Employee Benefits/Employee Ownership Plan

Quickway ESOP began on June 30, 2005 when 100% of the outstanding stock of Quickway Distribution Services, Inc. (QDS) was acquired by the QDS Employee Stock Ownership Plan and Trust (ESOP). The ESOP borrowed money to purchase the outstanding stock of QDS, which puts the future of QDS in our hands. When QDS does well, each eligible employee of QDS will benefit.

Frequently Asked Questions about Quickway’s ESOP

What is an ESOP?
ESOP stands for “Employee Stock Ownership Plan”. It is a type of retirement plan that is regulated by the federal government. It is a way for employees to share in beneficial company ownership. It rewards long-term employees who have helped make the Company successful.

How are ESOPs Used?
There are over 11,500 ESOPs in the U.S. covering more than 8,000,000 employees. There are over 10,500 ESOPs in privately held companies covering approximately 4,700,000 employees. Approximately 3,000 companies are ESOP majority owned. Approximately 1,500 companies are 100% ESOP owned. Over two-thirds of ESOPs are used as part of an ownership transition plan. The ESOP is an alternative to selling to an outsider. The government encourages ESOPs and regulates them in a manner similar to other employee benefits plans.

How Do I Get Stock in my ESOP Account?
Putting stock or cash in your account is called an “allocation”. Participants will receive an annual allocation.

What Factors Determine the Amount of Stock Allocated to My Account?
The total ESOP loan payments each year, the amount of your salary that year, and the amount of total payroll of all ESOP participants that year are factors that determine the amount of your stock allocation.

How Do I Know How Much the Stock is Worth?
QDS shares are not “publicly traded”. The value must be determined each year by an independent appraiser (not otherwise connected with the company). The appraisers consider factors that are beyond our control like the economy and the industry. The appraisers also consider factors that can be affected like safety, customer service and profitability.

What Affects the Value of Your ESOP Account?
Your total ESOP account value will depend on the number of shares you have in your account, the amount of stock that is paid for each year, your pay, how long you stay, and the value of the Company each year. In the future, the value of QDS stock could go up or down.

What is the Future Share Value?
The value of QDS shares is not guaranteed. As the loan is repaid, if all else were equal, you would expect the value of QDS stock to increase. The future value of QDS stock is directly tied to the profitability of the Company as well as the Company’s debts. It is everyone’s job to continue to make QDS successful. This should result in increased stock value.

How Much of my Account am I Entitled to?
This is determined by the Vesting Rules and Vesting Schedule. When less than 5 years of service have been completed, 0% of the account is vested. After 5 years of service, 100% of the account is vested. Vesting credit in the ESOP begins on the later of your hire date or effective date of the plan (January 1, 2004). You must work 1,000 hours in a Plan Year to get a Year of Service toward Vesting. A Plan Year is from January 1 to December 31. If you die, reach normal retirement age (65) or become disabled, you automatically will be fully vested.

Distribution (When Can I Get Money)?
Remember an ESOP is intended by the government to be a retirement plan. To get the value in your ESOP account you must either retire (65), die, become fully disable, or leave the Company for any other reason (if vested). In the first case (retire (65), die or become fully disabled), you will receive your benefits in a lump sum by the end of the year after the year in which you leave.

What if I Leave Before I’m 65?
You will not begin to be paid your vested account value until the later of the following: The ESOP loan is fully repaid (except in the case of normal retirement, death, or disability) or the sixth plan year following the plan year in which you separated from service is reached. Once eligible to receive distributions, you will receive payments over a five-year period based on the stock value at year-end.

Who Buys Your Stock?
Either the Company or the ESOP will buy your stock at the most recent valuation of the stock in the year you are being paid. You will receive cash, not stock, for the value of your account. You may not take a distribution of stock once you leave QDS.

What if I Leave Before I am Vested?
You will not be entitled to the value of any of your stock. You will “forfeit” your stock. Your forfeited shares will be redistributed to remaining ESOP participants (after 5 years). This rewards people who have stayed long enough to contribute to QDS success. We want to encourage everyone to stay. Remember, this is a retirement plan.

Can I Spend Any Money that I Get?
If you receive payment of your ESOP stock once you leave the Company (and generally before you reach age 59½), the money will be taxed as income and the government will take an additional 10% as a penalty. If you don’t put ESOP account payments directly into another retirement account, you could lose nearly 50% of it in taxes. The point is that the government intends ESOPs to be retirement accounts. To protect your retirement you will need to put any cash from you account into another qualified retirement plan (e.g. an IRA).

What Will the ESOP Cost You?
The ESOP is paid for by QDS so it will cost you nothing. This is a company retirement benefit. Employees are not permitted and cannot be required to contribute directly to the ESOP. Employees are not permitted to borrow against their ESOP account balances. The ESOP does not effect the monies currently in your 401(k) plan.

What Information Can I Expect in the Future?
You will receive a Summary Plan Description (SPD), an ESOP Summary Annual Report (SAR), Annual Individual ESOP Account Statements (prepared by an outside party), and access to full ESOP Plan Documents.

What Can I do as an Effective Employee Owner?
You can provide the highest quality customer service possible, think of how we could all work “safer” and “smarter”, watch costs, maximize equipment utilization, work cooperatively with each other, and keep in mind that the Company is more important than the terminal. Be committed to our success (no helmets).

What are our Future Goals?
To be known for “world-class” customer service. To value our employees. To provide a safe place to work. To provide our employees with work and retirement security. To build to last.