EXHIBIT 4.1
________________________________________________________________________________
THE GAP, INC.
and
GPS (GREAT BRITAIN) LIMITED
and
GAP (ESO) LIMITED
and
GAP (UK DISTRIBUTION) LIMITED
and
MOURANT & CO CAPITAL TRUSTEES LIMITED
________________________________________________________________________________
TRUST DEED
constituting
THE GAP, INC. UK EMPLOYEE STOCK PURCHASE PLAN
and
THE RULES
thereof
________________________________________________________________________________
Adopted by the Board on September 6, 2000
Approved Under Schedule 8 Finance ▇▇▇ ▇▇▇▇ by the Board of Inland
Revenue on [ ]
under Reference A1078/SY
This deed is made on day of 2000
BETWEEN
(1) THE GAP, INC. whose principal office is at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ("the Company")
and
(2) GPS (GREAT BRITAIN) LIMITED whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇;
and
(3) GAP (ESO) LIMITED whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇;
and
(4) GAP (UK DISTRIBUTION) LIMITED whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ (together with the Company referred to as
the "Participating Companies");
and
(5) MOURANT & CO CAPITAL TRUSTEES LIMITED whose registered office is at ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ and referred to as the Trustees.
1. PURPOSE
The purpose of this Deed is to establish a trust for the employee share
ownership plan known as The Gap, Inc. UK Employee Stock Purchase Plan ("the
Plan") which satisfies Schedule 8 Finance ▇▇▇ ▇▇▇▇.
2. STATUS
The Plan consists of this Deed and the attached rules and Appendices. The
definitions in the rules apply to this Deed. The Company shall from time
to time determine which of parts A to D of the Rules shall have effect.
Where the Company determines that part B shall have effect it shall also
specify whether there is to be an Accumulation Period of up to 12 months,
which shall apply equally to all Qualifying Employees in the Plan.
3. DECLARATION OF TRUST
3.1 The Participating Companies and the Trustees have agreed that all the
Shares and other assets which are issued to or transferred to the Trustees
are to be held on the trusts declared by this Deed, and subject to the
terms of the Rules. When Shares or assets are transferred to the Trustees
by the Company with the intention of being held as part of the Plan they
shall be held upon the trusts and provisions of this Deed and the Rules.
-2-
3.2 The Trustees shall hold the Trust Fund upon the following trusts namely:
(a) as to Shares which have not been awarded to Participants ("Unawarded
Shares") upon trust during the Trust Period to allocate those Shares
in accordance with the terms of this Deed and the Rules,
(b) as to whole Shares or fractional Shares which have been awarded to a
Participant ("Plan Shares") upon trust for the benefit of that
Participant on the terms and conditions set out in the Rules,
(c) as to Partnership Share Money upon trust to purchase Shares for the
benefit of the contributing Qualifying Employee in accordance with the
Rules, and
(d) as to other assets ("Surplus Assets") upon trust to use them to
purchase further Shares to be held on the trusts declared in (a)
above, at such time during the Trust Period and on such terms as the
Trustees in their absolute discretion think fit.
3.3 The income of Unawarded Shares and Surplus Assets shall be accumulated by
the trustees and added to, and held upon the trusts applying to, Surplus
Assets.
3.4 The income of Plan Shares and Partnership Share Money shall be dealt with
in accordance with the Rules.
3.5 The perpetuity period in respect of the trusts and powers declared by this
Deed and the Rules shall be the period of 80 years from the date of this
Deed.
4. NUMBER OF TRUSTEES
Unless a corporate Trustee is appointed, there shall always be at least 2
Trustees. Where there is no corporate Trustee, and the number of trustees
falls below 2, the continuing Trustee has the power to act only to achieve
the appointment of a new Trustee.
5. INFORMATION
5.1 The Trustees shall be entitled to rely without further enquiry on any
information or directions supplied by the Participating Companies in
respect of the eligibility of any person to become or remain a Participant
in the Plan.
5.2 Except as otherwise provided, the Trustees may in their discretion agree
with the Company or any of the Participating Companies matters relating to
the operation and administration of the Trust as they may consider
advisable in the interest of the Trust and so that no person claiming an
interest under this trust shall be entitled to question the legality or
correctness of any arrangement or agreement made between the Company and
any of the Participating Companies and the Trustees in relation to such
operation or administration.
5.3 The decision of the Committee in any dispute affecting Participants or
Participating Companies shall by final and conclusive.
-3-
5.4 The Trustees may employ on such terms as the Company may agree, and
determine, the remuneration of any agent or agents to transact all or any
business of whatsoever nature required to be done in the proper
administration of the Trust.
6. RESIDENCE OF TRUSTEES
Every Trustee shall be resident in the United Kingdom. The Company shall
immediately remove any Trustee who ceases to be so resident and, if
necessary, appoint a replacement.
7. CHANGE OF TRUSTEES
The Company has the power to appoint or remove any Trustee for any reason.
The change of Trustee, whether it is the appointment or removal shall be
effected by resolution of the board of directors of the Company and shall
take effect from the date that written notice of such removal is delivered
to the Trustee. Any Trustee may resign on no less than three month's
notice given in writing to the Company, provided that there will be at
least two Trustees or a corporate Trustee immediately after the retirement.
8. INVESTMENT AND DEALING WITH TRUST ASSETS
8.1 Save as otherwise provided for by the Plan, the Trustees shall not sell or
otherwise dispose of Plan Shares.
8.2 The Trustees shall obey any directions given by a Participant in accordance
with the Rules in relation to his Plan Shares and any rights and income
relating to those Shares. In the absence of any such direction, or
provision by the Plan, the Trustees shall take no action.
8.3 The Participating Companies shall, as soon as practicable after deduction
from Salary, pass the Partnership Share Money to the Trustees who will put
the money into an account with:
(a) an institution authorised under the Banking ▇▇▇ ▇▇▇▇;
(b) a building society; or
(c) a relevant European institution,
until it is either used to acquire Partnership Shares on the Acquisition
Date, or, in accordance with the Plan, returned to the individual from
whose Salary the Partnership Share Money has been deducted.
