                        Revised July 30, 1998

              IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                      __________________________

                             No. 97-30764
                      __________________________


RICHARD A. THREADGILL, SR.,
                                          Plaintiff-Appellee,

                                versus


PRUDENTIAL SECURITIES GROUP, INC., ET AL.,
                                                   Defendants,


GRAHAM ENERGY SERVICES INC. EXECUTIVE COMPENSATION PLAN;
BRAELOCH HOLDINGS INC. EXECUTIVE COMPENSATION PLAN,

                                          Defendants-Appellants,

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

JOSEPH KILCHRIST,

                                          Plaintiff-Appellee,

                                versus


PRUDENTIAL SECURITIES GROUP, INC., ET AL.,

                                          Defendants,

GRAHAM ENERGY SERVICES INC. EXECUTIVE COMPENSATION PLAN;
BRAELOCH HOLDINGS INC. EXECUTIVE COMPENSATION PLAN,

                                          Defendants-Appellants,

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

MICHAEL R. STEWART,

                                          Plaintiff-Appellee,
                             versus


PRUDENTIAL SECURITIES GROUP, INC., ET AL.,

                                          Defendants,


GRAHAM ENERGY SERVICES INC. EXECUTIVE COMPENSATION PLAN;
BRAELOCH HOLDINGS INC. EXECUTIVE COMPENSATION PLAN,

                                          Defendants-Appellants.

       ___________________________________________________

           Appeal from the United States District Court
               for the Eastern District of Louisiana
       ___________________________________________________

                          June 26, 1998

Before DAVIS, WIENER, and PARKER Circuit Judges.

WIENER, Circuit Judge:

     Defendants-Appellants Graham Energy Services Inc. Executive

Compensation Plan and BraeLoch Holdings Inc. Executive

Compensation Plan (collectively, “the Plans”) appeal the district

court’s grant of partial summary judgment in favor of Plaintiffs-

Appellees Richard Threadgill, Joseph Kilchrist, and Michael

Stewart (“the Beneficiaries”) —— all former Graham Energy

Services Inc. (“GESI”) employees and participants in its

executive compensation plan —— on the Beneficiaries’ claims

against the Plans for “Change of Control” pension benefits.

Concluding that the district court erred in reversing the plan

administrator’s decision denying these benefits, we reverse the

district court and reinstate the ruling of the plan

administrator.
                                  I

                       FACTS AND PROCEEDINGS

     BraeLoch Holdings Inc. (“BraeLoch”) and affiliated companies

worked with Prudential Bache Energy Production Co. (“Prudential-

Bache”) in managing oil and gas limited partnerships and selling

interests in them as investments to Prudential-Bache’s customers.

GESI, a Louisiana corporation, was a wholly-owned subsidiary of

BraeLoch.   On May 7, 1993, BraeLoch and Prudential-Bache agreed

to sell all of the partnership interests to Parker and Parsley

Acquisition Co. (“Parker”).    The transaction was memorialized in

an Agreement and Plan of Merger, under which Parker agreed to

merge with the partnerships.   The obligation to merge was

expressly contingent on, inter alia, the success of a tender

offer to be made by Parker to the partnerships’ limited partners:

If the tender offer failed to achieve its stated goals, the

prospective merger partners would not be obligated to merge.

Although the partnerships were clients of GESI, neither GESI nor

BraeLoch was a party to the Agreement and Plan of Merger.

     BraeLoch was a party, however, to another contemporaneously

executed contract, the Stock Purchase Agreement, in which

BraeLoch Successor Corp. (“Successor Corp.”) contracted with

BraeLoch and a Prudential-Bache affiliate —— Prudential

Securities Inc.1 —— to purchase all capital stock in BraeLoch.

     1
      According to the Plans’ brief, Prudential Securities Inc.
was involved in the transaction. Under the terms of the Stock

                                  3
According to the Beneficiaries, Successor Corp. was a Prudential-

Bache shell corporation, and the two May 7 contracts —— the

Agreement and Plan of Merger and the Stock Purchase Agreement ——

were entered into simultaneously for the purpose of liquidating

Prudential-Bache’s oil and gas investment business and the

BraeLoch companies as well.

     The Beneficiaries were executive employees of BraeLoch’s

Louisiana subsidiary, GESI.   As GESI officers, they participated

in the Graham Energy Services Inc. Executive Compensation Plan

(“the GESI Plan”), which provided, inter alia, “Change of

Control” benefits.   The GESI Plan defined Change of Control, in

pertinent part, as follows:

          A Change of Control shall be deemed to have
          occurred upon the earlier of:

          (a) the dissolution, liquidation, winding up
          the affairs of [BraeLoch] or the sale or
          transfer of all, or substantially all, of the
          assets of BraeLoch; provided, however, no
          such events shall be deemed to occur (i) in
          the event of an insolvency or bankruptcy of
          BraeLoch or (ii) in the event of the transfer
          of assets of BraeLoch to an affiliate of
          BraeLoch provided such affiliate assumes the
          obligations of the Plan and agrees to
          continue uninterrupted the rights of
          Participants under the Plan[.]

