EXHIBIT 10.8(7)
EXECUTION COPY
AMENDMENT NUMBER SEVEN
TO THE
UPS QUALIFIED STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
EFFECTIVE AS OF JANUARY 1, 1998
WHEREAS, The United Parcel Service (the "Company") maintains the UPS
Qualified Stock Ownership Plan and Trust Agreement (the "Plan") effective
January 1, 1998; and
WHEREAS, the Plan has been amended on a number of occasions since January
1, 1998, the most recent being Amendment No. 6; and
WHEREAS, the Board reserved the right in Section 12.1 of the Plan to
amend, modify or change the Plan from time to time; and
WHEREAS, it is desired to further amend the Plan to reflect certain
provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
("EGTRRA"); and
WHEREAS, this amendment is intended as a good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder; and
WHEREAS, except as otherwise provided, this amendment shall be effective
as of the first day of the first Plan Year beginning after December 31, 2001;
and
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Article I is amended effective as of August 1, 2002 to renumber Sections
1.11 to 1.65 as Sections 1.12 to 1.66, respectively, (and any internal
Plan cross-references are amended accordingly) and to add a new Section
1.10 which reads as follows:
Section 1.10 Catch-Up Contributions - means the sum of (1) contributions
defined as "catch-up contributions" made under the Savings Plan, (2) with
respect to an individual who becomes eligible to make elective deferrals under
the Savings Plan during any Plan Year as a result of losing coverage under a
collective bargaining agreement, his or her contributions defined as "catch-up
contributions" made under a Collectively Bargained Plan prior to the latest date
in such Plan Year on which he or she became eligible to make elective deferrals
under the Savings Plan, and (3) with respect to an individual who was a
participant in a Merged Plan who becomes eligible to make elective deferrals
under the Savings Plan as a result of a merger of that plan into the Savings
Plan, his or her defined as "catch-up contributions" made under such Merged Plan
in the Plan Year in which he or she first became eligible to make elective
deferrals under the Savings Plan.
2. The last paragraph of Section 1.15 (formerly Section 1.14) is amended to
read as follows:
The annual Compensation of each Participant taken into account under the Plan
shall not exceed $200,000 for Plan Years beginning on or after January 1, 2002,
as adjusted for cost-of-living
increases in accordance with Code Section 401(a)(17)(B). For Plan Years
beginning before January 1, 2002, the annual Compensation of each Participant
taken into account under the Plan shall not exceed $150,000 for Plan Years, as
adjusted for cost-of-living increases in accordance with Code Section
401(a)(17). The cost-of-living adjustment in effect for a calendar year applies
to any Plan Year beginning in such calendar year. If a Plan Year consists of
fewer than 12 months, the annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the short Plan Year,
and the denominator of which is 12. The annual compensation limit does not apply
for purposes of Section 5.1.
3. Article I is amended to renumber Sections 1.15 to 1.64 as Sections 1.16 to
1.65, respectively, (and any internal Plan cross-references are amended
accordingly) and to add a new Section 1.15 which reads as follows:
Section 1.15 Disability - means a medically determinable physical or
mental impairment as a result of which the Participant is disabled and qualified
for disability benefits under (a) the United States Social Security Act, (b) a
long term disability plan to which the Employer contributes for the Participant
or (c) workers compensation laws.
4. The last paragraph of Section 1.20 (formerly Section 1.19) is amended to
read as follows:
The annual Eligible Compensation of each Participant taken into account under
the Plan shall not exceed $200,000 for Plan Years beginning on or after January
1, 2002, as adjusted for cost-of-living increases in accordance with Code
Section 401(a)(17)(B) (the "annual compensation limit"). For Plan Years
beginning before January 1, 2002, the annual Eligible Compensation of each
Participant taken into account under the Plan shall not exceed $150,000 for Plan
Years, as adjusted for cost-of-living increases in accordance with Code Section
401(a)(17). The cost-of-living adjustment in effect for a calendar year applies
to any Plan Year beginning in such calendar year. If a Plan Year consists of
fewer than 12 months, the annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the short Plan Year,
and the denominator of which is 12. The annual compensation limit does not apply
for purposes of Section 5.1.
