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EXHIBIT 10.8
UPS
EXCESS COORDINATING BENEFIT PLAN
TABLE OF CONTENTS
ARTICLE I -- DEFINITIONS
Section 1.1 Definitions................................................ 1
(a) "Board of Directors"....................................... 1
(b) "Change in Control"........................................ 1
(c) "Code"..................................................... 2
(d) "Committee"................................................ 2
(e) "Coordinating Retirement Benefit".......................... 3
(f) "Coordinating Surviving Spouse Benefit".................... 3
(g) "Effective Date"........................................... 3
(h) "Eligible Employee"........................................ 3
(i) "Employer Company"......................................... 3
(j) "ERISA".................................................... 3
(k) "Participant".............................................. 3
(l) "Plan"..................................................... 3
(m) "Prior Plan"............................................... 3
(n) "Retirement Date".......................................... 3
(o) "Retirement Plan".......................................... 4
ARTICLE II -- ELIGIBILITY 4
Section 2.1 Eligible Employees......................................... 4
Section 2.2 Prior Plan................................................. 4
Section 2.3 Change in Control.......................................... 4
Section 2.4 Period of Participation.................................... 4
ARTICLE III -- BENEFITS 5
Section 3.1 Coordinating Retirement Benefit............................ 5
Section 3.2 Timing..................................................... 5
Section 3.3 Lump Sum Option............................................ 6
Section 3.4 Reduced Lump Sum........................................... 6
ARTICLE IV -- COORDINATING SURVIVING SPOUSE BENEFIT 7
Section 4.1 Coordinating Surviving Spouse Benefit...................... 7
Section 4.2 Timing and Form............................................ 8
ARTICLE V -- FORFEITURE OF BENEFITS 9
ARTICLE VI -- COMMITTEE 9
Section 6.1 Establishment of Committee................................. 9
Section 6.2 Delegation of Specific Responsibilities.................... 10
Section 6.3 Power to Establish Regulations............................. 10
Section 6.4 Liability of the Committee................................. 11
Section 6.5 Reliance by Committee...................................... 11
Section 6.6 Books and Records.......................................... 11
ARTICLE VII -- AMENDMENT AND TERMINATION 11
Section 7.1 Right of Amendment......................................... 11
Section 7.2 Right to Terminate......................................... 12
ARTICLE VIII -- NO FUNDING OBLIGATION 12
ARTICLE IX -- MISCELLANEOUS 12
Section 9.1 Claims Procedure........................................... 12
Section 9.2 No Guarantee of Employment................................. 13
Section 9.3 Nonalienation of Benefits.................................. 13
Section 9.4 ERISA...................................................... 13
Section 9.5 Construction............................................... 14
Page 1
UPS
EXCESS COORDINATING BENEFIT PLAN
United Parcel Service of America, Inc. ("UPS") hereby establishes,
effective as of January 29, 1998, this UPS Excess Coordinating Benefit Plan to
provide to certain highly compensated and management employees of UPS or its
affiliated companies who are participants in the Retirement Plan those
retirement benefits that cannot be paid from the Retirement Plan as a result of
the limitations imposed by Sections 401(a)(17) and 415 of the Code. This Plan
amends, restates and replaces the Prior Plan to the extent that plan provided
for "coordinating retirement benefits" as described in Section 3.1 of the Prior
Plan or death benefits as described in Section 5.1 of the Prior Plan.
ARTICLE I--DEFINITIONS
Section 1.1 Definitions. Whenever used herein, the following words
shall have the meaning set forth below unless otherwise clearly required by the
context:
(a) "Board of Directors" means the Board of Directors and/or
Executive Committee of UPS.
(b) "Change in Control" means
(1) the approval by the shareholders of UPS of a
reorganization, merger, share exchange or consolidation, in each case,
where persons who were shareholders of UPS immediately prior to such
reorganization, merger, share exchange or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power
of the reorganized, merged, surviving or consolidated company's then
outstanding securities entitled to vote generally in the election of
directors; or a liquidation or dissolution of UPS or of the sale of all
or substantially all of UPS's assets;
(2) consummation of a business combination between UPS
and any entity which has a market capitalization equal to or greater
than 80% of the market capitalization of UPS;
(3) individuals who, as of the effective date of this
Plan, constitute the Board of Directors (the "Incumbent Board") and who
cease for any reason to constitute at least an 80% majority of the
Board of Directors, provided that any person becoming a director
subsequent to the effective date whose election, or nomination for
election by UPS's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of UPS, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Securities Exchange Act of 1934) shall be considered as though such
person were a member of the Incumbent Board; or
(4) a change (other than due to retirement in the normal
course) of 50% or more of the executive officers of UPS at the level of
Senior Vice President and above within a consecutive twelve month
period.
