Group 1 Automotive Employee Benefits & Policies 401k Plan i
401k Plan
Two types of contributions are made to the Group 1 401k Plan:
§ contributions you choose to defer from your regular compensation, and
§ Employee Matching contributions that Group 1 may choose to make into the plan
during the plan year.
The plan trustee for this program is Merrill Lynch Trust Corp. Currently the match is 50% of the
first 4% of the employee's salary contributed to the plan. Participation is available after 6 months
of service. Please read the plan document before you participate in the plan so you will be aware
of the limits and restrictions that apply. To begin participation in the 401k, contact Merrill Lynch at
800.228.4015.
Periodically our 401k Plan Committee meets to review plan administration and fund performance
to ensure that the plan is operating well and that investment options are meeting expectations
given market conditions. Based on this review, three fund changes were made:
1) Replacement of the Black Rock Balanced Fund with the Oakmark Equity & Income Fund II.
This new fund was offered to participants effective December 1, 2001. The Black Rock
Balance Fund was eliminated as an investment option effective January 1, 2002 and any
participants funds held in Black Rock was mapped over by Merrill Lynch to the Oakmark
Equity & Income Fund II as of that date.
2) Addition of a second international mutual fund, ING Pilgrim International Value Fund.
This new fund was offered to participants effective December 1, 2001.
3) the Moderate GoalManager and the Aggressive GoalManager were modified effective
January 1, 2002. Call Merrill Lynch or go on-line to view the GoalManager allocations.
Group 1 Automotive Employee Benefits & Policies 401k Plan 1
401k Retirement Savings Plan
§ Definitions
§ Plan Information
§ Plan Highlights
§ Summary Plan Document
Group 1 Automotive Employee Benefits & Policies 401k Plan 2
Table of Contents
401K Retirement Savings Plan ..................................................................................................................... 1
Table of Contents .......................................................................................................................................... 2
Definitions...................................................................................................................................................... 3
Plan Information ............................................................................................................................................ 4
Plan Highlights .............................................................................................................................................. 5
Summary Plan Description............................................................................................................................ 6
1 What is the Plan, and what is its purpose? ................................................................................ 6
2 Am I Eligible to become a Member of the Plan? ........................................................................ 6
3 When will I become a Member of the Plan?............................................................................... 7
4 What is my "Compensation" for the purposes of the Plan? ....................................................... 7
5 What is a "Before-Tax" Contribution?......................................................................................... 7
6 When and by what means may I change my election of Before-Tax Contributions? ................ 7
7 Can the Company change my election? .................................................................................... 7
8 May I make After-Tax Contributions to the Plan?....................................................................... 8
9 May I make a Rollover Contribution or transfer to the Plan? ..................................................... 8
10 How much does the Company contribute on my behalf? ........................................................ 8
11 What Accounts are maintained for me under the Plan? .......................................................... 8
12 How and when do my Accounts increase or decrease?.......................................................... 8
13 How are my Accounts invested?.............................................................................................. 9
14 May I make withdrawals while I remain employed?............................................................... 10
15 May I borrow from the plan?................................................................................................... 11
16 What benefits do I receive when I leave the employ of the Company?................................. 12
17 How are my benefits paid?..................................................................................................... 13
18 May I sell Group 1 common stock distributed to me from the Plan? ..................................... 14
19 How do I select a Beneficiary?............................................................................................... 14
20 Can I assign any of my benefits? ........................................................................................... 14
21 What is a Qualified Domestic Relations Order? .................................................................... 14
22 What is the Claims Review Procedure under the Plan? ........................................................ 15
23 What is a top-heavy Plan? ..................................................................................................... 15
24 Can the Plan be amended?.................................................................................................... 16
25 What are my rights upon Plan termination?........................................................................... 16
26 What are my Rights Under ERISA?....................................................................................... 16
27 What are the federal income tax aspects of the Plan? .......................................................... 17
Group 1 Automotive Employee Benefits & Policies 401k Plan 3
Definitions
As you use this summary, you will notice that some of the terms are capitalized. These words or phrases
refer to concepts under your Plan which are described or defined in numbered paragraphs of this
summary. This section of the summary tells you where some of the more important definitions are found
so you can reference them for easier understanding of the Plan.
1. Accounts. See response to Question 11.
2. Before Tax Account. See response to Question 11.
3. Before Tax Contributions. See response to Question 5.
4. Beneficiary. See response to Question 19.
5. Compensation. See response to Question 4.
6. Committee. The Administrative Committee appointed by Group 1 Automotive to administer
the Plan and make decisions under the Plan. The address and phone number of the
Committee is listed at page 3 of this summary.
7. Company. The “Company” is Group 1 Automotive and any other employer which has
adopted the Plan with Group 1’s permission.
8. Eligible Employee. See response to Question 2.
9. Employer Contribution Account. See response to Questions 11 and 10.
10. Employer Discretionary Contribution. See response to Question 12.
11. Employer Matching Contributions. See response to Question 10.
12. Hardship Withdrawal. See response to Question 14.
13. Highly Compensated Employee. See response to Question 7.
14. Member. See response to Questions 2 and 3.
15. Participation Service. See response to Questions 3 and 16.
16. Plan. The Group 1 Automotive, Inc. 401(k) Savings Plan. See also response to Question 1.
17. Plan Year. The fiscal year of the Plan, which is January 1 through December 31.
18. Prospectus. See page 5 of this summary.
19. Qualified Domestic Relations Order. See response to Question 21.
20. Rollover Contribution Account. See response to Question 11.
21. Summary Plan Description. This summary of the terms of the Plan.
22. Total and Permanent Disability. See response to Question 16.
23. Trustee. The Trustee of the Plan is Merrill Lynch Trust Company, FSB. Information about
contacting the Trustee is found at page 3.
