Director Stock Unit Agreement – Gap
Grant No.
THE GAP, INC.
DIRECTOR STOCK UNIT AGREEMENT
The Gap, Inc. (the “Company”) hereby grants to (the “Director”), the
number of Stock Units under the Company153s 2011 Long-Term Incentive Plan (the
“Plan”) indicated below. This award is subject to all of the terms and
conditions contained in this Director Stock Unit Agreement (the “Agreement”),
including the terms and conditions contained in the attached Appendix A and the
Plan. The date of this Agreement is . Subject to the provisions of
Appendix A and of the Plan, the principal features of this award are as follows:
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Number of Stock Units: |
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Vesting of Stock Units (“Vesting Schedule”): |
100% of the Stock Units shall be immediately vested upon the Date of Grant. |
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Your signature below indicates your agreement and understanding that this
award is subject to all of the terms and conditions contained in Appendix A and
the Plan. PLEASE BE SURE TO READ ALL OF APPENDIX A AND THE PLAN, WHICH CONTAINS
THE SPECIFIC TERMS AND CONDITIONS OF THIS AWARD.
IN WITNESS WHEREOF, the Company and the Director have executed this
Agreement, in duplicate, to be effective as of the day and year first above
written.
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THE GAP, INC. |
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Date: |
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My signature below indicates that I understand that this award is subject to
all of the terms and conditions of this Agreement (including the attached
Appendix A) and of the Plan.
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DIRECTOR |
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Dated: |
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Address: |
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APPENDIX A
TERMS AND CONDITIONS OF STOCK UNIT GRANT
1. Grant of Stock Units. The Company hereby grants to the Director
under the Plan the number of Stock Units indicated on the first page of this
Agreement subject to the terms and conditions set forth in this Agreement and
the Plan.
2. Company153s Obligation to Pay. On any date, a Stock Unit has a value
equal to the Fair Market Value of one Share. Unless and until the Stock Units
have vested in accordance with the Vesting Schedule set forth on the first page
of this Agreement, the Director will have no right to payment of the Stock
Units. Prior to actual payment of any vested Stock Units, Stock Units represent
an unsecured obligation of the Company, payable (if at all) only from the
general assets of the Company.
3. Payment.
(a) General Rule. Vested Stock Units will be paid to the Director in
full Shares (with the balance, if any, in cash) as soon as practicable (but not
more than ninety (90) days) following the date which is three (3) years from the
Date of Grant, subject to paragraph 5.
(b) Election to Defer Payment. Notwithstanding paragraph 3(a), at
the discretion of the Committee and in accordance with the Plan, Code Section
409A and such rules established by the Committee, the Director may elect to
further defer delivery of the proceeds due with respect to his or her vested
Stock Units by properly completing and submitting a Stock Unit Deferral Election
Form (the “Election Form”) to the Company in accordance with the directions on
the Election Form and the procedures established by the Committee.
(c) Termination of Service. Notwithstanding paragraphs 3(a) and
3(b), in the event that the Director incurs a separation from service (within
the meaning of Code Section 409A) for any reason, including, but not limited to,
death, Disability, or Retirement, the vested Stock Units will be paid to the
Director (or in the event of the Director153s death, to his or her estate) as soon
as practicable following the date of such separation from service, except as
provided by paragraph 8, and in each case subject to paragraph 5.
(d) Change in Control. Notwithstanding paragraphs 3(a) and 3(b), in
order for the Committee to determine that the deferral of delivery of the
proceeds due with respect to any vested Stock Units will terminate on account of
a change in control or other similar transaction or event, such change in
control or other similar transaction or event must constitute a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company (as determined in accordance
with section 409A(a)(2)(A)(v) of the U.S. Internal Revenue Code of 1986, as
amended and Treasury Regulation Section 1.409A-3(i)(5)). Upon such a termination
of the deferral, the vested Stock Units will be paid to the Director as soon as
practicable following the date of such change in control or other similar
transaction or event (subject to paragraph 5).
4. Death of Director. Any distribution or delivery to be made to the
Director under this Agreement will, if the Director is then deceased, be made to
the Director153s designated beneficiary to the extent such designation is valid
under applicable law. If the Director has not designated a then living
beneficiary, distributions and deliveries will be made to the administrator or
executor of the Director153s estate. Any such administrator or executor must
furnish the Company with (a) written notice of his or her status as transferee,
and (b) evidence satisfactory to the Company to establish the validity of the
transfer and compliance with any laws or regulations pertaining to said
transfer.