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(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the administrative committee of the Plan,
the establishment and responsibilities of which are set forth in Article VII.
(e) "Coordinating Retirement Benefit" means the benefit described
in Section 3.1.
(f) "Coordinating Surviving Spouse Benefit" means the benefit
described in Section 4.1.
(g) "Effective Date" means January 29, 1998.
(h) "Eligible Employee" means each full-time manager and
supervisor of an Employer Company (as so designated on the payroll records for
such Employer Company) who has reached age 55 and completed as least 10 "years
of service" as described in the Retirement Plan.
(i) "Employer Company" means an Employer Company for purposes of
the Retirement Plan.
(j) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(k) "Participant" means an Eligible Employee and any other
employee or former employee of an Employer Company or surviving spouse who
becomes a participant in this Plan in accordance with Article II.
(l) "Plan" means the UPS Excess Coordinating Benefit Plan as set
forth in this document and as hereafter amended by the Board of Directors from
time to time.
(m) "Prior Plan" means the UPS Coordinating Benefit Plan, as
established as of January 1, 1986 and as thereafter amended.
(n) "Retirement Date" means the Participant's early, normal or
postponed retirement date for purposes of the Retirement Plan.
(o) "Retirement Plan" means the UPS Retirement Plan, as amended.
ARTICLE II--ELIGIBILITY AND PARTICIPATION
Section 2.1 Eligible Employees. The Committee shall designate those
Eligible Employees who shall be entitled to participate in this Plan and each
Eligible Employee so designated shall become a Participant upon the completion
of such application or other procedures established by the Committee to commence
participation.
Section 2.2 Prior Plan. Each former employee of an Employer Company who
was receiving a "coordinating retirement benefit" as described in Section 3.1 of
the Prior Plan and each surviving spouse who was receiving a death benefit as
described in Section 5.1 of the Prior Plan immediately before the Effective Date
automatically shall become a Participant in this Plan on the Effective Date to
the extent of his/her coordinating retirement benefit or death benefit under the
Prior Plan.
Section 2.3 Change in Control. Each employee of an Employer Company who
is employed as a full-time manager or supervisor at the time of a Change in
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Control (as designated on the payroll records for such Employer Company) whose
benefit under the Retirement Plan is limited at any date on or after the Change
in Control by Section 401(a)(17) or Section 415 of the Code automatically will
become a participant in this Plan as of the latest to occur of the date his/her
Retirement Plan benefit first becomes limited or the date of the Change in
Control.
Section 2.4 Period of Participation. Each person who becomes a
Participant in this Plan shall remain a Participant until the earlier of a)
his/her benefits under the Retirement Plan are no longer limited by Section
401(a)(17) or Section 415 of the Code or b) all benefits are paid to or on
behalf of such Participant in accordance with Article III or forfeited in
accordance with Article V.
ARTICLE III--BENEFITS
Section 3.1 Coordinating Retirement Benefit. Upon attainment of his/her
Retirement Date and retirement from service with all Employer Companies with a
benefit payable from the Retirement Plan, a Participant (other than a
Participant who was receiving a benefit under the Prior Plan) shall be entitled
to an annual Coordinating Retirement Benefit, equal to (a) minus (b) below:
(a) The Participant's benefit from the Retirement Plan (in the
same form payable to the Participant under the Retirement Plan) taking into
account any reduction applicable under the Retirement Plan for benefit payments
under other plans or programs, but without taking into account the additional
benefits described in Exhibit D of the Retirement Plan or the limitations of
Sections 401(a)(17) and 415 of the Code.
(b) The Participant's actual benefit from the Retirement Plan.
Each Participant who was receiving a coordinating retirement benefit described
in Section 3.1 of the Prior Plan immediately before the Effective Date shall
receive a Coordinating Retirement Benefit equal to the amount of that Prior Plan
benefit.
