As filed with the Securities and Exchange Commission on December 2, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
THE GAP, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 94-1697231
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Harrison Street, San Francisco, CA 94105
(Address of Principal Executive Offices)
The Gap, Inc. Executive
Deferred Compensation Plan
(Full Title of the Plan)
Lauri Shanahan, Esq.
The Gap, Inc.
One Harrison Street
San Francisco, CA 94105
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
(415) 427-2000
Copies to:
John E. Aguirre, Esq.
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Calculation of Registration Fee
Title of Amount to Proposed Proposed Amount of
securities to be registered maximum maximum fee*
be registered offering aggregate
price per offering
share* price
Deferred $60,000,000 100% $60,000,000 $16,680
Compensation
Obligations**
* Estimated solely for the purpose of calculating the registration fee.
** The Obligations are unsecured obligations of The Gap, Inc. to pay
deferred compensation in the future in accordance with the terms of The
Gap, Inc. Executive Deferred Compensation Plan.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this registration
statement: (i) The Gap, Inc.'s (the "Company") latest annual report filed
pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"); (ii) all other reports filed by the Company pursuant
to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal
year covered by the Company's latest annual report; and (iii) the description
of the Company's common stock set forth in the Company's Registration
Statement on Form 8-B relating thereto, including any amendment or report
filed for the purpose of updating such description. All documents filed by
the Company after the date of this registration statement pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment (that indicates all securities offered have been sold
or deregisters all securities then remaining unsold), shall be deemed to be
incorporated by reference in this registration statement and to be a part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
The securities being registered represent obligations (the "Obligations") of
the Company to pay deferred compensation in the future in accordance with the
terms of the Gap Inc. Executive Deferred Compensation Plan (the "Plan"),
which is filed as Exhibit 4.1 to this Registration Statement.
The Obligations are general unsecured obligations of the Company to pay
deferred compensation in the future according to the Plan from the general
assets of the Company, and rank equally with other unsecured and
unsubordinated indebtedness of the Company.
The amount of compensation to be deferred by each participant is determined in
accordance with the Plan based on elections by the participant. Amounts
credited to a participant's account are credited with deemed investment
returns equal to the experience of selected investment funds offered under the
Plan and elected by the Participant. The Obligations are payable upon
termination of employment or on a date or dates selected by the participant in
accordance with the terms of the Plan, subject to exceptions for in-service
withdrawals, death or termination of employment prior to age 50. The
Obligations are payable in the form of a lump-sum distribution or in
installments, at the election of the participant made in accordance with the
terms of the Plan.
Participants or beneficiaries may not sell, transfer, anticipate, assign,
hypothecate or otherwise dispose of any right or interest in the Plan. A
participant may designate one or more beneficiaries to receive any portion of
Obligations payable in the event of death.
The Company may pay all or a part of a participant's vested Obligations as an
in-service withdrawal. If an in-service withdrawal is paid, the Company will
suspend a participant's deferral election prospectively for a period of 12
months and withhold 10% of the amount of the in-service withdrawal. The
Company also reserves the right to amend or terminate the Plan at any time and
for any reason including an amendment that would accelerate the payment of
Obligations.
The Obligations are not convertible into any other security of the Company.
The Obligations will not have the benefit of a negative pledge or any other
affirmative or negative covenant on the part of the Company. No trustee has
been appointed to take action with respect to the Obligations and each
participant in the Plan will be responsible for enforcing his or her own
rights with respect to the Obligations.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Inapplicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company, as permitted in Section 102
of the General Corporation Law of the State of Delaware (the "GCL"),
eliminates the personal liability of a director to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for (i) any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
paying a dividend or approving a stock repurchase in violation of Delaware
law, or (iv) any transaction from which the director derived any improper
personal benefit.
Under the Bylaws of the Company, each director and officer of the Company is
entitled to indemnification, as a matter of contractual right, to the fullest
extent permitted by the GCL as the same exists or may hereafter be amended,
against all expenses, liability and loss incurred in connection with any
action, suit or proceeding in which he or she may be involved by reason of the
fact that he or she is or was a director or officer of the Company. Section
145 of the GCL empowers a corporation to indemnify any director or officer, or
former director or officer against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with any action,
suit or proceeding (other than a derivative action) by reason of the fact that
he or she is or was a director or officer or is or was serving at the request
of the corporation as an agent of another entity, if he or she acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action, had
no reasonable cause to believe his conduct was unlawful. In regard to a
derivative action, indemnification may not be made in respect of any matter as
to which an officer or director is adjudged to be liable unless the Delaware
Court of Chancery, or the court in which such action was brought, shall
determine such person is fairly and reasonably entitled to indemnity.
