United Parcel Service (UPS)

AMOUNT AND PAYMENT OF BENEFITS

Commencement at Normal Retirement Age. A Grandfathered Motor Cargo Participant who has attained Normal Retirement Age may elect to commence payment of his Accrued Benefit even if he has not terminated employment with all Employer Companies and Related Employers. If a Grandfathered Motor Cargo Participant continues to work past the date benefits commence under this Section, the benefit shall be adjusted annually on or before April 1 following the date benefit commenced to reflect the additional benefits, if any, accrued in the immediately preceding Plan Year.

Optional Lump Sum Payment. A Motor Cargo Participant who terminated employment with Motor Cargo on or after March 28, 2005 but prior to January 1, 2006 may elect to receive his Accrued Benefit in a cash lump sum as soon as practicable after his or termination of employment if the Present Value of such benefit is at least $1,000 but does not exceed $5,000. If a Motor Cargo Participant’s (other than a Grandfathered Motor Cargo Participant’s) benefit is cashed out pursuant to this Section 5.4(e) or Section 6.1, service associated with such cash-out shall be disregarded for purposes of the Plan; provided, however, that such service shall be counted in determining the Employee’s Year of Vesting Service and years of Benefit Service if, upon reemployment, the distribution is repaid by the Motor Cargo Employee to the Trustees in accordance with Section 5.4(f) of the main text of the Plan.

Disability Retirement Benefit. The Disability Retirement Benefit described in this Appendix shall apply only to a UPS Freight/Motor Cargo Participant who is determined to be Totally Disabled (as defined in this Appendix) as of any date prior to July 1, 2006. The Disability Retirement Benefit described in Section 5.5 of the main text of the Plan shall apply to any Motor Cargo Participant who is determined to be Totally Disabled (as defined in Article I of the main text of the Plan) as of any date on or after July 1, 2006.

Each Motor Cargo Participant who has completed at least 5 Years of Service and has a Total Disability before age 55 shall be entitled to an immediate Disability Retirement Benefit equal to 55% of the UPS Freight/Motor Cargo Participant’s vested Accrued Benefit commencing on the first day of the month coincident with or next following his Total Disability and ending on the date he ceases to be a Disabled Participant. The Disability Retirement Benefit shall be paid in a Single Life Only.

A Disabled Participant shall cease to be such if and when:

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The Trustee may require a Motor Cargo Participant to submit evidence of his continued eligibility for a Disability Retirement Benefit on a semi-annual basis. In the event a Disabled Participant refuses or fails to submit such evidence of continued disability, the Trustees will discontinue the disability benefit payments until the UPS Freight/Motor Cargo Participant does submit satisfactory evidence of his continued disability. No Disability Retirement Benefit shall be paid under this Appendix pending a determination of Total Disability by the Social Security Administration.

Minimum Benefit. Notwithstanding any other provision in this Appendix or the main text of the Plan, the Accrued Benefit of a Grandfathered Motor Cargo Participant who completed at least one “hour of service” (as defined in § 1.27 of the Motor Cargo Plan) on or after January 1, 1994 and prior to January 1, 2006, but who terminates employment before he is vested in accordance with Article VI, will be $25. If a Motor Cargo Participant is eligible for a minimum benefit under this Appendix, such benefit shall be paid from the Plan as soon as administratively possible.

If the minimum benefit is not claimed within 6 months after the Grandfathered Motor Cargo Participant is notified of the minimum benefit by either certified or registered mail at his last known address, the minimum benefit will be forfeited.

AMOUNT AND PAYMENT OF BENEFITS

AMOUNT AND PAYMENT OF BENEFITS

Commencement at Normal Retirement Age. A Grandfathered Motor Cargo Participant who has attained Normal Retirement Age may elect to commence payment of his Accrued Benefit even if he has not terminated employment with all Employer Companies and Related Employers. If a Grandfathered Motor Cargo Participant continues to work past the date benefits commence under this Section, the benefit shall be adjusted annually on or before April 1 following the date benefit commenced to reflect the additional benefits, if any, accrued in the immediately preceding Plan Year.