Section 3.2 Timing. Except as provided in Sections 3.3 and 3.4, the
Coordinating Retirement Benefit shall commence on the same date as payment of
the Participant's benefit under the Retirement Plan, be paid thereafter on the
same date as payments are made to the Participant or his/her surviving spouse or
beneficiary by the Retirement Plan, and shall cease to be paid upon cessation of
the payment of benefits to the Participant or his/her surviving spouse or
beneficiary from the Retirement Plan.
Section 3.3 Lump Sum Option. A Participant in salary grade 25 or higher
retiring after the Effective Date but on or before March 1, 1998, may make a
written election in accordance with procedures established by the Committee to
have the present value of all or a portion of the benefit payable to such
Participant under Section 3.1 paid to him/her in a lump sum as soon as
practicable following his/her retirement from service with all Employer
Companies in lieu of any benefit that would have been payable to such
Participant under Section 3.1. Present value shall be calculated using the
"applicable interest rate" and the "applicable mortality table" as defined in
Section 417 of the Code and such additional assumptions as the Committee deems
appropriate to reflect the possibility that the Participant's Retirement Plan
benefit will be increased when the limitations under Section 415 of the Code are
increased. The applicable interest rate for any Plan Year shall be determined
for the entire Plan Year based on the rate in effect for October
Page 4
preceding the beginning of such Plan Year. A lump sum option must be elected
before the Effective Date of this Plan and shall be irrevocable. No Coordinating
Surviving Spouse Benefit shall be payable on behalf of a Participant to the
extent such Participant receives a lump sum payment under this Section 3.3. A
Participant who receives a lump sum in lieu of his/her entire benefit payable
under Section 3.1 thereafter shall cease to be a Participant in this Plan.
I. Section 3.4 Reduced Lump Sum. Notwithstanding the foregoing, if the
rating assigned to UPS senior debt securities by Standard & Poor's
Rating Group becomes BBB- and the rating assigned to such securities by
Moody's Investors Services, Inc. becomes Baa3 (or, if either, but not
both ratings services cease to rate UPS senior debt securities, the
rating of the remaining service shall control) and such ratings remain
in effect for a period of 90 days, a Participant who is an employee or
former employee may at any time while such ratings are in effect elect
to receive a reduced benefit in lieu of the benefit that otherwise
would be payable to such Participant under Section 3.1 or 3.3. Such
reduced benefit shall be equal to the present value of (a)(i) the
benefit remaining to be paid to him/her if the Participant has begun to
receive benefits under this Plan or (ii) if the Participant has not
retired, the benefit that would have been payable to him/her if he/she
had terminated employment at the end of the month in which such request
is made less (b) 10%. Present value shall be calculated in accordance
with Section 3.3. Such reduced benefit shall be paid to such
Participant in a lump sum no later than 60 days after the written
request for such benefit is received by the Committee. An election of a
reduced benefit under this Section 3.4 shall be irrevocable. If a
Participant elects a benefit under this Section 3.4, no Coordinating
Surviving Spouse Benefit shall be payable on his/her behalf and such
Participant thereafter shall cease to be an eligible Participant in
this Plan.
ARTICLE IV--COORDINATING SURVIVING SPOUSE BENEFIT
Section 4.1 Coordinating Surviving Spouse Benefit. Upon the death of a
Participant (other than a Participant who was receiving a death benefit under
the Prior Plan) before commencement of a Coordinating Retirement Benefit , such
Participant's surviving spouse, if he/she is entitled to receive a Qualified
Joint and Survivor (Husband and Wife) Preretirement Survivor Benefit under the
Retirement Plan, shall be entitled to receive an annual Coordinating Surviving
Spouse Benefit from this Plan equal to (a) minus (b) minus (c) below:
(a) The survivor benefit that would be payable to such spouse from
the Retirement Plan without taking into account the additional benefits
described in Exhibit D of the Retirement Plan or the limitations of Sections
401(a)(17) and 415 of the Code.
(b) The actual benefit payable to such surviving spouse from the
Retirement Plan.
(c) An amount that bears the same proportion to the excess of (a)
over (b) as the portion of the Participant's benefit that was paid in a lump sum
under Section 3.3 bears to what would have been the Participant's entire benefit
under Section 3.1 of this Plan.
Notwithstanding the foregoing, if a Participant receives his/her entire benefit
in a lump sum under Section 3.3 or 3.4, no Coordinating Survivor Spouse Benefit
shall be payable to his/her surviving Spouse.