The Company carries insurance policies in standard form indemnifying its
directors and officers against liabilities arising from certain acts performed
by them in their respective capacities as such. The policies also provide for
reimbursement of the Company for any sums it may be required or permitted to
pay pursuant to applicable law to its directors and officers by way of
indemnification against liabilities incurred by them in their capacities as
such.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Inapplicable.
ITEM 8. EXHIBITS
4.1 Gap Inc. Executive Deferred Compensation Plan (the "Plan").
4.2 Amended and Restated Certificate of Incorporation of The Gap, Inc.
(incorporated by reference to Exhibit 3.1 to the registrant's
Annual Report on Form 10-K for the year ended January 30, 1993,
Commission File No. 1-7562).
4.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of The Gap, Inc. (incorporated by reference to
Exhibit (3) to the registrant's Quarterly Report on Form 10-Q for
the quarter ended May 2, 1998, Commission File No. 1-7562).
4.4 By-Laws of The Gap, Inc. (incorporated by reference to Exhibit C to
the registrant's Proxy Statement for its May 24, 1988 annual meeting
of stockholders, Commission File No. 1-7562).
4.5 Amended Article IV of By-Laws of The Gap, Inc. (incorporated by
reference to Exhibit 4.4 to the registrant's Registration Statement
on Form S-8, Commission File No. 333-00417).
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.
15.1 Letter re unaudited financial information.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is contained in
Exhibit 5.1 to this Registration Statement.
24.1 Power of Attorney of Directors.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933 each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of the
Plan's annual report pursuant to section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Signatures
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California on the 1st day
of December, 1998
THE GAP, INC.
(Registrant)
/s/ MILLARD S. DREXLER
Millard S. Drexler
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on
the dated indicated.
Signature Title Date
Principal Executive Officer:
/s/ MILLARD S. DREXLER
Millard S. Drexler President and Chief Executive December 1, 1998
Officer
Principal Financial and
Principal Accounting Officer:
/s/ WARREN R. HASHAGEN
Warren R. Hashagen Senior Vice President and December 1, 1998
Chief Financial Officer
Directors:
*
Adrian D. P. Bellamy Director December 1, 1998
*
Donald G. Fisher Director December 1, 1998
*
Doris F. Fisher Director December 1, 1998
*
Robert J. Fisher Director December 1, 1998
*
John M. Lillie Director December 1, 1998
*
Charles R. Schwab Director December 1, 1998
*
Brooks Walker, Jr. Director December 1, 1998
*
Sergio S. Zyman Director December 1, 1998
*By: /s/ ANNE B. GUST
Anne B. Gust
Attorney-in-Fact
A majority of the members of the Board of Directors.
EXHIBIT INDEX
4.1 The Gap, Inc. Executive Director Deferred Compensation Plan (the
"Plan").
4.2 Amended and Restated Certificate of Incorporation of The Gap, Inc.
(incorporated by reference to Exhibit 3.1 to the registrant's Annual
Report on Form 10-K for the year ended January 30, 1993, Commission
File No. 1-7562).
4.3 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of The Gap, Inc. (incorporated by reference to
Exhibit (3) to the registrant's Quarterly Report on Form 10-Q for
the quarter ended May 2, 1998, Commission File No. 1-7562).
4.4 By-Laws of The Gap, Inc. (incorporated by reference to Exhibit C to
the registrant's Proxy Statement for its May 24, 1988 annual meeting
of stockholders, Commission File No. 1-7562).
4.5 Amended Article IV of By-Laws of The Gap, Inc. (incorporated by
reference to Exhibit 4.4 to the registrant's Registration Statement
on Form S-8, Commission File No. 333-00417).
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.
15.1 Letter re unaudited financial information.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is contained in
Exhibit 5.1 to this Registration Statement.
24.1 Power of Attorney of Directors.
THE GAP INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(January 1, 1999 Restatement)
The Gap, Inc. (the "Company"), having established The Gap, Inc.
Executive Deferred Compensation Plan, effective January 1, 1994, and The Gap,
Inc. Executive Capital Accumulation Plan, effective April 1, 1994, for the
benefit of a select group of management employees of the Company and its
participating Affiliates, in order to provide such employees with certain
deferred compensation benefits, hereby amends and restates the Plans into one
Plan effective as of January 1, 1999. The Plan is an unfunded deferred
compensation plan that is intended to qualify for the exemptions provided in
sections 201, 301, and 401 of ERISA.
SECTION 1
DEFINITIONS
The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:
1.1 "Affiliate" shall mean a corporation, trade or business
which is, together with the Company, a member of a controlled group of
corporations or an affiliated service group or under common control (within
the meaning of section 414(b), (c), or (m) of the Code).
1.2 "Beneficiary" shall mean the person or persons entitled
to receive the balance credited to a Participant's Account under the Plan upon
the death of the Participant, as provided in Section 5.5.
1.3 "Board" shall mean the Board of Directors of the
Company, as from time to time constituted.
