GAPSHARE
(As Amended and Restated Effective January 1, 1989)
ARTICLE 1
NAME, EFFECTIVE DATE, PURPOSE AND CONSTRUCTION
1.1 Plan Name
Effective July 1, 1991, the Plan herein set forth shall
be designated as GapShare. Before that date, the Plan was designated as The
Gap Employee Savings/Retirement Plan.
1.2 Effective Date
(a) In General
Except as otherwise indicated, the Effective
Date of this amended and restated Plan shall be January 1, 1989.
1.3 Purpose
The Plan is intended to qualify under sections 401(a),
401(k) and 501(a) of the Internal Revenue Code of 1986 as amended and is
created and maintained for the exclusive benefit of Eligible Employees of the
Employers and their Beneficiaries, to encourage retirement savings and to
enable them to defer a portion of their compensation.
1.4 Construction
The following miscellaneous provisions shall apply in the
construction of this Plan Agreement:
(a) State Jurisdiction
All matters respecting the validity, effect,
interpretation and administration of this Plan shall be determined in
accordance with the laws of the State of California except where preempted by
ERISA or other federal statutes.
(b) Gender
Wherever appropriate, words used in the singular
may include the plural or the plural may be read as the singular, the
masculine may include the feminine, and the neuter may include both the
masculine and the feminine.
(c) Application of ERISA and Code References
All references to sections of ERISA or the Code, or
any regulations or rulings thereunder, shall be deemed to refer to such
sections as they may subsequently be modified, amended, replaced or amplified
by any federal statutes, regulations or rulings of similar application and
import enacted by the Government of the United States or any duly authorized
agency of the Government.
(d) Enforceable Provisions Remain Effective
If any provisions of this Plan shall be held by a court
of competent jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan shall be fully effective.
(e) Headings
Headings are inserted for reference only and
constitute no part of the construction of this Agreement.
1.5 Employment Relationship Not Affected
Nothing in the Plan shall be deemed a contract between the
Employers and any Employee, nor shall the rights or obligations of the
Employers or any Employee to continue or terminate employment at any time be
affected hereby.
1.6 Terminated Participants Not Affected
Notwithstanding anything to the contrary contained herein
and except as otherwise required by law, any person who was a Participant
under the Plan prior to the effective date of this amendment and restatement
and who is not both a Participant and an Eligible Employee under the amended
and restated Plan document, as it is made effective, will have his or her
rights and remedies, if any, determined by the terms and conditions of the
Plan in effect as of the date of his or her participation ceased or the date
he or she ceased or the date he or she cease to be an Eligible Employee,
whichever has occurred first.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION Definitions
Terms which are used only in a single Article are generally defined at the
beginning of that Article. The following words and phrases are used
throughout this Plan and are defined below:
2.1 "Account" means the aggregate of all records maintained
by the Committee for purposes of determining a Participant's or Beneficiary's
interest in the fund and shall include:
(a) "After-Tax Account" means that portion of an
Account attributable to after-tax contributions.
(b) "Pre-Tax Account" means that portion of an
Account which is attributable to Compensation Reductions.
(c) "100% Vested Company-Match Account" means that
portion of an Account which is attributable to (i) the first $300 of annual
Employer matching contributions made on behalf of a Participant in Plan Years
1985 and 1986 and (ii) the first $600 of such annual contributions made in
Plan Years thereafter.
(d) "Regular Company-Match Account" means the
portion of an Account which is attributable to (i) the excess over $300 of
Employer matching contributions made on behalf of a Participant in Plan Years
1985 and 1986, (ii) the excess over $600 of Employer matching contributions
made on behalf of a Participant in any Plan Year thereafter, (iii) Employer
matching contributions made on behalf of the Participant before January 1,
1985 which were based on his or her first $15,000 of Compensation in a Plan
Year and (iv) the plan which was replaced by this Plan effective June 30,
1978.
(e) "Excess Company-Match Account" means the portion
of an Account which is attributable to (i) Employer supplemental contributions
which were allocated to the Account of a Participant between January 1, 1985
and January 1, 1988 and (ii) Employer matching contributions made on behalf
of the Participant before January 1, 1985 which were based on his or her
compensation in excess of $15,000 in a Plan Year.
(f) "Non-Elective Account" means the portion of an
Account which is attributable to Employer contributions pursuant to Article
4.12(a).
(g) "Rollover Account" means the portion of an
Account which is attributable to an Employee's rollover contributions as
provided in Article 4.16.
2.2 "Adjustment Factor" means, effective January 1, 1988, the
cost of living factor prescribed by the Secretary of the Treasury under Code
section 415(d), as applied to such items and in such manner as the Secretary
shall provide.
2.3 "Affiliate" means a corporation, trade or business which
is, together with any Employer, 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), but only for the period during which
such other entity is so affiliated with any Employer.
2.4 "After-Tax Contributions" means after-tax contributions
made by a Participant pursuant to Articles 4.2 and 4.3.
2.5 "Allowable Compensation" means the total of all wages,
salaries, fees for professional services and other amounts paid by the
Employer or an Affiliated Employer during a Plan Year to a Participant for
services actually rendered in the course of employment including (but not
limited to) bonuses, overtime, commissions and incentive compensation, but
excluding amounts which are contributed to a retirement plan, deferred
compensation plan or other plan and which are not included as taxable income
for such year, or amounts which are not deemed to be income for current
services rendered such as amounts realized from the acquisition, sale,
exercise or exchange of Employer stock or stock options. For purposes of the
Plan, Allowable Compensation shall not include amounts which a Participant
elected to have the Employer contribute on his or her behalf for the Plan Year
as a Compensation Reduction. Allowable Compensation shall not exceed $200,000
(multiplied by the Adjustment Factor), provided, however, that the total of
the Allowable Compensation received by (1) a 5% Owner and/or one of the 10
most Highly Compensated Employees of the Employer, (2) his or her spouse, and
(3) his or her children who have not attained the age of 19 by the end of the
Plan Year, shall not exceed $200,000 (multiplied by the Adjustment Factor).
Allowable Compensation shall not include any amount paid or reimbursed by an
Employer or an Affiliate for moving expenses incurred by the Participant, but
only to the extent that it is reasonable to believe that such expenses are
deductible by the Participant under section 217 of the Code.
Notwithstanding the foregoing, amounts earned in the Plan
Year, but paid during the first few weeks of the next year because of the
timing of pay periods and pay days may be included on a uniform and consistent
basis in the Allowable Compensation of all similarly situated Participants for
the Plan Year. For Plan Years beginning before December 31, 1991, the
requirement that the amounts earned in a Plan Year be paid in the first few
weeks of the following year shall not apply.
2.6 "Alternate Payee" means any spouse, former spouse, child
or other dependent of a Participant recognized by a domestic relations order
as having a right to receive all, or a portion of, a Participant's benefits
under the Plan.
2.7 "Beneficiary" means any person designated by a Participant
to receive benefits upon the death of such Participant, subject to the
limitations of Article 3.3.
2.8 "Board" means the Board of Directors of The Gap, Inc.
2.9 "Code" means the Internal Revenue Code of 1986, as amended
(and regulations issued thereunder).
2.10 "Committee" means the Retirement Committee designated
under Article 11.
2.11 "Company" means The Gap, Inc.
2.12 "Compensation" means the sum of the salary, wages,
commissions, and overtime pay paid by an Employer to an Eligible Employee
while a Participant with respect to services rendered during the Plan Year,
including all amounts contributed by the 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. For an Employee who is
(i) a citizen or a resident alien of the United States and (ii) a Participant
at the time of a temporary transfer to employment abroad, Compensation shall
also include amounts paid on behalf of the Employee which the Employer and the
Employee have agreed in writing shall be deemed a substitution for a portion
of salary or wages. Compensation shall not exceed $200,000 (multiplied by the
Adjustment Factor) and the total of the Compensation received by (1) a 5%
Owner and/or one of the 10 most highly compensated employees of the Employer,
(2) his or her spouse and (3) his or her children who have not attained the
age of 19 by the end of the Plan Year, shall not exceed $200,000 (multiplied
by the Adjustment Factor).
2.13 "Compensation Reductions" means contributions made by an
Employer pursuant to a Participant's salary reduction election under Articles
4.2 and 4.3.
2.14 "Date of Hire" means the date on which an Employee first
performs an Hour of Service for the Employer.
2.15 "Disability" means the permanent incapacity of a
Participant, by reason of physical or mental illness, to perform his or her
usual duties for his or her Employer, resulting in termination of his or her
service with his or her Employer. Disability shall be determined by the
Committee in a uniform and nondiscriminatory manner after consideration of
such evidence as it may require, which shall include a report of such
physician or physicians as it may designate.
2.16 "Eligible Employee" has the meaning set forth in Article
3.1.
