Employee Stock Ownership Plan

ESOP II

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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

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Urban Engineers, Inc.Stock Ownership

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Urban Engineers, Inc.Stock Ownership

ESOP I

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Urban Engineers, Inc.Stock Ownership

100%

ESOP II

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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

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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

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ESOP Acquired Shares ReleaseESOP I

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57,500

shares

ESOP Acquired Shares ReleaseESOP I & ESOP II (planned)

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72,031

shares

57,500

shares

ESOP Acquired Shares ReleaseESOP I & ESOP II (estimated)

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72,031 shares57,500 shares

26,900

shares

Changes – Differences(In the Plan)

N O N E(to speak of)

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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

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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……

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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

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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

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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

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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

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Vesting Schedule:6-Year “Scaled”

Years of Service

Vesting %

Less than 2

2

3

4

56 or more

0%

20%

40%

60%

80%100%

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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

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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

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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

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Corporate Governance

No Change here either

ROLES have NOT changed - just the parties responsible for them

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Corporate GovernanceBefore

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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)

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Where does the ESOP fit?

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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?

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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

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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

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End of Presentation

QUESTIONS

?

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