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Each Participant who was receiving a death benefit under Section 5.1 of
the Prior Plan immediately before the Effective Date shall receive a
Coordinating Survivor Spouse Benefit equal to the amount of that Prior Plan
benefit.
Section 4.2 Timing and Form. Except as provided below, the Coordinating
Surviving Spouse Benefit shall commence on the same date as payment of the
survivor benefit under the Retirement Plan begins, be paid thereafter on the
same date as payments are made to the surviving spouse by the Retirement Plan,
and shall cease to be paid upon cessation of the payment of benefits to the
surviving spouse from the Retirement Plan. If a Participant makes an election
under Section 3.3 to have all or a portion of the benefit payable to such
Participant paid to him/her in a lump sum, but dies before receiving such
benefit, then all or a portion of the Coordinating Surviving Spouse Benefit
payable to his/her Spouse shall be paid to such Spouse in a lump sum (calculated
using the same assumptions described in Section 3.3) as soon as practicable
following the Participant's death. The portion of the Coordinating Surviving
Spouse Benefit payable in a lump sum shall be the same percentage of the benefit
elected by the Participant to be paid to him/her in a lump sum.
ARTICLE V--FORFEITURE OF BENEFITS
Anything herein to the contrary notwithstanding, if a Participant who
is receiving, or may be entitled to receive, a benefit hereunder engages in
competition with UPS or any Employer Company (without prior written
authorization given by the Board of Directors) or is discharged for cause, or
performs acts of willful malfeasance or gross negligence in a matter of material
importance to the Employer Company, payments thereafter payable hereunder to
such Participant or such Participant's spouse or beneficiary will, at the sole
discretion of the Board of Directors, be forfeited and neither UPS nor this Plan
will have any further obligation hereunder to such Participant or his/her spouse
or designated Beneficiary.
ARTICLE VI--COMMITTEE
Section 6.1 Establishment of Committee. Authority to control and manage
the operation and administration of the Plan shall be vested in the Committee
consisting of not less than three (3) members, who shall be appointed by the
Board of Directors. The Committee shall be the agent for service of process on
or with respect to the Plan. Committee members may be removed at any time by the
Board of Directors and may resign at any time, such resignation to be effective
when accepted by the Board of Directors. All vacancies shall be filled by the
Board of Directors. The Committee may appoint from their number such committees,
which may include individuals not members of the Committee, with such powers as
they shall determine; may authorize one or more of their number, or any agent,
to execute or deliver any instrument, or to make any payment in their behalf;
and may employ legal counsel (who may be counsel to UPS), agents, and such
clerical, accounting and other services as they may require in carrying out the
provisions of the Plan. A majority of the members of the Committee at the time
in office shall constitute a quorum for the transaction of business. All
resolutions or other action taken by the Committee at a meeting shall be by the
vote of the majority of the Committee at any meeting; or without a meeting, by
instrument in writing signed by all of the members of the Committee.
Section 6.2 Delegation of Specific Responsibilities. The members of the
Committee may agree in a writing signed by each member to allocate to any one of
their number or to other persons any of the responsibilities with which they are
charged pursuant hereto, provided the
Page 6
responsibilities and duties so delegated are definitively set forth so that the
person to whom the delegation is made is clearly aware of such duties and
responsibilities. If such delegation is made to a person not a member of the
Committee, that person or, in the case of a corporation, its responsible
officer, shall acknowledge the acceptance and understanding of such duties and
responsibilities.
Section 6.3 Power to Establish Regulations. The Committee shall
establish rules and regulations for the administration of the Plan and the
Committee. Except as otherwise herein expressly provided, the Committee shall
have the exclusive right to interpret the Plan and decide any matters arising in
the administration and operation of the Plan, and any interpretations or
decisions so made shall be conclusive and binding on all persons; provided,
however, that all such interpretations and decisions shall be applied in a
uniform manner to all employees and Participants similarly situated.
Section 6.4 Liability of the Committee. The Committee and members
thereof, to the extent of the exercise of their authority, shall discharge their
duties with respect to the Plan with care, skill, prudence and diligence;
provided, however, that no Committee member shall be responsible for the actions
or omissions of a member or any other person, other than himself/herself, which
are not in conformity hereto, unless such member knowingly participates in or
knowingly conceals such conduct which he/she knows to be in breach of this
standard, his/her own conduct has enabled the other member or other person to be
in breach of this standard, or he/she has knowledge of such breach by another
member or other person and fails to make reasonable efforts under the
circumstances to remedy such breach.