2.17 "Eligible Participant" means an Employee who has satisfied
the eligibility requirements of Article 3.2 and was an Eligible Employee at
any time during the Plan Year.
2.18 "Employee" means any person in the employ of one of the
Employers or Affiliates including officers, but excluding directors who are
not in the employ of one of the Employers of Affiliates.
2.19 "Employer" means the Company and any Affiliate which, with
the approval of the Board, adopts, becomes a party to and agrees to be bound
by all provisions of this Plan. Any action to be taken by an Employer
hereunder shall be by resolution of its board of directors or by action of an
authorized officer of such Employer. The Employers are listed in Appendix A
attached hereto, which Appendix shall be kept current by the Committee.
2.20 "Employer Matching Contributions" means contributions made
by an Employer pursuant to Article 4.4 on account of a Participant's Matched
Contributions.
2.21 "Employment Commencement Date" means each of the
following:
(a) The date on which an Employee first performs an
Hour of Service for an Employer or Affiliate with respect to which such
Employee is compensated or is entitled to compensation by the Employer or
Affiliate.
(b) In the case of an Employee who incurs a Period
of Severance and who is subsequently reemployed by an Employer or Affiliate,
the term Employment Commencement Date shall mean the first day following such
Period of Severance on which such Employee first performs an Hour of Service
for an Employer or Affiliate with respect to which he or she is compensated
or entitled to Compensation. Unless the Board shall expressly determine
otherwise, and except as is expressly provided in this Plan, an Employee shall
not, for the purposes of determining his or her Employment Commencement Date,
be deemed to have commenced employment with an Employer or Affiliate prior to
the effective date on which such entity became an Affiliate.
2.22 "Entry Date" means January 1, April 1, July 1, and October
1 of each year.
2.23 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
2.24 "Hour of Service" means each hour for which an Employee
is credited in accordance with the following rules:
(a) Hours Credited for Duties Performed. Each hour
for which an Employee is paid, or entitled to payment, for the performance of
duties for the Employer or Affiliate.
(b) Hours Credited When Duties Not Performed. Each
hour for which an Employee is paid, or entitled to payment, by an Employer of
Affiliate on account of a period of time during which no duties are performed
(regardless of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence; provided that no Hours of Service
shall be credited to an Employee:
(1) For a period during which no duties
are performed if payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, unemployment
compensation, or disability insurance laws;
(2) On account of any payment made or due an Employee solely as
reimbursement for medical or medically related expenses incurred by the
Employee.
(c) Hours Credited For Back Pay. Each hour not
otherwise credited under the Plan for which back pay, irrespective of
mitigation of damages, has either been awarded or agreed to by the Employer
or Affiliate. Such hours are to be credited to the period or periods to which
the award or agreement pertains.
(d) Hours Credited For Leave of Absence. Each hour
for any period during which an Employee is not paid but is on an approved
leave of absence, military duty or is temporarily laid off, provided that the
Employee:
(1) Returns to the employ of the Employer
or Affiliate immediately after the expiration of the leave or layoff, or in
the case of military duty, within 120 days or such longer period as may be
prescribed by applicable law, after first becoming eligible for military
discharge, and
(2) Remains in the employ of the Employer
or Affiliate for at least 30 days after such return, or
(3) Fails to return or remain employed as
provided above by reasons of his or her death, Disability or retirement.
Hours credited for such periods shall be based on a 40-hour week or, if
different, on the Employee's normally scheduled hours per week. However, if
the Employee fails to return to the employ of the Employer or Affiliate or to
remain in the employ of the Employer or Affiliate for at least 30 days after
his or her return for reasons other than his or her death, Disability or
retirement, then his or her original leave date shall be deemed to be his or
her termination date.
(e) Limit on Hours Credited. No more than 501 Hours
of Service shall be credited under subsections (b), (c) or (d) above to an
Employee on account of any single continuous period of time during which the
Employee performs no duties for the Employer or Affiliate.
(f) Crediting of Hours Subject to DOL Regulation.
The calculation of the number of Hours of Service to be credited under
subsections (b) and (c) above for periods during which no duties are
performed, and the crediting of such Hours of Service to periods of time for
purposes of computations under the Plan, shall be determined by the Committee
in accordance with the rules set forth in paragraphs (b) and (c) of DOL Reg.
section 2530-200b-2, which rules shall be consistently applied with respect
to all employees within the same job classifications.
(g) Hours of Service Equivalency. Hours of Service
for Employees under subsections (a), (b) and (c) above shall be determined by
crediting each Employee with 45 Hours of Service for each week in which the
Employee would have been credited with at least one Hour of Service under such
subsections. However, for classes of Employees paid on an hourly basis and
for Employees for whom records of hours are maintained, Hours of Service under
subsections (a), (b) and (c) shall be determined on the basis of hours for
which Compensation is paid or due.
2.25 "Matched Contributions" means After-Tax Contributions and
Compensation Reductions made pursuant to Article 4.2, upon which Employer
Matching Contributions are based.
2.26 "Owner" means any person who owns (within the meaning of
Code sections 318 and 416(i)(1)(B)), or has owned within the four Plan Years
prior to the Plan Year under consideration, a portion of the outstanding stock
or voting power of an Employer. The ownership percentage of a "5%" Owner
includes interests greater than 5%, that of a "1%" Owner includes interests
greater than 1% and that of a "1/2%" Owner includes interests greater than
1/2%.
2.27 "Participant" means any Employee or former Employee who
has made After-Tax Contributions or authorized Compensation Reductions in
accordance with Article 4, and whose Account hereunder has not subsequently
been liquidated.
2.28 "Period of Service" means the period of time commencing
on an Employee's Employment Commencement Date and ending on his or her
Severance Date. Periods of Service shall be measured under the elapsed time
method as authorized under regulations promulgated by the Secretary of Labor.
Periods of Service shall also be subject to the following rules:
(a) If an Employee severs from service by
resignation, discharge or retirement and returns to service within 12 months,
that Period of Severance shall be considered as part of that Employee's Period
of Service.
(b) Notwithstanding the rule in subparagraph (a)
above, if an Employee severs from service by reason of resignation, discharge
or retirement during a period of absence from service of 12 months or less,
which period of absence occurred for reasons other than a resignation,
discharge or retirement, such Period of Severance shall be considered as part
of the Employee's Period of Service only if such Employee performs an Hour of
Service within 12 months of the date on which the Employee was first absent
from service. An Employee is considered to have returned to service on his
or her new Employment Commencement Date.
(c) If an Employee is employed by an Affiliate, the
period of such employment shall be considered a part of the Employee's Period
of Service only for the period during which such Affiliate and the Employers
are members of a controlled group of corporations or are under common control.
(d) If an Employee is employed by a company
(hereafter, "Predecessor Company") heretofore or hereafter merged or
consolidated or otherwise acquired by an Employer, or all or a substantial
part of the assets or business of which have been or shall be acquired by an
Employer, then the period of such employment shall be considered a part of the
Employee's Period of Service:
(1) to the extent such employment
with the Predecessor Company is required to be treated as employment with the
Employer under regulations prescribed by the Secretary of Treasury; or
(2) to the extent granted by the
Board in its sole discretion effected on a nondiscriminatory basis as to all
persons similarly situated to employees of that Predecessor Company.
2.29 "Period of Severance" means the period of time commencing
on an Employee's Severance Date and ending on the Employee's Employment
Commencement Date, if any, following thereafter. However, if an Employee
severs from service because of the pregnancy of the Employee, the birth of a
child of the Employee, the placement of a child with the Employee in
connection with adoption of the child by the Employee, or for the purpose of
caring for such child by the Employee for a period immediately following birth
or placement, the one year period following the Employee's Severance Date
shall not constitute a Period of Severance for purposes of Article 6, provided
that the Employee provides the Committee with such timely information as the
Committee may reasonably require to establish that the absence is for a reason
described in this Article 2.29. The provisions of the preceding sentence
shall apply to all absences commencing after January 1, 1985.
2.30 "Plan" means GapShare, as set forth in this instrument and
as amended from time to time.
2.31 "Plan Administrator" means the Committee.
2.32 "Plan Year" means the accounting year of the Plan, which
is the 12-month period ending December 31. The Plan Year shall be the
limitation year for purposes of section 415 of the Code.
2.33 "Severance Date" means for an Employee, the earlier of (i)
the date on which he or she quits, retires, is discharged or dies, or (ii) the
date on which falls the first anniversary of the first day of his or her
period of absence from service for reasons other than a quit, retirement,
discharge or death, such as vacation, holiday, sickness, disability, leave of
absence or lay off.
