SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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14a-6(e)(2))
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THE GAP, INC.
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(Name of Registrant as Specified in Its Certificate)
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THE GAP, INC.
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED JANUARY 29, 2002
1. Purpose of the Plan
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The Gap, Inc. hereby establishes The Gap, Inc. Employee Stock Purchase
Plan, effective as of December 1, 1994, in order to provide eligible employees
of the Company and its participating Subsidiaries with the opportunity to
purchase Common Stock through payroll deductions. The Plan is intended to
qualify as an employee stock purchase plan under Section 423(b) of the Code.
2. Definitions
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2.1 "1934 Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific Section of the 1934 Act or regulation thereunder shall
include such Section or regulation, any valid regulation promulgated under such
Section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such Section or regulation.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended. Reference
to a specific Section of the Code or regulation thereunder shall include such
Section or regulation, any valid regulation promulgated under such Section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such Section or regulation.
2.4 "Committee" shall mean the committee appointed by the company's Chief
Executive Officer to administer the Plan. The members of the Committee shall
serve at the pleasure of the Chief Executive Officer. Any member of the
Committee may resign at any time by notice in writing mailed or delivered to the
Secretary of the Company. As of the effective date of the Plan, the members of
the Committee shall consist of the Retirement Committee appointed under
GapShare, the Company's "401(k)" Plan.
2.5 "Common Stock" means the common stock of the Company.
2.6 "Company" means The Gap, Inc., a Delaware corporation.
2.7 "Compensation" means a Participant's salary, wages, commissions and
overtime pay. A Participant's compensation shall not include any other type of
remuneration.
2.8 "Eligible Employee" means every Employee of an Employer, except any
Employee who, immediately after the grant of an option under the Plan, would own
stock and/or hold outstanding options to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of stock
of the Company or of any Subsidiary of the Company (including stock attributed
to such Employee pursuant to Section 424(d) of the Code).
2.9 "Employee" means an individual who is a common-law employee of any
Employer, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan. Notwithstanding
the preceding sentence, the term "Employee" shall not include any individual who
is classified as a "seasonal employee" (i.e., an employee whose customary
employment is for not more than 5 months in any calendar year).
2.10 "Employer" or "Employers" means any one or all of the Company and
those Subsidiaries which, with the consent of the Board, have adopted the Plan.
2.11 "Enrollment Date" means December 1, 1994, each June 1 of each
subsequent year, and/or such other dates determined by the Committee (in its
discretion) from time to time.
2.12 "Grant Date" means any date on which a Participant is granted an
option under the Plan.
2.13 "Participant" means an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a
Participant pursuant to Section 7 or Section 8.
2.14 "Plan" means The Gap, Inc. Employee Stock Purchase Plan, as set forth
in this instrument and as hereafter amended from time to time.
2.15 "Purchase Date" means the last business day of May and November, or
such other specific business days as may be established by the Committee from
time to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date.
2.16 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of
granting options under the Plan, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
3. Shares Subject to the Plan
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3.1 Number Available. 24,500,000 shares of Common Stock are available for
issuance pursuant to the Plan. Shares sold under the Plan may be newly issued
shares or treasury shares.
3.2 Adjustments. In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of the Company, the Board may make such adjustment, if any, as it
deems appropriate in the number, kind and purchase price of the shares available
for purchase under the Plan and in the maximum number of shares subject to any
option under the Plan.
4. Enrollment
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4.1 Participation. Each Eligible Employee may elect to become a
Participant by enrolling or re-enrolling in the Plan effective as of any
Enrollment Date. In order to enroll, an eligible employee must complete, sign
and submit to the Company an enrollment form in such form as may be specified by
the Committee from time to time. Any enrollment form received by the Company no
later than seven (7) calendar days before an Enrollment Date shall be effective
on that Enrollment Date, provided that the Committee, in its discretion, may (on
a uniform and nondiscriminatory basis) specify an earlier or later deadline for
the submission of enrollment forms. Any Participant whose option expires and who
has not withdrawn from the Plan automatically will be re-enrolled in the Plan on
the Enrollment Date immediately following the Purchase Date on which his or her
option expires.