24. Trust Fund. The Trust Fund which is administered by the Trustee to hold Plan assets.
25. Vested Interest. See response to Question 16.
26. Vesting Service. See response to Questions 15 and 16.
Group 1 Automotive Employee Benefits & Policies 401k Plan 4
Plan Information
Fiscal Year of Plan
January 1 through December 31
Type of Plan
Defined contribution, individual account plan
Plan No.
001
Plan Sponsor
Group 1 Automotive, Inc.
950 Echo Lane, Suite 100
Houston, Texas 77024
Employer I.D. No. 76-0506313
Plan Administrator
Administrative Committee
Group 1 Automotive, Inc. 401(k) Savings Plan
950 Echo Lane, Suite 100
Houston, Texas 77024
Telephone Number (713) 647-5700
The Plan is administered pursuant to the provisions of the Plan documents
Funding Medium
Plan assets are held in a Trust Fund by the Trustee
Trustee
Merrill Lynch Trust Company, FSB
300 Davidson Avenue (2W)
Somerset, New Jersey 08873
Agent for Service of Legal Process
The Plan Sponsor, the Plan Administrator or the Trustee
Process may be served at the addresses specified above
Other Employers
A complete list of all employers that have adopted the Plan can be obtained upon written request
to the Committee and is available for inspection at the office of the Committee.
Revised 01/2002
Group 1 Automotive Employee Benefits & Policies 401k Plan 5
Plan Highlights
1
The Group 1 Automotive, Inc. 401(k) Savings Plan is a profit sharing plan sponsored by Group
1 Automotive Inc., (the “Company”), designed to assist employees of the Company in providing
for their retirement.
2
An employee becomes a Member of the Plan after being employed as an Eligible Employee for
a period of six months, or on the date the employee reaches 18 years of age, whichever is
later.
3
As a Member of the Plan, you may elect to defer a percentage of your current Compensation,
between 1% to 15%. According to your election, the Company will reduce your Compensation
by that amount, and instead of paying you in cash, will contribute this amount on your behalf to
the Plan. The amount of Compensation that you elect to defer will not be subject to federal
income tax; it is considered a "Before-Tax Contribution."
4
Your election will remain in effect until you change or cancel it. You may
- change the percentage amount of Compensation that you had previously elected, or
- cancel your election.
The change will become effective as soon as administratively possible.
5
The Company may make “Employer Matching Contributions” on your behalf to the Plan. The
Company may revise the matching percentage, the percentage of your Before-Tax
Contributions to be matched, and the timing of the match, from time to time.
6
You can direct investment of the amounts held in your Accounts among the investment options
made available under the Plan. You may give investment instructions or change your
investment instructions as frequently as daily by contacting a Merrill Lynch Customer Service
Representative at 1-800-228-4015.
7
Merrill Lynch Trust Company, FSB is the Trustee of the Plan and will handle your requests or
answer your questions about the plan.
Group 1 Automotive Employee Benefits & Policies 401k Plan 6
Summary Plan Description
This document constitutes part of a prospectus covering securities that have been registered under the
Securities Act of 1933, as amended (the “Securities Act”).
Group 1 Automotive, Inc. (the “Company”) has filed a registration statement on Form S-8 (Registration
No. 333-80399) (the “Registration Statement”) with the Securities and Exchange Commission (the
“Commission”) in connection with the offer and sale of the Company’s common stock, par value $.01 per
share (“Group 1 Common Stock”) and the interests in the Group 1 Automotive, Inc. 401(k) Plan (the
“Plan”), pursuant to the Plan. This Summary Plan Description and the documents incorporated by
reference in the Registration Statement, taken together, constitute a prospectus (this “Prospectus”)
covering shares of Group 1 Common Stock and the interests in the Plan that have been registered under
the Securities Act.
The Company has at this time registered 1,250,000 shares of Group 1 Common Stock with the
Commission pursuant to the Registration Statement. Therefore, unless the Company registers additional
shares, Members will not be allowed to invest any further contributions in the Group 1 Common Stock
Fund at any time after the Plan has purchased 1,250,000 shares of Group 1 Common Stock. The
Company will provide without charge to any person, including any beneficial owner, to whom a copy of
this Prospectus is delivered, upon written or oral request of such person, a copy of the Plan and a copy of
any and all documents incorporated by reference in the Registration Statement or this Prospectus (other
than exhibits to such documents that are not incorporated by reference in the Registration Statement or
this Prospectus), as well as any other documents required to be delivered to such persons pursuant to
Rule 428(b) under the Securities Act.
Such requests should be directed to Human Resources Department, Group 1 Automotive, Inc., 950 Echo
Lane, Suite 100, Houston, Texas 77024. Telephone: (713) 647-5700. Facsimile: (713) 647-5868. E-mail:
bohara@group1auto.com.
NOTE: THIS SUMMARY MERELY SUMMARIZES KEY PLAN FEATURES AND DOES NOT REPLACE THE
LEGAL PLAN DOCUMENT WHICH GOVERNS IN THE CASE OF ANY DIFFERENCES.
1 What is the Plan, and what is its purpose?
The Group 1 Automotive, Inc. 401(k) Savings Plan (the “Plan”) is a defined contribution profit
sharing plan sponsored by Group 1 Automotive, Inc. (the “Company”). The Plan is designed to
assist employees of the Company in providing for their retirement. The Board of Directors of the
Company has appointed a Plan Administrative Committee (the “Committee”) that is responsible
for the general administration of the Plan. The Plan operates on a “Plan Year” consisting of the
12-consecutive month period commencing on January 1 of each year.
Certain employers that are affiliated with the Company have adopted the Plan to provide benefits
for their Eligible Employees and their Beneficiaries. A complete list of such employers and their
addresses can be obtained from the Committee upon written request. As used in this Summary
Plan Description, the term “Company” also refers to such employers.