2.34 "Spousal Consent" means the revocable written consent of
the Participants spouse witnessed by a Plan representative or a notary public
provided that such written consent shall not be required if it is established
to the satisfaction of a Plan representative that such consent be obtained
because (1) there is no spouse, or (2) the spouse cannot be located, or (3)
such other circumstances exist as may be prescribed by applicable regulation,
including but not limited to Code section 417(a)(4). Any such written Spousal
Consent or establishment that consent cannot be obtained shall be effective
only with respect to that spouse. Spousal Consent shall acknowledge the
designated Beneficiary, the specific form of any benefit paid under the Plan
(including any remaining benefits that a designated Beneficiary may receive)
and the effect of such consent. Any change in Beneficiary or benefit, elected
at a later time shall require a new Spousal Consent.
2.35 "Top-Heavy Plan" shall have the meaning set forth in
Article 12.1.
2.36 "Trust" means the trust created under the trust agreement
entered into between the Company and the Trustee for the purpose of funding
the benefits provided under the Plan.
2.37 "Trustee" means, effective July 1, 1992, Mellon Bank,
N.A., and any duly appointed successor. Before July 1, 1992, the Trustee was
Wells Fargo Bank, N.A.
2.38 "Trust Fund" means all property and income held by the
Trustee under the Trust Agreement.
2.39 "Valuation Date" means the last day of each March, June,
September and December and such other date as may be designated as provided
in Article 7 for the revaluation of Participants' Accounts.
ARTICLE 3
ELIGIBILITY, PARTICIPATION AND BENEFICIARY DESIGNATION
3.1 Eligible Employees
"Eligible Employee" means any Employee of an Employer, except, (i)
any Employee who is a nonresident alien and who receives no earned income
(within the meaning of section 911(d)(2) of the code) from an Employer
constituting income from sources within the United States (within the meaning
of section 861(a)(3) of the Code); (ii) any Employee who is employed in a
foreign country; provided that this exclusion shall not apply to an Employee
who is temporarily transferred to employment with an Employer in a foreign
country and who is a citizen or resident alien of the United States at the
time of such transfer; and (iii) any Employee whose compensation and
conditions of employment are established by the terms of a collective
bargaining agreement to which the Employer is a party and which does not
specifically provide for coverage of such Employee under the Plan.
3.2 Participation
(a) Plan Entry
Each Eligible Employee shall be eligible to
become a Participant in the Plan on the Entry Date coinciding with or next
following the later of the:
(i) Last day of the "Eligibility
Computation Period", as defined below, in which he or she completes 1,000
Hours of Service, and
(ii) Attainment of age 21,
provided on such Entry Date he or she is an Eligible Employee.
(b) Eligibility Computation Periods
An Employee's initial Eligibility Computation
Period ("ECP") is the 12 consecutive month period beginning with the
Employee's Employment Commencement Date. Before January 1, 1993, the
subsequent ECP is the 12 consecutive month period beginning on each
anniversary of such Employment Commencement Date. Effective January 1, 1993,
the subsequent ECP is the Plan Year beginning within the initial ECP and
following Plan Years. Notwithstanding the foregoing, if an Employee would
have satisfied the service requirement of this Article 3.2 with respect to a
subsequent ECP as defined under the terms of the Plan as in effect before
January 1, 1993, and if January 1, 1993 falls within such ECP, the Employee
shall be deemed to have satisfied the service requirement of this Article.
(c) Late Entry
An Eligible Employee who met all of the
requirements of Article 3.2(a) but elected not to become a Participant in the
Plan on the Entry Date on which participation could have begun, may become a
Participant on the first day of any subsequent calendar quarter, provided that
on such day he or she is an Eligible Employee.
3.3 Beneficiary Designation
(a) Designation Upon Becoming Participant
Each Eligible Employee, upon becoming a
Participant, shall designate a Beneficiary or Beneficiaries to receive
benefits under the Plan after his or her death. A Participant may change his
or her Beneficiary designation at any time. Designations of non-spousal
Beneficiaries made by married Participants shall be made only in accordance
with the provisions of (b) below. If such a designation of a non-spousal
Beneficiary by a married Participant does not meet the requirements of (b)
below, such designation shall be invalid and the Participant's spouse shall
be his or her Beneficiary. In the absence of a valid designation by an
unmarried Participant or if no designated Beneficiary survives an unmarried
Participant, unless otherwise provided by applicable law, his or her interest
shall be distributed to the following persons in the following order of
priority: his or her issue by right of representation, his or her parents or
his or her estate.
(b) Non-Spousal Designation by Married Participant
In the event that a married Participant wishes
to designate a Beneficiary other than his or her spouse, such designation
shall be subject to Spousal Consent.
3.4 Change from Ineligible to Eligible Employee
An Employee who is excluded under Article 3.1 for any
period shall be eligible to participate on the first date he or she is no
longer excluded, provided that the requirements of Article 3.2 have been
satisfied.
3.5 Former Employee Rehired
A former Employee who had completed the eligibility
requirements of Article 3.2 with an Employer and who is reemployed by an
Employer shall be eligible to become a Participant as of the date of
reemployment as an Eligible Employee.
3.6 Committee Determines Eligibility
Compliance with the eligibility requirements shall be
determined by the Committee in its absolute discretion, which shall also
inform each Employee of his or her eligibility to become a Participant. The
Committee shall provide each Participant with a summary plan description not
later than 90 days following the date he or she becomes an Eligible
Participant or within such other period as may be prescribed by applicable law
or regulation.
ARTICLE 4
CONTRIBUTIONS
4.1 Definitions
(a) "Actual Deferral Percentage" means, for the
group of Eligible Participants who are Highly Compensated Employees and for
the group of Eligible Participants who are Non-Highly Compensated Employees,
the average of the individual elective deferral percentages of each individual
in the applicable group. The individual elective deferral percentages are
calculated by dividing the total of an individual's elective deferrals under
the Plan for the applicable year by the individual's Testing Compensation for
that year. In computing an individual's elective deferral percentage, the
following special rules shall apply:
(1) If the Employer maintains any other
cash or deferred arrangement which is aggregated by the Employer with this
Plan for purposes of applying section 401(a)(4) or 410(b) of the Code, then
all such cash or deferred arrangements shall be treated as one plan.
(2) If a Highly Compensated Employee is
a participant in any other cash or deferred arrangement maintained by the
Employer, then the separate elective deferral percentage of that individual
under all such cash or deferred arrangements shall be aggregated.
(3) If a Highly Compensated Employee is
subject to the Family Aggregation Rule of subsection (g)(3) below, the
elective deferral percentage of the family unit shall be the combined elective
deferral percentages of all Family Members who are Eligible Employees.
(4) Amounts contributed to the Plan as
Excess Deferrals on behalf of a Non-Highly Compensated Employee shall not be
taken into account in calculating that individual's elective deferral
percentage.
(b) "Actual Contribution Percentage" means, for the
group of Eligible Participants who are Highly Compensated Employees and for
the group of Eligible Participants who are Non-Highly Compensated Employees,
the average of the individual contribution percentages of each individual in
the applicable group. The individual contribution percentages are calculated
by dividing the total of all After-Tax and Employer Matching Contributions
made by or on behalf of an individual for the applicable year by the
individual's Testing Compensation for that year. The special aggregation
rules set forth in subsection (a) above with respect to calculations of Actual
Deferral Percentage shall also apply to the calculation of Actual Contribution
Percentage.
(c) "Excess Aggregate Contributions" means
After-Tax and/or Employer Matching Contributions contributed to the Plan
by or on behalf of a Highly Compensated Employee in excess of the amounts
permitted under Article 4.10. Excess Aggregate Contributions shall be
calculated in accordance with Article 4.11.
(d) "Excess Contribution" means any Compensation
Reductions contributed to the Plan on behalf of a Highly Compensated
Employee in excess of the amounts permitted under Article 4.8. Excess
Contributions shall be calculated in accordance with Article 4.9.
(e) "Excess Deferral" means any amount contributed
to the Plan on behalf of a Participant for a Plan Year (or allocated to the
Plan as an excess deferral by the Participant) that (when aggregated with all
other elective deferrals for the Plan Year to any plan maintained by an
Affiliate) exceeds the 401(k) Maximum for that year.
(f) "401(k) Maximum" means the limit in effect under
section 402(g)(1) of the Code multiplied by the Adjustment Factor.
(g) "Highly Compensated Employee" means a Highly
Compensated Active Employee or Highly Compensated Former Employee as defined
in sections (1) and (2) below. Notwithstanding any language to the contrary
in this Plan, the determination of who is a Highly Compensated Employee shall
be made in accordance with section 414(q) of the Code and any regulations
issued thereunder.