Optional Lump Sum Payment. A Motor Cargo Participant who terminated employment with Motor Cargo on or after March 28, 2005 but prior to January 1, 2006 may elect to receive his Accrued Benefit in a cash lump sum as soon as practicable after his or termination of employment if the Present Value of such benefit is at least $1,000 but does not exceed $5,000. If a Motor Cargo Participant’s (other than a Grandfathered Motor Cargo Participant’s) benefit is cashed out pursuant to this Section 5.4(e) or Section 6.1, service associated with such cash-out shall be disregarded for purposes of the Plan; provided, however, that such service shall be counted in determining the Employee’s Year of Vesting Service and years of Benefit Service if, upon reemployment, the distribution is repaid by the Motor Cargo Employee to the Trustees in accordance with Section 5.4(f) of the main text of the Plan.

Disability Retirement Benefit. The Disability Retirement Benefit described in this Appendix shall apply only to a UPS Freight/Motor Cargo Participant who is determined to be Totally Disabled (as defined in this Appendix) as of any date prior to July 1, 2006. The Disability Retirement Benefit described in Section 5.5 of the main text of the Plan shall apply to any Motor Cargo Participant who is determined to be Totally Disabled (as defined in Article I of the main text of the Plan) as of any date on or after July 1, 2006.

Each Motor Cargo Participant who has completed at least 5 Years of Service and has a Total Disability before age 55 shall be entitled to an immediate Disability Retirement Benefit equal to 55% of the UPS Freight/Motor Cargo Participant’s vested Accrued Benefit commencing on the first day of the month coincident with or next following his Total Disability and ending on the date he ceases to be a Disabled Participant. The Disability Retirement Benefit shall be paid in a Single Life Only.

A Disabled Participant shall cease to be such if and when:

(i) he reaches Normal Retirement Age;

(ii) he ceases to suffer from Total Disability; or

(iii) he dies.

The Trustee may require a Motor Cargo Participant to submit evidence of his continued eligibility for a Disability Retirement Benefit on a semi-annual basis. In the event a Disabled

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Participant refuses or fails to submit such evidence of continued disability, the Trustees will discontinue the disability benefit payments until the UPS Freight/Motor Cargo Participant does submit satisfactory evidence of his continued disability. No Disability Retirement Benefit shall be paid under this Appendix pending a determination of Total Disability by the Social Security Administration.

Minimum Benefit. Notwithstanding any other provision in this Appendix or the main text of the Plan, the Accrued Benefit of a Grandfathered Motor Cargo Participant who completed at least one “hour of service” (as defined in § 1.27 of the Motor Cargo Plan) on or after January 1, 1994 and prior to January 1, 2006, but who terminates employment before he is vested in accordance with Article VI, will be $25. If a Motor Cargo Participant is eligible for a minimum benefit under this Appendix, such benefit shall be paid from the Plan as soon as administratively possible.

If the minimum benefit is not claimed within 6 months after the Grandfathered Motor Cargo Participant is notified of the minimum benefit by either certified or registered mail at his last known address, the minimum benefit will be forfeited.

AMOUNT AND PAYMENT OF BENEFITS

Section 5.1. Benefits Limited by Plan Provisions in Effect. The benefit to which a Motor Cargo Participant is entitled, and the form in which such benefit will be paid, shall be determined by the provisions of this Appendix K. This Article V shall apply to Motor Cargo Participants in lieu of Sections 5.1 (Benefits Limited by Plan Provisions in Effect; Retiree Benefit Increases), 5.2 (Benefit Amounts), 5.2A (Formulas), 5.6 (Benefit Payments Under Other Plans and Programs), 5.7(a) (Minimum Benefit for Participation as of the Effective Date), 5.11 (Suspension of Benefits) and 5.14 (UPS Aviation Technologies, Inc. Employees) of the main text of the Plan while he or she is a Motor Cargo Employee. Notwithstanding the forgoing, the last two sentences of 5.3(g) of the main text of the Plan shall not apply to a Grandfathered Motor Cargo Participant. Section 5.4 of the main text of the Plan (Disability Benefit) shall not apply to any Motor Cargo Participant who is determined to be Totally Disabled as of any date before July 1, 2006, but shall apply to any Motor Cargo Participant who is determined to be Totally Disabled as of any date on or after July 1, 2006. Any benefit paid under this Appendix K shall be subject to Sections 5.7(b) (Maximum Benefits), 5.8 (Limitations Regarding time of Payment of Benefits), 5.9 (Designation of Beneficiary), 5.10 (Final Payment to Participant or Beneficiary), 5.12 (Withholding of Income Tax) and 5.13 (Direct Rollover) of the main text of the Plan.

Section 5.2. Benefit Amounts.