5. Section 1.57(a) (formerly Section 1.56(a)) is amended to read as follows:
(a)
(1) Effective as of January 1, 2002, the date on which an
individual terminates employment with all Affiliates by reason of a
voluntarily quit, retirement, death, period of Disability of more
than 52 weeks, discharge, failure to return from layoff or
authorized leave of absence, or for any other reason (unless a
grievance is pending), provided for periods before January 1, 2002,
such separation constitutes a "separation from service" within the
meaning of Code Section 401(k) and, for periods on or after January
1, 2002, such separation constitutes a "severance from employment"
under the Savings Plan. A discharge will not be treated as a
Separation from Service while a grievance is pending but, if the
discharge is upheld, will be treated as a Separation from Service as
of the date of the discharge.
(2) Effective before January 1, 2002 but on or after May 1,
2000, the date on which an individual terminates employment with all
Affiliates by reason of a voluntarily quit, retirement, death, the
end of a period of disability of more than 52 weeks at which time a
physician certifies that the individual is currently disabled and
unable to return to work for an Affiliate, discharge, failure to
return from layoff or authorized leave of absence, or for any other
reason (unless a grievance is pending), provided for periods before
January 1, 2002, such separation constitutes a "separation from
service" within the meaning of Code Section 401(k) and, for periods
on or after January 1, 2002, such separation constitutes a
"severance from employment" under the Savings Plan. A discharge will
not be treated as a Separation from Service while a grievance is
pending but, if the discharge is upheld, will be treated as a
Separation from Service as of the date of the discharge.
(3) Effective before May 1, 2000, the earlier of the date
under Section 1.57(a)(2) or the date on which a 12-consecutive month
period ends during which the individual did not perform an Hour of
Service.
6. Section 4.1(a) is amended effective as of August 1, 2002 to read as
follows:
(a) On and After July 1, 2001. Subject to the rules and
limitations set forth in this ARTICLE IV and in ARTICLE V, including
the specific limitations set forth as matching formulas in this
Section 4.1, an Employer Company shall make the following
SavingsPLUS Contribution, if any, for each Accounting Period on
behalf of each Participant who was employed as an Eligible Employee
by such Employer Company on the last day of the Accounting Period
and each Participant whose last employment as an Eligible Employee
was with such Employer Company during the Accounting Period.
The SavingsPLUS Contribution made on behalf of each
Participant described in this Section 4.1(a) shall be equal to
A minus B where:
(1) A equals
(i) For each Employer Company listed in Appendix
4.1(a)(1)(A), zero.;
(ii) For each Employer Company listed in Appendix
4.1(a)(1)(B), 50% of his or her Pre-Tax Contributions that do
not exceed 6% of his or her Eligible Compensation for such
Plan Year;
(iii) For each Employer Company listed in Appendix
4.1(a)(1)(C), 100% of his or her Pre-Tax Contributions that do
not exceed 3% of his or her Eligible Compensation for such
Plan Year; or
(iv) For each Employer Company listed in Appendix
4.1(a)(1)(D), the sum of 100% of his or her Pre-Tax
Contributions that do not exceed 3% of his or her Eligible
Compensation for such Plan Year and 50% of his or her Pre-Tax
Contributions in excess of 3% but not in excess of 6% of his
or her Eligible Compensation for such Plan Year.
(2) B equals the SavingsPLUS Contribution and the matching
contribution (within the meaning of Code Section 401(m)) under a Merged
Plan previously made by any Employer Company with respect to him or her
during such Plan Year.
Effective August 1, 2002, no SavingsPLUS Contributions will be made with
respect to any Catch-Up Contributions (unless such contributions are
reclassified as Pre-Tax Contributions).
7. Section 4.1 is amended effective as of July 1, 2001 to correct a
scrivener's error and reinstate Sections 4.1(c), (d) and (e) which read as
follows:
(c) Application of Suspense Account and Forfeitures. Excess amounts that
are transferred to a Code Section 415 suspense account for a Plan Year pursuant
to Section 5.1, if any, and any amounts treated as forfeitures under the Plan
will be applied to reduce the SavingsPLUS Contributions for the next Plan Year
(and succeeding Plan Years, if necessary).