Section 6.5 Reliance by Committee. Board of Directors and Committee
members shall be fully protected with respect to any action taken or suffered by
them in good faith in reliance upon the advice or opinion of any insurance
carrier, accountant, legal counsel or physician, and all action so taken or
suffered shall be conclusive upon all Participants and any other person claiming
under the Plan.
Section 6.6 Books and Records. The Committee shall keep appropriate
books and records.
ARTICLE VII--AMENDMENT AND TERMINATION
Section 7.1 Right of Amendment. UPS reserves the right to make any
amendment or amendments to this Plan by resolutions of its Board of Directors,
provided, however, that no amendment shall reduce UPS's liability to provide any
benefits earned to date of amendment hereunder to employees who are Participants
on the date of amendment, except as provided in Article V hereof.
Section 7.2 Right to Terminate. UPS, by action of its Board of
Directors, may terminate this Plan at any time in whole or in part. No
termination of this Plan shall reduce UPS's liability to provide any benefits
earned to date of termination hereunder to employees who are Participants on the
date of termination based on the provisions of this Plan in effect immediately
prior to the date of termination, or the amount of benefits payable to a
Participant who has retired under the provisions of this Plan or the spouse or
other Beneficiary of any Participant receiving benefits under this Plan, except
as provided in Article V hereof. Upon termination of this Plan, no additional
employees may become Participants hereunder.
ARTICLE VIII--NO FUNDING OBLIGATION
The obligation of UPS to pay any benefits under this Plan shall be
unfunded and unsecured; and any payments under this Plan shall be made from the
general assets of UPS. Notwithstanding the foregoing, UPS may, in its
discretion, establish an irrevocable grantor trust for the purpose of funding
all or part
Page 7
of its obligations under this plan; provided however, that the terms of such
trust require that the assets thereof remain subject to the claims of UPS's
judgment creditors and are non-assignable and non-alienable by any Participant
or Beneficiary prior to distribution thereof.
ARTICLE IX--MISCELLANEOUS
Section 9.1 Claims Procedure. Any claim for a benefit under this Plan
shall be filed and resolved in accordance with the claims procedure provided
under the Retirement Plan which is hereby incorporated in this Plan by
reference, except that the Committee of this Plan shall be the entity with whom
a claim for review should be filed under this Plan.
Section 9.2 No Guarantee of Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer Company and
any employee or Participant, as a right of any employee or Participant to be
continued in the employment of the Employer Company, or as a limitation of the
right of the Employer Company to discharge the employee or Participant with or
without cause.
Section 9.3 Nonalienation of Benefits. No benefit or payment under this
Plan shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, levy or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber, levy upon or
charge the same shall be void except that benefits may be paid to an alternate
payee under a domestic relations order that is treated as a qualified domestic
relations order under the Retirement Plan. Notwithstanding this statement, if
the Participant is indebted to UPS at any time when payments are required to be
made under the provisions of this Plan, UPS shall have the right to reduce the
amount of payments remaining to be made to the Participant or his/her spouse or
beneficiary under the Plan to the extent of such indebtedness. An election by
UPS not to reduce such payment shall not constitute a waiver of its claim for
such indebtedness.
Section 9.4 ERISA. UPS intends that this Plan constitute an "excess
benefit plan" as defined in Section 3(36) of ERISA and, therefore, be exempt
from coverage under ERISA. However, to the extent this Plan does not constitute
an "excess benefit plan," UPS intends that this Plan come within the various
exceptions and exemptions to ERISA for a plan maintained for a "select group of
management or highly compensated employees" as described in Sections 201(2),
301(a) (3), and 401(a) (1) of ERISA. Any ambiguities in this Plan shall be
construed to effect the intent as described in this Section.
Section 9.5 Construction. The headings and subheadings set forth in
this Plan are intended for convenience only and have no substantive meaning
whatsoever. In the construction of this Plan, the singular shall include the
plural. This Plan shall be construed in accordance with the laws of the State of
Georgia.
Page 8
Executed this 29th day of January, 1998.
ATTEST: UNITED PARCEL SERVICE OF
AMERICA, INC.
/s/ Joseph R. Moderow
- ------------------------------------- /s/ James P. Kelly
Joseph R. Moderow -------------------------------------
Secretary James P. Kelly
Chairman
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