2 Am I Eligible to become a Member of the Plan?
You are eligible to become a Member of the Plan (an “Eligible Employee”) if you are employed by
the Company and are not (1) a member of a collective bargaining unit unless your collective
bargaining agreement provides for your coverage under the Plan, (2) a leased employee (an
employee of another employer who performs services for the Company under a leasing
arrangement), (3) a non-resident alien with no earned income from the Company that constitutes
income from sources within the United States, or (4) designated, compensated, or otherwise
classified or treated by the Company as a leased employee, independent contractor or other non-
common law employee.
Group 1 Automotive Employee Benefits & Policies 401k Plan 7
3 When will I become a Member of the Plan?
If you are an Eligible Employee, you will become a Member of the Plan on the date upon which
you complete six months of Participation Service or the date upon which you reach age 18,
whichever is later. Your Participation Service is determined in the same manner as your Vesting
Service, see Question 16. If you were a Member prior to a termination of your employment, you
will remain a Member upon being reemployed. If you had completed six months of Participation
Service and had reached age 18, but had not become a Member because you were not an
Eligible Employee, then you will become a Member upon becoming an Eligible Employee
because of a change in your employment status. Further, if you had completed six months of
Participation Service, but had not reached age 18 prior to a termination of your employment, you
will become a Member upon being reemployed if you are at least 18 years old. Finally, if you are
a Member who ceases to be an Eligible Employee, but you remain an employee, you will
continue to be a Member but, on and after the date you cease to be an Eligible Employee, you
will no longer be entitled to make Before-Tax Contributions to the Plan, see Question 5, or share
in allocations of Employer Contributions, see Question 10, until you again become an Eligible
Employee.
4 What is my "Compensation" for the purposes of the Plan?
All of your compensation from the Company while a Plan Member is considered for purposes of
the Plan other than reimbursements or other expense allowances, fringe benefits, moving
expenses, Company contributions to this or any other deferred compensation program, and
certain types of compensation, such as stock options, subject to special tax treatment. Your
“Before-Tax Contributions” to this Plan as described under Question 5, and other amounts that
you could have received in cash had you not entered into a salary reduction agreement with the
Company, are considered “Compensation”. However, your annual Compensation taken into
account for purposes of the Plan will not exceed $200,000. This amount will be adjusted
periodically in accordance with statutory limits to reflect increases in the cost-of-living and will be
prorated for a Plan Year of less than twelve months and to the extent otherwise required by law.
5 What is a "Before-Tax" Contribution?
As a Member you may elect to defer the receipt of a whole percentage of from 1% to 15% of your
current Compensation (but not in excess of $11,000 per calendar year, including amounts
deferred under this Plan and any other plan permitting elective deferrals in which you participate).
The $11,000 limitation will be adjusted periodically in accordance with statutory limits to reflect
changes in the cost of living. In accordance with your election, the Company will reduce your
Compensation by the amount that you elect to defer and instead of currently paying such
Compensation to you in cash, will contribute this amount on your behalf to the Plan as a “Before-
Tax Contribution.” The amount of Compensation that you elect to defer will not be subject to
federal income tax in the year deferred, but will be subject to Social Security taxes.
6 When and by what means may I change my election of Before-Tax Contributions?
Your election will remain in effect until you change or cancel it in accordance with procedures
prescribed by the Committee. You may (1) change the percentage amount of Compensation that
you had previously elected to defer, (2) cancel your election, or (3) following such cancellation,
resume deferrals at any time. The change will become effective as soon as administratively
possible. Election changes are made by calling Merrill Lynch at 1-800-228-4015.
7 Can the Company change my election?
Current law imposes special nondiscrimination rules regarding the amount of Compensation that
may be deferred by “Highly Compensated Employees” as that term is defined in the Internal
Revenue Code. If you are included within this definition, it is possible that the percentage of your
Compensation that you elect to defer may be reduced by the Committee on a temporary basis in
order to satisfy these nondiscrimination requirements. If these reductions are insufficient to satisfy
the nondiscrimination requirements, a portion of your deferrals (together with income thereon)
may be returned to you. These refunds will be subject to income tax. You will be notified by the
Committee if a reduction or refund is required.
Group 1 Automotive Employee Benefits & Policies 401k Plan 8
The Committee may also temporarily reduce your election in order to ensure that you do not
exceed the annual limit described in Question 5 and certain other limits set forth in the Internal
Revenue Code.
8 May I make After-Tax Contributions to the Plan?
No. All contributions to the Plan are on a before-tax basis.
9 May I make a Rollover Contribution or transfer to the Plan?
If you are a Plan Member and receive a qualifying distribution from an individual retirement
account or annuity or from another qualified plan, you may make a Rollover Contribution of that
distribution to this Plan in accordance with procedures established by the Committee. If you are a
Plan Member, you may also elect to make a direct rollover of a qualifying distribution from
another qualified plan to this Plan by directing that the distribution be paid directly to the Trustee
of this Plan in accordance with procedures established by the Committee. Any Rollover
Contribution or transfer will be held in your Rollover Contribution Account, see Question 11. You
will always have a 100% Vested right to the amounts in your Rollover Contribution Account.
10 How much does the Company contribute on my behalf?
The Company may, in its sole discretion, make “Employer Matching Contributions” on your behalf
based upon the amount of your Before-Tax Contributions, see Question 5. The Company will
determine the matching percentage, which is the percentage of your Before-Tax Contributions to
be matched, and the timing of the match. Employer Matching Contributions may vary among
operating units of the Company’s business. The Company may make Employer Matching
Contributions in the form of cash or shares of Group 1 Common Stock or a combination of both.
In certain cases, Employer Matching Contributions on behalf of “Highly Compensated
Employees” may be reduced to the extent necessary to comply with limitations imposed by the
Internal Revenue Code similar to those described under Question 7.
11 What Accounts are maintained for me under the Plan?
A “Before-Tax Account, an “Employer Contribution Account,” and a “Rollover Contribution
Account” are maintained for you.