The GESI Plan vested BraeLoch’s Board of Directors with the



Purchase Agreement itself, however, Prudential Securities Inc. is
not a party to the contract. We accept the Plans’ representation
at face value inasmuch as the Prudential-Bache affiliate’s role
in the transaction is not a matter of contention between the
parties.

                                 4
absolute right to amend the Plans at any time prior to the

occurrence of a Change of Control:

               The Board of Directors shall have the
          right, in its absolute discretion, at any
          time and from time to time, to modify or
          amend, in whole or in part, any or all of the
          provisions of this Plan, or suspend or
          terminate it entirely; provided that no such
          modification, amendment, suspension or
          termination may reduce the amount of benefits
          or adversely affect the manner of payment of
          benefits of (1) any Participant or
          Beneficiary then receiving benefits in
          accordance with the terms of Article III or
          (2) any Participant or Beneficiary entitled
          to benefits as a result of the occurrence of
          a Change of Control as described in Article
          IV prior to or concurrent with a termination
          of the Plan. The provisions of this Article
          V shall survive a termination of the Plan
          unless such termination is agreed to by the
          Participants.
     On May 20, less than two weeks after the two agreements were

signed, BraeLoch’s Board convened and formally adopted a

resolution to amend the GESI Plan to eliminate the Change of

Control benefit.   The Board also adopted a resolution to transfer

participants in the GESI Plan to the BraeLoch Plan, which was

itself amended to (a) eliminate its own Change of Control

benefits provision and (b) replace it with an annuity benefit.

Formal plan amendments were executed on June 10 (GESI Plan) and

June 14 (BraeLoch Plan).   The amendment to the GESI Plan

provided, in pertinent part:

          Article IV of the [GESI] Plan is hereby
          deleted in its entirety and shall have no
          application or effect with respect to the
          Plan, Graham Energy Services Inc. Executive
          Compensation Trust No. 1 (“Trust No. 1”) or

                                 5
          the Participants. There have not been and
          there shall be no consequences of a Change of
          Control. Specifically, but not by way of
          limitation, the transfer of voting shares of
          [BraeLoch] to [Successor Corp.], a Delaware
          Corporation, and any transactions in
          connection with such sale shall not result in
          any benefits under Article IV as in effect
          prior to its deletion hereby. All references
          to Article in the Plan and in Trust No. 1 are
          hereby deleted and any consequences related
          to Article IV of the Plan shall not result or
          be applicable.

                               * * *

          All participants in the Plan as of the date
          hereof have become participants in the
          BraeLoch Plan. As provided in Section 2.1(c)
          of the Plan, each such Participant shall no
          longer be a participant in the Plan.
          Instead, such Participant shall be a
          Participant in the BraeLoch Plan and all
          benefits to such Participants shall be paid
          solely from the BraeLoch Plan.

     At a time in May, subsequent to the execution of the two May

7 contracts, the Beneficiaries signed an enhanced severance

separation agreement which provided each of them with specified

benefits in the event his employment should terminate after the

sale of BraeLoch to Successor Corp. was complete.   This severance

agreement contained an express release by the Beneficiaries of

all claims against, inter alia, GESI and its corporate

affiliates.   Subsequently, each of the Beneficiaries accepted the

annuity benefit established in the same amendment that had

eliminated the Plans’ Change of Control benefits.   Two of the

Beneficiaries —— Kilchrist and Stewart —— signed additional

instruments in which they expressly consented to that plan

                                 6
amendment.

      On June 24, BraeLoch, Successor Corp., and Prudential

Securities Inc.2 executed an Amended and Restated Stock Purchase

Agreement.    That same day, Successor Corp. purchased BraeLoch’s

stock, closing the transaction contemplated in the Stock Purchase

Agreement as thus amended and restated.

      In July, the tender offer required by the other May 7

contract, the Agreement and Plan of Merger, achieved its goal.

Subsequent to satisfaction of that prerequisite, Parker merged

with the oil and gas partnerships (not with either BraeLoch or

GESI).    Each of the Beneficiaries’ employment with GESI had

terminated prior to the Parker merger with the partnerships:

Threadgill’s on August 31; Kilchrist’s and Stewart’s on September

30.   Each received all benefits provided for in his separation

agreement, as well as his annuity under the BraeLoch Plan.

      Nevertheless, in May of the following year, Threadgill filed

suit in state court against Prudential, First National Bank of

Commerce, BraeLoch, and Successor Corp., seeking the Change of

Control benefits once contained in the Plans but deleted by the

board resolution of the previous May.   Stewart and Kilchrist

filed similar lawsuits.    The defendants removed Threadgill’s case

to federal court and filed a motion to dismiss his action on the


      2
      Under the terms of the Amended and Restated Stock Purchase
Agreement itself, Prudential Securities Inc. was not a party to
the contract. See id.