(a) Normal Retirement Benefit. A Motor Cargo Participant who has a termination of employment with all Employer Companies and Related Employers on his or her Normal Retirement Date, shall be entitled to receive his or her retirement benefit, as determined in paragraphs (1) and (2):

(1) Benefit Formula. Subject to paragraph (2), the annual benefit of a Motor Cargo Participant shall equal the sum of (i) and (ii), when (i) and (ii) equal:

(i) the Motor Cargo Participant’s annual benefit accrued under the Motor Cargo Plan as of December 31, 2005;

(ii) for each calendar year beginning after December 31, 2005, an annual benefit determined by multiplying the Motor Cargo Participant’s years of Benefit Service completed after December 31, 2005 by $240.00.

(2) In no event shall the retirement benefit of a Motor Cargo Participant who does not complete an Hour of Service after December 31, 2005 be based on more than 25 consecutive “years of service” as defined in the Motor Cargo Plan. Additionally, the benefit of a Motor Cargo Participant who completes an Hour of Service on or after January 1, 2006, shall not be based on more than 30 years of Benefit Service.

(3) Commencement at Normal Retirement Age. A Grandfathered Motor Cargo Participant who has attained Normal Retirement Age may elect to commence

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payment of his or her Accrued Benefit even if he or she has not terminated employment with all Employer Companies and Related Employers.

(b) Early Retirement Benefit.

(1) Normal Commencement. A Motor Cargo Participant who terminates employment with all Employer Companies and Related Employers on or after his or her earliest Early Retirement Date but before his or her Normal Retirement Date shall be entitled to begin receiving his or her Accrued Benefit, determined as of such employment termination, as of his or her Normal Retirement Date.

(2) Early Commencement. A Motor Cargo Participant who is eligible to receive his or her Accrued Benefit as described in Section 5.2(b)(1) may elect to begin receiving such benefit upon any Early Retirement Date, provided that the Accrued Benefit is reduced for early commencement by .375% for each month by which his or her Early Retirement Date precedes his or her Normal Retirement Date.

(c) Deferred Vested Benefit.

(1) Normal Commencement. A Motor Cargo Participant who terminates employment with all Employer Companies and Related Employers after he or she is fully vested will be entitled to begin receiving his or her Accrued Benefit upon attaining his or her Normal Retirement Date.

(2) Early Commencement. A Motor Cargo Participant who is eligible to receive his or her Motor Cargo Early Retirement Benefit as described in Section 5.2(b) may commence such benefit as of the first day of any calendar month on or after he or she terminates employment with all Employer Companies and Related Employers and reaches age 55 but before his or her Normal Retirement Date, which benefit shall be determined as described in Section 5.2(b)(2).

(d) Postponed Retirement Benefit. A Motor Cargo Participant who terminates employment with all Employer Companies and Related Employers after his or her Normal Retirement Date shall be entitled to a benefit commencing as of his or her Postponed Retirement Date that is the Actuarial Equivalent of the Motor Cargo Participant’s Accrued Benefit payable as of the later of Normal Retirement Date or the last day of the prior Plan Year. A Motor Cargo Participant’s Accrued Benefit as of the end of each Plan Year following his or her Normal Retirement Date is the greater of: (1) his or her Accrued Benefit taking into account benefits accrued after his or her Normal Retirement Date or (2) the Accrued Benefit, determined as of the later of Normal Retirement Date or the end of the prior Plan Year, actuarially adjusted for late retirement.

Section 5.3. Form of Benefit Payment.

(a) Optional Forms. The Accrued Benefit payable to a Motor Cargo Participant will be paid in accordance with Section 5.3 of the main text of the Plan. In addition to the optional forms of benefit available under Section 5.3(f) of the main text of the Plan, a Motor Cargo Participant who was a participant in the Motor Cargo Plan on December 31, 2005 may elect, as

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an optional form of benefit, a five year certain and life annuity for his or her entire Accrued Benefit. For purposes of applying Section 5.3 of the main text of the Plan, the terms Actuarial Equivalent and Applicable Interest Rate shall have the meaning assigned to such terms in this Appendix K.