Before-Tax Account. An individual account maintained for you to which is credited your Before-
Tax Contributions, see Question 5, and certain special Employer Discretionary Contributions, see
Question 12.
Employer Contribution Account. An individual account maintained for you to which is credited
your share of any Employer Matching Contributions see Question 10.
Rollover Contribution Account. An individual account maintained for you to which is credited
your Rollover Contributions or transfers, see Question 9, if any.
12 How and when do my Accounts increase or decrease?
Your Accounts increase through (1) Before-Tax Contributions which you elect, (2) the Employer
Matching Contributions, if any, made by the Company on your behalf, (3) your Rollover
Contributions or transfers, if any, and (4) earnings on such amounts. If you have investment
losses, your Accounts may decrease. In addition, at the discretion of the Company’s Board of
Directors, certain special Employer Discretionary Contributions for a Plan Year may be allocated
among the Before-Tax Accounts and/or Employer Contribution Accounts (as determined by the
Board of Directors) of some or all Members who are not “Highly Compensated Employees,” to the
extent such allocation is necessary to permit the Plan to meet certain nondiscrimination rules
established under the Internal Revenue Code.
Contributions to the Plan are allocated to your Accounts when received by the Trustee. The
assets of the Plan are valued daily. Your Accounts will be divided into subaccounts to reflect your
investment in a particular Investment Fund or Funds as described in Question 13. The balance in
each of your Accounts at any time will be equal to the sum of the balances in each of your
subaccounts maintained within the Account.
Group 1 Automotive Employee Benefits & Policies 401k Plan 9
13 How are my Accounts invested?
You are permitted to direct the investment of the amounts held in your Accounts among the
investment alternatives made available under the Plan. You may give investment instructions or
modify your then-current investment instructions as frequently as daily by contacting a Merrill
Lynch Customer Service Representative at 1-800-228-4015. The request will normally be
processed the same day if initiated prior to 3 p.m. eastern time, and the following business day if
initiated thereafter. If you fail to make an investment election for your Account, your Account will
be invested in a lower-risk, lower-return alternative selected by the Committee. Presently, this
alternative is the Merrill Lynch Retirement Preservation Trust.
Investment Funds: Information pertaining to the specific investment funds available under the
Plan can be found in your enrollment and educational brochures. This information includes a
description of the investment funds available under the Plan and, with respect to each fund, a
general description of the investment objectives, risks and potential return characteristics of the
fund, including information relating to the type and diversification of assets comprising the fund’s
portfolio. In addition, more detailed information on any of the funds can be obtained by contacting
Merrill Lynch at 1-800-228-4015, or by making a request in writing to Merrill Lynch at the address
set forth below.
Group 1 Common Stock Fund: One of the investment funds that is available under the Plan is
the Group 1 Common Stock Fund. The Group 1 Common Stock Fund is not a diversified fund
and invests only in Group 1 Common Stock (with a de minimis amount of cash and cash
equivalents). The value of this fund can increase and decrease significantly since it invests only in
one stock. We strongly encourage you to carefully review the Company’s public filings with the
Securities and Exchange Commission, including the Company’s most recent Annual Report on
Form 10-K and each Quarterly Report on Form 10-Q, before electing to invest in the Group 1
Common Stock Fund.
Transaction Fees and Expenses: Except for purchases and sales of Group 1 Common Stock,
there are no transaction fees or expenses (e.g., commissions, sales loads, deferred sales
charges, and redemption or exchange fees) associated with the purchase or sale of shares of
investment funds offered under the Plan. However, each investment fund contains other fees and
expenses, which are reflected in the fund’s net investment return. A commission of ten cents per
share applies to all purchases and sales of Group 1 Common Stock.
Voting Rights: Except for investments in Group 1 Common Stock, voting or similar rights
associated with shares of the investment funds held in your Account will be exercised by the
Plan’s trustee as directed by the Committee and will not be passed through to Members.
Voting, tender, or similar rights associated with Group 1 Common Stock will be passed through to
Members invested in the Group 1 Common Stock Fund. Any shares of Group 1 Common Stock
not voted by such Members will be voted by the Plan’s trustee in the same ratio as shares with
respect to which voting direction was received.
Procedures have been designed to safeguard the confidentiality of any Member’s or beneficiary’s
rights with respect to the Member’s or beneficiary’s shares of Group 1 Common Stock held under
the Plan, including the right to purchase, sell, hold, or exercise voting, tender, or similar rights.
For example, procedures with ChaseMellon Shareholder Services, L.L.C., the Plan’s transfer
agent for Group 1 Common Stock, have been implemented so that the Company does not have
access to how you voted Group 1 Common Stock, your individual proxy cards, or proxy card
shareholder comments. In addition, information about your decisions to buy, sell, or hold Group 1
Common Stock are restricted to those assisting in the administration of the Plan. The Committee
is responsible for ensuring that these procedures are sufficient to safeguard the confidentiality of
this information and that such procedures are being followed. If the Committee determines that a
situation has potential for undue influence by the Company with respect to your rights as a
shareholder of the Company (through your Plan Accounts), the Committee will appoint an
independent fiduciary to perform such activities as are necessary to prevent undue influence.
These situations may include tender offers, exchange offers, or contested Board of Director
elections. You will be notified of such appointment and of the name, address, and phone number
of the independent fiduciary.
Group 1 Automotive Employee Benefits & Policies 401k Plan 10
Information Available Upon Request: Upon request, you may receive (based on the latest
information available to the Plan):
§ A description of the annual operating expenses of each investment fund available under
the Plan (e.g., investment management fees, administrative fees, or transaction costs),
which reduce the rate of return you receive, and the aggregate amount of such expenses
expressed as a percentage of average net assets of the investment fund;
§ Copies of any prospectuses, financial statements and reports, and of any other materials
relating to the investment funds available under the Plan, to the extent such information is
provided to the Plan;
§ A list of assets comprising the portfolio of certain investment funds which are “Plan
assets” (generally collective or common trust funds, but not mutual funds) available under
the Plan, the value of each such asset (or the proportion of the investment alternative
which it comprises) and, with respect to each such asset which is a fixed-rate investment
contract issued by a bank or savings and loan association, the name of the issuer, term
of the contract, and specified rate of return;
§ Information concerning the value of shares or units in each investment fund offered under
the Plan, as well as the past and current investment performance of each fund
determined net of expenses; and
§ Information concerning the value of shares or units in each investment fund offered under
the Plan and held in your Accounts.