                                  7
grounds that (1) the corporate defendants were not proper parties

to the suit as it sought benefits under an ERISA plan, and

(2) Threadgill had failed to exhaust the administrative remedies

expressly provided in the Plans.       Because Kilchrist’s and

Stewart’s claims were substantially identical to Threadgill’s,

the parties voluntarily consolidated the cases, agreeing that the

outcome of the motion to dismiss in the Threadgill suit would be

controlling in the Stewart and Kilchrist actions.

     The district court granted the defendants’ dismissal motion,

so the Beneficiaries filed administrative claims for Change of

Control benefits with the plan administrator of the Plans.       The

Beneficiaries contended that, by virtue of the May 7 contracts,3

they were entitled to Change of Control benefits notwithstanding

(1) the May 20 amendment deleting those benefits and (2) their

own execution of the enhanced severance separation agreements ——


     3
      Although the Beneficiaries now characterize their
administrative claim as having been predicated on both contracts
causing their benefits to vest under each of the Change of
Control definitions at issue —— the asset transfer provision and
the “liquidation, dissolution, winding up” language —— the
Beneficiaries relied solely on the Agreement and Plan of Merger
as having initiated a Change of Control exclusively under the
GESI Plan’s asset-transfer definition. We consider all the
permutations now offered by the Beneficiaries, however, because
(a) the plan administrator did consider, albeit summarily, the
possibility of a Change of Control having occurred by virtue of
the “liquidation, dissolution, winding up” of BraeLoch, and (b)
the Beneficiaries submitted the Stock Purchase Agreement as part
of the administrative record for the plan administrator’s
consideration, and they referred to it in their claim (albeit
without ever explicitly relying on it in support of their
position).

                                   8
and, in the cases of Kilchrist and Stewart, their express written

releases and consents to the amendment.   According to the

Beneficiaries, the execution of the merger and stock purchase

agreements constituted a Change of Control, causing the

Beneficiaries’ Change of Control benefits to vest prior to May

20.   As such, they insist, the amendment violated ERISA’s

anticutback provisions,4 precluding the denial of Change of

Control benefits on the basis of the May 20 resolutions and the

implementing plan amendments of June 10 and 14, respectively.

      After taking the Beneficiaries’ claims under submission, the

plan administrator determined that no Change of Control could

have occurred vis à vis the GESI Plan’s “dissolution,



      4
      See 29 U.S.C. § 1054(g) (1994). As we conclude that the
Change of Control benefits never vested, we need not devote our
attention to the Plans’ alternative argument that, even if the
benefits had accrued, the May 20 amendment is not subject to
anticutback scrutiny as the Plans are “top hat” plans. See
Miller v. Eichleay Eng’g Inc., 886 F.2d 30, 34 n.8 (3d Cir. 1989)
(“A top hat plan is ‘a plan which is unfunded and is maintained
by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly trained
employees.’”)(citing 29 U.S.C. §§ 1051(2), 1081(a)(3), and
1101(a)(1) (1994)); Spacek v. Maritime Ass’n, 134 F.3d 283, 295
(5th Cir. 1998) (“ERISA exempts top-hat plans from the fiduciary,
funding, participation and vesting requirements applicable to
other employee benefit plans.”) (quoting Duggan v. Hobbs, 99 F.3d
307, 310 (9th Cir. 1996)). We note in passing, however, that,
had resolution of the issue been necessary, we would likely have
held in favor of the Plans. In so noting, though, we are mindful
that, even though “no statutory mechanism exists to safeguard the
expectations of top hat plan participants in obtaining their
deferred compensation,” Spacek, 134 F.3d at 296, such
participants are not without non-statutory protections. See id.
at 295-297.

                                 9
liquidation, winding up” provision, and that, as a result, “the

question [could] be refined to: ‘Did a sale or other transfer of

all, or substantially all, of the assets of BraeLoch (to a non-

affiliate) occur prior to May 20, 1993?’” Answering in the

negative, the plan administrator determined that: (1) the

Agreement and Plan of Merger could not have triggered a Change of

Control because it did not involve or result in the sale or

transfer of all or substantially all of BraeLoch’s assets, and

(2) even if it had, the merger contemplated by that agreement

remained conditioned on the success of Parker’s tender offers to

the partners of the oil and gas partnerships.   Consequently,

reasoned the plan administrator, there could not have been a

Change of Control prior to the July expiration date of the tender

offers.   The Beneficiaries appealed the denial of their claims

and the plan administrator affirmed his decision.

