Employee Stock Purchase Plan (ESPP): The basics

Employee Stock Purchase Plan (ESPP): The basics

Here's an overview of how your plan works 1. You enroll in the Plan First, decide how much you want to contribute within the contribution limits and considering the length of the offering period established by your company. Enroll using the method(s) available to you. The amount or percentage you elect will be deducted from your pay (after taxes) throughout the entire offering period. Since your payroll deduction is being set up by your company, you will also need to complete an Account Authorization Form to activate your account with UBS. This form includes the necessary tax forms so you are not subject to backup withholding when you sell your shares.

Employee Stock Purchase Plan programs offer you a convenient way to purchase your company's stock.

Equity awards are an important part of your overall compensation and an opportunity to start building wealth or saving a lump sum for an important event such as buying a home, paying for college or supplementing your retirement savings. Below, we explain the basics of Employee Stock Purchase Plans and their logistics.

2. Your stock is purchased At the end of the offering period, your accumulated contributions will be used to purchase company stock on the purchase date and at the purchase price, as defined by your company's plan. The purchase price you receive is calculated by applying your plan's discounted rate, if any, to the fair market value and allocated among all plan purchasers. For your plan's discount amount and definition of fair market value, refer to your company's plan documents. Any leftover contribution dollars that amount to less than one share will be returned to you or applied to your next purchase.

Four steps to making company shares work for you An attractive advantage of an ESPP is the ability to purchase company stock at a discount from the fair market value (FMV) as defined by your company's plan. In other words, you can buy shares for the same amount of money than other investors paying regular open market prices on the same date. In addition, you do not have to pay commissions when the stock is purchased through your plan.

3. You monitor the status of your account Whenever you want, you can find out how many shares you have purchased and get your account balance online, via the UBS One Source website at onesource/ XYZ, where XYZ is your company's ticker. You may also speak with a Service Center Representative.

4. You have the freedom to manage your investments Once you have access to your shares, you can manage your holdings according to your personal financial

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plans. Depending on the terms of your company's plan, you may have the choice to hold your shares for the potential of future gains or to sell them. If your plan is a qualified plan under Section 423 of the Internal Revenue Code, there are tax ramifications for selling before the holding periods are met. Please see disqualifying dispositions below.

Disqualifying dispositions If you sell your shares within two years of the offering date or one year of purchase under a Qualified Plan, you will have a disqualifying disposition. In this case, the discount will be reported as compensation on your W-2, and you will have to pay ordinary income taxes in addition to any capital gains.

Stock ownership: your link to success When you purchase a share of stock in your company, you become a stockholder--you own part of the company and get to share in the financial risks and rewards of the company's future. Usually, stockholder privileges include the right to receive dividends when they are declared, to vote at stockholder meetings and to be provided with financial information about the company. Employee stockholders become more closely linked to a shared goal--the success of their company.

Selling your shares When you decide to sell shares of your company stock, you have the flexibility to decide what type of sale order you want to place. You can choose from the following order types:

?Market. This type of order is to sell shares as promptly as possible at the prevailing market price. It is not a guarantee of a specific price.

?Day limit. With this type of order, the participant sets the minimum sale price (the "limit price") at which the trade is to be executed. If the market price drops below this price, the order will not be executed unless or until the market price returns to or exceeds the limit price. If the order has not been executed by the end of the trading day, it will be automatically canceled.*

? Good 'til canceled (GTC). With this type of order, the participant sets the minimum sale price (the "limit price") at which the trade is to be executed. If the market price drops below this price, the order will not be executed unless or until the market price returns to or exceeds the limit price. This type of limit order remains in effect until it is executed or canceled. Depending on your company's arrangement with us, some types of GTC orders may expire after a fixed number of days, or when your company enters a blackout period.*

Tax considerations It is important to keep the potential tax consequences in mind when you sell stock. There will be varying tax liabilities, depending on whether you are a U.S. citizen or resident. UBS does not provide tax or legal advice and strongly suggests that you seek the advice of your tax advisor or legal counsel, as appropriate, before participating in the ESPP or placing any sale transactions.

Fees and expenses Commission fees When you sell your shares, you will be charged a commission fee negotiated by your company.

Processing and handling fees For the processing of each sale and confirmation transaction, you will be charged a processing and handling fee.

Transaction fees For each sale of stock in a brokerage account, the firm is required to pay a fee to a self-regulatory organization, which must pay the U.S. Securities and Exchange Commission (SEC) a transaction fee based on the volume of securities sold on its market. This nominal fee is subject to change by the SEC.

Wire fees Our firm charges a fee for each wire transfer of funds.

Currency conversions Currency conversions are provided by UBS Group AG or UBS Securities LLC at competitive rates. Built into those rates is a mark-up. UBS FS may derive an economic benefit that may affect the exchange rate received. The currency conversion rate appears on the account statement.

Questions and answers Who is eligible to participate? Any employee who has met the company's requirements is eligible to participate. For specific eligibility requirements, refer to the particulars of your company's plan or contact your company directly.

Why should I participate in the ESPP? Your decision to participate should be based on your individual financial circumstances. The plan is designed, however, to facilitate employee ownership of your company's stock. You purchase your company stock typically at a discount--a price below the open market value. As an added benefit, your plan purchases are made commission-free.

How will I know how much stock has been purchased for me? The firm will maintain a record of all stock purchased for your account. To find out how many shares you own and their current market value, you can access your account through this website, or, if you prefer, you can speak with a Service Center Representative. You will receive a monthly statement if there was activity and/or a quarterly statement if there are assets in the account.

Can I change or stop my contributions? You can usually stop or change the level of your payroll deduction contributions by contacting your company. If available and during an open enrollment period, you may also change your payroll deduction contributions through this website.

How long does it take to receive the proceeds when I sell my shares? Generally, the proceeds will be available on the second business day after the sale date. At that time, the funds can be mailed, wired or transferred to your full-service account, according to your instructions.

What if I leave my company? Depending on your company's plan, if you leave, your contributions that have not yet been used to purchase shares will be refunded to you. Your shares will remain in your account at UBS.

* Please note that market orders are executed before limit and GTC orders, while limit and GTC orders are entered in the order received.

UBS Financial Services Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with UBS Financial Services Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

? UBS 2018. All rights reserved. The key symbol and UBS are among the registered and unregistered trademarks of UBS. UBS Financial Services Inc. is a subsidiary of UBS Group AG. Member FINRA/SIPC.

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