If you would like to receive any of the above information, please contact:
Merrill Lynch
Group 1 Automotive, Inc.
Client Service Team
P. O. Box 173852
Denver, CO 80217-3852
Telephone: 1-800-228-4015
General Information: The Committee is authorized to establish and implement procedures for
the Plan’s Member-directed investment program. The Committee has designated Merrill Lynch,
as detailed above, to assist in the program’s operation. Neither the Committee, Merrill Lynch, the
Company, nor any of their employees or agents may give investment advice regarding the
investment of your Accounts. Any information furnished under the program does not constitute
investment advice or recommendations.
For more complete information about any of the investment funds available under the Plan,
including each fund’s special risks, management fees, and other charges and expenses, please
consult a prospectus. Prospectuses for each investment fund may be obtained by calling 1-800-
228-4015. Please read the prospectus carefully before you invest.
The Plan intends to meet the requirements of section 404(c) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) and section 2550.404(c)-1 of Title 29 of the Code of
Federal Regulations. Fiduciaries of the Plan may be relieved of liability for any losses which are
the result of investment instructions given by Members or beneficiaries.
14 May I make withdrawals while I remain employed?
If you have a Rollover Contribution Account, you may withdraw an amount not exceeding the
balance in that Account at any time.
If you have attained age 59_, you may withdraw an amount not exceeding your Vested Interest,
see Question 16, in all of your Accounts at any time. This withdrawal will come, first, from your
Rollover Contribution Account, second, from your Vested Interest in your Employer Contribution
Account and, finally, from your Before-Tax Account.
If you are faced with a financial hardship, as determined by the Committee, have made all
permissible withdrawals pursuant to the above paragraphs and pursuant to the terms of any other
retirement plans of the Company and its affiliates in which you are a member, and have obtained
Group 1 Automotive Employee Benefits & Policies 401k Plan 11
all available loans under the Plan and pursuant to the terms of any other retirement plans of the
Company and its affiliates in which you are a member, you may make a “Hardship Withdrawal”
from your Employer Contribution Account and your Before-Tax Account. The amount you may
withdraw may not exceed the sum of (1) your Vested Interest, see Question 16, in the balance of
your Employer Contribution Account and (2) the aggregate amount of Before-Tax Contributions
that have been credited to your Before-Tax Account, less any previous withdrawals or
distributions of such amounts, but not more than the balance of your Before-Tax Account. In any
event, you may not withdraw a total amount in excess of the amount determined by the
Committee as being available for withdrawals due to your financial hardship, including any
amount necessary to pay any income taxes or penalties reasonably anticipated to result from the
withdrawal. Such a withdrawal will come first from your Vested Interest in your Employer
Contribution Account and then from your Before-Tax Account.
The determination of the existence of a financial hardship and the amount required to be
distributed to meet the need created by the hardship will be made by the Committee pursuant to
legal requirements. A withdrawal will be deemed to be made on account of an immediate and
heavy financial need if the withdrawal is on account of:
§ unreimbursed or unreimbursable medical expenses incurred or to be incurred by you,
your spouse, or your dependents;
§ your purchase (excluding mortgage payments) of a principal residence;
§ payment of tuition and related educational fees, and room and board expenses, for the
next twelve-months of post-secondary education for you, your spouse, or your
dependents; or
§ the need to prevent your eviction from your principal residence or the foreclosure on the
mortgage of your principal residence.
If you make a Hardship Withdrawal, then, for a period of 6 months following such withdrawal, you
may not again make (1) Before-Tax Contributions to the Plan or (2) any other elective
contributions or employee contributions to any other plan of the Company or its affiliates.
All withdrawals may be made from the Plan only in accordance with the procedures established
by the Committee. You may make only one withdrawal (other than a Hardship Withdrawal) from
the Plan in any one Plan Year, and no withdrawals may be made from an Account to the extent
that it has been pledged to secure a loan, see Question 15. If an Account from which a
withdrawal is to be made is invested in more than one Investment Fund described in Question 13,
then you must designate which fund or funds the withdrawal should be made from. In the
absence of such designation, the withdrawal will be made pro rata from each fund in which the
Account is invested. You may elect to have all or part of the taxable portion of your withdrawal
(other than a hardship withdrawal from your Before-Tax Account) transferred directly to another
qualified plan or annuity plan or an individual retirement account or an individual retirement
annuity (other than an endowment contract) established by you.
15 May I borrow from the plan?
You may apply to Merrill Lynch for a loan from the Plan in an amount not to exceed 50% of the
balance of your Accounts. Any loan will come, first, from your Rollover Contribution Account,
second, from your Vested Interest, see Question 16, in your Employer Contribution Account, and,
finally, from your Before-Tax Account. Notwithstanding the foregoing, in no event may you borrow
an amount in excess of $50,000 (reduced by the highest outstanding balance of loans to you from
the Plan in the past year). The Committee may establish a processing fee applicable to loans
from the Plan.
Any loan made will bear interest at one percent above the prime rate of interest as quoted in The
Wall Street Journal (or such other national publication as the Committee may select) for the first
business day of the month in which the loan is made, and such loan will be made as an
investment of a segregated loan fund to be established in the Trust Fund for you. Your loan will
be secured by the segregated loan fund, which will be funded by cashing in the portion of your
Accounts necessary to fund the loan.
