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Employee Stock Ownership Plan
ESOP II
2
Agenda
1. Ownership History
2. Why ESOP II?
3. ESOP II Details
4. ESOP Account Rules - Changes /
Differences
5. Corporate Governance
6. Looking to the Future
3
Urban Engineers, Inc.Stock Ownership
4
Urban Engineers, Inc.Stock Ownership
ESOP I
5
Urban Engineers, Inc.Stock Ownership
100%
ESOP II
6
Urban Engineers, Inc.Stock Ownership
ESOP I ESOP II TOTAL
ESOT Ownership 42% 58% 100%
ESOT Shares Purchased 57,500 72,031 129,531
(ESOT = Employee Stock Ownership Trust)
(ESOP = Employee Stock Ownership Plan)
Why ESOP II?
� Tax advantages to both:
– Selling Shareholders &
– Urban
� Retain culture of Urban Engineers
– Reinforces commitment to company
� Provides a Secondary Retirement vehicle to our employees
– Allows NEW shares to be allocated
7
ESOP II - Details
� Transaction was completed December 30, 2013
� Transaction Debt incurred
� Bank Loan (External) is for five (5) yrs (like a mortgage)
� ESOP Acquisition Loan (Internal) is for eight (8) yrs
� Notes issued to other selling shareholders
� ESOP Trust (owner of shares)
� External ESOP Trustee engaged
� Urban Engineers, Inc.’s Board of Directors� Two (2) additional EXTERNAL Directors added
� by June 30, 2014
8
ESOP Acquired Shares ReleaseESOP I
9
57,500
shares
ESOP Acquired Shares ReleaseESOP I & ESOP II (planned)
10
72,031
shares
57,500
shares
ESOP Acquired Shares ReleaseESOP I & ESOP II (estimated)
11
72,031 shares57,500 shares
26,900
shares
Changes – Differences(In the Plan)
N O N E(to speak of)
12
ESOP Account Rules
� Eligibility / Allocations / Vesting / Distributions
All the same Rules
� Statement format and content MAY change – To account for the two (2) separate Blocks of Shares
– Required to maintain separate records for each block of stock purchased by the Trust
13
Eligibility
Still the same
� Be 18 years or older
� Complete 1,000 hours during the plan yearThat is all there is to it……
� When do you Enter?
– Depends……
14
ESOP Eligibility Timeline:Hired Early in the Year
1/1/14 1/1/15
4/15/13:Hire Date
Enter ESOP on January 1, 2013
~10/15/13:Completes
1,000+ Hours,Age 18+
1/1/13
15
ESOP Eligibility Timeline:Hired Late in the Year
1/1/14 1/1/15
8/15/13:Hire Date
Enter ESOP onJanuary 1, 2014
~6/30/14:Completes
1,000+ Hours,Age 18+
1/1/13
16
Allocations
Still the same
� Need to be eligible
� Then receive allocation for any Plan Year in which:
– Work 1,000 hours AND
– Either: you are employed on Sept 1 or Dec 31 • Or: in the year of your retirement, death, or disability
� How many shares depends on:• Your earnings in proportion to gross earnings &
• The number of shares being allocated
17
Vesting
Again - - Still the same ******� Vesting on ESOP I shares transfers to
the new ESOP II shares� You do not start at zero for ESOP II
� Shares become vested based on years of service
− 1 year of service is 1,000 hrs worked in a plan year
18
Vesting Schedule:6-Year “Scaled”
Years of Service
Vesting %
Less than 2
2
3
4
56 or more
0%
20%
40%
60%
80%100%
19
Distributions
� You receive your benefit only after you are
no longer employed by Urban
– One set of rules applies for retirement, death or disability
– Second set of rules applies for resignation or termination
� Separate presentation for Distributions
NOTE: Only your vested amount is available for distribution
20
Disclosure Requirements
Still the Same� Annually
� Participant Statement
� Summary Annual Report (SAR)
� ESOP Plan Document− Available for review by any Participant
� Summary Plan Description (SPD)− Brief description of the ESOP Plan Document
− Provided to all current participants and to new participants after they are eligible
− On file and available on K@U
21
Selecting a Beneficiary
� Fill out a beneficiary form and identify who is to receive your ESOP benefit in the event of your death – MUST SIGN Form
� Spouse is beneficiary unless s/he consents to someone else on the beneficiary form (in writing)
– Form is available with new hire packet or on K@U and MUST be returned to HR
22
Corporate Governance
No Change here either
ROLES have NOT changed - just the parties responsible for them
23
Corporate GovernanceBefore
24
Senior Leaders
Board of Directors
elect
hire and oversee
Shareholders
Employees
CEO: Ed D’Alba
hire and oversee
ESOPParticipants
when meeteligibility
requirements
Ed &Joe
MinorityShareholders
appoint and oversee
ESOT(Trustee) > 51%
Corporate GovernanceNow
� Shareholder(s) of Urban Engineers, Inc.� Principals, Associates are replaced by the 100% owner - the
ESOT
� Board of Directors – Ed & Joe are still directors but additional directors will be added
� Urban Management – Management team still in control of the corporate decisions (day to day operations)
25
Where does the ESOP fit?
26
Senior Leaders
Board of Directors
elect
hire and oversee
ESOT (Shareholder)
Employees
CEO: Ed D’Alba
hire and oversee
ESOPParticipants
when meeteligibility
requirements
ESOPTrustee
select
appoint and oversee
100%
Where does the ESOP fit?
27
Senior Leaders
Board of Directors
elect
hire and oversee
Shareholder
Employees
CEO: Ed D’Alba
hire and overseeESOPParticipants
when meeteligibility
requirements
ESOPTrustee
select
appoint and overseeDay-to-Day:constantly
improve the
business
ESOP
CommunicationCommittee
advise
select
Bottom Line
� ESOT owns 100% of Urban Engineers, Inc.
– All profits/equity goes to the Trust
– ESOP participants receive the entire profit
� The ESOP creates an opportunity to share wealth YOU help create – even more than before
� The data is on your side: it can be very successful
� No guarantees, success depends on company’s ability to thrive
28
The Challenge Ahead
� Opportunity to build and MAINTAIN wealth
� How can YOU help?
– Become a valuable asset to company performance
– Utilize all resources Urban provides
– Motivate and help others to succeed
– Maintain a vast perspective about problem solving
29
End of Presentation
QUESTIONS
?
30