The Trustees shall pass on any interest arising on this invested money to
the individual from whose Salary the Partnership Share money has been
deducted. The Trustees are, however, not obliged to keep monies in an
interest bearing account.
8.4 The Trustees may either retain or sell Unawarded Shares at their absolute
discretion. The proceeds of any sale of Unawarded Shares shall form part of
Surplus Assets.
8.5 The Trustees shall have all the powers of investment of a beneficial owner
in relation to Surplus Assets.
-4-
8.6 The Trustees shall not be under any liability to the Participating
Companies or to current or former Qualifying Employees by reason of a
failure to diversify investments, which results from the retention of Plan
or Unawarded Shares.
8.7 The Trustees may delegate its powers, duties or discretions under this Deed
or under the rules of the Plan to any persons and on any terms. No
delegation made under this clause shall divest the Trustees of their
responsibilities under this Deed or under the Schedule. The Trustees have
absolute discretion as necessary or appropriate to administer the Plan.
The Trustees may allow any Shares to be registered in the name of an
appointed nominee provided that such Shares shall be registered in a
designated account. Such registration shall not divest the Trustees of
their responsibilities under this Deed or the Schedule.
The Trustees may at any time, and shall if the Company so directs, revoke
any delegation made under this clause or require any Plan assets held by
another person to be returned to the Trustees, or both.
9. LOANS TO TRUSTEES
The Trustees shall have the power to borrow money for the purpose of:
(a) acquiring Shares as specifically provided for in the Plan; and
(b) paying any other expenses properly incurred by the Trustees in
administering the Plan.
10. TRUSTEES' OBLIGATIONS UNDER THE PLAN
Notice of Award of Free and Matching Shares
10.1 As soon as practicable after Free and Matching Shares have been awarded to
a Participant, the Trustees shall give the Participant a notice stating:
(a) the number and description of those Shares;
(b) their Initial Market Value on the date of Award; and
(c) the Holding Period applicable to them.
Notice of Award of Partnership Shares
10.2 As soon as practicable after any Partnership Shares have been acquired for
a Participant, the Trustees shall give the Participant a notice stating:
(a) the number and description of those Shares;
(b) the amount of money applied by the Trustees in acquiring those shares
on behalf of the Participant; and
(c) the Market Value at the Acquisition Date.
-5-
Notice of acquisition of Dividend Shares
10.3 As soon as practicable after Dividend Shares have been acquired on behalf
of a Participant, the Trustees shall give the Participant a notice stating:
(a) the number and description of those shares;
(b) their Market Value on the Acquisition Date;
(c) the Holding Period applicable to them; and
(d) any amount not reinvested and carried forward for acquisition of
further Dividend Shares.
Notice of any foreign tax deducted before dividend paid
10.4 Where any foreign cash dividend is received in respect of Plan Shares held
on behalf of a Participant, the Trustees shall give the Participant notice
of the amount of any foreign tax deducted from the dividend before it was
paid.
Restrictions during the Holding Period
10.5 During the Holding Period the Trustees shall not dispose of any Matching or
Dividend Shares (whether by transfer to the employee or otherwise) except
as allowed by the following paragraphs of the Schedule:
(a) paragraph 32 (power of Trustees to accept general offers etc.);
(b) paragraph 72 (power of Trustees to raise funds to subscribe for rights
issue);
(c) paragraph 73 (meeting PAYE obligations); and
(d) paragraph 121(5) (termination of plan: early removal of shares with
participant's consent).
PAYE Liability etc.
10.6 The Trustees may dispose of a Participant's Shares or accept a sum from the
Participant in order to meet any PAYE liability in the circumstances
provided in paragraph 95 of the Schedule (PAYE: shares ceasing to be
subject to the Plan).
Where the Trustees receive a sum of money which constitutes a Capital
Receipt in respect of which a Participant is chargeable to income tax under
Schedule E, the Trustees shall pay to the employer a sum equal to that on
which income tax is so payable.
The Trustees shall maintain the records necessary to enable them to carry
out their PAYE obligations, and the PAYE obligations of the employer
company so far as they relate to the Plan.
-6-
Where the Participant becomes liable to income tax under Schedule E, Case V
of Schedule D, or Schedule F, the Trustees shall inform the Participant of
any facts which are relevant to determining that liability.
Money's worth received by Trustees
10.7 The Trustees shall pay over to the Participant as soon as is practicable,
any money or money's worth received by them in respect of or by reference
to any shares, other than new shares within paragraph 115 of the Schedule
(company reconstructions).
This is subject to:
(a) the provisions of Part VII of the Schedule (dividend reinvestment);
(b) the Trustees obligations under paragraphs 95 and 96 of the Schedule
(PAYE: obligations to make payments to employer etc); and
(c) the Trustees' PAYE obligations.
General offers etc.
10.8 If any offer, compromise, arrangement or scheme is made which affects the
Free Shares or Matching Shares the Trustees shall notify Participants.
Each Participant may direct how the Trustees shall act in relation to that
Participant's Plan Shares. In the absence of any direction, the Trustees
shall take no action.
11. POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE
If instructed by Participants in respect of their Plan Shares the Trustees
may dispose of some of the rights under a rights issue arising from those
Shares to obtain enough funds to exercise the remaining rights.
The rights referred to are the rights to buy additional shares or rights in
the same company.
12. POWER TO AGREE MARKET VALUE OF SHARES
Where the Market Value of Shares falls to be determined for the purposes of
the Schedule, the Trustees may agree with the Inland Revenue that it shall
be determined by reference to such date or dates, or to an average of the
values on a number of dates, as specified in the agreement.