1.4 "Bonus" shall mean an award of cash payable to an
Employee in April of any fiscal year other than an ELCAPP Bonus
1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended. Reference to a specific section of the Code shall include such
section, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation amending, supplementing or superseding
such section.
1.6 "Committee" shall mean the Global Benefits Committee of
the Company's Board.
1.7 "Company" shall mean The Gap, Inc.
1.8 "Company Contributions" shall mean the amounts credited
to Participants' Accounts under the Plan by the Company, in accordance with
Section 3.3.
1.9 "Deferral Contributions" shall mean the amounts
credited to Participants' Accounts under the Plan pursuant to their deferral
elections made in accordance with Section 2.2. A Participant's Deferral
Contributions shall include his or her Bonus and ELCAPP Bonus Deferral
Contributions and Salary Deferral Contributions, as described in Section 3.1
1.10 "ELCAPP Bonus" shall mean an award of cash payable to
an Employee pursuant to the Executive Long-Term Cash Award Performance Plan or
the Executive Long-Term Cash Award Performance Plan II ("ELCAPP").
1.11 "Eligible Employee" shall mean an Employee of an
Employer who is employed at the level of "director" or higher and who has a
Salary greater than 150% of the Social Security taxable wage base. Eligible
Employee shall not include any Employee who is employed in a foreign country,
unless he or she has been temporarily transferred to employment with an
Employer in a foreign country and is a citizen or resident alien of the United
States at the time of the transfer. An Employee's eligibility for any Plan
Year shall be determined as of November 1 of the preceding Plan Year, based on
the Employee's position and salary and on the taxable wage base in effect on
that date; provided, however, that in the case of an Employee who first
satisfies the conditions for being an Eligible Employee on or before June 1 of
any Plan Year, eligibility shall be determined as of that June 1. If a
Participant ceases to be an Eligible Employee, no further Deferral
Contributions shall be made to the Plan on his or her behalf unless he or she
is again determined to be an Eligible Employee, but the balance credited to
his or her Account shall continue to be credited with earnings under the terms
of the Plan, and shall be distributed to him or her at the time and in the
manner set forth in Section 5.
1.12 "Employee" shall mean an individual who is employed by
one of the Employers as a common-law employee.
1.13 "Employer" shall mean the Company and each
participating Affiliates. At such times and under such conditions as the
Board may direct, one or more other Affiliates may become participating
Affiliates or a participating Affiliate may be withdrawn from the Plan.
1.14 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended. Reference to a specific section of ERISA
shall include such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending, supplementing or
superseding such section.
1.15 "Participant" shall mean an Eligible Employee who has
become a Participant in the Plan pursuant to Section 2.1 and has not ceased to
be a Participant pursuant to Section 2.4.
1.16 "Participant's Account" or "Account" shall mean as
to any Participant the separate account maintained on the books of the Company
in order to reflect his or her interest under the Plan.
1.16.1 "Bonus Deferral Account" shall be the
subaccount maintained to record the Bonus and ELCAPP Bonus Deferral
Contributions made by the Participant, and the earnings relating thereto. To
the extent necessary to reflect a Participant's distribution elections, a
separate Bonus Deferral Account may be maintained with respect to amounts
credited to the Participant's Bonus Deferral Account for any Plan Year
1.16.2 "Salary Deferral Account" shall be the
subaccount maintained to record the Salary Deferral Contributions made by the
Participant, and the earnings relating thereto. To the extent necessary to
reflect a Participant's distribution elections, a separate Salary Deferral
Account may be maintained with respect to the amounts credited to the
Participant's Salary Deferral Account for any Plan Year.
1.16.3 "Company Contribution Deferral Account" shall
be the subaccount maintained to record any Company Contributions made by the
Company, and the earnings related thereto. To the extent necessary to reflect
a Participant's distribution elections, a separate Company Contribution
Deferral Account may be maintained with respect to amounts credited to the
Participant's Company Contribution Deferral Account for any Plan Year.
1.17 "Plan" shall mean The Gap, Inc. Executive Deferred
Compensation Plan, as set forth in this instrument and as hereafter amended
from time to time.
1.18 "Plan Year" shall mean the calendar year.
1.19 "Retirement" shall mean a Participant's termination of
employment with all Employers and all Affiliates at or after age 50.
1.20 "Salary" shall mean a Participant's basic yearly
salary, excluding bonuses and taxable and nontaxable fringe benefits;
provided, however, that Salary shall include Salary Deferral Contributions and
all amounts contributed by an Employer pursuant to a salary reduction
agreement which are not includable in the Employee's gross income under
sections 125, 402(a)(8), or 402(b) of the Code.
1.21 "Termination Date" shall mean a Participant's
termination of employment with all Employers and Affiliates.
SECTION 2
PARTICIPATION
2.1 Participation. Each Eligible Employee's decision to
become a Participant shall be entirely voluntary.