(b) Lump Sum Payment A Motor Cargo Participant who terminated employment with Motor Cargo on or after March 28, 2005 but prior to January 1, 2006 may elect to receive his or her Accrued Benefit payable under Section 5.3 in a cash lump sum as soon as practicable after his or termination of employment if the Present Value of such benefit is at least $1,000 but does not exceed $5,000. If a Motor Cargo Participant’s (other than a Grandfathered Motor Cargo Participant’s) benefit is cashed out pursuant to this Section 5.3(b) or Section 6.1, service associated with such cash-out shall be disregarded for purposes of the Plan; provided, however, that such service shall be counted in determining the Employee’s Year of Vesting Service and years of Benefit Service if, upon reemployment, the distribution is repaid by the Motor Cargo Employee to the Trustees, together with interest at 5% or such other rate as may in the future be established or otherwise made effective by regulation or administration action implementing Sections 204(c)(2)(C) and 204(e) or ERISA.

Section 5.4. Disability Benefit.

(a) Before July 1, 2006. Each Motor Cargo Participant who has completed at least 5 years of Vesting Service and has a Total Disability before age 55 and before July 1, 2006 shall be entitled to an immediate disability benefit equal to 55% of the Motor Cargo Participant’s vested Accrued Benefit commencing on the first day of the month coincident with or next following his or her Total Disability and ending on the date he or she ceases to be a Disabled Participant. The disability benefit provided by this Section 5.4 shall be paid in the Normal Form or in any form elected by the Participant under Section 5.3.

A Disabled Participant shall cease to be such if and when:

(i) he or she reaches age 55;

(ii) he or she ceases to suffer from Total Disability; or

(iii) he or she dies.

When a Disabled Participant reaches age 55, the provisions of Section 5.2(b) shall apply. Notwithstanding the previous sentence, if the disability benefit payable under this Section 5.4 is more valuable than the Motor Cargo Early Retirement Benefit, the disability benefit shall continue to be paid to the Motor Cargo Participant upon attaining his or her earliest Early Retirement Date in lieu of the Motor Cargo Early Retirement Benefit.

The Trustee may require a Motor Cargo Participant to submit evidence of his or her continued eligibility for a disability benefit on a semi-annual basis. In the event a disabled Motor Cargo Participant refuses or fails to submit such evidence of continued disability, the Trustees will discontinue the disability benefit payments until the Motor Cargo Participant does submit satisfactory evidence of his or her continued disability. No disability benefit shall be paid

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under this Section 5.4 pending a determination of Total Disability by the Social Security Administration.

(b) After June 30, 2006. Each Motor Cargo Participant who is determined to be Totally Disabled as of any date on or after July 1, 2006 shall be eligible to receive the disability retirement benefit described in Section 5.4 of the main text of the Plan.

Section 5.5 Qualified Joint and Survivor (Husband and Wife) Preretirement Survivor Benefit. Each vested Motor Cargo Participant shall have the Qualified Joint and Survivor (Husband and Wife) Benefit as described in Section 5.3 of the main text of the Plan effective for the benefit of his or her spouse so that if such Participant dies prior to his or her Annuity Starting Date his or her spouse will be entitled to receive a Preretirement Survivor Benefit as described in Section 5.5 of the main text of the Plan based on his or her Accrued Benefit described in this Appendix K and determined without regard to Section 5.5(c) of the main text of the Plan.

Section 5.6 Benefit Payments Under Other Plans and Programs. The benefits otherwise provided in this Appendix K and accrued after December 31, 2005 shall be reduced in the case of any Motor Cargo Participant, Disabled Participant or beneficiary, by the amount of any benefits payable to such Motor Cargo Participant, Disabled Participant, or beneficiary under any other non-government pension or retirement plan or program to which contributions have been made by an Employer Company on behalf of such person or under which service with an Employer Company is counted in calculating benefits, except the UPS Savings Plan and any other cash or deferred plan described in Section 401(k) of the Code or the UPS Qualified Stock Ownership Plan, to the extent that such benefits payable under such other plan or program are based on a period of time included in the calculation of years of Benefit Service, for purposes of this Appendix K and are not attributable to contributions made to such other plan or program by the Motor Cargo Participant or Disabled Participant.

If a reduction in benefits is also called for in another plan or plans sponsored and maintained by the Employer Company by reason of the benefits payable to a Motor Cargo Participant under this Plan, the reduction in benefits shall be made only in the benefits payable under the plan in which the Motor Cargo Participant last participated, and if he or she participated in more than one such other plan, then the reduction shall be made in the reverse order of participation with no reduction in the benefits payable under the plan in which the Motor Cargo Participant or Disabled Participant first participated.

If the Motor Cargo Participant receives one form of benefit under this Plan and another form of benefit under any such other plan, any reduction hereunder shall be based on actuarially equivalent forms of benefit.