1. 18 th Ohio Employee Ownership Conference Ohio Employee Ownership Center Kent State University April 16, 2004

2. ESOPs 101 ABC’s 0f ESOPs for Employee Owners

3. Employee Stock Ownership Plans ESOPS

4. What Is An ESOP? A Pension Plan Can Borrow Money Invests in Company Stock Stock held in trust

5. The ESOP Trust Suspense Account Individual Accounts

6. Why Set Up An ESOP? Flexibility Create Equity Linked to Corporate Performance Tax Advantages

7. Major Tax Incentives for Employee Ownership Contribution/Principal Deduction for the Company Tax-Sheltered Accounts for the Employees

8. Common Questions As an ESOP shareholder, am I personally liable for the company’s debts? Who gets the profits in the company? Can I vote my stock? What happens if the company goes under? Can I sell my stock? What if I leave the company before retirement?

9. Employee Owned Companies in the United States 1974---ESOP legislation passed by U.S. Congress 1975---1,600 employee-owned companies employing 250,000 2003---11,000 employee-owned companies employing 8.8 million

10. Employee Owned Companies in Ohio Number of employee-owned companies in Ohio 425 Number of Jobs 325,000

11. Employee Ownership An idea that works for Ohio To create and retain jobs To raise and anchor capital in local communities To improve corporate performance

12. About the OEOC Since our founding in 1987, we have Assisted some 438 firms and plants employing 83,000 people explore whether employee ownership is for them Of these, 64 firms employing 13,600 have implemented partial or complete employee ownership

13. Key Factors to Consider in a Buyout Questions that help to identify red flags Is the current owner willing to sell? Do the employees and/or their union want to buy? Is competent management available? Is there enough time for a buyout? Is the plant competitive? Will labor-management relations hinder success?

14. Steps in Doing a Buyout Education about the buyout Establish a buyout association Preliminary feasibility assessment Business plan Negotiate sales agreement with seller Arrange financing Close deal

15. 18 th Ohio Employee Ownership Conference Ohio Employee Ownership Center Kent State University April 16, 2004