2.2 Elections. An Eligible Employee may elect to become a
Participant (or to reinstate active participation) in this Plan by electing to
make Deferral Contributions under the Plan.
2.2.1 Salary Deferral Elections. An Eligible Employee
may elect to make Salary Deferral Contributions for any Plan Year no later
than December 31 of the preceding Plan Year. An election under this
Section 2.2.1 to make Salary Deferral Contributions shall be effective for
each succeeding Plan Year, until changed by the Eligible Employee in
accordance with such procedures as the Committee (in its discretion) may
specify from time to time
2.2.2 Bonus and ELCAPP Bonus Deferral Elections. An
Eligible Employee may elect to make a Bonus Deferral Contribution with respect
to his or her Bonus (payable on April 1 of any Plan Year) no later than
June 30 of the preceding Plan Year.
In addition, an Eligible Employee may elect to make an ELCAPP
Bonus Deferral Contribution with respect to his or her ELCAPP Bonus (payable
as of April 1, immediately following the end of the Performance Cycle as
defined in ELCAPP) no later than June 30 of the second year of the applicable
Performance Cycle. For example:
Performance Cycle begins: February 4, 1996
Performance Cycle ends: January 30, 1999
Bonus payable: April 1, 1999
Bonus deferral election made by: June 30, 1997
An election to make Bonus and ELCAPP Bonus Deferral Contributions
shall be effective for each succeeding Plan Year, until changed by the
Eligible Employee in accordance with such procedures as the Committee (in its
discretion) may specify from time to time.
2.2.3 No Election Changes During Plan Year. A
Participant shall not be permitted to change or revoke his or her election for
a Plan Year after the beginning of such Plan Year, except that (a) to the
limited extent provided in Section 2.3, a Participant may change or revoke his
or her election, (b) if a Participant's job changes to a position which is
ineligible for the Plan, his or her deferrals under the Plan shall cease, and
(c) if permitted by the Committee, in its sole discretion, a Participant may
revoke his or her election for the remainder of the Plan Year.
2.2.4 Specific Timing and Method of Election.
Notwithstanding any contrary provision of this Section 2.2, the Committee, in
its sole discretion, shall determine the manner and deadlines for Participants
to make Compensation Deferral elections. The deadlines prescribed by the
Committee may be earlier than the deadlines specified in Sections 2.2.1 and
2.2.2, but shall not be later than the deadlines prescribed in such Sections.
2.3 Suspension of Participation. In the event that all or
part of the Participant's vested Account is paid to the Participant as an
in-service withdrawal pursuant to Section 5.7, the Committee, in its sole
discretion, may suspend the Participant's Deferral Contributions for a period
of twelve months following such payment. However, an election to make
Deferral Contributions under Section 2.2 shall be irrevocable as to amounts
deferred as of the effective date of any suspension in accordance with this
Section 2.3.
2.4 Termination of Participation. An Eligible Employee who
has become a Participant shall remain a Participant until his or her entire
vested Account balance is distributed. However, an Eligible Employee who has
become a Participant may or may not be an active Participant making Deferral
Contributions for a particular Plan Year, depending upon whether he or she has
elected to make Deferral Contributions for such Plan Year
SECTION 3
DEFERRAL CONTRIBUTIONS
3.1 Amount of Contributions. At the times and in the manner
prescribed in Section 2.2, each Eligible Employee may elect to defer up to (a)
75% of his or her Salary, and (b) 90% of his or her Bonus or ELCAPP Bonus for
a Plan Year and to have the amounts of such deferrals credited to his or her
Account under the Plan on the books of the Company. An Eligible Employee may
elect to defer an amount equal to any specific percentage (in whole percentage
increments) of the Participant's Compensation. Notwithstanding any contrary
provision of the Plan, the Committee may reduce a Participant's Deferral
Contributions to the extent necessary to satisfy applicable withholding tax
requirements and employee welfare plan contributions.
3.2 Crediting of Deferral Contributions. The amounts
deferred pursuant to Section 3.1 shall reduce the Participant's Compensation
during the Plan Year and shall be credited to the Participant's Account as of
the last day of the month in which the amount (but for the deferral) otherwise
would have been paid to the Participant.
3.3 Company Contributions. From time to time, the Committee
may determine (in its sole discretion) that a Company Contribution shall be
credited to a Participant's Company Contribution Deferral Account, on such
terms and conditions as the Committee may specify in its sole discretion. The
Company Contribution (if any) made on behalf of a Participant shall be
credited to the Participant's Company Contribution Deferral Account as of the
date specified by the Committee. The exact dollar amount of a Company
Contribution credited to any Participant's Company Contribution Deferral
Account shall be determined by the Committee under such formulae as it shall
adopt from time to time.