Group 1 Automotive Employee Benefits & Policies 401k Plan 12
As a condition to authorizing any loan, the Committee will require that you authorize the Company
to make payroll deductions to be transferred to the Trustee in payment of your loan plus interest.
The terms of the loan (1) will require level amortization with payments not less frequently than
quarterly, (2) will require that it be repaid within five years, (3) will permit prepayment in full
without penalty, and (4) will require that the balance of the loan becomes due and payable no
later than the date you are first entitled to a distribution from the Plan following termination of
employment.
If you are on an unpaid leave of absence, you may elect to suspend payment on your loan during
your leave for up to one year. When you return from the leave or upon the expiration of one year,
you may refinance your loan over a period that does not extend beyond the original term of the
loan.
If you do not repay your loan (including interest) within the prescribed time, your loan will be
repaid from the segregated loan fund; provided, however, that the portion of your Before-Tax
Account pledged as security for a loan may not be used to satisfy the payment of such loan
(including interest) prior to the time such amounts are otherwise distributable from the Plan. Any
such outstanding loan (including interest) will be repaid from the segregated loan fund prior to any
withdrawal or distribution of benefits from such segregated loan fund.
No more than one loan will be made to you in any 12-month period. A loan may not be for an
amount less than $1,000.00. No loan will be made to you if you owe any amount on an
outstanding loan previously made to you from the Plan.
16 What benefits do I receive when I leave the employ of the Company?
Retirement Benefits: If you terminate employment on or after reaching age 65, you will be
entitled to 100% of the amounts in your Accounts, regardless of the number of your Years of
Vesting Service.
Disability Benefits: If you terminate employment by reason of Total and Permanent Disability,
you will be entitled to 100% of the amounts in your Accounts. You will be considered totally and
permanently disabled upon certification by the Committee, supported by medical opinion (unless
waived by the Committee), that you are permanently incapable of performing your job for physical
or mental reasons.
Death Benefits: If you die while employed, your beneficiary, see Question 19, will be entitled to
100% of the amounts in your Accounts.
Severance Benefits: If you terminate employment prior to reaching age 65 for a reason other
than Total and Permanent Disability or death, you will be entitled to 100% of the amounts in your
Before-Tax Account and Rollover Contribution Account, if any. You will also be entitled to a
percentage (your “Vested Interest”) of the amounts in your Employer Contribution Account. Your
Vested Interest will be determined by your years of “Vesting Service” in accordance with the
following schedule:
Full 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%
Vesting Service: You will be credited with Vesting Service based upon your aggregate service
with the Company, whether or not completed consecutively. Service with an employer that is a
member of a controlled group of employers (as defined in the Internal Revenue Code) with the
Company will count as service with the Company.
If you leave the employ of the Company while actively employed (not on authorized leave) and
are reemployed within one year, the period while you were not employed will be considered as a
Group 1 Automotive Employee Benefits & Policies 401k Plan 13
period of service in determining your Vesting Service. If you leave the employ of the Company
during an authorized leave and are reemployed within one year of the start of the authorized
leave, the period while you were not employed will be considered as a period of service in
determining your Vesting Service.
If you leave the employ of the Company at a time when you do not have any Vested Interest, and
are gone for a period that equals or exceeds the greater of (1) five years or (2) your prior years of
Vesting Service, your prior years of Vesting Service will be disregarded. For this purpose, you will
not be deemed to have terminated your employment if you are absent (but are not on an
authorized leave of absence) due to pregnancy, childbirth, adoption of a child, or the care of a
child after birth or adoption until the second anniversary of the first date of such absence. The
period between the first and second anniversaries of the first date of such absence will neither be
considered to be a period of service with the Company nor a period of severance.
Forfeitures: If you terminate employment with a Vested Interest of less than 100% and receive a
lump sum distribution by the close of the second Plan Year following the Plan Year in which your
employment is terminated, the portion of your Employer Contribution Account in which you do not
have a Vested Interest will become a forfeiture as of the date of your distribution and will be
applied to reduce Company contributions and/or pay Plan administrative expenses. If you are
subsequently reemployed by the Company prior to an absence of five consecutive years, the
forfeited amount will be restored to your Employer Contribution Account unadjusted by any gains
or losses of the Trust Fund since the forfeiture; provided, however, that if you received a
distribution as described above, you must repay to the Plan the amount distributed to you within
five years from the date you are reemployed.
If your Vested Interest is less than 100% and you make a withdrawal while employed, or receive
a distribution other than a lump sum distribution, or receive a lump sum distribution after the close
of the second Plan Year following the Plan Year in which you terminated your employment, a
separate account will be established for the amounts remaining in your Employer Contribution
Account at the time of the withdrawal or distribution, and your Vested Interest in that separate
account will be determined under a special formula provided in the Plan. After an absence of five
consecutive years, or upon your death, if earlier and if you are not employed by the Company on
the date of your death, the forfeitable portion of your separate account and Employer Contribution
Account, if any, will be forfeited.
17 How are my benefits paid?
If you terminate your employment for any reason, your benefit will be paid in one lump sum cash
payment, except that, to the extent your Accounts are invested in Group 1 Common Stock, you
may elect payment in whole shares of Group 1 Common Stock with any balance of your Accounts
(including fractional shares of Group 1 Common Stock) paid in cash. In the event of your death,
your benefit will be paid to your designated beneficiary see Question 19.
Your benefit will generally be paid to you as soon as administratively feasible after the date you
terminate employment. However, if your Vested Interest in your Accounts exceeds $5,000 and
you have not reached age 65, died, or consented to the payment, the payment of your benefit will
be deferred to the date that is as soon as administratively feasible after the date you reach age
65 or die (or as soon as administratively feasible after any earlier date you elect to receive
payment by written notice to the Committee).
If your Vested Interest in your Accounts does not exceed $5,000, your benefit will always be
distributed to you as soon as administratively feasible after the date you terminate employment.