(1) "Highly Compensated Active Employee"
means any Employee who performs services for an Employer during the Plan Year
being tested (the "Determination Year") and who, subject to the Family
Aggregation Rule of section (3) below, meets any of the following criteria:
(A) During the Plan Year preceding
the Determination Year (the "Look-Back Year") --
(i) was a 5% Owner (within
the meaning of section 414(q)(3) of the Code);
(ii) received Testing
Compensation in excess of the $75,000 amount in effect under section 414(q)(1)
of the Code multiplied by the Adjustment Factor;
(iii) received Testing
Compensation in excess of the $50,000 amount in effect under section 414(q)(1)
of the Code multiplied by the Adjustment Factor, and was a member of the "top-
paid group" (within the meaning of section 414(q)(4) of the Code) for that
year; or
(iv) was an officer and
received Testing Compensation for such year greater than fifty percent (50%)
of the dollar limitation in effect under section 415(b)(1)(A) of the Code for
that year (or, if no officer has Testing Compensation in excess of that
threshold for that year, the highest paid officer for that year);
(B) Would be described in clause
(ii), (iii) or (iv) of paragraph (A) above if the term "Determination Year"
were substituted for the term "Look-Back Year" and is one of the one hundred
(100) Participants who received the highest Testing Compensation for the
Determination Year; or
(C) Is a 5% Owner (within the
meaning of section 414(q)(3) of the Code) at any time during the Determination
Year.
(2) "Highly Compensated Former Employee"
means an Employee or former Employee who did not perform services for an
Employer during the Determination Year and who was a Highly Compensated Active
Employee either for the Plan Year of his or her separation from service (as
defined under section 414(q) of the Code) or for any Plan Year ending on or
after his or her 55th birthday.
(3) Family Aggregation Rule. A Family
Member and a Family Employee (as defined herein) shall be aggregated and
treated as one Employee receiving Testing Compensation and contributions under
the Plan equal to the sum of such Testing Compensation and contributions
received by the Family Member and the Family Employee. "Family Member" means
an Employee who, at any time during a Determination or Look-Back Year, is a
spouse, lineal ascendant or descendant, or spouse of a lineal ascendant or
descendant of a Family Employee during the applicable year. "Family Employee"
means either (a) a 5% Owner (within the meaning of section 414(q)(3) of the
Code) who is an active or former Employee or (b) a Highly Compensated Active
Employee who is one of the ten employees who received the highest Testing
Compensation for that year.
(4) Testing Compensation. For purposes
of this subsection (g), "Testing Compensation" shall include amounts earned
before an Employee became an Eligible Participant and amounts greater than
$200,000, multiplied by the Adjustment Factor.
(5) Calendar Year Election. For any
Determination Year, the Committee may elect to determine Highly Compensated
Employees on the basis of the calendar year coinciding with or ending within
the Determination Year. If the Determination Year coincides with the calendar
year, then determinations under this Article 4.1(g) shall be made only on the
basis of the Determination Year and disregarding the Look-Back Year.
(h) "Non-Highly Compensated Employee" means any Eligible
Employee who is not a Highly-Compensated Employee.
(i) "Testing Compensation" means Allowable
Compensation plus amounts contributed by an Employer pursuant to a salary
reduction election and which are not includable in the Employee's gross income
under section 125, 402(a)(8) and 402(b) of the Code. Testing Compensation for
a Plan Year shall not include: (a) amounts greater than $200,000, multiplied
by the Adjustment Factor; or (b) effective January 1, 1993, amounts earned
before an Employee became an Eligible Participant. The total of Testing
Compensation received by: (a) a Highly Compensated Employee who is one of the
ten most Highly Compensated Employees and/or a 5% Owner, (b) his or her spouse
or (c) his or her lineal descendants who have not attained the age of 19 by
the end of the Plan Year, shall not exceed $200,000 (multiplied by the
Adjustment Factor).
4.2 Matched Contributions.
A Participant may elect Matched Contributions in
accordance with one of the following methods:
(a) After-Tax Contributions. A Participant may
make, by payroll deduction, After-Tax Contributions of 2%, 3% or 4% of his or
her Compensation, which shall be allocated to his or her After-Tax Account.
(b) Compensation Reductions. A Participant (except
for a Puerto Rican citizen employed in Puerto Rico) may elect to reduce his
or her Compensation by 2%, 3% or 4% and to have his or her Employer contribute
the amount of the reduction to the Plan. Compensation Reductions shall be
allocated to a Participant's Pre-Tax Account.
(c) Combination Matched Contributions. To the
extent permitted by the Committee, a Participant may make After-Tax
Contributions of 2% of Compensation in accordance with subsection (a) above
and (except for a Puerto Rican citizen employed in Puerto Rico) may elect
Compensation Reductions of 2% of Compensation in accordance with subsection
(b) above.
4.3 Non-Matched Contributions.
A Participant may make non-matched After-Tax Contributions
by payroll deduction or by lump sum contribution and may (except for a Puerto
Rican citizen employed in Puerto Rico) authorize non-matched Compensation
Reductions, subject to the following limitations:
(a) Any non-matched Compensation Reductions for a
Plan Year shall not exceed 12% of the Participant's Compensation for that Plan
Year;
(b) Any non-matched After-Tax Contributions shall
not exceed 17% of the Participant's Compensation for the Plan Year;
(c) For Plan Years beginning before 1993, a
Participant who is eligible to participate in The Gap Nonqualified
Supplemental Executive Retirement Plan may not make or authorize non-matched
contributions to the Plan; and
(d) Effective January 1, 1993, for any Plan Year,
the Committee may limit or prohibit contributions under this Article 4.3 with
respect to Participants who are Highly Compensated Employees for such Plan
Year.
4.4 Employer Matching Contributions.
(a) The Employers shall make Employer Matching
Contributions in amounts equal to a percentage of a Participant's Matched
Contributions. Such percentage shall be determined with respect to each
Employer by the Board and announced to Participants before the beginning of
each Plan Year. The Board may provide for special percentages for
Participants who are employed by more than one Employer. If no percentage is
determined by the Board for a particular year, the percentage will be deemed
to be 0%.
(b) The first $600 contributed as Employer Matching
Contributions on behalf of a Participant during a Plan Year shall be allocated
to his or her 100% Vested Company-Match Account. Additional Employer Matching
Contributions for the Plan Year shall be contributed to the Participant's
Regular Company-Match Account.
4.5 Elections.
(a) The Committee shall establish procedures for
election of After-Tax Contributions and Compensation Reductions by
Participants and shall prescribe written forms for the making of such
elections.
(b) A Participant may prospectively increase,
decrease, or revoke his or her After-Tax Contribution and/or Compensation
Reduction election at any time on the form prescribed by the Committee,
subject to such rules as the Committee may establish. The prospective
increase, decrease, or revocation of an election shall be effective as soon
as practicable following the Committee's approval of the completed form, and
shall remain in full force and effect until terminated or revoked in writing,
or superseded by a new election.
(c) If the Committee determines that any limitation
contained in Articles 4 or 5 will be violated in any Plan Year or taxable year
of a Participant, the Committee shall take such action as it deems appropriate
to assure compliance with such limitations. Such action may include a
prospective reduction, revocation, or temporary suspension of After- Tax
Contribution or Compensation Reduction elections of Participants, with or
without the consent of such Participants, to the extent permitted by the Code.
4.6 Timing of Contributions.
The Employers shall pay contributions to the Trust no
later than 60 days after either the end of the payroll period triggering such
contribution or the date any lump sum contribution is made.
4.7 Excess Deferrals.
(a) 401(k) Maximum. Notwithstanding anything in
this Article 4 to the contrary, a Participant's Compensation Reductions (when
aggregated with all other elective deferrals to any plan maintained by an
Affiliate) may not exceed the 401(k) Maximum.
(b) Excess Deferrals. If the Committee determines
that an Excess Deferral has been made to the Plan on behalf of a Participant,
the Committee shall cause the Excess Deferral, and any income attributable
thereto, to be distributed to the Participant before April 15 following the
calendar year of the deferral in accordance with section 402(g)(2)(A)(ii) of
the Code. Income shall be allocated to Excess Deferrals in the manner
provided in Article 4.9(c). Distributions of Excess Deferrals shall be deemed
to be attributable first to non-matched Compensation Reductions and then, to
the extent necessary, to matched Compensation Reductions.
(c) Allocated Excess Deferrals. If a Participant
has, in accordance with section 402(g)(1)(i) of the Code, allocated to the
Plan as Excess Deferrals amounts that would not otherwise be Excess
Deferrals, the Committee may in its discretion distribute such amounts in
accordance with subsection (b) above.
4.8 Actual Deferral Percentage Limitation.
In no event shall the Actual Deferral Percentage (the
"ADP") for Eligible Participants who are Highly Compensated Employees ("HCEs")
for a Plan Year exceed the maximum ADP for the HCEs, as determined by
reference to the ADP for Eligible Participants who are Non-Highly Compensated
Employees ("NHCEs"), in accordance with the following table:
If the ADP Then the Maximum ADP for
for the NHCEs is the HCEs is:
Less than 2% 2.0 x NHCEs' ADP
2% to 8% NHCEs ADP + 2%
More than 8% 1.25 x NHCEs' ADP
4.9 Excess Contributions.
In the event that the Committee determines that the ADP
for the Highly Compensated Employees exceeds the ADP maximum for a Plan Year,
then the amount of any Excess Contributions contributed on behalf of a Highly
Compensated Employee, and any income allocable thereto, shall be distributed
to the Highly Compensated Employee before the close of the Plan Year that next
follows the Plan Year to which the Excess Contributions relate.