5. Withholding of Taxes. The Director agrees that the Company will
withhold a portion of the Shares scheduled to be issued pursuant to vested Stock
Units that have an aggregate market value sufficient to pay the federal, state
and local income, employment and any other applicable taxes required to be
withheld by the Company or its designated Affiliate, determined at minimum
statutory withholding rates. The Company will only withhold whole Shares and
therefore the Director also authorizes deduction without notice from amounts
payable to the Director in cash in an amount sufficient to satisfy the Company153s
remaining tax withholding obligation. Notwithstanding the previous two
sentences, the Director, if the Company in its sole discretion so agrees, may
elect to furnish to the Company written notice, no more than 30 days and no less
than 5 days in advance of the date the
vested Stock Units are scheduled to be paid (in accordance with paragraph 3),
of his or her intent to satisfy the tax withholding requirement by remitting the
full amount of the tax withholding to the Company on this date. In the event
that Director provides such written notice and fails to satisfy the tax
withholding requirement by the date the vested Stock Units are scheduled to be
paid (in accordance with paragraph 3), the Company shall satisfy the tax
withholding requirement pursuant to the first two sentences of this section.
6. Rights as Stockholder. Subject to paragraph 7, neither the Director
nor any person claiming under or through the Director will have any of the
rights or privileges of a stockholder of the Company in respect of any Shares
deliverable hereunder unless and until certificates representing such Shares
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Director. After such issuance, recordation,
and delivery, the Director will have all the rights of a stockholder of the
Company with respect to such Shares.
7. Dividend Equivalents. The Director shall be entitled to receive
Dividend Equivalents paid on Shares underlying the Stock Units. Any Dividends
Equivalents automatically shall be deemed reinvested in Stock Units annually on
each anniversary after the date of grant or, if earlier, the settlement of the
Stock Units (the “Dividend Equivalent Stock Units”). Dividend Equivalent Stock
Units shall be subject to the same terms and conditions as the Stock Units,
including any deferral election.
8. Section 409A. Notwithstanding anything in the Plan or this
Agreement to the contrary, if at the time of the Director153s “separation from
service” within the meaning of Section 409A, as determined by the Company other
than due to the Director153s death (x) the Director is a “specified employee”
within the meaning of Section 409A at the time of such separation and (y) the
payment of any vested Stock Units that become payable as a result of such
separation will result in the imposition of additional tax under Section 409A if
paid to the Director on or within the six (6) month period following the
Director153s separation from service, then the payment of such vested Stock Units
will not be made until the date six (6) months and one day following the date of
the Director153s separation from service, subject to paragraph 5, unless the
Director dies following his or her separation from service, in which case, the
vested Stock Units will be paid in Shares to the Director153s estate upon his or
her death, subject to paragraph 5. It is the intent of this Agreement to comply
with the requirements of Section 409A so that none of the Stock Units provided
under this Agreement or Shares issuable thereunder will be subject to the
additional tax imposed under Section 409A, and any ambiguities herein will be
interpreted to so comply. For purposes of this Agreement, “Section 409A” means
Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and any
proposed, temporary or final Treasury Regulations and Internal Revenue Service
guidance thereunder, as each may be amended from time to time.
9. No Effect on Service. The transactions contemplated hereunder and
the vesting schedule set forth on the first page of this Agreement do not
constitute an express or implied promise of continued service for any period of
time. The terms of the Director153s service shall not be affected by the grant of
this award.
10. Address for Notices. Any notice to be given to the Company under
the terms of this Agreement must be addressed to the Company, in care of its
Legal Department, at The Gap, Inc., Two Folsom, San Francisco, California 94105,
or at such other address as the Company may hereafter designate in writing. Any
notice to be given to the Director will be addressed to the Director at the
address set forth on the records of the Company. Any such notice will be deemed
to have been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, and deposited, postage prepaid, in a United States post
office.
11. Grant is Not Transferable. Except as otherwise expressly provided
herein, this grant, and the rights and privileges conferred hereby, may not be
transferred, assigned, pledged, or hypothecated in any way (whether by operation
of law or otherwise) and may not be subject to sale under execution, attachment,
or similar process. Upon any attempt to transfer, assign, pledge, hypothecate,
or otherwise dispose of this grant, or any right or privilege conferred hereby,
or upon any attempted sale under any execution, attachment, or similar process,
this grant and the rights and privileges conferred hereby immediately will
become null and void.
