Employee stock purchase plan outside ERISA

Mr. Jerome J. Cohen                               APR 25 1977
Guggenheimer & Untermyer
[Recipient address omitted]                      OPINION 77-37 A

Dear Mr. Cohen:
                                              3(1)
Re:   Long Island Lighting Company Employee    3(2)
      Stock Purchase Plan

This is in reply to your letter of October 28, 1975,
requesting a determination under the Employee Retirement
Income Security Act of 1974 (ERISA) relating to the
Employee Stock Purchase Plan (Plan) of the Long Island
Lighting Company (Company). We regret our delay in
responding.

Your letter sets forth the following information with
respect to your request. The Plan was established for
the purpose of providing an opportunity for Company
employees to purchase shares of the Company's common
stock at a small discount from current market value.
The Company's common stock is traded on the New York
Stock Exchange. The Company has received rulings from
the Internal Revenue Service determining that the Plan
qualifies as an employee stock purchase plan within the
meaning of Section 423(b) of the Internal Revenue Code.

Each year of the operation of the Plan is divided into
two six-month "Purchase Periods". During any Purchase
Period, an employee may accumulate funds to purchase
shares under the Plan through payroll deductions,
lump-sum payments or a combination of both. At the end
of the Purchase Period, the amounts so accumulated in
the employee's account under the Plan are applied toward
the purchase of shares at a price generally equal to 90
percent of the average of the highest and lowest prices
for the shares on the New York Stock Exchange on the last
trading day within the Period. The employee has the
right to dispose of the shares at any time, although
the employee enjoys tax advantages by retaining the shares

                                           OPINION 77-37 A


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for at least two years after purchase. An employee may
terminate his participation in the Plan with respect to
any Purchase Period before the last business day thereof.
Upon termination, the employee is entitled to withdraw
any cash balance standing in his account under the Plan
at that time.

Based on the information set forth in your letter, you
have requested a determination that the Plan is not an
employee benefit plan within the meaning of section 3(3)
of ERISA.

In order to come within the definition of the term
"employee benefit plan" under section 3(3) of ERISA, a
plan must be either an "employee welfare benefit plan",
as defined in section 3(1) of ERISA, or an "employee
pension benefit plan", as defined in section 3(2) of
ERISA.

Section 3(1) of ERISA defines the term "employee welfare
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 such plan, fund or program
was established or is maintained for the purpose of
providing one of the benefits listed in section 3(1) or
one of the benefits described in section 302(c) of the
Labor Management Relations Act, 1947, other than pensions
on retirement or death, and insurance to provide such
pension. Your letter represents that the Plan was estab-
lished and is maintained solely for the purpose of
providing an opportunity for Company employees to purchase
shares of the Company. The benefit of ownership of stock
is not one of the benefits listed in section 3(1) of
ERISA.

Section 3(2) of ERISA defines the term "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
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

                                           OPINION 77-37 A




                           -3-


contributions made to the plan, the method of calculating
benefits under the plan, or the method of distributing
benefits from the plan.

Your letter represents that the Plan does not provide for
retirement income for employees of the Company and does
not result in deferral of income by employees until termi-
nation of employment. In this regard, your letter further
represents that an employee is free to sell or otherwise
dispose of his shares at any time and receive the income
from such sale or disposition without penalty or limita-
tion. Accordingly, the Plan does not necessarily by its
terms or as a result of surrounding circumstances result
in a deferral of income by employees until termination
of covered employment or beyond, notwithstanding the tax
advantages for employees of delaying the sale of disposi-
tion of their shares for at least two years from the
purchase of the shares. Thus, the Plan is not an employee
pension benefit plan within the meaning of section 3(2) of
ERISA.

Because the Plan is neither an employee welfare benefit
plan nor an employee pension benefit plan, the Plan does not
constitute an employee benefit plan within the meaning of
section 3(3) of ERISA.

This letter constitutes an advisory opinion under ERISA
Procedure 76-1 (copy enclosed) and as such, is subject
to the relevant provisions of such procedure, including
section 10 thereof relating to the effect of advisory
opinions.

Sincerely,



Fred W. Stuckwisch
Director
Office of Regulatory Standards
  and Exceptions

Enclosure