(a) Determination of Excess Contributions. The
amount of Excess Contributions for the Plan Year shall be determined in the
following manner:
(1) The deferrals of the Highly
Compensated Employee(s) with the highest deferral rate shall be reduced to the
extent necessary to satisfy the ADP test or until the deferral rate equals the
deferral rate of the Highly Compensated Employee(s) with the next highest
deferral rate, whichever is less. This process shall be repeated until the
ADP test is satisfied.
(2) The amount of Excess
Contributions for a Highly Compensated Employee shall be equal to his or her
deferrals (calculated using his or her original deferral rate), minus his or
her deferrals calculated using the deferral rate as reduced under paragraph
(a)(1) above.
(3) The amount of Excess
Contributions, as determined according to the method described in this
paragraph (a), shall be reduced by any Excess Deferrals previously distributed
to a Participant for the Plan Year under section 4.7(c) above.
(4) Excess Contributions shall
be deemed to be attributable first to non-matched Compensation Reductions and
then, to the extent necessary, to matched Compensation Reductions.
(b) Allocation Upon Family Aggregation. In the case
of a Highly Compensated Employee whose deferral rate is determined under the
Family Aggregation Rule of Article 4.1(g)(3), the deferral rate shall be
reduced in accordance with the "levelling" method described in Treas. Reg
section 1.401(k)-1(f)(2). Excess contributions for the family unit shall be
allocated among the family members in proportion to the deferrals of each
family member that has been combined.
(c) Allocation of Income. For Plan Years beginning
before 1992, the income allocable to any Excess Contributions for such Plan
Year and for the period between the end of the Plan Year and the date of
distribution shall be determined in accordance with Treas. Reg.
section 1.401(k)-1(f) (4)(ii)(C) and (D). Effective January 1, 1992, the income
allocable to any Excess Contributions for the Plan Year and for the period
between the end of the Plan Year and the date of distribution shall be
determined in accordance with the method otherwise used under the Plan for
allocation of earnings to Participants' accounts and the income allocable to
those excess contributions.
4.10 Actual Contribution Percentage Limitation.
In no event shall the Actual Contribution Percentage (the "ACP") for
Eligible Participants who are Highly Compensated Employees ("HCEs") for a Plan
Year exceed the maximum ACP for the HCEs, as determined by reference to the
ACP for Eligible Participants who are Non-Highly Compensated Employees
("NHCEs"), in accordance with the following table:
If the ACP Then the Maximum ACP
for the NHCEs is for the HCEs is:
Less than 2% 2.0 x NHCEs' ADP
2% to 8% NHCEs ADP + 2%
More than 8% 1.25 x NHCEs' ADP
4.11 Excess Aggregate Contributions.
In the event that the Committee determines that the ACP
for the HCEs exceeds the ACP Maximum for a Plan Year, then the amount of any
Excess Aggregate Contributions contributed on behalf of an HCE, and any income
allocable thereto, shall be distributed to the HCE in the following order:
(a) unmatched After-Tax Contributions; (b) vested Employer Matching
Contributions; and (c) matched After-Tax Contributions. Such distribution
shall be made before the close of the Plan Year that next follows the Plan
Year to which the Excess Aggregate Contributions relate. Any remaining Excess
Aggregate Contributions that are non-vested Employer Matching Contributions
shall be forfeited by the date given in the preceding sentence and shall be
treated in the same manner as forfeitures under Article 6.3.
(a) Determination of Distributable Amount. The
amount of Excess Aggregate Contributions for an HCE, the income allocable
thereto and the family aggregation rules shall be determined in the manner
provided in Article 4.9 with respect to Excess Contributions.
(b) Prohibition on Multiple Use. Notwithstanding
any contrary Plan provision, the multiple use of the alternative methods of
compliance with sections 401(k) and 401(m) of the Code, as set forth in
sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) of the Code shall not be
permitted. In the event that multiple use occurs, it shall be corrected by
reducing the ADP and/or ACP for HCEs (in the discretion of the Committee) and
treating such reductions as Excess Contributions and/or Excess Aggregate
Contributions (as appropriate) under Article 4.9 or this Article 4.11.
4.12 Alternative Correction Methods.
In lieu of or in addition to the correction methods for
Excess Contributions and Excess Aggregate Contributions set forth in Articles
4.9 and 4.11, the following methods may be employed:
(a) An Employer may, at its discretion, make a non-
elective contribution on behalf of a group of Eligible Participants designated
by the Employer who were Non-Highly Compensated Employees on the last day of
the applicable Plan Year. Such contribution shall be allocated to Non-
Elective Accounts of each Eligible Participant who is to share in such
contribution and may be allocated at the discretion of the Employer in equal
dollar amounts or in proportion to the Compensation of the Eligible
Participants.
(b) Subject to article 5 and Article 4.10, a
Participant may elect to recharacterize Excess Contributions under Article 4.9
as After-Tax Contributions in accordance with Treas. Reg. section
1.401(k)-1(f)(3). Contributions recharacterized under this subsection shall
continue to be subject to all withdrawal restrictions applicable to
Compensation Reductions.
4.13 Correction of Employer Matching Contributions.
Employer Matching Contributions that are attributable to
Excess Deferrals, to Excess Contributions or to After-Tax Contributions that
are Excess Aggregate Contributions shall be forfeited and treated in the same
manner as forfeitures under Article 6.3.
4.14 Code ADP and ACP Rules Incorporated.
Articles 4.1 and 4.7 through 4.13 above are intended to
satisfy the requirements of sections 401(k) and (m) of the Code and, to the
extent not otherwise stated above, the provisions of such section and
regulations thereunder are incorporated herein by reference.
4.15 Profits Not Required.
The Employers shall make all contributions required under
the Plan without regard to the extent of the Employers' earnings or profits
for any Plan Year.
4.16 Rollover Contributions.
(a) Contributions.
The Committee may direct the Trustee to accept
a payment to the Trust of assets held for the benefit of any Employee who is
or will become a Participant, if such payment qualifies as a direct transfer
under section 401(a)(31) or a rollover under section 402(a) or (c) or
408(d)(3)(A)(ii) of the Code; provided, however, that all such payments must
be in cash.
(b) Accounting.
Assets paid to the Trust pursuant to this
Article 4.16 shall be credited to the Participant's Rollover Account, as of
the date the contribution is received, which shall be fully vested and shall
share in Trust gains or losses pursuant to Article 7.
(c) Nonqualifying Rollovers.
If it is later determined that a payment made
pursuant to subsection (a) did not in fact qualify as a direct transfer under
section 401(a)(31) or as a rollover under section 402(a)(5) or
408(d)(3)(A)(ii) of the Code, then the balance credited to the Rollover
Account shall immediately be (i) segregated from all other Plan assets, (ii)
treated as a nonqualified trust established by and for the benefit of the
Participant, and (iii) distributed to the Participant. A nonqualifying
rollover shall be deemed never to have been a part of the Trust.
4.17 Effective Date.
Unless otherwise specifically indicated, Article 4.1 and
Articles 4.7 through 4.13 shall be effective as of January 1, 1988.
ARTICLE 5
LIMITATIONS
5.1 Limitations On Annual Allocations
(a) Notwithstanding any other provisions of this
Plan to the contrary, the Aggregate Annual Additions to a Participant's
Account for any Plan Year shall not exceed the lesser of 25% of the
Participant's Allowable Compensation for such year or $30,000 (or such higher
amount for the Plan Year as may be established by regulations under section
415(c) of the Code). The "Aggregate Annual Additions" for a Plan Year are the
sum of all amounts (excluding rollover contributions) allocated to the
Participant's Account under Article 4 and under any plan of an Affiliate (as
determined in accordance with section 415(h) of the Code) that is aggregated
with the Plan under Article 5.2(a), plus any other amounts treated as annual
additions under section 415(c)(2) of the Code.
(b) In the event that the limitation in (a) would
otherwise be exceeded with respect to any Participant, the following actions
shall be taken in the following order, until the limitation in (a) is
satisfied:
(i) Some or all of the Participant's
unmatched After-Tax Contributions made during such Plan Year (if any) and
earnings attributable thereto shall be returned to the Participant.
(ii) Some or all of the Participant's
matched After-Tax Contributions during such Plan Year (if any) and earnings
attributable thereto shall be returned to the Participant.
(iii) Some or all of the Participant's
unmatched Compensation Reductions and earnings attributable thereto shall be
returned to the Participant.