     The Beneficiaries then filed an amended complaint in the

district court, naming the Plans as defendants.   The Plans moved

for summary judgment on the ground that the plan administrator

had not abused his discretion.   Even though the plan

administrator framed the Change of Control issue in terms of

whether the Agreement and Plan of Merger constituted an asset

transfer, the district court focused on the “liquidation,

dissolution, winding up” definition of Change of Control;5 more

     5
      The plan administrator’s concentration on the asset-
transfer Change of Control definition and summary treatment of

                                 10
particularly, and within that paradigm, solely on “winding up”:

          The plan administrator based his finding that
          the May 7th Agreement and Plan of Merger did
          not create a “Change of Control” within the
          meaning of the Plans on the fact that even
          though the May 7th Agreement obligated
          BraeLoch to commence “winding up” the affairs
          of the company, the Agreement was contingent
          since it contained provisions for termination
          of the agreement prior to closing under
          certain conditions.

Having so characterized the issue, the district court went on to

deny the Plans’ motion, finding that

          [t]he Agreement and Plan of Merger was
          binding and enforceable as of May 7, 1993,
          obligated BraeLoch to commence “winding up”
          the affairs of the company, to terminate all
          its corporate relationships with third
          parties, to sell its oil and gas partnership
          interests, to consummate the merger, and
          required the Board and executive officers to
          resign.

Following the district court’s denial of the Plans’ motion, the

Beneficiaries filed a motion for partial summary judgment on the

issue of the Plans’ liability for Change of Control benefits.

The district court granted the Beneficiaries’ motion and the

Plans timely appealed.

                               II


the issue under the GESI Plan’s “dissolution, liquidation,
winding up” provision are not surprising given the fact that the
Beneficiaries relied exclusively on the former definition in
advancing their administrative claim that a Change of Control had
occurred prior to May 20. The plan administrator’s oblique
reference to a Change of Control under the latter definition may
very well have provided the impetus for the “winding up” analysis
urged by the Beneficiaries for the first time in the district
court.

                               11
                            ANALYSIS

A.   Standard of Review

     We review grants of summary judgment de novo, applying the

same standards as the district court.6   When the terms of a

benefit plan governed by ERISA give the plan administrator

discretionary authority to determine eligibility for benefits ——

which grant of discretion is undisputed by the Beneficiaries as

to the plan administrator of the ERISA plans at issue in the

instant case —— the district court reviews the plan

administrator’s denial of benefits for abuse of discretion.7    On

appeal, we review de novo the district court’s holding on the

question whether the plan administrator abused its discretion.8

We will not, however, set aside the district court’s factual

findings underlying its review of the plan administrator’s

determination unless those findings are clearly erroneous.9




     6
      Melton v. Teachers Ins. & Annuity Ass’n of America, 114
F.3d 557, 559 (5th Cir. 1997).
     7
      Barhan v. Ry-Ron Inc., 121 F.3d 198, 201 (5th Cir. 1997)
(citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115,
109 S.Ct 948, 956-57, 103 L.Ed.2d 80 (1989)).
     8
      Id. at 200.
     9
      Bellaire Gen’l Hosp. v. Blue Cross Blue Shield of Michigan,
97 F.3d 822, 829 (5th Cir. 1996).

                               12
B.    Plan Interpretation

      Eligibility for benefits under any ERISA plan is governed in

the first instance by the plain meaning of the plan language.10

In   Wildbur v. ARCO Chemical Co.,11 we set forth the generally

applicable12 methodology for reviewing a plan administrator’s

denial of benefits:

              First, a court must determine the legally
              correct interpretation of the plan. If the
              administrator did not give the plan the
              legally correct interpretation, the court
              must then determine whether the
              administrator's decision was an abuse of
              discretion. . . . In answering the first
              question, i.e., whether the administrator’s
              interpretation of the plan was legally
              correct, a court must consider:

                   (1)   whether the administrator
                         has given the plan a
                         uniform construction,
                   (2)   whether the
                         interpretation is
                         consistent with a fair
                         reading of the plan, and
                   (3)   any unanticipated costs
                         resulting from different

      10
           Nickel v. Estate of Estes, 122 F.3d 294, 298 (5th Cir.
1997).
      11
           974 F.2d 631 (5th Cir. 1992).
      12
      Although we routinely employ this two-step approach in
testing de novo a plan administrator’s interpretation of a plan
for abuse of discretion, rigid adherence to the Wildbur method is
not always necessary. See Duhon v. Texaco, Inc., 15 F.3d 1302,
1307-08 & n.3 (5th Cir. 1994) (noting that “the reviewing court
is not rigidly confined to [Wildbur’s] two-step analysis in every
case,” and departing from the methodology in concluding that the
plan administrator did not abuse his discretion). It is,
however, generally instructive and appropriate to the analysis in
the instant case.

                                    13
                        interpretations of the
                        plan.