4.2 Payroll Withholding. On his or her enrollment form, each Participant
must elect to make Plan contributions via payroll withholding from his or her
Compensation at a rate equal to any whole percentage from 1% to 15%, or such
lesser percentage that the Committee may establish from time to time for all
options to be granted on any Enrollment Date. A Participant may elect to
increase or decrease his or her rate of payroll withholding (effective as of any
Enrollment Date) by submitting a new enrollment form in accordance with such
procedures as may be established by the Committee from time to time. A
Participant may stop his or her payroll withholding by submitting a new
enrollment form in accordance with such procedures as my be established by the
Committee from time to time. In order to be effective, an enrollment form must
be received by the Company no later than seven (7) calendar days before the date
elected for the change or cessation, provided that the Committee, in its
discretion, may (on a uniform and nondiscriminatory basis) specify an earlier or
later deadline for the submission of enrollment forms. Any participant who is
automatically re-enrolled in the Plan will be deemed to have elected to continue
his or her contributions at the percentage last elected by the Participant.
5. Options to Purchase Common Stock
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5.1 Grant of Option. On each Enrollment Date on which the Participant
enrolls or re-enrolls in the Plan, he or she shall be granted an option to
purchase shares of Common Stock.
5.2 Duration of Option. Each option granted under the Plan shall expire on
the earliest to occur of (a) the completion of the purchase of shares on the
last Purchase Date occurring within 27 months of the Grant Date of such option,
(b) such shorter option period as may be established by the Committee from time
to time prior to an Enrollment Date for all options to be granted on such
Enrollment Date, or (c) the date on which the participant ceases to be such for
any reason. Until otherwise determined by the Committee for all options to be
granted on an Enrollment Date, the period referred to in clause (b) in the
preceding sentence shall mean (a) for options granted on December 1, 1994, the
period from December 1, 1994, through May 31,1995, and (b) for options granted
on or after June 1, 1995, the period from the applicable Enrollment Date through
the last business day of the May next following the Enrollment Date.
5.3 Number of Shares Subject to Option. The number of shares available for
purchase by each Participant under the option will be established by the
Committee from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date. Notwithstanding the preceding, an option (taken
together with all other options then outstanding under this Plan and under all
other similar employee stock purchase plans of the Employers) shall not give the
Participant the right to purchase shares at a rate which accrues in excess of
$25,000 of fair market value at the applicable Grant Dates of such shares (less
the fair market value at the applicable Grant Dates of any shares previously
purchased during such year under options which have expired or terminated) in
any calendar year during which such Participant is enrolled in the Plan at any
time. Notwithstanding the preceding, in no event shall a Participant have the
right to purchase in excess of 25,000 shares of Common Stock in any calendar
year.
5.4 Other Terms and Conditions. Each option shall be subject to the
following additional terms and conditions:
(a) payment for shares purchased under the option shall be made only
through payroll withholding under Section 4.2;
(b) purchase of shares upon exercise of the option will be accomplished
only in installments in accordance with Section 6.1;
(c) the price per share under the option will be determined as provided in
Section 6.1; and
(d) the option in all respects shall be subject to such other terms and
conditions (applied on a uniform and nondiscriminatory basis), as the Committee
shall determine from time to time in its discretion.
6. Purchase of Shares
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6.1 Exercise of Option. On each Purchase Date, the funds then credited to
each Participant's account shall be used to purchase whole shares of Common
Stock, or fractional shares of Common Stock at the Committee's discretion. Any
cash remaining after whole shares of Common Stock have been purchased shall be
carried forward in the Participant's account for the purchase of shares on the
next Purchase Date. The price of the shares purchased under any option shall be
85% of the lower of:
(a) the closing price of Common Stock on the Grant Date for such option
on the New York Stock Exchange Composite Transactions Index; or
(b) the closing price of Common Stock on the Purchase Date on the New York
Stock Exchange Composite Transactions Index.
6.2 Crediting of Shares. Shares purchased on any Purchase Date shall be
delivered to a broker designated by the Committee to hold shares for the benefit
of the Participants. As determined by the Committee from time to time, such
shares shall be delivered as physical certificates or by means of a book entry
system. Although the Participant may direct the broker to sell such shares at
any time (subject to applicable securities laws), the shares may not be
transferred to another broker or to any other person (including the Participant)
until 24 months after the Grant Date of the option with which the shares were
purchased.
6.3 Exhaustion of Shares. If at any time the shares available under the
Plan are over-enrolled, enrollments shall be reduced proportionately to
eliminate the over-enrollment. Any funds that cannot be applied to the purchase
of shares due to over-enrollment shall be refunded to the Participants (without
interest).