(iv) Some or all of the Participant's
matched Compensation Reductions and earnings attributable thereto shall be
returned to the Participant.
(c) To the extent that may be required under
regulations pursuant to section 415 of the Code, Matching Contributions made
with respect to contributions returned pursuant to subsection (b) above shall
be forfeited or paid out to the Participant in accordance with such
regulations.
5.2 Other Plans
(a) Defined Contribution Plans
All defined contribution plans (terminated or
not) maintained by an Employer or an Affiliate (as determined in accordance
with section 415(h) of the Code) shall be aggregated with this Plan, and all
plans so aggregated shall be considered as one plan in applying the
limitations of this Article 5.2.
(b) Defined Benefit Plans
If any Participant participates both in this
Plan and in one or more defined benefit plans maintained by any Employer or
an Affiliate (as determined in accordance with section 415(h) of the Code) for
the same Plan Year, then the sum of the "defined benefit plan fraction" and
the "defined contribution plan fraction" (within the meaning of section 415(e)
of the Code) shall not exceed 1.0.
ARTICLE 6
VESTING OF ACCOUNTS
6.1 Automatic Vesting
(a) Vesting at Age 60, Death or Disability
The entire value of a Participant's Account shall become
fully vested when the Participant attains age 60 while an Employee, or upon
his or her termination of employment by reason of death or Disability.
(b) Vesting of Certain Accounts
A Participant's After-Tax Account, Pre-Tax
Account, 100% Vested Company-Match Account, Rollover Account and Non-Elective
Account shall be fully vested at all times.
6.2 Vesting Schedule
Except as otherwise provided in this Article 6, a
Participant's Regular Company-Match Account and his or her Excess Company-
Match Account shall become vested in accordance with the following schedule:
Period of Service Vested Percentage
Less than 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
Notwithstanding the foregoing, the vested percentage to be applied to the
Regular Company-Match Account and Excess Company-Match Account of a
Participant who made contributions to the Plan prior to January 1, 1985 shall
not be less than it was under the terms of the Plan prior to January 1, 1985.
6.3 Forfeitures (Effective September 1, 1992)
(a) Date of Forfeiture
The portion of a terminated Participant's Regular Company-
Match Account and Excess Company-Match Account that is not vested shall be
forfeited on the earliest of the following dates:
(1) The date of termination, if the
Participant had no vested interest in such Accounts on that date;
(2) The date the Participant receives a
distribution of his entire vested interest in such Accounts; or
(3) The date on which the Participant
completes a five-year Period of Severance.
(b) Forfeiture Suspense Account
All forfeitures shall be credited to the Plan's
"Forfeiture Suspense Account". The Forfeiture Suspense Account shall be a
separate account of the Plan. Amounts held in the Forfeiture Suspense Account
on any December 31 which have not been re-credited to Participants' Accounts
under Article 6.3 shall be used to reduce the obligation of such Employer to
make Matching Contributions and shall be allocated to the Accounts of
Participants who are employed by such Employer in the same manner as the
corresponding contribution would have been allocated.
(c) Recrediting of Forfeitures
If the terminated Participant is reemployed and
again becomes a Participant before a five-year Period of Severance, an amount
equal to the amount of any forfeiture under subsection (a)(1) or (2) above
shall be withdrawn from the Forfeiture Suspense Account and recredited to the
Participant's Regular Company-Match Account and Excess Company-Match Account
as of his or her Employment Commencement date in the manner provided under
Article 6.4. If there are insufficient funds in the Forfeiture Suspense
Account to make the necessary restoration, the Employer shall make a special
contribution for this purpose which will be allocated to the appropriate
account or accounts of the affected Participant and not in accordance with the
other provisions of this Plan.
6.4 Vesting in Recredited Forfeitures
Forfeitures recredited to the Regular Company-Match
Account and Excess Company-Match Account of a Participant shall be treated as
follows:
(a) If the Participant has not received any
distributions from either such account, the amount of the forfeiture shall be
recredited to the appropriate accounts, and his or her Regular Company-Match
Account and Excess Company-Match Account shall thereafter be subject to the
vesting schedule in Article 6.2.
(b) If the Participant has received a distribution
of part or all of his or her vested interest in his or her Regular Company-
Match Account and Excess Company-Match Account, the amount forfeited shall be
re-credited to the appropriate accounts and the vested interest in his or her
Regular Company-Match Account and Excess Company-Match Account shall be
credited to a special account the vested percentage of which is determined by
the formula, X = (C - D)/(100% - D), where:
(i) X is vested percentage;
(ii) C is the Participant's current vested
percentage under the Plan;
(iii) D is (1) the vested percentage as of
the date the prior distribution was made if the Participant received a
distribution of his or her full vested percentage or (2) if there was not a
distribution of the full vested percentage, "D" is the percentage of the
account previously distributed.
6.5 Reemployment After 5 Years
If a Participant is reemployed after a Period of Severance
of five or more years, a new Account shall be established for the Participant
for future Employer contributions but there will be no recrediting of amounts
previously forfeited.
6.6 Reallocation of Lost Participant's Account
Effective July 1, 1992, if all or a portion of a
Participant's Account becomes payable under Article 9 and the Committee cannot
locate the Participant or his or her Beneficiary (if such Beneficiary is
entitled to payment), the Committee shall make a reasonable attempt to find
the Participant or Beneficiary, including securing any assistance available
from the Internal Revenue Service. If the Committee cannot locate the
Participant or Beneficiary after such reasonable search, the Participant's
vested Account shall be forfeited and allocated to the Forfeiture Suspense
Account. If the Participant or his or her Beneficiary subsequently presents
a valid claim for benefits to the Committee, the Committee shall cause the
vested Account, equal to the amount which was forfeited under this Article 6,
to be restored.
ARTICLE 7
INVESTMENT FUNDS, ALLOCATION OF TRUST
INCOME OR LOSS AND VALUATION OF ACCOUNTS
7.1 Investment Funds
(a) The assets of the Trust Fund shall be allocated
among such investment funds as the Board may from time to time determine,
including the Money Market Fund and The Gap Stock Fund (the "Investment
Funds").
(b) Money Market Fund
The primary investment objective of this fund
shall be to minimize the risk of market fluctuations while maximizing the
safety of principal and to obtain the highest current income commensurate with
those objectives.
(c) Gap Stock Fund
The sole investment objective of this fund shall
be to acquire and hold shares of the common stock of The Gap, Inc.
7.2 Separate Accounts
The Committee shall open and maintain a separate Account
for each Participant. Each Participant's Account shall reflect the amounts
allocated thereto and distributed therefrom and such other information as
affects the value of such Account pursuant to this Plan.
7.3 Quarterly Valuation
As of each Valuation Date, the Committee shall secure from
the Trustee a statement of receipts and disbursements of each Investment Fund
during the three month period ending on that day and of the fair market value
of such Investment Fund on that day and, based on such statement, a
determination shall be made of the amount of the net income or loss of such
Investment Fund, including the net appreciation or depreciation in the value
of such Investment Fund since the next preceding Valuation Date. The
Committee shall allocate to each Participant's Account that portion of such
income or loss as is equal to the proportion that the value of his or her sub-
Account in such Investment Fund (if any) bears to the value of all such sub-
Accounts. Subject to Article 7.4, the Committee shall adopt procedures to
determine the appropriate gain or loss that shall be apportioned in the case
of contributions, transfers, loans, withdrawals or rollovers that shall have
occurred since the immediately preceding Valuation Date.
7.4 Valuation of Account When Payment Is Due
Except as otherwise specifically provided herein, when a
total distribution is to be made from a Participant's Account, the value of
the Account shall be determined as of the Valuation Date coinciding with or
preceding the distribution date. Earnings and loss shall be credited to the
Participant's Account for the period of time from the Valuation Date as of
which the amount of the payment is determined up to the date on which payment
is actually made. Such interest shall be computed by the Committee at the
average rate being credited to the Money Market Fund. For this purpose the
daily rate being credited by the Trustee to the Money Market Fund at the
beginning of each month shall be deemed to apply to all succeeding days in
such month. Notwithstanding the foregoing, in the event that the distribution
to a Participant shall include shares of the common stock of The Gap, Inc.
earnings and loss shall be credited only on the amount of cash distributed to
the Participant.
7.5 Statement of Accounts
As soon as practicable after each Valuation Date, the
Committee shall furnish to each Participant a statement of his or her Account,
as determined as of such valuation date. Upon the discovery of any error or
miscalculation in an Account, the Committee shall correct the same, to the
extent feasible. Statements to Participants are for reporting purposes only,
and no allocation, valuation or statement shall vest any right or title in any
part of the Trust Fund, nor require any segregation of Trust assets, except
as is specifically provided in this Agreement.