                  If a court concludes that the
             administrator’s interpretation is incorrect,
             the court must then determine whether the
             administrator abused his discretion. Three
             factors are important in this analysis:

                  (1)   the internal consistency
                        of the plan under the
                        administrator’s
                        interpretation,
                  (2)   any relevant regulations
                        formulated by the
                        appropriate
                        administrative agencies,
                        and
                  (3)   the factual background of
                        the determination and any
                        inferences of lack of
                        good faith.13

“Only if the court determines that the administrator did not give

the plan the legally incorrect interpretation, must the court

then determine whether the administrator’s decision was an abuse

of discretion.”14

C.   De Novo Review

     The Plans argue that the district court misapplied Wildbur

—— reversing the sequence of its analysis of legal correctness

and abuse of discretion —— and insist that the plan

administrator’s decision was neither legally incorrect nor an

abuse of discretion.     We proceed with our own de novo Wildbur

     13
          Wildbur, 974 F.2d at 637-38 (citations omitted).
     14
      Tolson v. Avondale Industries, Inc., —— F.3d ——, 1998
WL 247954 at *4 (5th Cir. 1998)


                                   14
review of each of the grounds put forth by the Beneficiaries to

support a Change of Control finding.

     1.    “DISSOLUTION,   LIQUIDATION, WINDING UP”

                 a.   The Agreement and Plan of Merger

     The plan administrator summarily disposed of the possibility

that the Agreement and Plan of Merger effected a Change of

Control by causing the “dissolution, liquidation, winding up the

affairs”    of BraeLoch.       In contrast, the district court

concentrated on this definition of Change of Control —— or, more

precisely, just on “winding up” —— in overturning the

administrative decision.         The    court found that the Agreement and

Plan of Merger obligated BraeLoch to commence the process of

“winding up” its affairs.         Reasoning that this perceived winding-

up process caused the Change of Control benefits to vest prior to

the BraeLoch directors’ May 20 amendment of The Plans, the court

concluded that the plan administrator abused his discretion in

denying the Beneficiaries’ claims.

     The Plans contest the district court’s interpretation,

arguing that there is no evidence in the administrative record

that a “winding up” of BraeLoch’s affairs occurred, or was even

required to commence, prior to May 20 —— not, at least, within

the universally accepted meaning of “winding up” in the context

of business corporation law.           In other words, there is no

evidence that BraeLoch (1) liquidated its assets or distributed

them in-kind to its shareholders, (2) otherwise disposed of its

                                        15
property, (3) ceased conducting its day-to-day business, or (4)

took the legally required steps to dissolve the corporation.    In

an effort to support the district court, the Beneficiaries

counter that the Agreement and Plan of Merger caused the de facto

termination and liquidation of BraeLoch because BraeLoch’s sole

business was managing the oil and gas partnerships acquired by

Parker pursuant to the agreement.

     The Plans respond by noting that, even though the service

company’s loss of the oil and gas partnership interests was

tantamount to the loss of a substantial client, a corporation is

not “dissolved,” “liquidated,” or “wound up” solely because it

loses a major segment of its business: Such corporate sea changes

can only be effectuated by formal corporate action; there is no

such thing as a de facto liquidation.   In (a) isolating the term

“winding up” and viewing it in a vacuum and (b) finding that,

alone, “winding up” somehow contemplates a “process” the

commencement of which sufficed to cause benefits to vest under

the GESI Plan’s conjunctive “dissolution, liquidation, winding

up” definition of Change of Control, the district court failed to

appreciate that (1) the formal corporate event denoted by this

tri-partite term of art occurs only at the time when the

corporation acts formally, pursuant to the appropriate statutes

of its state of incorporation, to dissolve itself; and, (2) as a

matter of corporate law, a merger between business entities does

not necessarily constitute or result in a formal dissolution,

                               16
liquidation, and winding up of the merged corporation.15

     In further support of the plan administrator’s

interpretation, the Plans observe that the district court’s

whole-cloth creation of this “winding-up process” analysis is not

only contrary to established corporate law, but is also contrary

to the plain language of the GESI Plan which clearly defines a

Change of Control in terms of a fait accompli, an event that has

occurred: Under any fair reading of the GESI Plan, a Change of

Control must actually take place —— not merely be contemplated in

the future —— for the benefits to vest.   As the Agreement and

Plan of Merger contained several conditions precedent or

contingencies, any one of which, if unmet, would have precluded

occurrence of the merger, the mere signing of that agreement

would not have been sufficient, in and of itself, to trigger a

Change of Control.16

     15
      See Rauch v. RCA Corp., 861 F.2d 29 (2d Cir. 1988) and
Rothschild Internat’l Corp. v. Liggett Group Inc., 474 A.2d 133
(Del. 1984) (holding that owners of preferred stock were not
entitled to the liquidation or redemption preference specified in
their stock agreements because the merger of the corporations in
which they owned stock did not constitute the liquidation of the
corporation). In fact, virtually every business corporation law
in this country contemplates, in sequence, (1) the formal
adoption of a corporate resolution to commence liquidation,
followed by (2) the sale or distribution in-kind of its assets,
the payment if its debts, and the gradual reduction and eventual
termination of its routine operations, and concluding with (3)
the issuance of a final certificate of dissolution by the
designated state officer, e.g., the Secretary of State. See,
e.g., LA. REV. STAT. ANN. §§ 12:141-12:149 (West 1994).
     16
      The Beneficiaries rely on articles 1767 and 1775 of
Louisiana’s Civil Code for the proposition that the legal effects

