Form of Domestic Nonqualified Stock Option Agreement
Stock Up On Success
Gap Inc.'s Stock Option Bonus Program
Non-qualified Stock Option Agreement
In recognition of Gap Inc.'s financial results for the _____ fiscal year,
effective [grant date], the Company hereby awards an option to purchase ____
shares of Gap Inc. common stock at the exercise price of $________ per share
to:
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This option is scheduled to become exercisable on _________________.
The latest date this option expires is effective _____________________.
Should your employment end prior to _____________, this option grant will be
forfeited.
This grant number ________ is subject to all the terms and conditions of the
Agreement and the Plan, including those contained on the reverse.
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Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
1. Grant of Option. The Company hereby grants to Employee under Stock Up On
Success, Gap Inc.'s Stock Option Bonus Program (the "Plan"), for past
services as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her
services, 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 of Shares set forth on the front side 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 the front side of this Agreement. 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 stock
dividends, split-ups or combinations of shares, reclassifications, mergers,
consolidations, reorganizations or liquidations. Subject to any required
action of the stockholders of the Company, if the Company shall be the
surviving corporation in any merger or consolidation, the option granted
hereunder (to the extent that it is still outstanding) shall pertain to and
apply to the securities to which a holder of the same number of Shares that
are then subject to the option would have been entitled. To the extent
that the foregoing adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Compensation and Stock
Option Committee of the Company's Board of Directors (the "Committee"),
whose determination in that respect shall be final, binding and conclusive.
4. Commencement of Exercisability. Except as otherwise provided in this
Agreement, the right to exercise the option awarded by this Agreement shall
accrue as set forth on the front side of this Agreement, assuming that
Employee is still employed with the Company or an Affiliate on such
date(s). If Employee is not so employed on such date(s), the option shall
terminate, as set out in paragraph 6.
5. Postponement of Exercisability. Notwithstanding paragraph 4 or any other
provision of this Agreement, prior to the date this option is scheduled to
become exercisable, the Committee, in its sole discretion, may determine
that the right to exercise all or part of the option awarded by this
Agreement shall accrue on a date later than such date. The Committee shall
exercise its power to postpone the commencement of exercisability only if
the Committee, in its sole discretion, determines that Employee has taken a
personal leave of absence (as defined from time to time by the Committee)
since the date of this Agreement. The duration of the period of
postponement shall equal the duration of the personal leave of absence. If
Employee does not return from the personal leave of absence, the option
shall terminate as set out in paragraph 6.
6. Termination of Option. In the event that Employee's employment with the
Company or an Affiliate terminates for any reason other than Retirement (as
defined in the Plan) or death, this option shall immediately thereupon
terminate, except that Employee shall have three (3) months from such
termination to exercise any unexercised portion of the option which is then
exercisable. In the event of Employee's Retirement, this option shall
immediately thereupon terminate, except that Employee may, within one (1)
year after the date of such Retirement, or within ten (10) years from the
date of this Agreement, whichever shall first occur, exercise any
unexercised portion of the option (whether or not exercisable). In the
event that Employee shall die while in the employ of the Company or an
Affiliate, any unexercised portion of the option (whether or not
exercisable) may be exercised by Employee's beneficiary or transferee, as
hereinafter provided, for a period of one (1) year after the date of
Employee's death or within ten (10) years from the date of this Agreement,
whichever shall first occur. Notwithstanding the preceding two sentences,
in the event that within one year of the date of this Agreement, Employee
dies or terminates employment due to Retirement, this option shall
immediately thereupon terminate.
7. Persons Eligible to Exercise. The option shall be exercisable during
Employee's lifetime only by Employee. The option shall be non-transferable
by Employee other than by a beneficiary designation made in a form and
manner acceptable to the Secretary of the Company (or its designee), or by
will or the applicable laws of descent and distribution.
8. Death of Employee. To the extent exercisable after Employee's death, the
option shall be exercised only by Employee's designated beneficiary or
beneficiaries, or if no beneficiary survives Employee, by the person or
persons entitled to the option under Employee's will, or if Employee shall
fail to make testamentary disposition of the option, 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.
9. 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 (a) 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 determines is required to be
withheld by reason of such exercise), and (b) by giving satisfactory
assurances in writing if requested by the Company, signed by the person
exercising the option, that the Shares to be purchased upon such exercise
are being purchased for investment and not with a view to the distribution
thereof. If permitted by the Company under such procedures as the Company
(in its discretion) may specify from time to time, Employee instead may
exercise the option by a broker-assisted exercise using a stock broker
specified by the Company.
10. No Rights of Stockholder. Neither Employee nor any person claiming under or
through said Employee 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 Employee.
11. No Right to Continued Employment. Employee understands and agrees that this
Agreement does not impact in any way the right of the Company, or the
Affiliate employing Employee, as the case may be, to terminate or change
the terms of the employment of Employee at any time for any reason
whatsoever, with or without good cause. Employee understands and agrees
that his or her employment is "at-will" and that either the Company or
Employee may terminate Employee's employment at any time and for any
reason. Employee also understands and agrees that his or her "at-will"
status can only be changed by an express written contract signed by an
authorized officer of the Company and Employee.
12. 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
Corporate Law Department, at The Gap, Inc., Xxx Xxxxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, or at such other address as the Company may hereafter
designate in writing. Any notice to be given to Employee shall be
addressed to Employee at the address set forth on the stock option
administration records of the Company.
13. 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.
14. Maximum Term of Option. Notwithstanding any other provision of this
Agreement, this option is not exercisable after the expiration of ten (10)
years from the date of this Agreement.
15. 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.
16. 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 shall govern. Terms used and not defined in this Agreement shall have
the meaning set forth in the Plan.
17. Committee Authority. The Committee shall have all discretion and 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
Committee in good faith shall be final and binding upon Employee, the
Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or this Agreement.
18. Captions. Captions provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
19. 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.
20. Modifications. This Agreement constitutes the entire understanding of the
parties on the subjects covered. Employee expressly warrants that he or she
is not relying on any promises, representations, or inducements regarding
the subject matter of this Agreement 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.
