EXHIBIT 10.1
                                     Form of
                           United Parcel Service, Inc.
                           Incentive Compensation Plan
                           Long-Term Incentive Awards


                    Nonqualified Stock Option Award Agreement
                               (Not Transferable)

THIS AGREEMENT evidences the grant by UNITED PARCEL SERVICE, INC., a Delaware
corporation (the "Company") in accordance with the Company's Incentive
Compensation Plan (the "Plan"), of a nonqualified stock option ("Option") to the
employee named below ("Employee"). This Option entitles Employee to purchase
from the Company the number of shares of the Company's class A Common Stock
("Shares") set forth below upon satisfaction of the vesting requirements and
payment of the exercise price per Share ("Option Price"), in each case, as set
forth below. This Option is granted effective as of the date set forth below
("Grant Date ") and is subject to all of the terms and conditions set forth
below.

                                   ----------
      Employee:                                     ((Employee))
      Number of Shares:                             ((Number))
      Option Price:                                 ((Option))
      Grant Date:                                   [insert date]
      Earliest Exercise Date:                       [five years from grant date]
      Latest Exercise Date:                         [ten years from grant date]

ATTEST:                                     UNITED PARCEL SERVICE, INC.



- -----------------------------               ------------------------------------
         Secretary                          Chairman and Chief Executive Officer

                              Terms and Conditions

1.   Plan. This Option is subject to all of the terms and conditions set forth
     herein and in the Plan, as the same may be amended from time to time, which
     is herein incorporated by reference; provided, however, that if a term of
     the Plan would cause this Option to be subject to Section 409A of the Code,
     such term is not incorporated by reference. Terms not defined in this
     agreement are defined in the Plan. If any term or condition in this Option
     is inconsistent with the Plan, the Plan shall control. By accepting this
     Option, the Employee unconditionally agrees to be bound by the applicable
     terms, conditions and provisions of the Plan and this Award. The grant of
     an Option in any year does not entitle an individual to an Option in any
     subsequent year.

2.   Vesting.

     a.  General Rule. The Option will vest and become exercisable on the
         Earliest Exercise Date; provided that you are employed by the Company
         or a Subsidiary on that date.

     b.  Death, Disability or Retirement. If your employment terminates by
         reason of your death, disability (as defined in the Plan) or retirement
         (as defined in the Plan) before the Earliest Exercise Date, the Option
         will immediately vest.

     c.  Termination for Reasons Other than Death, Disability or Retirement. You
         will forfeit any right to exercise any outstanding non-vested Option if
         you terminate employment before the Earliest Exercise Date other than
         by reason of your death, disability or retirement. Your vested Option
         (if any) must be exercised within 90 calendar days of termination and
         will expire at 4:00 p.m. New York Time on the 90th calendar day
         following the date your employment terminates. The forfeited Option
         will not be restored even if you return to employment with the Company
         or a Subsidiary before the Earliest Exercise Date.

3.   Exercise. You may exercise your Option at any time (subject to the UPS
     Insider Trading Guidelines) between the Earliest Exercise Date and the
     Latest Exercise Date (unless your Option terminates earlier as a result of
     termination of employment). You may partially exercise your Option if the
     number of Shares you purchase is at least 500 or, if less, all the Shares
     remaining unexercised under the Option. Payment may be made in cash or in
     Shares that you own (the Shares must have been held by you for over six
     months and not encumbered and, if acquired by exercise of an ISO, must have
     been held by you for over one year), or a combination of cash and Shares.
     We will withhold shares to pay the taxes due upon the exercise of your
     Option.

4.   Expiration. This Option will expire immediately at 4:00 p.m. New York Time
     on the Latest Exercise Date.

5.   Nontransferable. This Option is not transferable except by will or the laws
     of descent and distribution.