Employee-owned stock purchase plan outside ERISA pension definition

P/OPINION 76-113
                                               3(2)


                   September 30, 1976


Dear          :

Thank you for your letter concerning the Employee
Retirement Income Security Act of 1974 (ERISA) as it
relates to the (named) Stock Plan (Plan). We regret that
we were unable to reply to your inquiry earlier.

In your letter you request a determination that the Plan
is not an employee pension benefit plan covered by the
ERISA.

The Plan has been established by the (named) Company for
the purpose of encouraging the long-term investment in
Company stock by a select group of officers and employees
in order to provide such persons with additional
incentive to improve the Company's performance and to
remain in the employ of the Company. The Board of
Directors selects the officers and employees of the
Company to participate in the Plan and specifies the
amount of stock each participant may purchase. Other than
prohibiting discrimination between officers or employees
on the basis of age or length of service, the plan
agreement provides that the Board may use any criteria it
deems appropriate in determining whom it wishes to select
to participate.

The purchase price of the stock is set at forty percent of
book value, and provision is made in the Plan for payment
on an installment basis by the participants. In the event
that a participant desires to dispose of some stock he has
purchased under the Plan, or if he terminates his
employment with the Company for any reason, the Company
has the right to repurchase the stock from the
participant.

Section 3(2) of the ERISA defines an "employee pension
benefit plan" as any plan, fund or program established or
maintained by an employer or by an employee organization,
or by both, to the extent that by its express terms or as
a result of surrounding circumstances such plan, fund or
program provides retirement income to employees, or
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P/OPINION 76-113

results in a deferral of income by employees for periods
extending to the termination of covered employment or
beyond, regardless of the method of calculating the
contributions made to the plan, the method of calculating
the benefits under the plan or the method of distributing
benefits from the plan.

Under the terms of the Plan as set forth in your letter, a
participant upon purchase of a share of stock becomes sole
owner of such share even though the Company retains a
security interest in the share of stock in the case of an
installment sale. Futhermore, the Company retains the
right to repurchase the share of stock or designate a
purchaser if the participant desires to sell the share or
terminates employment with the Company. However, despite
these restrictions, the participant, as sole owner, has
the right, which may be exercised at any time, to sell,
assign or otherwise dispose of his interest in the Plan.
Thus, any deferral of income by a participant until
termination results solely from his or her decision to
retain ownership of the stock. Due to the elements of
ownership and control by the participant, the Plan does
not fall within the definition of an "employee pension
benefit plan" contained in section 3(2) of the ERISA
because the Plan does not provide retirement income nor
contain provisions which result in the deferral of income
for periods extending to the termination of covered
employment and beyond.

Sincerely,