13. PERSONAL INTEREST OF TRUSTEES
Trustees, and directors, officers or employees of a corporate Trustee,
shall not be liable to account for any benefit accruing to them by virtue
of their:
(a) participation in the Plan as a Qualifying Employee;
-7-
(b) ownership, in a beneficial or fiduciary capacity, of any shares or
other securities in any Participating Company; or
(c) being a director or employee of any Participating Company, being a
creditor, or being in any other contractual relationship with any such
Company.
14. TRUSTEES' MEETINGS
The Trustees shall hold meetings as often as is necessary for the
administration of the Plan. There shall be at least two Trustees present
at a meeting except where the sole Trustee is a corporate Trustee and the
Trustees shall give due notice to all the Trustees of such a meeting.
Decisions made at such a meeting by a majority of the Trustees present
shall be binding on all the Trustees. A written resolution signed by all
the Trustees shall have the same effect as a resolution passed at a
meeting.
15. SUBSIDIARY COMPANIES
Any Subsidiary in addition to those Subsidiaries which are already parties
to this Deed may with the agreement of the Company become a party to this
Deed and the Plan by executing a deed of adherence agreeing to be bound by
this Deed and the Rules.
Any company which ceases to be a Subsidiary shall cease to be a
Participating Company.
16. EXPENSES OF PLAN
The Participating Companies shall meet the costs of the preparation and
administration of this Plan.
17. TRUSTEES' LIABILITY AND INDEMNITY
17.1 The Participating Companies shall jointly and severally indemnify each of
the Trustees against any expenses and liabilities which are incurred
through acting as a Trustee of the Plan and which cannot be recovered from
the Trust Fund. This does not apply to expenses and liabilities which are
incurred through fraud, wilful wrongdoing or negligence or are covered by
insurance under clause 17.3.
17.2 No Trustee shall be personally liable for any breach of trust (other than
through fraud, wilful wrongdoing or negligence) over and above the extent
to which the Trustee is indemnified by the Participating Companies in
accordance with clause 17.1 above.
17.3 A non-remunerated Trustee may insure the Plan against any loss caused by
him or any of his employees, officers, agents or delegates. A non-
remunerated Trustee may also insure himself and any of these persons
against liability for breach of trust not involving fraud or wilful
wrongdoing or negligence of the Trustee or the person concerned.
17.4 A Trustee who carries on a profession or business may charge for services
rendered on a basis agreed with the Company. A firm or company in which a
Trustee is interested or by which he is employed may also charge for
services rendered on this basis.
-8-
18. COVENANT BY THE PARTICIPATING COMPANIES
The Participating Companies hereby jointly and severally covenant with the
Trustees that they shall pay to the Trustees all sums which they are
required to pay under the Rules and shall at all times comply with the
Rules.
19. ACCEPTANCE OF GIFTS
The Trustees may accept gifts of Shares and other assets which shall be
held upon the trusts declared by clause 3.1 or 3.4 as the case may be.
20. TRUSTEES' LIEN
The Trustees' lien over the Trust Fund in respect of liabilities incurred
by them in the performance of their duties (including the repayment of
borrowed money and tax liabilities) shall be enforceable subject to the
following restrictions:
(a) the Trustees shall not be entitled to resort to Partnership Share
Money for the satisfaction of any of their liabilities; and
(b) the Trustees shall not be entitled to resort to Plan Shares for the
satisfaction of their liabilities except to the extent that this is
permitted by the Plan.
21. AMENDMENTS TO THE PLAN
The Committee may, with the Trustees' written consent, from time to time
amend the Plan provided that:
(a) no amendment which would adversely prejudice to a material extent the
rights attaching to any Plan Shares awarded to or acquired by
Participants may be made nor may any alteration be made giving to
Participating Companies a beneficial interest in Plan Shares, and
(b) if the Plan is approved by the Inland Revenue at the time of an
amendment or addition, any amendment or addition to a "key feature"
(as defined in paragraph 118(3)(a) of the Schedule) of the Plan shall
not have effect unless and until the written approval of the Inland
Revenue has been obtained in accordance with paragraph 4 of the
Schedule.
22. TERMINATION OF THE PLAN
22.1 The Plan shall terminate:
(a) in accordance with a Plan Termination Notice issued by the Company to
the Trustees under paragraph 120 of the Schedule, or
(b) if earlier, on the expiry of the Trust Period.
22.2 The Company shall immediately upon executing a Plan Termination Notice
provide a copy of the notice to the Trustees, the Inland Revenue and each
individual who has Plan
-9-
Shares or who has entered into a Partnership Share Agreement which was in
force immediately before the Plan Termination Notice was issued.
22.3 Upon the issue of a Plan Termination Notice or upon the expiry of the
Trust Period, paragraph 121 of the Schedule shall have effect.
22.4 Any Shares or other assets which remain undisposed of after the
requirements of paragraph 121 of the Schedule have been complied with shall
be held by the Trustees upon trust to pay or apply them to or for the
benefit of the Participating Companies as at the termination date in such
proportion, having regard to their respective contributions, as the
Trustees shall in their absolute discretion think appropriate.
23. SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS
Where Shares are transferred to the Trustees in accordance with
paragraph 76 of the Schedule, they shall award such Shares only as Free and
Matching Shares, and in priority to other available Shares.
24. NOTICES
Each notice, request or other communication to be given or made under the
Plan shall be in writing and delivered or sent to the relevant party at its
address as notified to the other party
25. PROPER LAW
This Deed and the trusts of this Deed shall be governed by and constructed
in accordance with the laws of England and Wales.
IN WITNESS whereof this deed has been signed by the duly authorised
representatives of the Participating Companies and the Trustees the day and year
first before written.