                               17
     We agree completely with the Plans’ interpretation of the

meaning of Change of Control as embodied in the “dissolution,

liquidation, winding up” language of the GESI Plan.    The district

court misapprehended the widely-understood meaning of that

cohesive, tri-partite phrase and impermissibly parsed it by

carving out “winding up” and focusing on the dictionary meaning

of only that one of the three inextricably intertwined terms of

the phrase.   And, in so doing, the district court ignored the

legal correctness factors outlined in Wildbur, offering no

explanation as to how the plan administrator’s interpretation:

(1) was inconsistent with a fair reading of the plan, (2)

conflicted with previous constructions, if any, of the Change of

Control provision (disturbing the uniformity of plan


of the June 1993 closing of the Agreement and Plan of Merger are
retroactive to the contract’s date of inception —— May 7, 1993.
LA. CIV. CODE ANN. arts. 1767, 1775 (West 1987). The Plans respond
that Louisiana law —— particularly the Civil Code —— is
inapplicable to the Change of Control determination inasmuch as
(1) the plan language alone is determinative and (2) to the
extent Louisiana law “relates to” the plan, it is preempted by
ERISA.” See 29 U.S.C. § 1144(a) (1994). We need not reach this
issue, though, as we are not convinced in the first instance that
the plan administrator reached an incorrect legal interpretation,
much less abused his discretion, in determining that the
Agreement and Plan of Merger did not implicate the “dissolution,
liquidation, winding up” Change of Control provision. Moreover,
the applicable reference for these questions of Louisiana
corporate law is not the Civil Code but Title 12 of the Louisiana
Revised Statutes, La. Rev. Stat. Ann. §§ 12:1-12:178 (West 1994).
Known in Louisiana as the Business Corporation Law, this portion
of Title 12 makes it pellucid that “dissolution, liquidation,
winding up” does not even commence, as a matter of law, until
formal corporate resolutions are adopted, appointing a
liquidator, with duly certified copies filed, inter alia, in the
office of the Secretary of State.

                                18
construction) or (3) resulted in costs unanticipated by the plan.



     Of these considerations, we find most significant the

court’s failure to explain how: (1) an interpretation diverging

from well-settled business corporation principles is consistent

with a fair reading of the plan, or (2) BraeLoch could have

anticipated, as a foreseeable cost, the necessity of funding

Change of Control benefits for plan participants who accept

annuity and severance benefits as alternate forms of

compensation, given (a) the consensual nature of the transaction

described in the Agreement and Plan of Merger, and (b) the broad

amendment power vested in BraeLoch’s board of directors under the

GESI Plan.

     Moreover, even assuming arguendo that the plan

administrator’s implicit conclusion was not legally correct,17

and thus failed the first step of Wildbur, the district court

still erred in overturning the plan administrator’s decision, as

it did so without taking into account the deference afforded

administrative decisions under the second step of Wildbur review.

The district court substituted its own judgment for that of the

plan administrator’s without considering: (1) the internal


     17
      As noted earlier, the plan administrator did not examine
the possibility that the Agreement and Plan of Merger effected a
“dissolution, liquidation, winding up” of the affairs of
BraeLoch, having conclusionally determined that the language was
inapplicable. See supra note 5 and accompanying text.

                               19
consistency of the plan under the administrator’s interpretation;

(2) administrative regulations, if any, dictating a different

interpretation; or (3) whether the facts and the sequence of

occurrences support the administrator’s conclusion.   Indeed, with

regard to the third factor, the district court opened the door to

an unintended and illogical vesting explanation.   The widely-

accepted purposes for including Change of Control benefits in

employee benefit plans —— to (1) fend off hostile takeovers and

(2) assure key employees that they will be fairly compensated in

the event of a hostile takeover by depriving corporate raiders of

the power to prevent such payment —— could not have been

furthered by recognizing the accrual of Change of Control

benefits.18   The Agreement and Plan of Merger embodied a

consensual business transaction, and the Beneficiaries accepted

the annuity benefit which was duly substituted for the Change of

Control benefits once a friendly merger partner was located and

the risk of hostile takeover avoided.19

     18
      See Allen v. Westpoint-Pepperel, Inc., 1996 WL 2004 at *5
(S.D.N.Y. 1996) (“[T]here are two principal purposes (other than
deterring potential raiders) for putting a ‘Change in Control’
provision in an employee benefit plan. The first is to assure
employees that they will be paid in the event of a takeover by
depriving a raider of the power to prevent payment. The second
is to insure that key employees will be able to focus on their
jobs during the hectic period associated with a potential
takeover, rather than having to worry about how they will pay
their bills if they lose their jobs.”).
     19
      In addition to its inappropriate “winding up” analysis,
the district court erred as a matter of law when it based its
abuse of discretion finding on the facts that (1) BraeLoch’s top

