Put Option pricing

[dmwe]

I'm working with a non-publicly traded ESOP with an 11/30 PYE. An employee who terminated in 2006, anticipating that the stock price will decline, finally sent in his distribution election form to rollover his stock & cash to an IRA. He also submitted a Put Option form to Put the stock back to the corporation in return for a 5-year note. He signed and dated the distribution form and Put Option form on 11/24/08.

As trustee and recordkeeper, we proceded to pull the stock from our vault to send it to the transfer agent and sent the IRA account opening paperwork to the participant.

The stock was reissued as of 11/28/08 to the IRA but didn't get back to me until Dec. 1st. I still have to send the stock along with the Put Option to the company after we determine whether or not the participant must sign the back of the certificate.

Here's my question...will his distribution and subsequent note payable from the company be at the 11/30/07 price, or the 11/30/08 price since we are now into a new plan year? Does the pricing hinge on the date of the Put Option or the date the stock is delivered to the company, the Put is accepted, and the note payable is prepared?

The plan document isn't specific to this situation coming up. The Put Option does specify that the stock will be valued as of the preceding year-end stock price.

Thanks

[BeckyMiller]

See Rev. Rul. 81-158. That says that it is the value on the date the shares are provided to the transfer agent. Beyond that you need to go to a lawyer because there is all that stuff about what the document says, following past practices on interpretations of what the document says, etc.