Your benefit will be eligible for direct rollover treatment. You will have the option to request that all
or a portion of your benefit be transferred directly to another qualified plan or annuity plan or an
individual retirement account or individual retirement annuity (other than an endowment contract)
established by you, with any remainder paid directly to you. Prior to any transfer, the Committee
may request that you furnish a statement from the plan or account to which the transfer is to be
made that it is, or is intended to be, a plan which is eligible to receive the payment, and that it will
accept the transfer. Any portion of your benefit you elect to have paid directly to you will have
20% withheld for federal income tax by the Plan. The withholding requirement imposed on the
Plan is mandatory and you will not be allowed to waive it. Only the benefit amount received
Group 1 Automotive Employee Benefits & Policies 401k Plan 14
directly by you will be subject to withholding. No withholding will be imposed on the portion of
your benefit you elect to have transferred directly to another plan or account.
If your benefit is payable to your spouse in the event of your death, your spouse will have the
same direct rollover rights and withholding requirements as are described above except that the
direct rollover may only be made to an individual retirement account or individual retirement
annuity. A beneficiary other than your spouse will not have direct rollover rights, but, in this case,
mandatory income tax withholding will not apply.
18 May I sell Group 1 common stock distributed to me from the Plan?
Generally, Members or Beneficiaries who are not “affiliates” of the Company (as defined in Rule
405 of the Securities Act) may sell or transfer shares of Group 1 Common Stock distributed to
them from the Plan. An affiliate is any person who controls or is a part of a group that controls the
Company. Executive officers and directors of the Company will generally be considered to be
affiliates.
The Company has not filed a registration statement, and no prospectus is available, regarding
reoffers or resales by affiliates of the Company of securities distributed from the Plan. Reoffers or
resales by affiliates of the Company may be made only with an effective registration statement
under the Securities Act or in accordance with Rule 144 or another exemption from applicable
registration requirements.
Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) generally provides
that any profit realized by an officer or director of the Company, or a beneficial owner of more
than 10% of the Group 1 Common Stock who purchases and sells, or sells and purchases, any
equity security of the Company within any period of less than six months (a “short-swing sale”)
shall inure to and be recoverable by the Company.
An election to have Before-Tax Contributions invested in the Group 1 Common Stock Fund is
exempt from Section 16(b); however, an election to transfer funds from the Group 1 Common
Stock Fund to another fund may be deemed to be a sale of Group 1 Common Stock and an
election to transfer funds to the Group 1 Common Stock Fund from another fund may be deemed
to be a purchase of Group 1 Common Stock for purposes of Section 16(b).
The foregoing discussion is a summary of Section 16 of the Exchange Act and the rules
thereunder as they relate to certain transactions by officers and directors of the Company. The
discussion is not a complete analysis. Accordingly, officers and directors are strongly advised to
consult legal counsel before effecting any transaction in Group 1 Common Stock.
19 How do I select a Beneficiary?
You may designate a Beneficiary or Beneficiaries to receive any Plan benefit owing upon your
death by executing and filing the prescribed form with the Committee. Any such designation may
be changed at any time by executing and filing a new form with the Committee. If you are
married, your spouse must consent in writing if you designate someone other than your spouse
as your primary Beneficiary. If you die with no designation in effect, your benefit will be paid to
your surviving spouse, if any, or otherwise to the executor or administrator of your estate or to
your heirs at law.
20 Can I assign any of my benefits?
Neither you nor your beneficiary may assign, pledge, encumber, or otherwise transfer any of your
right or interest of any kind in your benefits. However, the Committee will comply with the terms of
any “Qualified Domestic Relations Order” as required under applicable law.
21 What is a Qualified Domestic Relations Order?
A “Qualified Domestic Relations Order” is an order issued by a state domestic relations court
which meets certain requirements set out in the Internal Revenue Code and is determined to be
“qualified” by the Committee. Once determined to be qualified, such an order directs the Plan to
Group 1 Automotive Employee Benefits & Policies 401k Plan 15
pay all or a portion of your Account balances to an alternate payee such as an ex-spouse in
connection with a divorce decree or a child support or similar order. You will be given notice by
the Plan if an order is submitted to the Committee to determine if it is qualified. Once determined
to be qualified, the order will determine who is entitled to your Plan benefits.
22 What is the Claims Review Procedure under the Plan?
You (or your authorized representative acting on your behalf) may file a claim under the Plan or
appeal a decision on your claim or any other matter which is adverse to you.
In the event the Committee makes a decision which is adverse to you (such as a determination
that you are not eligible to participate in the Plan, or a denial or modification of your claim for Plan
benefits), you will be notified in writing of the following:
• the specific reason for the decision, denial or modification;
• the Plan provisions and all pertinent circumstances upon which the decision, denial or
modification is based;
• any additional material or information necessary to perfect your claim, and the reasons
why such material or information is necessary; and
• the Plan’s claim review procedure and the time limits applicable to such procedure.
In the event your claim is denied or modified, you may, within 60 days following receipt of the
denial or modification, submit a written request to the Committee for review of its initial decision.
At this time, you may submit any additional comments, documents, records or other information
which you believe may be relevant to your claim. You will also be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records and other information
relevant to your claim. The materials you submit will be considered by the Committee even if
they were not submitted with your original claim. Within 60 days following the request for review,
the Committee must, after providing you with a full and fair review, render its final decision in
writing to you stating specific reasons for its decision. If special circumstances require an
extension of this 60-day period, the Committee’s decision will be rendered as soon as possible,
but not later than 120 days after receipt of your request for review. If an extension of time for
review is required, you will receive written notice of the extension prior to the beginning of the
extension period.
If after final review, you are still not satisfied with the Committee’s decision, you have the right to
being a civil action under Section 502(a) of the Employee Retirement Income Security Act of
1974. For more information about this right, see “What are my Rights Under ERISA,” Question
26 below.
.
