EXHIBIT 10.5
Grant No. __________
THE GAP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
The Gap, Inc. (the "Company") hereby grants to __________________ (the
"Director"), a stock option under The Gap, Inc. Nonemployee Director Deferred
Compensation Plan (the "Plan"), to purchase shares of common stock of the
Company, $0.05 par value ("Shares"). This option is subject to all of the terms
and conditions contained in this Agreement, including the terms and conditions
contained in the attached Appendix A. The date of this Agreement is ___________.
Subject to the provisions of Appendix A and of the Plan, the principal features
of this option are as follows:
Number of Shares
Purchasable with this Option:
---------------------------- _________
Price per Share:
--------------- _________
Date Option was Granted:
----------------------- _________
Date Option is
Scheduled to become Exercisable:
------------------------------- _________
Latest Date Option Expires:
-------------------------- _________
As provided in this Plan and in this Agreement, this option may
terminate before the date written above, including before the option is
exercised. For example, if Director's service ends for a reason other than
death, Disability or Retirement, this option will terminate on the earlier of
its normal expiration date or three months after the date on which Director's
service ends. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE
SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
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.
THE GAP, INC.
Dated: ___________ ____________________________________
Chairman of the Board
My signature below indicates that I understand that this option is
subject to all of the terms and conditions of this Agreement (including the
attached Appendix A) and of the Plan.
DIRECTOR
Dated:________________ _____________________________________________
Address: ____________________________________
____________________________________
____________________________________
Social Security No.: _______________
APPENDIX A
----------
TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION
1. Grant of Option. The Company hereby grants to the Director under
---------------
the Plan a non-qualified stock option to purchase, on the terms and conditions
set forth in this Agreement and the Plan, all or any part of the number shares
set forth on page 1 of this Agreement. The option granted hereby is not intended
to be an Incentive Stock Option within the meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share (the "Option Price")
--------------
shall be equal to the price set forth on page 1 of this Agreement, which is the
fair market value of the Shares subject to the option on the date of this
Agreement, minus the amount of the Director's Compensation deferrals for the
Fiscal Quarter which includes the date of this Agreement, and divided by 937
(rounded to the nearest whole cent). The Option Price shall be payable in the
legal tender of the United States.
3. Number of Shares. The number and class of Shares specified in
----------------
paragraph 1 above, and/or the Option Price, are subject to appropriate
adjustment in the event of changes in the capital stock of the Company by reason
of merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, or other change in the
corporate structure of the Company affecting the Shares. Such adjustments shall
be made by the Board of Directors (the "Board"), whose determination in that
respect shall be final, binding and conclusive.
4. Commencement of Exercisability. The option awarded by this
------------------------------
Agreement shall be fully exercisable on the date of this Agreement.
5. Termination of Option. In the event of the Director's Termination
---------------------
of Service for any reason other than Retirement, Disability or death, the
Director may, within three (3) months after the date of such Termination of
Service, or within seven (7) years from the date of this Agreement, whichever
shall first occur, exercise any unexercised portion of the option. In the event
of the Director's Termination of Service by reason of his or her Retirement or
Disability, the Director may, within three (3) years after the date of such
Termination of Service, or within seven (7) years from the date of this
Agreement, whichever shall first occur, exercise any unexercised portion of the
option. In the event that the Director shall die prior to the expiration of his
or her option, any unexercised portion of the option may be exercised by the
Director's beneficiary or transferee, as hereinafter provided, for a period of
three (3) years after the date of the Director's death.
6. Persons Eligible to Exercise. The option shall be exercisable
----------------------------
during the Director's lifetime only by the Director. The option shall be non-
transferable by the Director other than by a beneficiary designation made in a
form and manner acceptable to the Board, or by will or the applicable laws of
descent and distribution.
7. Death of Director. To the extent exercisable after the Director's
-----------------
death, the option shall be exercised only by the Director's designated
beneficiary or beneficiaries, or if no such beneficiary is designated, by his or
her legal representative. Any transferee exercising the option must furnish the
Company (a) written notice of his or her status as transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of the
option and compliance with any laws or regulations pertaining to said transfer,
and (c) written acceptance of the terms and conditions of the option as
prescribed in this Agreement.
8. Exercise of Option. The option may be exercised by the person then
------------------
entitled to do so as to any Shares which may then be purchased by giving written
notice of exercise to the Company, specifying the number of full Shares to be
purchased and accompanied by full payment of the purchase price thereof (and the
amount of any income tax the Company is required by law to withhold by reason of
such exercise).
9. No Rights of Stockholder. Neither the Director nor any person
------------------------
claiming under or through said Director shall be or have any of the rights or
privileges of a stockholder of the Company in respect of any of the Shares
issuable upon the exercise of the option, unless and until certificates
representing such Shares shall have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to Director.
10. No Effect on Service. Nothing in this Agreement shall confer upon
--------------------
the Director the right to continue in service on the Board.
11. Addresses for Notices. Any notice to be given to the Company under
---------------------
the terms of this Agreement shall be addressed to the Company, in care of its
Law Department, at The Gap, Inc., Xxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, or at such other address as the Company may hereafter designate in
writing. Any notice to be given to the Director shall be addressed to the
Director at the address set forth beneath the Director's signature hereto, or at
such other address as the Director may hereafter designate in writing. Any such
notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, registered or certified and
deposited, postage and registry fee prepaid, in a United States post office.
12. Non-Transferability of Option. Except as otherwise herein provided,
-----------------------------
the option herein granted and the rights and privileges conferred hereby shall
not be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of said option, or of any right or privilege
conferred hereby, contrary to the provisions hereof, or upon any attempted sale
under any execution, attachment or similar process upon the rights and
privileges conferred hereby, said option and the rights and privileges conferred
hereby shall immediately become null and void.
13. Maximum Term of Option. Notwithstanding any other provision of this
----------------------
Agreement except the last sentence of Paragraph 5 above relating to the death of
the Director (in which case this option is exercisable to the extent set forth
therein), this option is not exercisable after the expiration of seven (7) years
from the date of this Agreement.
14. Binding Agreement. Subject to the limitation on the transferability
-----------------
of the option contained herein, this Agreement shall be binding upon and inure
to the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.
15. Plan Governs. This Agreement is subject to all the 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 shall govern. Terms used and not defined in this
Agreement shall have the meaning set forth in the Plan.
16. Board Authority. The Board shall 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. All actions taken and all interpretations
and determinations made by the Board in good faith shall be final and binding
upon Director, the Company and all other interested persons. No member of the
Board shall 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 shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall 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 parties on the subjects covered. The Director
expressly warrants that he or she is not executing 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 contract executed by a duly authorized officer of the Company.