Executed as a deed )
on behalf of )
The Gap, Inc. )
By )
________________________ Authorised Signatory
________________________ Authorised Signatory
-10-
Executed as a deed )
on behalf of )
GPS (Great Britain) )
Limited )
By )
________________________ Director
________________________ Director or
Secretary
Executed as a deed )
on behalf of )
Gap (ESO) Limited )
By )
________________________ Director
________________________ Director or
Secretary
Executed as a deed )
on behalf of )
Gap (UK Distribution) )
Limited )
By )
________________________ Director
________________________ Director or
Secretary
-11-
The common seal of )
Mourant & Co Capital )
Trustees Limited )
was hereunto affixed )
in the presence of: )
_________________________ Director
__________________________ Authorised
Signatory
-12-
RULES OF THE GAP, INC. UK
EMPLOYEE STOCK PURCHASE PLAN
1. DEFINITIONS
2. PURPOSE OF THE PLAN
3. ELIGIBILITY OF INDIVIDUALS
4. PARTICIPATION ON SAME TERMS
5. PARTNERSHIP SHARES (PART A)
6. MATCHING SHARES (PART B)
7. DIVIDEND SHARES (PART C)
8. COMPANY RECONSTRUCTIONS
9. RIGHTS ISSUES
10. LEAVERS
11. NUMBER OF SHARES
-13-
1. DEFINITIONS
1.1 The following words and expressions have the following meanings:
"Accumulation Period" in relation to Partnership Shares, the period during
which the Trustees accumulate a Qualifying Employee's
Partnership Share Money before acquiring Partnership
Shares or repaying it to the employee
"Acquisition Date" (a) in relation to Partnership Shares, where there is an
Accumulation Period, the meaning given by paragraph
42(3) of the Schedule; and
(b) in relation to Dividend Shares, the meaning given by
paragraph 56(3) of the Schedule
"Associated Company" the same meaning as in section 416 of ICTA 1988
"Award Date" in relation to Matching Shares, the date on which such
Shares are awarded
"Award" (a) in relation to Matching Shares, the appropriation of
Matching Shares in accordance with the Plan; and
(b) in relation to Partnership Shares, the acquisition
of Partnership Shares on behalf of Qualifying Employees
in accordance with the Plan
"Capital Receipt" the same meaning as in paragraph 79 of the Schedule
"Close Company" the same meaning as in section 414 of ICTA 1988
"the Committee" shall mean the committee appointed by the company's
Chief Executive Officer to administer the Plan
"the Company" The Gap, Inc.
"Connected Company" the same meaning as in paragraph 16(4) of the Schedule
"Control" the same meaning as in section 840 of ICTA 1988
"Dealing Day" a day on which the Stock Exchange is open for the
transaction of business
"the Deed" The Gap, Inc. UK Employee Stock Purchase Plan Trust
"Dividend Shares" Shares acquired on behalf of a Participant from
reinvestment of dividends under Part C of the Plan and
which are subject to the Plan
-14-
"Group Plan" the Plan as established by The Gap, Inc., and
extending to its Subsidiaries which are Participating
Companies
"Holding Period" (a) in relation to Matching Shares, the period
specified by the Company as mentioned in Rule 6.5; and
(b) in relation to Dividend Shares, the period of 3
years from the Acquisition Date
"ICTA 1988" the Income and Corporation Taxes ▇▇▇ ▇▇▇▇
"Initial Market Value" the Market Value of a Share on an Award Date. Where
the Share is subject to a restriction or risk of
forfeiture, the Market Value shall be determined
without reference to that restriction or risk
"Market Value" in relation to Shares to be awarded under the Plan on
any date
(a) the closing price of a Share on the New York Stock
Exchange Composite Transactions Index; or
(b) the Market Value of a Share determined in
accordance with the provisions of Part VIII of the
Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇ and agreed for
the purposes of the Plan with the Inland Revenue
Shares Valuation Division on/or before that day
"Matching Shares" Shares awarded under Part B of the Plan and which are
subject to the Plan
"Material Interest" the same meaning as in paragraph 15 of the Schedule
"NICs" National Insurance Contributions
"Participant" an individual who has received under the Plan an Award
of Matching Shares or Partnership Shares, or on whose
behalf Dividend Shares have been acquired
"Participating Company" the Company and such of its Subsidiaries as are
parties to the Deed or have executed deeds of
adherence to the Plan under clause 15 of the Trust
Deed
"Partnership Shares" Shares awarded under Part A of the Plan and which are
subject to the Plan
"Partnership Share an agreement in the terms set out in the Appendix
Agreement"
-15-
"Partnership Share Money" money deducted from a Qualifying Employee's Salary
pursuant to a Partnership Share Agreement and held
by the Trustees to acquire Partnership Shares or to
be returned to such a person
"the Plan" The Gap, Inc. UK Employee Stock Purchase Plan
"Plan Shares" (a) Matching Shares and Partnership Shares awarded
to Participants;
(b) Dividend Shares acquired on behalf of
Participants; and
(c) shares in relation to which paragraph 115(5)
(company reconstructions: new shares) of the
Schedule applies that remain subject to the Plan
"Plan Termination Notice" a notice issued under paragraph 120 of the Schedule
"Profit Sharing Scheme" a profit-sharing scheme approved by the Board of
Inland Revenue under Schedule 9 of ICTA 1988
"Qualifying Corporate Bond" the same meaning as in section 117 of the Taxation
of Chargeable Gains ▇▇▇ ▇▇▇▇
"Qualifying Employee" an employee who must be invited to participate in
an award in accordance with Rule 3.5 and any
employee who the Company has invited in accordance
with Rule 3.6
"Redundancy" the same meaning as in the Employment Rights ▇▇▇
▇▇▇▇
"Relevant Employment" employment by the Company or any Associated Company
"Retirement Age" 50
"Salary" the same meaning as in paragraph 48 of the Schedule
"the Schedule" Schedule 8 to the Finance ▇▇▇ ▇▇▇▇
"Shares" shares of common stock in the capital of the
Company which comply with the conditions set out in
paragraph 59 of the Schedule
"the Stock Exchange" the New York Stock Exchange
"Subsidiary" any company which is for the time being under the
Control of the Company
"Tax Year" a year beginning on 6 April and ending on the
following 5 April
-16-
"the Trustees" the trustees or trustee of the Plan
"the Trust Fund" all assets transferred to the Trustees to be held
on the terms of the Trust Deed and the assets from
time to time representing such assets, including
any accumulations of income
"the Trust Period" the period of 80 years beginning with the date of
the Deed
1.2 References to any Act, or Part, Chapter, or section (including ICTA 1988)
shall include any statutory modification, amendment or re-enactment of that
Act, for the time being in force.