(d) No SavingsPLUS Contributions on Refunds. No SavingsPLUS Contributions
will be made with respect to any Pre-Tax Contributions that are refunded by the
Savings Plan or a Collectively Bargained Plan to satisfy Code Section 401(k),
Section 402(g) or Section 415. If it is determined that any portion of the
SavingsPLUS Contributions credited to a Participant's SavingsPLUS Account is
attributable to refunded Pre-Tax Contributions, the number of whole shares of
UPS Stock attributable to the match on refunded Pre-Tax Contributions
automatically will be deducted from the Participant's SavingsPLUS Account (or if
the Participant has diversified his or her SavingsPLUS Account pursuant to
Section 8.10, an amount equal to the value of those shares automatically will be
deducted from the Participant's account under the Savings Plan) and will be
transferred to a Code Section 415 suspense account (if the refund of Pre-Tax
Contributions was for purposes of Code Section 415) or treated as a forfeiture
(e) Allocation. The SavingsPLUS Contribution, if any, made on behalf of
each Participant will be credited to his or her SavingsPLUS Account as of the
last day of each Accounting Period.
8. Section 5.1(a) is amended effective for limitation years beginning after
December 31, 2001 to read as follows:
(a) General Rule. The term "limitation year" as defined in Code
Section 415 and the corresponding regulations means the calendar year.
Except to the extent permitted with respect to Catch-Up Contributions,
the total annual additions (as described in Section 5.1(b)) allocated to
a Participant's Account for any limitation year when added to the
contributions that are treated as made on behalf of such Participant for
such limitation year under the coordination rules in Section 5.1(c) will
not exceed the lesser of
(1) 100% (25% for limitation years before January 1, 2002) of
the Participant's Compensation for the limitation year;
(2) $40,000 ($30,000 for limitation years beginning before
January 1, 2002) (as adjusted under Code Section 415(d)), or
(3) such lesser amount as the Committee deems necessary or
appropriate to satisfy the requirements of Code Section 415 in light
of Section 5.1(d) and the benefits, if any, accrued and the
contributions, if any, made for such Participant under any other
defined contribution plan maintained by an Affiliate.
If a short limitation year (less than 12 months) is created because of an
amendment, the limitation described in (2) above will be prorated.
9. Section 5.2(c) is amended to read as follows:
(c) Multiple Use Limitation.
(1) For Plan Years beginning after January 1, 2002, the
multiple use test described in Treas. Reg.1.401(m)-2 and Section
5.5(c)(2) below shall not apply.
(2) For Plan Years beginning before January 1, 2002, the ACPs
of all Highly Compensated Employees will be reduced (beginning with
the highest of such percentages) to the extent required under Code
Section 401(m) and the regulations issued under that section to
prevent multiple use of the alternative test described in Code
Section 401(k)(3)(A)(ii)(II) and in Code Section 401(m)(2)(A)(ii) in
the same Plan Year. The reduction will be treated as an Excess
Aggregate Contribution. If the ESOP feature is activated, the
multiple use limitation will not apply unless this Plan (or another
ESOP maintained by an Affiliate also permits elective deferrals.
10. Section 8.1 is amended to read as follows:
Section 8.1 General. A Participant may request distribution of his
or her Account when he or she has a Separation from Service. In addition, a
Participant may request a withdrawal from his or her Savings Plan Account before
a Separation from Service to the extent
provided in Section 8.7 or his or her Account before a Separation from Service
to the extent provided in Section 8.7A.
11. Article VIII is amended to add a new Section 8.7A which follows Section
8.7 and precedes Section 8.8 and which reads as follows:
Section 8.7A Disability. A Participant who has been absent for more
than 52 weeks on account of Disability (but who has not experienced a Separation
from Service) and whose Disability continues through the date of withdrawal
under this Section 8.7A may withdraw all or any portion of his or her Account at
any time by submitting a request for withdrawal in accordance with the
procedures adopted by the Committee for this purpose. Such withdrawal shall be
subject to any additional restrictions, uniformly applied with respect to
Participants similarly situated, as are prescribed by the Committee regarding
the frequency and minimum amount of such withdrawal.
12. Section 8.13 is amended effective for distributions made after December
31, 2001 to read as follows:
Section 8.13 Eligible Rollover Distribution.