7. Withdrawal
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7.1 Withdrawal. A Participant may withdraw from the Plan by submitting a
completed enrollment form to the Company. A withdrawal will be effective only if
it is received by the Company at least seven (7) calendar days before the
proposed date of withdrawal, provided that the Committee, in its discretion, may
specify (on a uniform and nondiscriminatory basis) an earlier or later deadline
for the submission of enrollment forms. When a withdrawal becomes effective, the
Participant's payroll contributions shall cease and all amounts then credited to
the Participant's account shall be distributed to him or her (without interest).
8. Cessation of Participation
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8.1 Termination of Status as Eligible Employee. A Participant shall cease
to be a Participant immediately upon the cessation of his or her status as an
Eligible Employee (for example, because of his or her termination of employment
from all Employers for any reason). As soon as practicable after such cessation,
the Participant's payroll contributions shall cease and all amounts then
credited to the Participant's account shall be distributed to him or her
(without interest). Notwithstanding the preceding sentence, if the Participant's
termination is not entered into the Company's payroll system in sufficient time
to prevent the purchase of shares on the next Purchase Date, the amounts then
credited to the Participant's account shall be used to purchase whole shares of
Common Stock, with any remaining amount refunded to the Participant (without
interest).
9. Designation of Beneficiary
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9.1 Designation. Each Participant may, pursuant to such uniform and
nondiscriminatory procedures as the Committee may specify from time to time,
designate one or more Beneficiaries to receive any amounts credited to the
Participant's account at the time of his or her death. Notwithstanding any
contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative
only after (and for so long as) the Committee determines (on a uniform and
nondiscriminatory basis) to permit the designation of Beneficiaries.
9.2 Changes. A Participant may designate different Beneficiaries (or may
revoke a prior Beneficiary designation) at any time by delivering a new
designation (or revocation of a prior designation) in like manner. Any
designation or revocation shall be effective only if it is received by the
Committee. However, when so received, the designation or revocation shall be
effective as of the date the designation or revocation is executed (whether or
not the Participant still is living), but without prejudice to the Committee on
account of any payment made before the change is recorded. The last effective
designation received by the Committee shall supersede all prior designations.
9.3 Failed Designations. If a Participant dies without having effectively
designated a Beneficiary, or if no Beneficiary survives the Participant, the
Participant's Account shall be payable to his or her estate.
10. Administration
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10.1 Plan Administrator. The Plan shall be administered by the Committee.
The Committee shall have the authority to control and manage the operation and
administration of the Plan.
10.2 Actions by Committee. Each decision of a majority of the members of
the Committee then in office shall constitute the final and binding act of the
Committee. The Committee may act with or without a meeting being called or held
and shall keep minutes of all meetings held and a record of all actions taken by
written consent.
10.3 Powers of Committee. The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of the Plan
and to control its operation in accordance with its terms, including, but not by
way of limitation, the following discretionary powers:
(a) To interpret and determine the meaning and validity of the provisions
of the Plan and the options and to determine any question arising under, or in
connection with, the administration, operation or validity of the Plan or the
options;
(b) To determine any and all considerations affecting the eligibility of
any employee to become a Participant or to remain a Participant in the Plan;
(c) To cause an account or accounts to be maintained for each Participant;
(d) To determine the time or times when, and the number of shares for
which, options shall be granted;
(e) To establish and revise an accounting method or formula for the plan;
(f) To designate a broker to receive shares purchased under the Plan and
to determine the manner and form in which shares are to be delivered to the
designated broker;
(g) To determine the status and rights of Participants and their
Beneficiaries or estates;
(h) To employ such brokers, counsel, agents and advisers, and to obtain
such broker, legal, clerical and other services, as it may deem necessary or
appropriate in carrying out the provisions of the Plan;
(i) To establish, from time to time, rules for the performance of its
powers and duties and for the administration of the Plan;
(j) To adopt such procedures and subplans as are necessary or appropriate
to permit participation in the Plan by employees who are foreign nationals or
employed outside of the United States;
(k) To delegate to any one or more of its members or to any other person,
severally or jointly, the authority to perform for and on behalf of the
Committee one or more of the functions of the Committee under the Plan.
10.4 Decisions of Committee. All actions, interpretations, and decisions of
the Committee shall be conclusive and binding on all persons, and shall be given
the maximum possible deference allowed by law.
10.5 Administrative Expenses. All expenses incurred in the administration
of the Plan by the Committee, or otherwise, including legal fees and expenses,
shall be paid and borne by the Employers, except any stamp duties or transfer
taxes applicable to the purchase of shares may be charged to the
account of each Participant. Any brokerage fees for the purchase of shares by a
Participant shall be paid by the Company, but brokerage fees for the resale of
shares by a Participant shall be borne by the Participant.