7.6 Special Valuation Dates at Committee Discretion
The Committee may direct the Trustee to determine the fair market
value of the Trust Fund and may make a determination of Trust income or loss
as of any other date. If the allocation of such Trust income or loss will
produce a significant change in the value of Participants' Accounts, and if
such valuation shall affect a distribution, then such date shall thereupon be
deemed a Valuation Date, and allocation of the Trust income or loss to
Participant's Accounts shall be made in accordance with the provisions of
Article 7.3.
7.7 Restoration Procedures
In the event that a Participant's Account was improperly
excluded in any year from an allocation of a contribution, income, gain or
loss, such Participant's Account shall be restored to its correct status by
the addition of amounts in the manner reasonably determined by the Committee.
The Employers shall contribute the amounts necessary to fully restore such
Amounts.
ARTICLE 8
INVESTMENTS AND LOANS
8.1 Investment Authority
The Committee is hereby granted full power and authority
to direct the Trustee to invest and reinvest the Trust Fund or any part
thereof in accordance with the standards set forth in Article 11, and subject
to Articles 7.1 and 8.3.
8.2 Appointment of Investment Manager
The power of the Committee to direct, control or manage
the investment of the Trust Fund may be delegated to an investment manager
appointed by the Committee. Such investment manager, if appointed, must
acknowledge in writing that he or she is a fiduciary with respect to the Trust
Fund and shall then have the power to manage, acquire, or dispose of any asset
of the Trust Fund. An investment manager must be a person who is (i)
registered as an investment advisor under the Investment Advisors Act of 1940;
(ii) a bank, as defined in that Act, or (iii) an insurance company qualified
to perform such services under the laws of more than one state.
8.3 Investment Direction
A Participant may direct the investment of his or her
Account among the funds designated under Article 7.1. Any such investment
direction shall specify the percentage of the current balance of his or her
Account that shall be invested in each of the funds permitted under Article
7.1. The Participant may specify any percentage that is a whole multiple of
five percent (5%) and does not in the aggregate exceed one hundred percent
(100%). Notwithstanding the foregoing, the maximum amount that a Participant
may direct to be invested in the Gap Stock Fund is fifty percent (50%) of the
current balance of his or her Account. The Committee shall develop and
maintain rules governing the rights of Participants to change their investment
directions with respect to (a) contributions and compensation deferrals that
will be added to their Accounts in the future and (b) amounts already in their
accounts, and may permit Participants to designate different investment
percentages with respect to such amounts. Investment changes shall be
permitted quarterly, pursuant to the rules established by the Committee. The
Account of a Participant who fails to specify investment directions shall be
100% invested in the Money Market Fund.
8.4 Loans to Participants
(a) Loan Program
The Trustee shall, when so directed by the
Committee, make a loan or loans to a Participant or Beneficiary in accordance
with the loan program set forth in Appendix B, which may be modified by the
Committee at its discretion. In determining whether the limitations of the
Article have been exceeded at any date, all loans made at any time from the
Plan (or from any other qualified plans maintained by an Employer or an
Affiliate) to a Participant or Beneficiary and still outstanding on such date
shall be aggregated, and the Participant's vested interest in all qualified
plans maintained by an Employer or Affiliate, shall be aggregated.
(b) Loan Charges
Any charges levied by the Trustee relating to
the establishment of a separate loan account for a Participant may be passed
on to him in a non-discriminatory manner. All Participants and Beneficiaries
receiving a loan from the Plan shall receive a clear statement of all charges
involved in the loan transaction.
(c) Loan Treated as Segregated Account
Any loan made to a Participant or Beneficiary
shall be accounted for as a segregated account in the Trust. Repayments of
the principal amount of the loan will reduce the total amount of principal due
in the segregated loan account by the amount of such payments and will
increase by an equal amount the restored value of the Participant's Account.
Payments of interest on such loan will reduce the total amount of interest due
in the segregated loan account and such payments shall be credited directly
to the Participant's Account.
8.5 Voting of Company Stock
The Trustee shall be authorized to vote the shares of the
common stock of The Gap, Inc. held by the Gap Stock Fund as hereinafter
provided:
(a) At the time notice of any meeting of the
shareholders of The Gap, Inc. is to be mailed to such shareholders, the
Committee shall cause a notice and form of proxy to be prepared and delivered
to each Participant whose Accounts are invested in whole or in part in the Gap
Stock Fund. The proxy shall permit each such Participant to direct the
Trustee as to how it shall vote at such meeting or any adjournment thereof the
number of shares of such common stock allocated to the Participant's Account.
The notice shall contain instructions for the use of the proxy and shall state
that the proxy must be completed and returned to the Trustee or other agent
designated by the Retirement Committee at least five days prior to the date
of the shareholders' meeting to be effective.
(b) The Trustee shall vote all shares of such common
stock for which it receives timely, signed, and dated proxies in accordance
with those proxies. With respect to shares for which the Trustee does not
receive timely, signed, and dated proxies, the Trustee shall vote such shares
in accordance with instructions given by the Committee.
ARTICLE 9
DISTRIBUTIONS AND WITHDRAWALS
9.1 General
(a) Benefits from Trust Only
Benefits under the Plan shall be distributed
solely from the Trust. The Employer has no liability or responsibility for
Plan benefits or for the Trust.
(b) Administrative Rules
Distributions shall be made by the Trustee only
in accordance with the directions of the Committee. The Committee has the
authority to direct the distributions in accordance with the terms and
conditions of the Plan, but the Committee shall have no power of discretion
or consent with regard to a Participant's or Beneficiary's choice of the form
or timing of a distribution, except as specifically stated herein or to the
extent that the Committee is constrained by the options available under the
Plan or by the requirements of law or regulation.
9.2 Distribution upon Termination or Disability
Unless otherwise specifically provided in the Plan,
distribution of a Participant's Account shall not be made before the
Participant's death, Disability or termination of employment with all
Employers and Affiliates. Upon a Participant's termination or Disability,
distribution shall be made as follows:
(a) Amounts under $3,500
If the Participant's vested Account balance does
not exceed $3,500 and has not exceeded $3,500 at the time of any earlier
distribution, distribution shall be made in a lump sum as soon as practicable
after the amount can be determined.
(b) Amounts over $3,500
In all other cases, the Participant may elect
in writing to: (1) Begin distribution as soon as
practicable after the amount can be determined; or
(2) Defer receipt of payments in
accordance with subsection (c) below.
(c) Deferral of Distributions
(1) A Participant who meets the
requirements of subsection (b) above may defer the commencement of a
distribution by providing the Committee with a written, signed notice
specifying the date on which distribution is to be made, provided that
distribution must begin no later than April 1 after the Participant reaches
age 70 1/2.
(2) In the case of a Participant who does
not elect an immediate distribution and who does not provide a written notice
in accordance with subsection (c)(1) above, distribution shall be deferred
until the Participant reaches age 62 unless the Participant consents in
writing to an earlier distribution within 90 days of the date of such
distribution.
(d) Distribution Deadline
Unless deferred at the election of the
Participant pursuant to subsection (c) above, distribution to a Participant
must begin no later than the 60th day after the end of the Plan Year in which
the latest of the following dates occurs:
(1) The date the Participant reaches age
65;
(2) The 10th anniversary of the
Participant's commencement of participation in the Plan; or
(3) The date the Participant's service
with the Employer terminates.
However, if the amount of the payment cannot be ascertained and/or the
Participant cannot be located by the date required above, payment shall be
made within 60 days after all the facts are known.
9.3 Distribution at Age 70-1/2
Distribution of a Participant's vested Account shall be
made or begin no later than April 1 following the year the Participant reaches
age 70-1/2 (or such later date as is specified by the Internal Revenue Service
in the case of Participants who reached age 70-1/2 before December 31, 1987).
A Participant who is an Employee on such date shall receive, for the duration
of his or her employment, distributions in periodic installments equal to the
required minimum distribution under section 401(a)(9)(A)(ii) of the Code and
regulations thereunder. Upon the Participant's termination of employment, the
remainder of his or her vested Account shall be distributed in a lump sum
payment.
9.4 Method of Payment to a Participant
(a) Form of Payment. Except as otherwise provided
in Section 9.3, payment will be made to a Participant in a lump sum. To the
extent that may be required under the Code, for payments after December 31,
1992, a Participant may elect to have the payment made directly to the trustee
or sponsor of an eligible retirement plan. For purposes of this payment
option, "eligible retirement plan" means an individual retirement account, an
individual retirement annuity, a qualified defined contribution plan which
permits the acceptance of rollover distributions, or a qualified annuity plan
described in section 403(a) of the Code. In order to elect a direct payment,
a Participant must specify the eligible retirement plan which is to receive
the payment in the form and at the time specified by the Plan Administrator.
Notwithstanding any other provision of the Plan, a direct payment pursuant to
this subsection shall be subject to any conditions or limitations imposed by
the eligible retirement plan.