23 What is a top-heavy Plan?
Certain provisions of the Plan are required by law to take effect automatically if the Plan is
classified as “top-heavy.” A top-heavy plan is one in which the sum of the Account balances of
certain “key employees” exceeds 60% of the sum of the Account balances of all employees. If the
Plan is determined to be top-heavy for a Plan Year, the Company will be required to make a
minimum contribution to the Plan on your behalf if you are not a key employee and if you are
employed by the Company on the last day of the Plan Year to which the top-heavy determination
applies. The minimum contribution will be the lesser of (1) 3% of your Compensation or (2) a
percentage equal to the largest percentage of Compensation contributed on behalf of any key
employee.
The Committee will notify you if the Plan becomes “top-heavy.”
Group 1 Automotive Employee Benefits & Policies 401k Plan 16
24 Can the Plan be amended?
Subject to special statutory rules regarding qualified plan amendments, the Company reserves
the right to amend the Plan at any time, for any reason by action of its Board of Directors or by
action of the Committee.
25 What are my rights upon Plan termination?
Plan termination insurance under Title IV of the Employee Retirement Income Security Act of
1974 (“ERISA”) does not apply to this Plan since your interests are maintained in individual
Accounts.
The Company has established the Plan with the intention and expectation that from year to year it
will be able to make contributions as described in Question 10. However, the Company realizes
that circumstances not now foreseen, or circumstances beyond its control, may make it either
impossible or inadvisable to continue to make contributions. Therefore, the Company has the
power to terminate the Plan at any time.
If contributions to the Plan are permanently discontinued or if the Plan is terminated or partially
terminated with respect to your interest, you will be 100% Vested in all amounts in your Accounts.
Your Accounts will continue to be invested as described in Question 13 until the balance of your
Accounts is distributed. In the case of discontinuance, distribution will occur as otherwise
provided in the Plan. In the case of termination, distribution will occur as soon as practicable
following Internal Revenue Service approval.
26 What are my Rights Under ERISA?
As a Member of the Group 1 Automotive, Inc. 401(k) Savings Plan, you are entitled to certain
rights and protections under the Employee Retirement Income Security Act of 1974 (“ERISA”).
ERISA provides that all Plan participants shall be entitled to:
§ Examine, without charge, at the Administrative Committee’s office and at other specified
locations such as worksites, all documents governing the Plan, and a copy of the latest
annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor.
§ Obtain, upon written request to the Administrative Committee, copies of documents
governing the operation of the Plan, and copies of the latest annual report (Form 5500
Series) and updated summary plan description. The Committee may make a reasonable
charge for the copies.
Receive a summary of the Plan’s annual financial report. The Administrative Committee is
required by law to furnish each Member with a copy of this summary annual report.
Obtain a statement telling you of your Vested rights under the Plan. If you do not have Vested
rights, the statement will tell you how many more years you will need to work with the Company
to become Vested. This statement must be requested in writing and is not required to be given
more than once every twelve (12) months. The Plan must provide the statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are
responsible for the operation of the Plan. The people who operate your Plan, called “fiduciaries”
of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants
and Beneficiaries. No one, including the Company or other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising
your rights under ERISA. If your claim for a Plan benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right to have the Plan
review and reconsider your claim. Under ERISA, there are steps you can take to enforce the
Group 1 Automotive Employee Benefits & Policies 401k Plan 17
above rights. For instance, if you make a written request for certain materials from the Plan and
do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court
may require the Plan Administrator to provide the materials and pay you up to $110 a day until
you receive the materials, unless the materials were not sent because of reasons beyond the
control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in
whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the
Plan’s decision or lack thereof concerning the qualified status of a domestic relations order, you
may file suit in Federal court. If it should happen that Plan fiduciaries misuse the Plan’s money,
or if you are discriminated against for asserting your rights, you may seek assistance from the
U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order you to pay these costs
and fees, for example, if it finds your claim is frivolous.
If you have any questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you should contact
the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor,
listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension
and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W.,
Washington, D.C. 20210.
27 What are the federal income tax aspects of the Plan?
It is the intent of the Company that the Plan and its related trust, as presently constituted, be
“qualified” within the meaning of sections 401(a) and 501(a) of the Internal Revenue Code. The
Company intends to apply for a determination letter from the Internal Revenue Service that the
Plan is qualified. Depending on changes to the Internal Revenue Code or applicable Treasury
Regulations, the Company may need to amend the Plan from time to time in order for the Plan to
maintain its qualified status. Assuming the Plan is operated in accordance with the Plan
document and applicable regulations:
The Company is permitted to deduct for federal income tax purposes the amount of the
Company’s contributions to the Plan, within specified limits;
§ Your Before-Tax Contributions and any Employer Contributions made to the Plan on
your behalf will not be currently taxable to you; and
§ Neither such contributions to the Plan nor the income and/or growth of the Investment
Funds under the Plan will be taxable to you prior to the time that you receive a
distribution from the Plan.
The federal income tax treatment applicable to distributions of Plan benefits is governed by
complex rules set forth in the Internal Revenue Code and the Treasury Regulations promulgated
thereunder. You are urged to carefully consider the tax consequences associated with receiving a
distribution from the Plan in advance of the request or receipt of such distribution, and to refer
specific questions to your own tax advisors. In order to provide you with a general description of
the federal income tax rules applicable to Plan distributions, you or your beneficiary will
automatically receive, prior to your receipt of a distribution from the Plan, a copy of a “Special Tax
Notice Regarding Plan Payments” which summarizes these rules.
The foregoing is not a complete statement of the federal income tax aspects of the Plan, and is
not intended as a substitute for careful tax planning by each Member. In addition to the federal
income tax consequences discussed above, participation in the Plan may have significant state
and local income tax consequences, which are not discussed in this summary. Accordingly,
participants are urged to consult their tax advisors with respect to the effect on their own
particular circumstances.