12. Restrictions on Sale of Securities. The Shares issued as payment
for vested Stock Units awarded under this Agreement shall be registered under
the federal securities laws and shall be freely tradable upon receipt. However,
the Director153s subsequent sale of the Shares shall be subject to any market
blackout-period that may be imposed by the Company and must comply with the
Company153s insider trading policies, and any other applicable securities laws.
13. Binding Agreement. Subject to the limitation on the
transferability of this grant contained herein, this Agreement will be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors, and assigns of the Company and the Director.
14. Additional Conditions to Issuance of Certificates for Shares. The
Shares deliverable to the Director may be either previously authorized but
unissued Shares or issued Shares that have been reacquired by the Company.
Solely for purposes of Delaware corporate law, par value for the Shares actually
delivered to the Director for the Stock Units will be deemed satisfied by past
services rendered by the Director. The Company shall not be required to issue
any Shares hereunder so long as the Company reasonably anticipates that such
issuance will violate Federal securities law or other applicable law; provided
however, that in such event the Company shall issue such Shares at the earliest
possible date at which the Company reasonably anticipates that the issuance of
the Shares will not cause such violation. For purposes of the previous sentence,
any issuance of Shares that would cause inclusion in gross income or the
application of any penalty provision or other provision of the Code shall not be
treated as a violation of applicable law.
15. Plan Governs. This Agreement is subject to all terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan will govern. Capitalized terms used and not defined in
this Agreement will have the meaning set forth in the Plan.
16. Committee Authority. The Committee will have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent
therewith and to interpret or revoke any such rules (including, but not limited
to, the determination of whether or not any Stock Units have vested). All
actions taken and all interpretations and determinations made by the Committee
in good faith will be final and binding upon the Director, the Company, and all
other interested persons. No member of the Committee will be personally liable
for any action, determination, or interpretation made in good faith with respect
to the Plan or this Agreement.
17. Captions. Captions provided herein are for convenience only and
are not to serve as a basis for interpretation or construction of this
Agreement.
18. Agreement Severable. In the event that any provision in this
Agreement will be held invalid or unenforceable, such provision will be
severable from, and such invalidity or unenforceability will not be construed to
have any effect on, the remaining provisions of this Agreement.
19. Modifications to the Agreement. This Agreement constitutes the
entire understanding of the Company and the Director on the subjects covered,
including the Director153s right to receive a grant of stock units under Section 9
of the Plan. The Director expressly warrants that he or she is not accepting
this Agreement in reliance on any promises, representations, or inducements
other than those contained herein. Modifications to this Agreement or the Plan
can be made only in an express written agreement executed by a duly authorized
officer of the Company. Notwithstanding anything to the contrary in the Plan or
this Agreement, the Company reserves the right to revise this Agreement as it
deems necessary or advisable, in its sole discretion and without the consent of
the Director, to comply with Section 409A of the Code or to otherwise avoid
imposition of any additional tax or income recognition under Section 409A of the
Code in connection with these Stock Units (including settlement or payment
thereof).
20. Amendment, Suspension or Termination of the Plan. By accepting
this award, the Director expressly warrants that he or she has received a right
to an equity based award under the Plan, and has received, read, and understood
a description of the Plan. The Director understands that the Plan is
discretionary in nature and may be modified, suspended, or terminated by the
Company at any time.
21. Notice of Governing Law. This grant of Stock Units shall be
governed by, and construed in accordance with, the laws of the State of
California without regard to principles of conflict of laws.
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THE GAP, INC.
2011 LONG-TERM INCENTIVE PLAN
STOCK UNIT DEFERRAL ELECTION FORM
Complete and return this Election Form if you want to defer the settlement
(payment) of stock units granted to you under The Gap, Inc. 2011 Long-Term
Incentive Plan (the “Plan”).
Stock units that are granted to you under the Plan (“Stock Units”) generally
become payable as soon as practicable after the date which is three (3) years
from the date of vesting (the “Original Payment Date”) in whole shares of common
stock of The Gap, Inc. (the “Company”), with the balance, if any, in cash. Stock
Units are immediately one hundred percent (100%) vested upon the Date of Grant.