10.6 Eligibility to Participate. No member of the Committee who is also an
employee of an Employer shall be excluded from participating in the Plan if
otherwise eligible, but he or she shall not be entitled, as a member of the
Committee, to act or pass upon any matters pertaining specifically to his or her
own account under the Plan.
10.7 Indemnification. Each of the Employers shall, and hereby does,
indemnify and hold harmless the members of the Committee and the Board, from and
against any and all losses, claims, damages or liabilities (including attorneys'
fees and amounts paid, with the approval of the Board, in settlement of any
claim) arising out of or resulting from the implementation of a duty, act or
decision with respect to the Plan, so long as such duty, act or decision does
not involve gross negligence or willful misconduct on the part of any such
individual.
11. Amendment, Termination and Duration
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11.1 Amendment, Suspension, or Termination. The Board, in its sole
discretion, may amend or terminate the Plan, or any part thereof, at any time
and for any reason. If the Plan is terminated, the Board, in its discretion, may
elect to terminate all outstanding options either immediately or upon completion
of the purchase of shares on the next Purchase Date, or may elect to permit
options to expire in accordance with their terms (and participation to continue
through such expiration dates). If the options are terminated prior to
expiration, all amounts then credited to Participants' accounts which have not
been used to purchase shares shall be returned to the Participants (without
interest) as soon as administratively practicable.
11.2 Duration of the Plan. The Plan shall commence on the date specified
herein, and subject to Section 11.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter.
12. General Provisions
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12.1 Participation by Subsidiaries. One or more Subsidiaries of the Company
may become participating Employers by adopting the Plan and obtaining approval
for such adoption from the Board. By adopting the Plan, a Subsidiary shall be
deemed to agree to all of its terms, including (but not limited to) the
provisions granting exclusive authority (a) to the Board to amend the Plan, and
(b) to the Committee to administer and interpret the Plan. Any Subsidiary may
terminate its participation in the Plan at any time. The liabilities incurred
under the Plan to the Participants employed by each Employer shall be solely the
liabilities of the Employer, and no other Employer shall be liable for benefits
accrued by a Participant during any period when he or she was not employed by
such Employer.
12.2 Inalienability. In no event may either a Participant, a former
Participant or his or her Beneficiary, spouse or estate sell, transfer,
anticipate, assign, hypothecate, or otherwise dispose of any right or interest
under the Plan; and such rights and interests shall not at any time be subject
to the claims of creditors nor be liable to attachment, execution or other legal
process. Accordingly, for example, a Participant's interest in the Plan is not
transferable pursuant to a domestic relations order. The preceding shall not
affect the Participant's right to direct the sale or transfer of shares that
have been allocated to the Participant's account at the broker designated by the
Committee (subject to the provisions of the Plan).
12.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
12.4 Requirements of Law. The granting of options and the issuance of
shares shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or securities exchanges as the
Committee may determine are necessary or appropriate.
12.5 No Enlargement of Employment Rights. Neither the establishment or
maintenance of the Plan, the granting of options, the purchase of shares, nor
any action of any Employer or the Committee, shall be held or construed to
confer upon any individual any right to be continued as an employee of the
Employer nor, upon dismissal, any right or interest in any specific assets of
the Employers other than as provided in the Plan. Each Employer expressly
reserves the right to discharge any employee at any time, with or without cause.
12.6 Apportionment of Cost and Duties. All acts required of the Employers
under the Plan may be performed by the Company for itself and its Subsidiary,
and the costs of the Plan may be equitably apportioned by the Committee among
the Company and the other Employers. Whenever an Employer is permitted or
required under the terms of the Plan to do or perform any act, matter or thing,
it shall be done and performed by any officer or employee of the Employers who
is thereunto duly authorized by the Employers.
12.7 Construction and Applicable Law. The Plan is intended to qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the Code.
Any provision of Plan which is inconsistent with Section 423 of the Code shall
without further act or amendment by the Company or the Board be reformed to
comply with the requirements of ss. 423. The provisions of the Plan shall be
construed, administered and enforced in accordance with such Section and with
the laws of the State of California (excluding California's conflict of laws
provisions).
12.8 Captions. The captions contained in and the table of contents prefixed
to the Plan are inserted only as a matter of convenience, and in no way define,
limit, enlarge or describe the scope or intent of the Plan nor in any way shall
affect the construction of any provision of the Plan.