                                 20
               b.   The Stock Purchase Agreement

     The Beneficiaries also contend that the other May 7

contract, the Stock Purchase Agreement, evidences that a Change

of Control was triggered under the GESI Plan’s “dissolution,

liquidation, winding up” provision.20   The Beneficiaries maintain

that the Stock Purchase Agreement required that: (1) BraeLoch

shareholders sell all of their stock to Successor Corp.

(purportedly a Prudential shell company), and (2) BraeLoch be

operated under the control of Successor Corp. pending closing, at

which time all BraeLoch officers and directors were to resign.

      The Plans challenge, as unsubstantiated, the Beneficiaries’

claims that Successor Corp. would control BraeLoch pending the

sale and that BraeLoch shareholders could not avoid the

obligation to close the transaction.    The Plans also argue that,

as with a merger, a transfer of stock ownership does not

constitute the “dissolution, liquidation, winding up” of a


three officers were replaced by executives from the acquiring
company after the Agreement and Plan of Merger was executed, and
(2) the agreement prohibited BraeLoch’s Board from taking any
unusual corporate action. We agree with the Plans’ legal
contentions that a change in management is not an act of
dissolution and that the obligation to refrain from any unusual
corporate activity is essentially one of maintaining the
business-as-usual status quo and, as such, is antithetical to any
winding-up.
     20
      The district court did not address the possibility that
the Stock Purchase Agreement effected a “dissolution,
liquidation, winding up” of BraeLoch, but this does not preclude
our consideration of the issue, as we review de novo the district
court’s holding on the question whether the plan administrator
abused his discretion.

                                21
corporation.21      Even if we were to assume without granting that

the Beneficiaries offer a legally correct interpretation of the

GESI Plan language in relation to the Stock Purchase Agreement,

we would remain unpersuaded that the plan administrator abused

his discretion in disregarding this proffered “dissolution,

liquidation, winding up” evidence.          As with the Agreement and

Plan of Merger, we discern no Change of Control in the execution

of the Stock Purchase Agreement on May 7, 1993; neither do we see

such a change when we view the two May 7 contracts in pari

materiae.

     2.     “SALE  OR TRANSFER OF ALL, OR SUBSTANTIALLY ALL, OF THE
            ASSETS OF BRAELOCH”

     The Beneficiaries also re-urge the position that they took

in the administrative proceedings; i.e., that BraeLoch’s

execution of the Agreement and Plan of Merger effected the

transfer of substantially all of its assets, thereby triggering a

Change of Control.22      As previously noted, the plan administrator

     21
      See In re Traung’s Estate, 185 P.2d 801, 803 (Cal. 1947)
(refusing to find liquidation by sale of corporate stock when
“[t]he contract of sale did not require nor contemplate the
liquidation or dissolution of the corporation,” but rather
“provided for the sale of all of its capital stock, and not the
transfer of the corporate assets,” and noting that “even the sale
of all of the property of a corporation does not work a
dissolution or liquidation of it”). As in the contract
considered in Traung’s Estate, the Stock Purchase Agreement did
not contemplate liquidation or dissolution, but, to the contrary,
obligated BraeLoch to continue as a going concern.
     22
      Although the Beneficiaries do not appear to offer the
Stock Purchase Agreement as having likewise initiated a Change of
Control under this definition, to the extent that their arguments

                                      22
rejected this argument, determining that (1) the subject

agreement did not involve or result in the sale or transfer of

substantially all of the assets of BraeLoch, and (2) even

assuming that it produced such a transfer, the agreement could

not have done so effectively prior to the July expiration of

Parker’s tender offers to the partnerships’ partners.   The plan

administrator based his conclusion that no such transfer had

occurred by virtue of entering into the Agreement and Plan of

Merger on the facts that (1) all of the assets involved in the

merger were at all relevant times owned by the partnerships, not

by BraeLoch, and (2) BraeLoch’s financial statements confirm that

it had not been divested of its assets as a result of the merger.