1.3 Words of the feminine gender shall include the masculine and vice versa and
words in the singular shall include the plural and vice versa unless, in
either case, the context otherwise requires or it is otherwise stated.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to enable employees of Participating Companies to
acquire shares in a company which give them a continuing stake in that
company.
3. ELIGIBILITY OF INDIVIDUALS
3.1 Subject to rule 3.4, individuals are eligible to participate in an Award
only if:
(a) they are employees of a Participating Company;
(b) they are eligible on the date(s) set out in paragraph 13(1) of the
Schedule; and
(c) they do not fail to be eligible under either or both Rules 3.2 or 3.3
3.2 Individuals are not eligible to participate in an Award of Shares if they
have, or within the preceding twelve months have had, a Material Interest
in:
(a) a Close Company whose Shares may be appropriated or acquired under the
Plan; or
(b) a company which has Control of such a company or is a member of a
consortium which owns such a company.
3.3 Individuals are not eligible to participate in an Award of Free Shares in
any Tax Year if in that Tax Year:
(a) they have been awarded shares under a Profit-Sharing Scheme established
by the Company or a Connected Company, or are to be awarded such shares
at the same time; or
-17-
(b) they have received (or are to receive at the same time) an Award under
another plan established by the Company or a Connected Company and
approved under the Schedule, or if they would have received such an
Award but for their failure to meet a performance target.
3.4 Individuals are not eligible to participate in an Award of Partnership
Shares or Matching Shares in any Tax Year if in that Tax Year they have
received (or are to receive at the same time) an Award under another plan
established by the Company or a Connected Company (as defined in paragraph
16(4) of the Schedule) and approved under the Schedule, or if they would
have received such an Award but for their failure to meet a performance
target.
Employees who must be invited to participate in Awards
3.5 Individuals shall be eligible to receive an Award of shares under the Plan
if they meet the requirements in Rule 3.1 and are chargeable to income tax
in respect of their employment under Case I of Schedule E.
In this case they shall be invited to participate in any Awards of
Partnership Shares and Matching Shares, and acquisitions of Dividend
Shares, as are set out in the Plan.
Employees who may be invited to participate in Awards
3.6 The Company may also invite any employee who meets the requirements in Rule
3.1 to participate in any Award of Partnership Shares or Matching Shares,
and acquisitions of Dividend Shares, as are set out in the Plan.
4. PARTICIPATION ON SAME TERMS
4.1 Every Qualifying Employee shall be invited to participate in an Award on
the same terms. All who do participate in an Award shall do so on the same
terms.
-18-
PART A
5. PARTNERSHIP SHARES
5.1 The Company may at any time invite every Qualifying Employee to enter into
an agreement with the Company (a "Partnership Share Agreement") in the
terms of the draft in the Appendix to these Rules.
5.2 Partnership Shares shall not be subject to any provision under which they
may be forfeit.
Maximum amount of deductions
5.3 The amount of Partnership Share Money deducted from an employee's Salary
shall not exceed (Pounds)125 in any month or such other amount as may be
permitted by the Schedule. If the Salary is not paid monthly, the
(Pounds)125 limit shall be calculated proportionately.
5.4 The amount of Partnership Share Money deducted from an employee's Salary
over an Accumulation Period shall not exceed 10% of the total of the
payments of Salary made to such employee over that Accumulation Period or
if there is no Accumulation Period, 10% of the Salary payment from which
the deduction is made.
5.5 Any amount deducted in excess of that allowed by Rule 5.3 or 5.4 shall be
paid over to the employee, subject to both deduction of income tax under
PAYE and NICs, as soon as practicable.
Minimum amount of deductions
5.6 The minimum amount to be deducted under the Partnership Share Agreement in
any month shall be the same in relation to all Partnership Share Agreements
entered into in response to invitations issued on the same occasion. It
shall not be greater than (Pounds)10.
Notice of possible effect of deductions on benefit entitlement
5.7 Every Partnership Share Agreement shall contain a notice under paragraph 38
of the Schedule.
Restriction imposed on number of Shares awarded
5.8 The Company may specify the maximum number of Shares to be included in an
Award of Partnership Shares.
5.9 The Partnership Share Agreement shall contain an undertaking by the Company
to notify each Qualifying Employee of any restriction on the number of
Shares to be included in an Award.
5.10 The notification in Rule 5.9 above shall be given if there is an
Accumulation Period, before the beginning of the Accumulation Period
relating to the Award.
-19-
Plan with Accumulation Period
5.11 If there is an Accumulation Period, the Trustees shall acquire Shares on
behalf of the Qualifying Employee, on the Acquisition Date, using the
Partnership Share Money.
5.12 The number of Shares acquired on behalf of each Participant shall be
determined by reference to the lower of:
(a) the Market Value of the Shares at the beginning of the Accumulation
Period; and
(b) the Market Value of the Shares on the Acquisition Date.
5.13 If a transaction occurs during an Accumulation Period which results in a
new holding of Shares being equated for the purposes of capital gains tax
with any of the Shares to be acquired under the Partnership Share
Agreement, the employee may agree that the Partnership Share Agreement
shall have effect after the time of that transaction as if it were an
agreement for the purchase of shares comprised in the new holding.
Surplus Partnership Share Money
5.14 Any surplus Partnership Share Money remaining after the acquisition of
Shares by the Trustees:
(a) may, with the agreement of the Participant, be carried forward to the
next Accumulation Period or the next deduction; and
(b) in any other case, shall be paid over to the Participant, subject to
both deduction of income tax under PAYE and NICs, as soon as
practicable.
