ESOP - Duffey Southeast

ESOP OWNER’S MANUAL

Hello, owner! Thanks to Duffey Southeast, Inc.’s Employee Stock Ownership Program (ESOP), we are all owners of the company. Yes, we own it all. That includes you. With ownership comes responsibility. It’s up to each of us to understand how an ESOP benefits us - and how to keep the company healthy and strong. Your ESOP Owner’s Manual is here to do just that. 1945 H.E. Hennigh 1957 H.E. Hennigh formed 2001 H.E. H was founded as a a corporation aquired by proprietorship Corporatio owned sub

First, a little history. In 1945, H.E. Hennigh founded a proprietorship under his name. Twelve years later in 1957, H.E. Hennigh formed a corporation and operation this way for over 40 years. In 2001, H.E. Hennigh was acquired by a third party, Parsons Corporation. A year later, Bob Talley, president of Duffey Construction Company, Inc., founded Duffey Southeast, Inc. as a sister company. The company was formed to allow the continuation of services to our clients developed over three generations. In 2020, Dan Baker and Darrin Kines started looking at the future of the company and the executive team unanimously decided selling to a third party again wasn’t the right move for Duffey Southeast, Inc. They decided there was no one better to own the company than the people that love Duffey Southeast, Inc. the most, us. Conversations with industry peers were set in motion to further understand converting the company to an ESOP. Throughout the process, an ESOP Trust was established and those company shares went into it to be distributed to employee owners over time. In February of 2021, it was announced to all employees that Duffey Southeast, Inc. had converted to an Employee Stock Ownership Program as a way of ensuring a healthy future for the company. Hennigh was 2002 Duffey Southeast, 2020 Duffey Southeast y Parsons Inc. was founded Inc. began operations on as a wholly under an ESOP structure bsidiary

So, what is ESOP stands for Employee Stock O employee retirement plan, in whi to employees. However, an ESOP employer retirement plans. The main difference: when your a company, you benefit directly fro increase. Standard retirement pla important to note that the same i What employee ownership means Not all ESOPs think a Only employees of Duffey Southeast, Inc. Some ESOP Companie can own shares of the company. Shares ownership as a financi that have not yet been distributed are held it as an awesome way in a trust on behalf of employee owners have a positive impac like yourself. Your role as an owner is pretty value of our company important. While ownership is primarily a skin in the game. Whic financial benefit, just as with other stock motivation. It inspires in ownership programs, an ESOP is different. a vibrant work environ That’s because you affect the share value team of individuals wh by the positive impact of your work. When looking for ways to ma the company does well, you do well. better through smarte teamwork means stron

an ESOP? Ownership Plan. It’s a form of an ich company shares are distributed P is very different from other types of actions positively affect the value of the om it because the value of your shares ans may not distribute gain as fairly. It’s is true for company losses, too. alike How you affect the value of Duffey Southeast, Inc. es simply see stock ial benefit. But we see » You help generate new business and y that everyone can win new clients ct on the health and y. We all have some » You spot new revenue opportunities ch can be a powerful with existing clients ntense collaboration, nment, and a big » You help improve our processes in ho are all consistently order to reduce expenses ake the company er process. Better » You find ways to save money and nger results. you’re a good financial steward

How the Duffey Southeast, Inc. ESOP Works At Duffey Southeast, Inc., all our people play an extremely important role. Your hardwork, your optimism, your dedication. You are the reason our clients keep coming back to us. The reason we build beyond expectations. As employee owners, we all have rights and responsibilities.

Roles, Responsibilities, and Benefits of Ownership Ownership versus management We’re all owners, but we aren’t all part of the Executive Leadership team. Management is a function, ownership is a financial stake. All owners contribute to the successes of the company but only the management team faces the responsibility of setting the vision for the future and decides what to pursue to achieve it. Control versus participation Stock ownership in an ESOP is meaningful because you participate in making the stock more valuable. Unlike shareholders of Coca-Cola or Apple who have no active participation, everything you do in your role can directly impact the value of Duffey Southeast, Inc. Benefits of the long term Retirement may be a long way off or right around the corner for you but we will all benefit from the ESOP. Depending on your age, you may not see the benefits immediately. However, the longer you stay with the company, the more shares you’ll accumulate and the better prepared you are for your future. Even better, your funds grow without any financial contribution from you.

Board & Executive Team’s R Board of Directors Purpose The primary role is to provide insight, advice, and support to the executive team. » Oversee the Executive Team and company performance » Conduct useful, two-way discussions about the key decisions facing the company » Seek out sufficient industry and financial expertise to add value to decisions » Define the roles and behaviors required by the board and the boundaries of the Executive Team » Undertake projects related to board structure, composition, and process Decision making authority » Approval of the company mission/vision/purpose statement » approval of the annual business plan (includes high-level account plans, sales/marketing plan, strategic plan, departmental plan, and annual budget) » Seek and nominate new Directors to the Board as needed » Executive Leadership hiring and compensation » Capital structure and indebtedness » Risk management and insurance policies » Acquisitions, divestitures, and capital expenditures above $50,000 (?)

Roles & Responsibilities Executive Team Purpose The primary role is the financial and operational management of the company. » Develop and execute the annual business plan (includes high-level account plans, sales/ marketing plan, strategic plan, departmental plan, and annual budget) » Set the company mission/vision/purpose and ensure successul execution » Set operational policies and practices » Develop financial strategy/reporting » Maintain relationships with key external business partners (e.g., banking and insurance) Decision making authority » Approval of account and departmental tactical plans (Overall strategy and budgets approved by the board) » Expenses greater than $2,500 (?) but less than $50,000 (?) (which would require board approval) » Position justifications » Promotion decisions » Non-Executive Leadership management compensation, annual merit increases, spot bonuses, and company-wide bonus programs » Director level and above performance assessment » Organizational structure and succession plan » New vendor selections

Frequently How do I become an ESOP participant? You must meet the below criteria to be part of th ESOP: » At least 21 years of age » 1,000 working hours over the last 12 months » Entry dates: Upon closing December 31, 2020 June 30 and Decmeber 31 How are shares allocated to a participants’ a The allocation of shares is based on your compe and the number of available shares. Am I a shareholder? Legally, only the ESOP Trust can own shares, so yo not own Duffey Southeast, Inc. shares. That’s why don’t get a stock certificate.You are the benefic the shares that are allocated to you. What is a share price? The value is determined once-a-year by an independent appraiser. How will I be informed on my account balan You will receive an annual participant statement indicating the value of your account.

Asked Questions Can I contribute my own money to the ESOP? he No, the plan does not allow for individual employee contributions to the ESOP Trust. 0; then What happens when we run out of shares? As employees leave Duffey Southeast, Inc., their shares accounts? go back in the trust for redistribution. ensation When do I start getting my money? ou do Upon retirement, employees will be paid annually over y you a 5-year period starting one year after the last day ciary of of employement. After quitting or other termination, employees will be paid after a 5-year break-in-service period. After the waiting period, vested balance is paid in five annual payments. nce? Can I borrow money out of my ESOP account? t Unlike a 401k, you cannot borrow money from your ESOP account. In what form do I receive my money? You will receive your distribution in cash subject to our company’s distribution policy. If you receive a distribution prior to normal retirement age, you have the option of converting your distributions to another retirement account (401k / IRA).

WE OWN IT. ALL OF IT.