(a) General. Notwithstanding any provision of this Plan to the
contrary that would otherwise limit a Distributee's election under
this Section 8.13, a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an
Eligible Rollover Distribution of two hundred dollars ($200) or more
transferred to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(b) Definitions.
(1) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include:
(i) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified
period of ten (10) years or more;
(ii) any distribution to the extent that
distribution is required under Code Section 401(a)(9);
(iii) any distribution of Pre-Tax Contributions or
pre-tax contributions under a Merged Plan on account of
hardship on or after January 1, 1999; and
(iv) effective for distributions made before
January 1, 2002, the portion of any distribution that is
not includible in gross income.
Effective for distributions made after December 31, 2001, a portion of a
distribution shall not fail to be an Eligible Rollover Distribution merely
because the portion consists of after-tax employee contributions which are not
includible in gross income. However, such portion which consists of after-tax
contributions may be paid only to an individual retirement annuity described in
Code Section 408(a) or Code Section 408(b), or to a qualified defined
contribution plan described in Code Section 401(a) or Code Section 403(a) that
agrees to account separately for amounts so transferred, including separately
accounting for the portion of such distribution which is includible in gross
income and the portion of such portion which is not so includible.
(2) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), a qualified trust described in Code Section 401(a) and,
effective for distributions made after December 31, 2001, an annuity contract
described in Code Section 403(b) or an eligible plan under Code Section 457(b)
which is maintained by a state, political subdivision of a state, or any agency
or instrumentality of a state or political subdivision of a state and which
agrees to separately account for amounts transferred into such Plan from this
Plan in order to be an Eligible Retirement Plan. The definition of Eligible
Retirement Plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code Section 414(p).
(3) Distributee. A Distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are Distributees with regard to the interest of the spouse or former
spouse.
(4) Direct Rollover. A Direct Rollover is a payment by this Plan to
the Eligible Retirement Plan specified by the Distributee.
(5) Additional Limitations. Notwithstanding the foregoing,
(i) if the Distributee elects to have his or her Eligible
Rollover Distribution paid in part to him or her and paid in part as
a Direct Rollover, the Direct Rollover must be in an amount of two
hundred dollars ($200) or more;
(ii) a Direct Rollover to more than one Eligible Retirement
Plan will not be permitted. and
(iii) a Direct Rollover of UPS Stock may not be transferred to
an Eligible Retirement Plan other than an individual retirement
account as described in Code Section 408(a) and with respect to
which prior to November 15, 1999, the custodian or trustee of which
agrees to be bound by the terms of the UPS Stock Trust.
13. Section 13.9 is amended to read as follows:
Section 13.9 Top Heavy Plan.
(a) Determination. The Committee as of the last day of each
Plan Year (the "determination date") will determine the sum of the
present value of the accrued benefits of "key employees" (as defined
in Code Section 416(i)(1)) and the sum of the present value of the
accrued benefits of all other Employees in accordance with the rules
set forth in Code Section 416(g), or will take such other action as
the Committee deems appropriate to conclude that no such
determination is necessary under the circumstances. If the sum of
the present value of the accrued benefits of such key employees
exceeds 60% of the sum of the present value of the accrued benefits
of all employees as of the determination date, this Plan will be
"top-heavy" for the immediately following Plan Year. For purposes of
this Section, the present value of the accrued benefit of each
employee will be equal to the sum of
(1) the balance of the employee's Account under this
Plan (determined for this purpose as of the last day of each
Plan Year, which is the "valuation date" for this Plan);
(2) the present value of the employee's accrued benefit,
if any, (determined as of the most recent valuation date
occurring within a 12-month period ending on the determination
date) under
(i) each qualified plan (as described in Code
Section 401(a)) maintained by an Affiliate (a) in which
a key employee is a participant or (b) that enables any
plan described in subclause (i) to meet the requirements
of Code Section 401(a)(4) or Section 410 (the "required
aggregation group"), and
(ii) each other qualified plan maintained by an
Affiliate (other than a plan described in clause (a)
that may be aggregated with this Plan and the plans
described in clause (a), provided such aggregation group
(including a plan described in this clause (b) continues
to meet the requirements of Code Section 401(a)(4) and
Section 410 (the "permissive aggregation group"); and
(3)
(i) for Plan Years beginning on or after January
1, 2002, the value of any withdrawals and distributions
made from this Plan and the plans described in (2) above
during the 1- year period ending on such determination
date and the value of any contributions due under this
Plan and the defined contribution plans described in (2)
above but as yet unpaid as of such determination date.