The Committee (as defined in the Plan) permits you to defer the settlement of
your Stock Units beyond the Original Payment Date on a tax-deferred basis in
accordance with the terms of the Plan. To achieve this favorable tax result, the
amounts deferred will represent an unfunded and unsecured promise to pay on
behalf of the Company. With respect to any amounts that you defer, you will
become a general, unsecured creditor of the Company, which means that your
deferral remains subject to the claims of the Company153s creditors, and, if the
Company153s assets are insufficient to pay all of its creditors, you may not
receive part or all of your deferral.
Please note that the Plan has been amended to comply with Section 409A of the
Internal Revenue Code (“Section 409A”). As a result, any deferral elections made
with respect to Stock Units must comply with the requirements of Section 409A.
This means that deferral elections can be accepted and become effective
only if the following requirements (the “Deferral
Requirements”) are satisfied: (a) the deferral election must be made at least
twelve (12) months before the Original Payment Date; (b) the deferral election
must defer the payment of the Stock Units for a period of not less than five (5)
years from the Original Payment Date; and (c) the deferral election may not take
effect until at least twelve (12) months after the date on which the election is
made.
Notwithstanding the foregoing and any election made hereunder, in accordance
with paragraph 3(c) of the Stock Unit Agreement applicable to your Stock Units,
the vested Stock Units will be paid to you (or in the event of your death, to
your estate) as soon as practicable following the date you incur a Termination
of Service for any reason, including, but not limited to, death, Disability, or
Retirement (as such terms are defined in the Plan); provided, however, that
payment will be made no earlier than six (6) months and one (1) day following
the date of termination to the extent necessary to comply with Section 409A. In
addition, in accordance with paragraph 3(d), of the Stock Unit Agreement
applicable to your Stock Units, the vested Stock Units will be paid to you (or
in the event of your death, to your estate) as soon as practicable following the
date of certain changes in control of the Company or other similar events.
I. PERSONAL INFORMATION (Please Print)
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Director Name: (the “Director”) |
II. STOCK UNIT DEFERRAL ELECTION (Choose
One)
Payment of the Stock Units indicated below will be made as soon as
practicable following the date you choose below (the “Designated Payment Date”),
provided that the Deferral Requirements are satisfied. This means that your
Designated Payment Date will be given effect only if (a) you complete and return
this Election Form at least twelve (12) months before the Original Payment Date,
and (b) the Designated Payment Date is at least five (5) years from the Original
Payment Date. As noted above, any payment will be made in the form of whole
shares of Company common stock with the balance, if any, in cash.
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wish to further defer the settlement (i.e., payment) of the Stock Units |
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I elect to defer the settlement (i.e., payment) of the Stock Units granted to |
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Until I notify the Company otherwise, I elect to defer the settlement of all |
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IMPORTANT: Please note that if the Original Payment Date is
within twelve (12) months of the date you complete and return this Election Form
then, due to Section 409A requirements, we cannot accept your deferral election
and it will be deemed null and void. This means that payment of the Stock Units
will be made as soon as practicable after the Original Payment Date regardless
of your deferral election.
Any amounts deferred will be taxable as ordinary income in the year paid.
Please seek advice from your professional tax advisor before making your
deferral election.
III. DIRECTOR SIGNATURE
I acknowledge that I have read and reviewed a copy of the Plan153s prospectus.
I understand that my decision to defer the settlement of Stock Units will make
me only a general, unsecured creditor of the Company. I also understand that the
amounts deferred will be taxable as ordinary income in the year paid. If the
Company determines that it is required to withhold for any taxes, including, but
not limited to, income or employment taxes, prior to the date of deferred
payout, I agree that, if I do not make other arrangements that are satisfactory
to the Committee, in its sole discretion, the Company will withhold from the
amounts due to me. I also understand that, upon receipt of deferred payouts, in
addition to federal taxes, I may owe taxes both (1) to the state where I resided
at the time of making this election and, if different, (2) to the state where I
reside when I receive a deferred payout.
The Committee shall have the discretion to make all determinations and
decisions regarding this deferral election. To the extent the Committee
determines that this election does not comply with applicable laws, now or in
the future, this election shall be null and void. In such an event, amounts
deferred shall be settled (1) immediately if the Original Payment Date already
has occurred, or (2) upon the Original Payment Date if in the future.
By signing this Election Form, I authorize implementation of the above
instructions. I understand that the deferral elections that I have made on this
Election Form are generally irrevocable and may not be changed in the future
except in accordance with the requirements of Section 409A and the procedures
specified by the Committee.
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DIRECTOR |
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Signed: |
Date: |
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Agreed to and accepted: |
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THE GAP, INC. |
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By: |
Date: |
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Title: |
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