3.4 Deemed Investment Returns and Deemed Interest on
Accounts. Although no assets will be segregated or otherwise set aside with
respect to a Participant's Account, the amount that is ultimately payable to
the Participant with respect to his or her Account shall be determined as if
such Account had been invested in accordance with the Participant's deemed
investment elections (provided that such elections must comply with the
procedures established by the Committee pursuant to this Section 3.4). The
Committee, in its sole discretion, shall adopt (and may modify from time to
time) such rules and procedures as it deems necessary or appropriate to
implement and/or restrict the deemed investment of the Participants' Accounts.
Such procedures generally shall provide that a Participant shall be entitled
to make deemed investment elections as to the deemed investment of his or her
Account, subject to any limitations determined by the Committee in its
discretion. Such procedures may differ among Participants or classes of
Participants, as determined by the Committee in its discretion.
Notwithstanding the foregoing, if any Company Contribution is credited to a
Participant's Company Contribution Deferral Account, such Contribution shall
be deemed to be invested as determined by the Committee in its sole
discretion
SECTION 4
ACCOUNTING
4.1 Participants' Accounts. At the direction of the
Committee, there shall be established and maintained on the books of the
Company for each Participant:
(a) A Salary Deferral Account to which shall be
credited all Salary Deferral Contributions made by the Participant;
(b) A Bonus Deferral Account to which shall be credited
all Bonus and ELCAPP Bonus Deferral Contributions made by the
Participant; and
(c) A Company Contribution Deferral Account to which
shall be credited all Company Contributions made by the Company (if
any).
To the extent necessary to reflect a Participant's distribution elections, the
Committee may direct the establishment of a separate Salary Deferral Account,
Bonus Deferral Account and/or Company Contribution Deferral Account with
respect to amounts credited to a Participant's Account for any Plan Year.
Each Participant's Account shall also be credited at the end of each month
with deemed earnings and losses and/or deemed interest in accordance with
Section 3.4.
4.2 Participants Remain Unsecured Creditors. No funds shall
be set aside or earmarked for a Participant's Account, which shall be a purely
bookkeeping device. Instead, all amounts credited to a Participant's Account
under the Plan shall continue for all purposes to be a part of the general
assets of the Employer. Each Participant's interest in the Plan shall make
him or her only a general, unsecured creditor of the Employer.
4.3 Accounting Methods. The accounting methods or formulae
to be used under the Plan for the purpose of maintaining the Participants'
Accounts, including the calculation and crediting of deemed returns, gains and
losses and any deemed interest shall be determined by the Committee, in its
sole discretion. The accounting methods or formulae selected by the Committee
may be revised from time to time.
4.4 Reports. Each Participant shall be furnished with
periodic statements of his or her Account, reflecting the status of his or her
interest in the Plan, at least annually.
SECTION 5
DISTRIBUTIONS
5.1 Salary Deferral Account. Distribution of a Participant's
Salary Deferral Account shall be made only after his or her Termination Date.
Except as provided in Section 5.4, such distribution shall be made in a lump
sum as soon as practicable following that Termination Date. For purposes of
such distribution, the value of the Participant's Salary Deferral Account
shall be determined as of the last day of the month following the Termination
Date
5.2 Bonus Deferral Account. Except as provided in
Section 5.4, a Participant's Bonus Deferral Account shall be distributed in a
lump sum as soon as practicable following his or her Termination Date, unless
the Participant has elected an earlier in-service distribution date or dates
for all or a portion of such Account.
5.2.1 In-Service Distribution Election. A
Participant's election of an in-service distribution date must be made at the
time of his or her Bonus or ELCAPP Deferral Contribution election for a Plan
Year, shall apply only to amounts deferred pursuant to that election and shall
be irrevocable. A participant may elect an in-service distribution date with
respect to a Bonus or ELCAPP Deferral Contribution to be in one of the
following years: 2001, 2002, 2003, 2004, 2008, 2009, 2010, 2011, 2013, 2014,
2015, 2017, 2018, 2019 or 2020, provided that an in-service distribution date
may not be earlier than the Plan Year following the year in which the bonus
would have been paid absent the deferral.
5.2.2 In-Service Distribution Payments. Payments made
pursuant to an in-service distribution election shall be made on or before the
last working day of April of the Plan Year in which such payment was elected
to be made. For purposes of such payment the value of the Participant's Bonus
Deferral Account shall be determined as of the December 31 preceding the date
of distribution.
5.3 Company Contribution Deferral Account. Distribution of a
Participant's vested Company Contribution Deferral Account shall be made at
the same time and in the same manner as distribution of the Participant's
Salary Deferral Account.
5.4 Retirement Installment Distributions. A Participant may
elect to receive payments from his or her Salary Deferral Account and/or Bonus
Deferral Account that are made after his or her Retirement in annual
installments for 5, 10 or 15 years.