The preceding sentence shall also apply to distributions
under a terminated plan which, had it not been
terminated, would have been required to be aggregated
with the Plan under Code Section 416(g)(2)(A)(i). In the
case of a distribution made for a reason other than
separation from service, death or disability, this
provision shall be applied by substituting "5-year
period" for "1-year period."
(ii) for Plan Years beginning before January 1,
2002, the value of any withdrawals and distributions
made from this Plan and the plans described in (2) above
during the 5 year period ending on such determination
date and the value of any contributions due under this
Plan and the defined contribution plans described in (2)
above but as yet unpaid as of such determination date;
provided, however, effective for Plan Year beginning on or
after January 1, 2002, the accrued benefit of any employee
will be disregarded if such employee has not performed any
services for any Affiliate at any time during the one (1) year
period ending on the date as of which such determination is
made and, effective for Plan Years beginning before January 1,
2002, the accrued benefit of any employee will be disregarded
if such employee has not performed any services for any
Affiliate at any time during the five (5) year period ending
on the date as of which such determination is made.
(b) Special Top-Heavy Contribution. If the Committee determines that this
Plan is "top-heavy" for any Plan Year, the following special rules will apply
notwithstanding any other rules to the contrary set forth elsewhere in this
Plan.
(1) A contribution will be made for each Participant who is an
Eligible Employee on the last day of such Plan Year that, when added to
the employer contribution and forfeitures otherwise allocated on behalf of
such individual for such Plan Year under this Plan and any other defined
contribution plan maintained by an Affiliate, is equal to:
(i) for each such Eligible Employee who is not a participant
in a top-heavy defined benefit plan maintained by the Employer or an
Affiliate, the lesser of (a) 3% of such Eligible Employee's
Compensation for such year or (b) the percentage at which
contributions are made (or are required to be made) for such year to
the key employee for whom such percentage is the highest; or
(ii) for each such Eligible Employee who also participates in
a top-heavy defined benefit plan maintained by the Employer or an
Affiliate, 5% of such Eligible Employee's Compensation for such
year;
provided, however, that no such contribution will be made under this Section for
any Eligible Employee to the extent such Eligible Employee receives the
top-heavy minimum contributions (as described in Code Section 416(c)) under
another defined contribution plan maintained by the Employer or an Affiliate for
such Plan Year.
(2) Effective for Plan Years beginning after January 1, 2002,
SavingsPLUS Contributions shall be taken into account for purposes
of satisfying the minimum contribution requirements of Code Section
416(c)(2) and the Plan. The preceding sentence shall apply with
respect to SavingsPLUS Contributions made under the Plan or, if the
minimum contribution requirement is met in another defined
contribution plan, such other plan. SavingsPLUS Contributions that
are used to satisfy the minimum contribution requirements shall be
treated as employer matching contributions for purposes of the
actual contribution percentage test and the other requirements of
Code Section 401(m
(3) For Plan Years beginning before January 1, 2000, if the
sum of the present value of the accrued benefits of key employees
(computed as described in Section 13.9(a)) exceeds 90% of the sum of
the present value of the accrued benefits of all employees (computed
as described in Section 13.9(a)) as of the determination date this
Plan will be "super top-heavy" for the immediately following Plan
Year.
14. This amendment is intended as good faith compliance with the requirements
of EGTRRA and is to be construed in accordance with EGTRRA and guidance
issued thereunder. This amendment shall supersede the provisions of the
Plan to the extent those provisions are inconsistent with the provisions
of this amendment.
IN WITNESS WHEREOF, the undersigned certify that United Parcel Service of
America, Inc., based upon action by its Board of Directors on December 20, 2002,
has caused this Amendment Number Seven to be adopted.
ATTEST: UNITED PARCEL SERVICE
OF AMERICA, INC.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxx
--------------------------------- --------------------------------
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxx
Secretary Chairman