     The Beneficiaries observe that the financial statements on

which the plan administrator relied do not reflect the operating

value of BraeLoch’s assets, which value reveals that the loss of

the partnership interests effectively shut down BraeLoch’s

business, given that those interests were the source of the bulk

of the company’s income and cash flow.   The Plans respond by

pointing out that appraising the company’s assets in terms of

their “operating value” has nothing to do with the analysis and

misinterprets the plan language, which defines Change of Control

simply in terms of BraeLoch’s assets vel non, without reference


on appeal can be read as urging error on this ground, we do not
believe that the plan administrator abused his discretion in
implicitly concluding that the Stock Purchase Agreement did not
constitute an asset transfer.

                               23
to the “operating values” or “income and cash flow” of those

assets.

     We agree with the Plans on this point as well. More

importantly, in proffering this contention the Beneficiaries

either totally miss the point or intentionally obfuscate it: The

question is not whether they are “right” and the plan

administrator is “wrong” but solely whether, in reaching a

putatively wrong result, the plan administrator abused his

discretion, a test that is easy for the administrator to pass,

given that it is a much more deferential standard of review than

de novo or even clearly erroneous.         In sum, we see no abuse of

discretion in the plan administrator’s interpretation of the

Agreement and Plan of Merger vis à vis the GESI Plan’s asset-

transfer Change of Control language.

     3.   MISCELLANEOUS   FACTS

     The Beneficiaries claim that the plan administrator further

abused his discretion by ignoring the minutes of BraeLoch’s May

20 Board of Directors meeting.        They aver that the minutes reveal

the Board’s determination that a Change of Control and “winding

up” had already occurred.         In like manner, they also insist that

BraeLoch’s funding of Ford Graham’s Retirement Trust pension plan

—— which contained a Change of Control provision identical to the

one at issue in the GESI Plan —— constitutes an admission that a

Change of Control took place.        The Plans deflate this assignment

by showing that the Ford Graham payments —— which began in March

                                      24
of 1992, over a year before the first two agreements were

executed on May 7, 1993 —— were not contingent on a Change of

Control and that the Beneficiaries’ allegations with regard to

the Graham trust are without evidentiary support.23

     Finally, the Beneficiaries characterize correspondences

leading up to and following the May 7 agreements as “clear and

direct evidence” that these agreements initiated a “winding up”

of BraeLoch.   The Plans attack the competency of this evidence,

arguing that it indicates “nothing more than the writers’

contemplation of a possibility that at some indeterminate point

in the future, various corporations would wind up.”

     Again, the issue is not the accuracy of the plan

administrator’s determination, but whether he abused his

discretion in making it.   Besides concluding that the plan

administrator’s decisions were legally correct, however, we also

perceive no abuse of discretion in the method he employed in

reaching his conclusions with respect to these subsidiary grounds


     23
      The plan administrator dismissed consideration of the Ford
Graham payment as irrelevant to a Change of Control
determination, finding that

     Ford Graham was being paid under a Retirement
     Continuation Agreement in effect since March 1992. It
     was not an ERISA plan and could not be amended without
     express approval, in writing by both parties. The
     contract was bought out at the express request of the
     acquirer of [BraeLoch]. The Plan Administrator found
     no evidence that the Company declared a change of
     control in connection with this settlement of a
     contract liability[.]

                                25
advanced by the Beneficiaries as supporting a Change of Control

finding.

                                III

                           CONCLUSION24

     Having carefully reviewed the appellate record in this case

and the legal arguments advanced by counsel in their appellate

briefs and at oral argument, we are satisfied that the positions

taken by the Beneficiaries mischaracterize ordinary if

sophisticated merger and acquisition contracts —— clearly,

agreements to do future things —— as having prematurely triggered

a “Change of Control.”   These same arguments appear to have

influenced the district court to set up the “winding up” straw

man and then knock it down, in disregard of clearly established

corporate law and rules of interpretation, and likewise in

disregard (or at least misapplication) of the jurisprudential

road map that we have drawn for courts of this circuit to follow

when testing for an ERISA plan administrator’s abuse of the broad

discretion vested in him by the plan documents.   In our de novo

review, we conclude that the plan administrator not only reached


     24
      As we have decided the Plans’ appeal in their favor on the
issue of the district court’s erroneous review of the plan
administrator’s decision, we need no reach the Plans’ alternative
arguments that the district court erred by: (1) considering
evidence outside the administrative record, and (2) failing to
apply the principles of ratification and release —— which
principles are implicated by the Beneficiaries’ acceptance of the
annuity benefit and the enhanced separation agreement —— to bar
the Beneficiaries’ claims.

                                26
the correct legal conclusion, which —— under the first step of

the Wildbur test —— should end court review; he also exercised

his discretion without abusing it, thereby satisfying the second

step of the Wildbur rubric as well.   Consequently, the summary

judgment ruling of the district court is reversed and judgment is

hereby rendered in favor of the Plans, dismissing the

Beneficiaries’ claims for Change of Control benefits, at their

cost.

REVERSED and RENDERED at Appellees’ cost.




                               27