5.4.1 Installment Elections. A Participant's election
of installment distributions must be made at the time of his or her Salary
and/or Bonus Deferral Contribution election for a Plan Year and automatically
shall apply to amounts deferred with respect to each succeeding Plan Year,
until changed by the Participant in accordance with such procedures as the
Committee (in its discretion) may specify from time to time. No such election
shall be effective if the Participant's Termination Date occurs before he or
she attains age 50.
5.4.2 Installment Payments. The first installment
payment shall be made as soon as practicable following the Participant's
Retirement date and succeeding payments shall be made on or before the last
working day of April in each succeeding year. However, in no case shall a
Participant receive more than one installment payment in any calendar year.
The amount to be distributed in each installment payment shall be determined
by dividing the value of the Account as of the Valuation Date preceding the
date of each distribution by the number of installment payments remaining to
be made. The "Valuation Date" shall be: (a) for the first installment
distribution, the last day of the month immediately preceding the distribution
date; and (b) for all succeeding distributions, the December 31 immediately
preceding each distribution date
5.5 Death Distributions. If a Participant dies before the
entire balance of his or her Account has been distributed, the remaining
balance of the Participant's Account shall be distributed to his or her
Beneficiary in a lump sum as soon as practicable.
5.6 Beneficiary Designations. Each Participant may
designate, in a signed writing delivered to the Committee on such form as it
may prescribe, one or more Beneficiaries to receive any distribution which may
become payable as the result of the Participant's death. Primary and
secondary Beneficiaries are permitted.
5.6.1 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 notice 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.
5.6.2 Failed Designations. If a Participant dies
without having effectively designated a Beneficiary, or if no Beneficiary
(primary or secondary) survives the Participant, the Participant's Account
shall be payable to his or her surviving spouse, or, if the Participant is not
survived by his or her spouse, the Account shall be paid to his or her estate.
5.7 In-Service Withdrawals. The Committee, in its sole
discretion and notwithstanding any contrary provision of the Plan, may
determine that all or part of the Participant's vested Account shall be paid
to him or her immediately as an in-service withdrawal; provided, however, that
an amount equal to ten percent of the total amount of the in-service
withdrawal shall be withheld by the Company. Participants shall be limited to
one in-service withdrawal per Plan Year.
5.8 Payments to Incompetents. If any individual to whom a
benefit is payable under the Plan is a minor, or if the Committee determines
that any individual to whom a benefit is payable under the Plan is incompetent
to receive such payment or to give a valid release therefor, payment shall be
made to the guardian, committee or other representative of the estate of such
individual which has been duly appointed by a court of competent jurisdiction.
If no guardian, committee or other representative has been appointed, payment
may be made to any person as custodian for such individual under the
California Uniform Transfers to Minors Act or may be made to or applied to or
for the benefit of the minor or incompetent, the incompetent's spouse,
children or other dependents, the institution or persons maintaining the minor
or incompetent, or any of them, in such proportions as the Committee from time
to time shall determine; and the release of the person or institution
receiving the payment shall be a valid and complete discharge of any liability
of the Employers with respect to any benefit so paid
5.9 Undistributable Accounts. Each Participant and (in the
event of death) his or her Beneficiary shall keep the Committee advised of his
or her current address. If the Committee is unable to locate the Participant
or Beneficiary to whom a Participant's Account is payable under this
Section 5, the Participant's Account shall be frozen as of the date on which
distribution would have been completed in accordance with this Section 5, and
no further deemed investment returns shall be credited thereto. If a
Participant whose Account was frozen (or his or her Beneficiary) files a claim
for distribution of the Account within seven years after the date that it was
frozen, and if the Committee determines that such claim is valid, then the
frozen balance shall be paid by the Company in a lump sum cash payment as soon
as practicable thereafter.
5.10 Committee Discretion. Within the specific time periods
described in this Section 5, the Committee shall have sole discretion to
determine the specific timing of the payment of any Account balance under the
Plan.
SECTION 6
PARTICIPANT'S INTEREST IN ACCOUNT
6.1 Deferral Contributions. Subject to Sections 6.2
(relating to vesting in Company Contributions), 8.1 (relating to creditor
status) and 9.2 (relating to amendment and/or termination of the Plan), a
Participant's interest in the balance credited to his or her Account at all
times shall be 100% vested and nonforfeitable.
6.2 Vesting in Company Contributions. A Participant's
interest in his or her Company Contribution (if any) shall become 100% vested
and nonforfeitable on the date that is one year after the date such Company
Contribution was made, but only if the Participant remains an employee of the
Company or an Affiliate for such entire one year period. Upon the
Participant's Termination Date, the vested portion of his or her Company
Contribution Deferral Account shall be distributable to him or her in the
manner and at the time set forth in Section 5, and the unvested portion of
such Account shall be permanently forfeited.
