been amended to meet the requirements of the Securities Act of 1933, as amended, or shall be available for delivery, or (c) no stop order proceedings shall be threatened or contemplated, such amounts shall be invested as previously directed or otherwise required under the terms of the Plan.

Each Member who is an officer, director or greater than 10% shareholder of Penske Automotive Group, Inc. may elect to be subject to such optional limitations and restrictions as may be imposed by the Plan Administrator regarding the extent to which such person may (a) direct the investment under the Penske Automotive Common Stock Fund of any portion of his future Pre-Tax Contributions and Employer Matching Contributions to be made on his behalf, (b) transfer any portion of his existing accounts under the Plan into or out of the Penske Automotive Common Stock Fund, (c) receive a distribution or withdrawal from any portion of his accounts invested under the Penske Automotive Common Stock Fund or (d) receive a loan from the Plan with respect to any portion of his accounts invested under the Penske Automotive Common Stock Fund. Any such limitations and restrictions which are so elected by such a person shall apply notwithstanding any other provision of the Plan to the contrary.

4.9

Compliance With Employer Securities Diversification Requirements. Notwithstanding any other provision of the Plan to the contrary, the Plan shall comply with the requirements of Code section 401(a)(35) and ERISA section 204(j) for all Plan Years beginning after December 31, 2006; provided, however, that the transitional relief provided under Internal Revenue Service Notice 2006-17 and Internal Revenue Service Notice 2008-7 (and any subsequent guidance or regulations) shall apply. Accordingly, for any period during which any Plan account of a Member, any beneficiary under the Plan with respect to which the beneficiary is entitled to exercise the rights of a Member (i.e., the beneficiary of a deceased Member) or any alternate payee who has a Plan account (the Member or the beneficiary or the alternate payee is an “Applicable Individual”) holds publicly traded employer securities (as defined under Code section 401(a)(35)(G)(v)), the following rules shall apply:

The Applicable Individual may elect to direct the Plan to invest any such employer securities and to reinvest an equivalent amount in other investment options meeting the requirements of Section 4.9(B).

The Plan shall:

(1)

offer not less than three investment options, other than employer securities, to which an Applicable Individual may direct the proceeds from the divestment of employer securities pursuant to this Section 4.9, each of which is diversified and has materially different risk and return characteristics;

(2)

permit the divestment and reinvestment of employer securities by Applicable Individuals in a periodic (not less than quarterly), reasonable manner; and

(3)

not impose any restrictions or conditions with respect to the investment of employer securities which are not imposed on the investment of other assets of the Plan; provided, however, that this rule shall not apply to any restrictions or conditions imposed by securities laws.

For purposes of Section 4.9.B, a restriction or condition with respect to employer securities includes:

(1)

a restriction on an Applicable Individual’s rights to divest an investment in employer securities that is not imposed on an investment that is not in employer securities; and

(2)

a benefit that is conditioned on investment in employer securities.

The Plan shall also provide Applicable Individuals with the notice required by ERISA section 101(m) regarding the divestiture rights required under Code section 401(a)(35) and ERISA section 204(j).

SECTION 5

VESTING

5.1

Vesting. Each Member shall have a fully vested, nonforfeitable right to his Pre-Tax. Contribution Account, After-Tax Contribution Account, Transfer Pre-Tax Contribution Account and Rollover Account at all times. Each Member shall vest in his or her Employer Matching Contribution and Transfer Employer Contribution Accounts according to the following schedule:


Years of Service		Vesting Percentage

Less than 3		0%
3 or more		100%

Notwithstanding the foregoing schedule, a Member shall become vested in his Transfer Employer Contribution Account in accordance with the vesting schedule in the Prior Plan, if the vesting schedule in the Prior Plan is more rapid than that set forth above. A Member who attains his Normal Retirement Date, dies or incurs a Disability shall become 100% vested in his Employer Matching Contribution Account.

One-Year Breaks in Service for Vesting Purposes . If a Member incurs one or more consecutive one-year Breaks in Service, then:

Years of Service before such one-year Breaks in Service shall not be taken into account until the Member completes one Year of Service after his return;

Years of Service prior to the one-year Breaks in Service shall not be taken into account if the Member has no vested right in his Pre-Tax Contribution Account, Top Heavy Contribution Account, Employer Matching Contribution Account, or Transfer Employer Contribution Account under the Plan and the number of consecutive one-year Breaks in Service in greater than one and equals or exceeds the greater of (1) the aggregate number of his Years of Service (excluding Years of Service not required to be taken into account by reason of any prior one-year Breaks in Service), or (2) five; and

If a Member incurs five or more consecutive one-year Breaks in Service, Years of Service after such one-year Breaks in Service shall not be taken into account in determining the nonforfeitable percentage of such Member’s benefit derived from Employer contributions which accrued before such one-year Breaks in Service.

Notwithstanding the foregoing, a Member shall vest in the portion of his Transfer Employer Contribution Account attributable to his matching contribution account transferred from the Ford of Tulsa 401(k) Plan according to the following schedule:


Years of Service	Vesting Percentage

0		0
1		20%
2		40%
3		60%
4		80%
5 or more		100%

5.2

Forfeitures. A Member’s vested Accrued Benefit shall be determined in accordance with Section 5.1 as of the date he terminates employment. The nonvested portion shall be forfeited on the earlier of the date on which the Member:

receives a distribution of his vested Accrued Benefit, if any, provided that such distribution is made no later than the close of the second Plan Year following the year in which the Member terminates participation in the Plan; or

has five consecutive one-year Breaks in Service measured from the Plan Year in which the Member’s date of termination occurs.

Said forfeiture shall be used, at the Employer’s discretion, to either (i) reduce future Employer Matching Contributions, or (ii) pay Plan administrative expenses under Section 11.3.

For purposes of this Section 5.2, if the value of a Member’s vested Accrued Benefit is zero, the Member shall be deemed to have received a distribution of such vested Accrued Benefit on termination of employment.

5.3

Change in Vesting Schedule. In the event the Employer adopts an amendment to the Plan that changes the Plan’s vesting provisions such that the nonforfeitable (i.e., vested) percentage of any Member, when determined under the Plan as so amended, would at any time be less than would have been the case absent such amendment, then the following rules shall apply.

Election . Each Member who has completed at least three years of service (within the meaning of Treasury Regulations section 1.411(a)-8T(b)(3)) shall be permitted to elect, during the election period described in paragraph B below, to have his nonforfeitable percentage determined without regard to such amendment.

Election Period . The election described in paragraph (i) may be made during the period that begins not later than the date on that the Plan amendment is adopted and that ends no earlier than the latest of the following dates:

(1)

The date that is 60 days after the day the Plan amendment is adopted.

(2)

The date that is 60 days after the day the Plan amendment becomes effective.

(3)

The date that is 60 days after the day the Member is issued notice of the Plan amendment by the Employer or Plan Administrator.

5.4

Lost Members. If a Member’s vested Accrued Benefit is distributable to such Member, but the Plan Administrator is unable after a diligent search to find the Member or a Beneficiary to whom payments may be made, such Member’s vested Accrued Benefit shall be forfeited and applied to reduce future Employer Matching Contributions or the payment of Plan administrative expenses (as permitted by the Plan’s rules relating to forfeitures). If, after such forfeiture, the Member or a Beneficiary makes a claim for the forfeited vested Accrued Benefit, the Plan shall reinstate such Benefit and distribute it to the Member or Beneficiary in accordance with the terms of the Plan. The Plan Administrator shall be deemed to have made a diligent search for the Member if the Plan Admi

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