Withdrawal from Partnership Share Agreement
5.15 An employee may withdraw from a Partnership Share Agreement at any time by
notice in writing to the Company. Unless a later date is specified in the
notice, such a notice shall take effect 30 days after the Company receives
it. Any Partnership Share Money then held on behalf of an employee shall
be paid over to that employee as soon as practicable. This payment shall
be subject to income tax under PAYE and NICs.
Repayment of Partnership Share Money on withdrawal of approval or
Termination
5.16 If approval of the Plan is withdrawn or a Plan Termination Notice is
issued in respect of the Plan, any Partnership Share Money held on behalf
of employees shall be repaid to them as soon as practicable, subject to
deduction of income tax under PAYE and NICs.
Scaling down
5.17 If the Company receives applications for Partnership Shares exceeding the
Award maximum determined in accordance with Rule 5.8 then the following
steps shall be taken in sequence until the excess is eliminated.
-20-
Step 1. the excess of the monthly deduction chosen by each applicant over
(Pounds)10 shall be reduced pro rata;
Step 2. all monthly deductions shall be reduced to (Pounds)10;
Step 3. applications shall be selected by lot, each based on a monthly
deduction of (Pounds)10.
Each application shall be deemed to have been modified or withdrawn in
accordance with the foregoing provisions, and each employee who has applied
for Partnership Shares shall be notified of the change.
-21-
PART B
6. MATCHING SHARES
6.1 The Partnership Share Agreement sets out the basis on which a Participant
is entitled to Matching Shares in accordance with this Part of the Rules.
General requirements for Matching Shares
6.2 Matching Shares shall:
(a) be Shares of the same class and carrying the same rights as the
Partnership Shares to which they relate;
(b) subject to Rule 6.4, be awarded on the same day as the Partnership
Shares to which they relate are acquired on behalf of the Participant;
and
(c) be awarded to all Participants on exactly the same basis.
Ratio of Matching Shares to Partnership Shares
6.3 The Partnership Share Agreement shall specify the ratio of Matching Shares
to Partnership Shares for the time being offered by the Company and that
ratio shall not exceed 2:1. The Company may vary the ratio before
Partnership Shares are acquired. Employees shall be notified of the terms
of any such variation before the Partnership Shares are awarded under the
Partnership Share Agreement.
6.4 If the Partnership Shares on that day are not sufficient to produce a whole
Matching Share, the match shall be made when sufficient Partnership Shares
have been acquired to allow at least one Matching Share to be appropriated.
Holding Period for Matching Shares
6.5 The Company shall, in relation to each Award Date, specify a Holding Period
for Matching Shares throughout which a Participant shall be bound by the
terms of the Partnership Share Agreement.
6.6 The Holding Period shall, in relation to each Award, be a specified period
of not less than 3 years nor more than 5 years, beginning with the Award
Date and shall be the same for all Participants who receive an Award at the
same time. The Holding Period shall not be increased in respect of Matching
Shares awarded under the Plan.
6.7 Participants may during the Holding Period direct the Trustees:
(a) to accept an offer for any of their Matching Shares if the acceptance
or agreement shall result in a new holding being equated with those
original Shares for the purposes of capital gains tax; or
-22-
(b) to accept an offer of a Qualifying Corporate Bond (whether alone or
with other assets or cash or both) for their Matching Shares if the
offer forms part of such a general offer as is mentioned in paragraph
(c); or
(c) to accept an offer of cash, with or without other assets, for their
Matching Shares if the offer forms part of a general offer which is
made to holders of shares of the same class as their Shares or to the
holders of shares in the same company, and which is made in the first
instance on a condition such that if it is satisfied the person making
the offer shall have control of that company, within the meaning of
section 416 of ICTA 1988; or
(d) to agree to a transaction affecting their Matching Shares or such of
them as are of a particular class, if the transaction would be entered
into pursuant to a compromise, arrangement or scheme applicable to or
affecting;
(i) all of the ordinary share capital of the Company or, as the case
may be, all the shares of the class in question; or
(ii) all the shares, or all the shares of the class in question, which
are held by a class of shareholders identified otherwise than by
reference to their employment or their participation in a plan
approved under the Schedule.
-23-
PART C
7. DIVIDEND SHARES
Reinvestment of cash dividends
7.1 The Partnership Share Agreement, shall set out the rights and obligations
of Participants receiving Dividend Shares under the Plan.
7.2 The Company may direct that any cash dividend in respect of Plan Shares
held on behalf of Participants may be applied in acquiring further Plan
Shares on their behalf.
7.3 Dividend Shares shall be Shares:
(a) of the same class and carrying the same rights as the Shares in
respect of which the dividend is paid; and
(b) which are not subject to any provision for forfeiture.
7.4 The Company may decide to:
(a) apply all Participants' dividends, up to the limit specified in Rule
7.6, to acquire Dividend Shares;
(b) to pay all dividends in cash to all Participants; or
(c) to offer Participants the choice of either (a) or (b) above.
7.5 The Company may revoke any direction for reinvestment of cash dividends.
7.6 The amount applied by the Trustees in acquiring Dividend Shares shall not
exceed (Pounds)1,500 per participant in each Tax Year. For the purposes of
this Rule, the Dividend Shares are those acquired under this Plan and those
acquired under any other plan approved under the Schedule. In exercising
their powers in relation to the acquisition of Dividend Shares, the
Trustees must treat Participants fairly and equally.
7.7 If the amounts received by the Trustees exceed the limit in Rule 7.6, the
balance shall be paid to the Participant as soon as practicable.
7.8 The Trustees shall apply all the cash dividend to acquire Shares on behalf
of the Participant on the Acquisition Date. The number of Dividend Shares
acquired on behalf of each Participant shall be determined by the Market
Value of the Shares on the Acquisition Date.