SECTION 7
ADMINISTRATION OF THE PLAN
7.1 Plan Administrator. The Company is hereby designated as
the administrator of the Plan (within the meaning of section 3(16)(A) of
ERISA). On behalf of the Company, the Committee shall have the authority to
control and manage the operation and administration of the Plan. Any member
of the Committee may resign at any time by notice in writing mailed or
delivered to the Board, who may remove any member of the Committee at anytime
and may fill any vacancy that exists
7.2 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.
7.3 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 to determine any question arising under,
or in connection with, the administration, operation or validity of the
Plan or any amendment thereto;
(b) To determine any and all considerations affecting the
eligibility of any Employee to become a Participant or remain a
Participant in the Plan;
(c) To cause one or more separate Accounts to be maintained
for each Participant;
(d) To cause Deferral Contributions and Company Contributions
and deemed earnings or losses and/or deemed interest to be credited to
Participants' Accounts;
(e) To establish and revise an accounting method or formula
for the Plan, as provided in Section 4.3;
(f) To determine the manner and form in which any
distribution is to be made under the Plan;
(g) To determine the status and rights of Participants and
their spouses, Beneficiaries or estates;
(h) To employ such counsel, agents and advisers, and to
obtain such 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 arrange for annual distribution to each Participant of
a statement of benefits accrued under the Plan;
(k) To publish a claims and appeal procedure satisfying the
minimum standards of section 503 of ERISA pursuant to which individuals
or estates may claim Plan benefits and appeal denials of such claims;
(l) 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; and
(m) to decide all issues and questions regarding Account
balances, and the time, form, manner and amount of distributions to
Participants.
7.4 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
7.5 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.
7.6 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.
7.7 Indemnification. Each of the Employers shall, and hereby
does, indemnify and hold harmless the members of the Committee, from and
against any and all losses, claims, damages or liabilities (including
attorneys' fees and amounts paid, with the approval of an authorized officer
of the Company, 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.
SECTION 8
FUNDING
8.1 Unfunded Plan. All amounts credited to a Participant's
Account under the Plan shall continue for all purposes to be a part of the
general assets of the Company. The interest of the Participant in his or her
Account, including his or her right to distribution thereof, shall be an
unsecured claim against the general assets of the Company. Although the
Company may choose to invest a portion of its general assets for purposes of
enabling it to make payments under the Plan, nothing contained in the Plan
shall give any Participant or beneficiary any interest in or claim against any
specific assets of the Company.
SECTION 9
MODIFICATION OR TERMINATION OF PLAN
9.1 Employers' Obligations Limited. The Plan is voluntary on
the part of the Employers, and the Employers do not guarantee to continue the
Plan. The Company at any time may, by amendment of the Plan, suspend Deferral
Contributions or Company Contributions or may discontinue Deferral
Contributions or Company Contributions, with or without cause. Complete
discontinuance of all Deferral Contributions or Company Contributions shall be
deemed a termination of the Plan.
9.2 Right to Amend or Terminate. The Board reserves the
right to alter, amend or terminate the Plan, or any part thereof, in such
manner as it may determine, for any reason whatsoever. Any alteration,
amendment or termination shall take effect upon the date indicated in the
document embodying such alteration, amendment or termination, provided that no
such alteration or amendment shall divest any amount already credited to a
Participant's Account under the Plan. The Company may (but shall have no
obligation to) seek a private letter ruling from the Internal Revenue Service
regarding the tax consequences of participation in the Plan. If such private
letter ruling is sought, the Committee shall have the right to adopt such
amendments to the Plan (whether retroactive or prospective) that the Internal
Revenue Service may require as a condition to the issuance of such ruling.
9.3 Effect of Termination. If the Plan is terminated
pursuant to this Section 9, the balances credited to the Accounts of the
affected Participants shall be distributed to them at the time and in the
manner set forth in Section 5; provided, however, that the Committee, in its
sole discretion, may authorize accelerated distribution of Participants'
Accounts as of any earlier date.
SECTION 10
GENERAL PROVISIONS
10.1 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.
10.2 Rights and Duties. Neither the Employers nor the
Committee shall be subject to any liability or duty under the Plan except as
expressly provided in the Plan, or for any action taken, omitted or suffered
in good faith.
10.3 No Enlargement of Employment Rights. Neither the
establishment or maintenance of the Plan, the making of any Deferral
Contributions or Company Contributions 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 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.
10.4 Apportionment of Costs and Duties. All acts required of
the Employers under the Plan may be performed by the Company for itself and
its Affiliates, 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 Employer who is thereunto duly authorized by the board of directors of the
Employer.
10.5 Applicable Law. The provisions of the Plan shall be
construed, administered and enforced in accordance with ERISA, and to the
extent not preempted by ERISA, with the laws of the State of California.
10.6 Severability. If any provision of the Plan is held
invalid or unenforceable, its invalidity or unenforceability shall not affect
any other provisions of the Plan, and in lieu of each provision which is held
invalid or unenforceable, there shall be added as part of the Plan a provision
that shall be as similar in terms to such invalid or unenforceable provision
as may be possible and be valid, legal, and enforceable.