Certain amounts not reinvested to be carried forward
7.9 Subject to Rule 7.7, any amount that is not reinvested:
(a) because the amount of the cash dividend is insufficient to acquire a
Share; or
-24-
(b) because there is an amount remaining after acquiring the Dividend
Shares;
may be retained by the Trustees and carried forward to be added to the
amount of the next cash dividend to be reinvested.
7.10 If, during the period of three years beginning with the date on which the
dividend was paid:
(a) it is not reinvested; or
(b) the Participant ceases to be in Relevant Employment; or
(c) a Plan Termination Notice is issued;
the amount shall be repaid to the Participant as soon as practicable. On
making such a payment, the Participant shall be provided with the
information specified in paragraph 90 of the Schedule.
Holding Period for Dividend Shares
7.11 The Holding Period for Dividend Shares shall be a period of 3 years,
beginning with the Acquisition Date.
7.12 Participants may during the Holding Period direct the Trustees:
(a) to accept an offer for any of their Dividend Shares if the acceptance
or agreement shall result in a new holding being equated with those
shares for the purposes of capital gains tax; or
(b) to accept an offer of a Qualifying Corporate Bond (whether alone or
with other assets or cash or both) for their Dividend Shares if the
offer forms part of such a general offer as is mentioned in paragraph
(c); or
(c) to accept an offer of cash, with or without other assets, for their
Dividend Shares if the offer forms part of a general offer which is
made to holders of shares of the same class as their Shares or to
holders of shares in the same company, and which is made in the first
instance on a condition such that if it is satisfied the person making
the offer shall have control of that company, within the meaning of
section 416 of ICTA 1988; or
(d) to agree to a transaction affecting their Dividend Shares or such of
them as are of a particular class, if the transaction would be entered
into pursuant to a compromise, arrangement or scheme applicable to or
affecting;
(i) all of the ordinary share capital of the company or, as the case
may be, all the shares of the class in question; or
(ii) all the shares, or all the shares of the class in question, which
are held by a class of shareholders identified otherwise than by
reference to their employment or their participation in a plan
approved under the Schedule.
-25-
7.13 Where a Participant is charged to tax in the event of their Dividend
Shares ceasing to be subject to the Plan, he shall be provided with the
information specified in paragraph 93(4) of the Schedule.
-26-
PART D
8. COMPANY RECONSTRUCTIONS
8.1 The following provisions of this Rule apply if there occurs in relation to
any of a Participant's Plan Shares (referred to in this Rule as "the
Original Holding"):
(a) a transaction which results in a new holding (referred to in this Rule
as "the New Holding") being equated with the Original Holding for the
purposes of capital gains tax; or
(b) a transaction which would have that result but for the fact that what
would be the new holding consists of or includes a Qualifying
Corporate Bond.
8.2 If an issue of Shares of any of the following description (in respect of
which a charge to income tax arises) is made as part of a company
reconstruction, those Shares shall be treated for the purposes of this Rule
as not forming part of the New Holding:
(a) redeemable shares or securities issued as mentioned in section
209(2)(c) of ICTA 1988;
(b) share capital issued in circumstances such that section 210(1) of ICTA
1988 applies; or
(c) share capital to which section 249 of ICTA 1988 applies.
8.3 In this Rule:
"Corresponding Shares" in relation to any New Shares, means the Shares in
respect of which the New Shares are issued or which the New Shares
otherwise represent; and
"New Shares" means shares comprised in the New Holding which were issued in
respect of, or otherwise represent, shares comprised in the Original
Holding.
8.4 Subject to the following provisions of this Rule, references in this Plan
to a Participant's Plan Shares shall be respectively construed, after the
time of the company reconstruction, as being or, as the case may be, as
including references to any New Shares.
8.5 For the purposes of the Plan:
(a) a company reconstruction shall be treated as not involving a disposal
of Shares comprised in the Original Holding; and
(b) the date on which any New Shares are to be treated as having been
appropriated to or acquired on behalf of the Participant
shall be that on which Corresponding Shares were so appropriated or
acquired.
-27-
8.6 In the context of a New Holding, any reference in this Rule to shares
includes securities and rights of any description which form part of the
New Holding for the purposes of Chapter II of Part IV of the Taxation of
Chargeable Gains ▇▇▇ ▇▇▇▇.
9. RIGHTS ISSUES
9.1 Any shares or securities allotted under clause 23 of the Trust Deed shall
be treated as Plan Shares identical to the shares in respect of which the
rights were conferred. They shall be treated as if they were awarded to or
acquired on behalf of the Participant under the Plan in the same way and
at the same time as those shares.
9.2 Rule 9.1 does not apply:
(a) to shares and securities allotted as the result of taking up a rights
issue where the funds to exercise those rights were obtained
otherwise than by virtue of the Trustees disposing of rights in
accordance with this Rule; or
(b) where the rights to a share issue attributed to Plan Shares are
different from the rights attributed to other ordinary shares of the
company.
10. LEAVERS
10.1 A Participant who ceases to be in Relevant Employment must remove his Plan
Shares within 90 days of such cessation of employment. If the Trustees do
not receive sufficient notice from the Participant for the sale or
transfer of Plan Shares within 90 days, then the Trustee shall have the
discretion to dispose of those shares to meet any PAYE or NIC liability on
behalf of the Participant.
11. NUMBER OF SHARES
11.1 Not more than One Million shares of common stock may be awarded pursuant
to the Plan.