10.7 Captions. The captions contained in and the table of
contents prefixed to the Plan are inserted only as a matter of convenience and
for reference 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
EXECUTION
IN WITNESS WHEREOF, the Company, by its duly authorized officer,
has executed this Plan on the date indicated below.
THE GAP, INC.
Dated: _______________, 1998 By ________________________________
Title:
Signature
ORRICK, HERRINGTON
& SUTCLIFFE LLP
November 30, 1998
The Gap, Inc.
One Harrison Street
San Francisco, CA 94105
Re: The Gap, Inc. Registration Statement on Form S-8
Ladies and Gentlemen:
At your request, we are rendering this opinion in connection with
the proposed issuance pursuant to The Gap, Inc. Executive Director Deferred
Compensation Plan (the "Plan"), of up to $60,000,000 in aggregate amount of
deferred compensation obligations (the "Obligations") of The Gap, Inc., a
Delaware corporation (the "Company"). The Obligations are unsecured
obligations of the Company to pay deferred compensation in the future in
accordance with the terms of the Plan.
We have examined instruments, documents, and records which we
deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the following: (a) the
authenticity of original documents and the genuineness of all signatures; (b)
the conformity to the originals of all documents submitted to us as copies;
and (c) the truth, accuracy, and completeness of the information,
representations, and warranties contained in the records, documents,
instruments, and certificates we have reviewed.
Based on such examination, we are of the opinion that the
$60,000,000 of Obligations to be issued by the Company pursuant to the Plan
are binding obligations of the Company, and, when issued in accordance with
the provisions of the Plan, will be legally issued, fully paid, and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
this Registration Statement on Form S-8 and to the use of our name wherever it
appears in the Registration Statement. In giving such consent, we do not
consider that we are "experts" within the meaning of such term as used in
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission issued thereunder with respect to any part
of the Registration Statement, including this opinion, as an exhibit or
otherwise.
Very truly yours,
/s/ ORRICK HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
Deloitte &
Touche LLP
50 Fremont Street Telephone: (415) 247-4000
San Francisco, California 94105-2230 Facsimile: (415) 247-4329
November 30, 1998
The Gap, Inc
One Harrison Street
San Francisco, California, 94105
We have made reviews, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of The Gap, Inc. and subsidiaries for the periods ended
August 1, 1998, and August 2, 1997, and for the periods ended May 2, 1998,
and May 3, 1997, as indicated in our reports dated August 11, 1998, and
May 12, 1998 respectively; because we did not perform audits, we expressed
no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended August 1, 1998, and
May 2, 1998, are being incorporated by reference in this Registration Statement
on Form S-8.
We also are aware that the aforementioned reports, pusuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
San Francisco, California
Deloitte &
Touche LLP
50 Fremont Street Telephone (415) 247-4000
San Francisco, California 94105-2230 Facsimile: (415) 247-4329
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Gap, Inc. on Form S-8 of our report dated February 27, 1998, incorporated
by reference in the Annual Report on Form 10-K of The Gap, Inc. for the year
ended January 31, 1998.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
November 30, 1998
Deloitte Touche
Tohmatsi
International
POWER OF ATTORNEY OF DIRECTORS
KNOW BY ALL PERSONS BY THESE PRESENTS:
Each of the undersigned hereby constitutes and appoints Donald G.
Fisher and Anne B. Gust, each of them with power to act alone, his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign a Registration Statement on Form S-8 relating to
$60,000,000 of deferred compensation obligations under The Gap, Inc. Executive
Deferred Compensation Plan, and any and all amendments of such Registration
Statements, including post-effective amendments, and to file the same,
together with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such attorney-in-
fact full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises hereof, as fully
to all intents and purposes as he or she might do or could do in person,
thereby ratifying and confirming all that said attorney-in-fact or his or her
substitutes may lawfully do or cause to be done by virtue hereof.
/s/ ADRIAN D.P. BELLAMY Date: November 23, 1998
Adrian D. P. Bellamy
/s/ MILLARD S. DREXLER Date: November 23, 1998
Millard S. Drexler
/s/ DONALD G. FISHER Date: November 23, 1998
Donald G. Fisher
/s/ DORIS F. FISHER Date: November 23, 1998
Doris F. Fisher
/s/ ROBERT J. FISHER Date: November 23, 1998
Robert J. Fisher
/s/ JOHN M. LILLIE Date: November 23, 1998
John M. Lillie
/s/ CHARLES R. SCHWAB Date: November 23, 1998
Charles R. Schwab
/s/ BROOKS WALKER, JR. Date: November 23, 1998
Brooks Walker, Jr.
/s/ SERGIO ZYMAN Date: November 23, 1998
Sergio Zyman