-28-
APPENDIX The Gap, Inc. UK Employee Stock Purchase Plan
("the Plan"): Partnership Share Agreement
This agreement is between:
------------------------------------------------------------------------------------------------------------------------------------
Participant ("the Participant") Company ("the Company") Trustees ("the Trustees")
Name: Name: Name : Mourant & Co Capital Trustees
Home Address: Registered Address: Limited
Payroll Number: Registered Number:
------------------------------------------------------------------------------------------------------------------------------
This agreement sets out the terms on which the Participant agrees to buy shares
and accept Matching Shares under the terms of the Plan and is subject to the
rules of the Plan. The definitions in the Plan Rules apply to this agreement:
NOTICE TO PARTICIPANT ABOUT POSSIBLE EFFECT ON BENEFITS
Deductions from your pay to buy Partnership Shares under this agreement may
affect your entitlement to, or the level of, some contributory social security
benefits, statutory maternity pay and statutory sick pay. They may also have a
similar effect in respect of some contributory social security benefits paid to
your wife or husband. With this agreement you should have been given
information on the effect of deductions from your pay to buy Partnership Shares
on entitlement to social security benefits, statutory sick pay and statutory
maternity pay. The effect is particularly significant if your earnings are
brought below the lower earnings limit for National Insurance purposes, and is
explained in the information: it is therefore important that you read it before
choosing to enrol. If you have not been given a copy, ask your employer for it.
Otherwise a copy may be obtained from any office of the Inland Revenue,
Department of Social Security, or, in Northern Ireland, of the Department for
Social Development. You should take the information you have been given into
account in deciding whether to buy Partnership Shares.
-------------------
Insert amount
----------- between (Pound)10
(Pound) and (Pound)125 per
----------- month and not more
than 10% of my
PARTICIPANT salary
-------------------
1. I agree to allow my employer to deduct the following amount per month from
my Salary:
2. I agree that these deductions will be used to buy Partnership Shares in The
Gap, Inc. for me. I agree that the Trustees will accumulate my deductions
from [Company to specify beginning and end of Accumulation Period] and buy
Partnership Shares in The Gap, Inc. for me after the end of the
Accumulation Period.
3. I agree to accept Matching Shares in The Gap, Inc. awarded to me under the
Plan and leave them in the hands of the Trustees, and not to assign, charge
or otherwise dispose of my beneficial interest in the shares for the whole
of the Holding Period of 3 years.
4. I agree that all dividends paid on my shares will be used by the Trustees
to buy more shares in The Gap, Inc. for me according to the rules of the
Plan. I agree to accept the Dividend Shares bought for me and leave them in
the hands of the Trustees, and not to assign, charge or otherwise dispose
of my beneficial interest in the shares for the whole of the Holding Period
of 3 years.
5. I understand that shares may fall in value as well as rise.
6. I have read this agreement and agree to be bound by it and by the rules of
the Plan.
7. I may specify to the Trustees the designation of one or more beneficiaries
to receive any amounts credited to my account at the time of my death.
COMPANY
8. The Company agrees to arrange for shares in The Gap, Inc. to be bought for
me, according to the rules of the Plan.
9. The Company agrees to provide one Matching Share for every seven
Partnership Shares purchased.
10. The Company undertakes to notify me of any restriction on the number of
Partnership Shares available in the (or each) Award.
TRUSTEES
11. The Trustees agree to keep my Salary deductions in [name of bank] until
they are used to buy shares in The Gap, Inc. for me.
Signature: _______________________________ Date: ___ / ___ /_____
PLEASE USE BLOCK CAPITALS AND READ THE WHOLE OF THE AGREEMENT BEFORE SIGNING
-29-
Rights and Obligations
1. I agree that taking part in the Plan does not affect my rights,
entitlements and obligations under my contract of employment, and does not
give me any rights or additional rights to compensation or damages if my
employment ceases.
2. I may stop the deductions at any time, or begin them again at the beginning
of any Accumulation Period, by writing to the Trustees, but I may not make
up any amounts missed when deductions were stopped.
3. I agree that the deductions from my salary, or the number of shares that I
receive may be scaled down if the limit on the number of shares set by the
Company for this award is exceeded.
4. I may ask the Trustees for my Partnership Shares at any time, but I may
have to pay income tax and National Insurance Contributions when they are
taken out of the Plan.
5. I agree to allow the Trustees to sell some or all of my shares to pay any
income tax and National Insurance Contributions in respect of my shares
ceasing to be subject to the Plan, unless I provide them in advance with
sufficient funds to pay these amounts.
6. I agree that any deductions not used to buy shares will at the discretion
of the Trustees be carried forward and added to the next deduction or
Accumulation Period.
7. If there is a rights issue, I agree to allow the Trustees to sell some of
the rights attached to my shares in the Plan, in order to fund the exercise
of the rights attached to other shares held by me in the Plan.
8. I can at any time withdraw from this agreement by writing to the Trustees.
Any unused deductions will be returned to me after the deduction of any
necessary income tax or National Insurance Contributions.
9. I agree that withdrawal from this agreement will not affect the terms on
which I agreed to buy shares already held for me under the Plan.
Accumulation Period
10. The Accumulation Period shall come to an end when [specify nature of
event(s)], but this agreement shall continue until terminated by any party
giving notice to the others.
11. I may only restart deductions at the start of a new Accumulation Period.
Matching Shares
12. The ratio of Matching Shares to Partnership Shares is 1:7 and may be varied
by the Company giving me notice in advance.
13. If the ratio varies, the Company will notify me before the Partnership
Shares are bought for me.
Partnership Share Money held by Trustees
14. The Trustees are under no obligation to keep the deductions in an interest-
bearing account, but if they do, they will pay the interest to me.
Dividend Reinvestment
15. Cash dividends will be used to buy more shares (Dividend Shares) for me.
16. Any amount over (Pounds)1500 in each tax year will be paid to me.
17. Any amount below (Pounds)1500 not used to buy shares shall be carried
forward and added to the next cash dividend to be reinvested.
Holding Period: Dividend and Matching Shares
18. I understand that my obligations during the Holding Period will end:
a) if I cease to be in Relevant Employment;
b) if the Company terminates the Plan in accordance with Clause 22 of the
Deed and I have consented to the transfer of the Shares to me.
19. I understand that my obligations under the Holding Period are subject to:
a) the right of the Trustees to sell my shares to meet PAYE obligations;
b) the Trustees accepting at my direction an offer for my shares in
accordance with the Plan.
-30-