(b) Payment in Cash or in Kind. Payment will
normally be made in cash; provided, however, that, to the extent that a
Participant's Account is invested in whole or in part in the Gap Stock Fund,
he or she may elect to receive a portion of his or her lump sum payment in the
common stock of The Gap, Inc.; further provided that, for distributions before
January 1, 1993, no distribution of fewer than ten shares of stock of The Gap,
Inc. shall be made. Payments in the common stock shall be made as follows:
(i) the number of shares of the common
stock included in the distribution shall be the number of shares allocated as
of the last valuation date plus any shares purchased by subsequent
contributions and less any shares liquidated since the last valuation,
(ii) the fair market value of the shares
distributed shall be determined as of the Valuation Date used to establish the
total amount to be distributed to the Participant,
(iii) the amount determined in (ii) plus the
cash distributed to the Participant shall be equal to the amount which would
otherwise be distributed to such Participant,
(iv) the Committee will establish
procedures to ensure that by permitting Participants to elect to receive a
portion of their distribution in shares of the common stock of The Gap, Inc.,
the interests of all other Participants will not be adversely affected.
9.5 Distribution Upon Death of Participant
If a Participant dies before payment has been made to him, his or her
Account shall be distributed as follows:
(a) Distribution to a Beneficiary will be made as
soon as practicable following the Participant's death, provided that a
surviving spouse may defer receipt of such payment until the date on which the
Participant would have reached his or her 65th birthday provided the
Participant's Account balance is more than $3,500. If such spouse dies before
receiving such payment, the provisions of this Article 9.5 shall be applied
as if such spouse were the Participant.
(b) Distribution to a Beneficiary who is the
Participant's surviving spouse shall be made in a lump sum. A non-spouse
Beneficiary may elect to receive payment in a lump sum or in five or fewer
equal annual installments. All installment distributions pursuant to this
subsection must be completed within five years of the Participant's death.
9.6 Distributions to Minors or Legal Incompetents
In case of any distribution to a minor or to a legally
incompetent person, the Committee may: (a) direct the Trustee to make the
distribution to his or her legal representative, to a designated relative,
or directly to such person for his or her benefit; or (b) instruct the
Trustee to use the distribution directly for his or her support, maintenance,
or education. The Trustee shall not be required to oversee the application,
by any third party, of any distributions made pursuant to this Article 9.6.
9.7 Distributions Made Pursuant to Pre-1984 Designations
The provisions of Article 9.3 shall not apply to
distributions made pursuant to a Participant's written designation to defer
commencement of his or her distribution which met the provisions of the Code
as they existed prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
9.8 In-Service Withdrawals
(a) Committee Establishes Rules
The Committee has the power to establish uniform
and nondiscriminatory rules and from time to time to modify or change such
rules governing the manner and method by which Participant withdrawals may be
made.
(b) Withdrawal Charged to Participant's Account
The Committee shall direct the Trustee to make a
distribution to a Participant who is an active Employee of the amount which
such Participant is eligible to withdraw and the amount of such withdrawal
shall be charged by the Committee against the Account of the Participant.
Effective January 1, 1992, withdrawals under this Article 9.8 will be charged
against the Participant's Account as of the date of the withdrawal, and
earnings or loss attributable to the withdrawal shall be credited to the
Account for the period between the preceding Valuation Date and the actual
date of payment.
(c) Withdrawals Permitted for Hardship
(i) At the request of a Participant, the
Committee shall authorize a withdrawal at any time from his or her Pre-Tax
Account, provided that authorization for such withdrawal and the amount
thereof shall be given only on account of hardship incurred by the Participant
which imposes immediate and heavy financial needs which may not reasonably be
met by the Participant's other resources. Such withdrawal shall not exceed
the amount required to meet the immediate financial need created by the
hardship plus income and excise tax attributable to such withdrawal. The
amount which may be withdrawn from such Participant's Pre-Tax Account shall
not exceed the lesser of:
(1) The value of his or her Pre-
Tax Account; or
(2) The value of his or her Pre-
Tax Account as of December 31, 1988, plus the total of the contributions
allocated to his or her Pre-Tax Account since December 31, 1988, less any
amounts withdrawn from his or her Pre-Tax Account after such date.
(ii) A distribution shall be deemed to be
due to an immediate and heavy financial need if it is on account of:
(1) Medical expenses incurred or
clearly anticipated by the Employee or his or her spouse or other dependent;
(2) Purchase of the Employee's
principal residence;
(3) Payment of tuition and related
fees for the next twelve or fewer months of post-secondary education for the
Employee or his or her spouse or other dependents;
(4) The need to prevent the
eviction from or the foreclosure on the mortgage of the Employee's principal
residence;
(5) Payment of funeral expenses
of a family member; or
(6) Such other needs to be added
by the Commissioner of Internal Revenue.
(iii) A distribution shall be treated as
necessary to satisfy a financial need if the Employee represents in writing
that the need can not be relieved:
(1) Through reimbursement or
compensation by insurance or otherwise;
(2) By liquidation of the
Employee's assets to the extent that such liquidation would not cause an
immediate and heavy financial need;
(3) By cessation of elective
contributions under the Plan; or
(4) By other distributions or
loans from this Plan or any other plan or by borrowing from commercial sources
on reasonable terms.
(e) Withdrawals Permitted Without Hardship
Upon the request of a Participant, the Committee
may authorize a withdrawal from his or her After-Tax and Rollover Accounts at
any time but limited to one withdrawal of this type per fiscal year. In
addition, amounts may be withdrawn from the portion of his or her 100% Vested
Company-Match Account which is attributable to Contributions made after 1987
and from the vested portion of his or her Regular Company-Match Account. The
Committee may require up to 30 days' written notice for any withdrawal. Such
a withdrawal shall be made from the appropriate Account or Accounts in the
order named in this paragraph.
The following rules shall apply:
(i) Amounts may not be withdrawn which would
include employer contributions made in the preceding 24 months or earnings
attributable thereto.
(ii) A Participant's vested interest in his
or her Regular Company-Match Account from which he or she has received an in-
service withdrawal shall be determined in accordance with Article 6.4(b).
(f) Suspension of Participation
Any Participant who makes a withdrawal pursuant
to this Article 9.8 shall be suspended from making After-Tax Contributions and
Compensation Reductions until the Entry Date next following a 12-month period
after the date of application for withdrawal, unless the withdrawal was made
only from the Participant's After-Tax Unmatched Account. This provision shall
not be effective for withdrawals after June 30, 1991.
9.9 Complete Withdrawal
A Participant who has reached the age of 60 may withdraw
his or her entire account, or some lesser amount, without establishing
hardship and without incurring a suspension of his or her right to make
contributions to the Plan. This right may not be exercised more than once per
calendar year. Such withdrawals shall be charged against the Participant's
Account in accordance with Article 9.8(b).
9.10 Limitations on Distributions Upon Plan Termination
Distributions of a Participant's Pre-Tax Account upon
termination of the Plan shall not commence prior to the Participant's
termination of employment or his or her attainment of age 60 except for
hardship withdrawals in accordance with Article 10.10, unless payment is made
in a lump sum and (i) no successor defined contribution plan is adopted (other
than an ESOP as defined in Code section 4975(e)(7)); or (ii) the distribution
is:
(1) After the date of and in connection with the
sale of all Employer assets used in its trade or business to a non-Affiliated
Employer by whom the Participant is still employed and who does not maintain
this Plan after such sale;
(2) After the date of and in connection with the
sale of an incorporated Affiliate's interest in a subsidiary by whom the
Participant is employed and which does not maintain this Plan after such sale;
or
(3) Otherwise permitted by applicable law and
regulations.
ARTICLE 10
FIDUCIARY RESPONSIBILITY
10.1 Named Fiduciaries
The authority to control and manage the operation and
administration of the Plan shall be allocated as provided in the trust
agreement between the Board, the Committee and the Trustee, all of whom are
named fiduciaries under ERISA. In addition, procedures for the appointment
of another fiduciary, an investment manager, are set forth in Article 8.2.
10.2 Fiduciary Standards
Each fiduciary shall discharge its duties with respect to
the Plan solely in the interest of the Participants and Beneficiaries as
follows: (a) For the exclusive purpose of providing benefits
to Participants and their Beneficiaries;
(b) With the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(c) By diversifying the investments of the Trust
Fund so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(d) In accordance with the Plan and the trust
agreement.
10.3 Fiduciaries Liable for Breach of Duty
A fiduciary shall be liable, as provided in ERISA, for any
breach of his or her fiduciary responsibilities. In addition, a fiduciary
under this Plan shall be liable for a breach of fiduciary responsibility of
another fiduciary under this Plan, but only as provided under section 405 of
ERISA.
10.4 Fiduciary May Employ Agents
Any person or group of persons may serve in more than one
fiduciary capacity with regard to the Plan. A fiduciary other than the
Trustee may, with the consent of the Board, employ one or more persons to
render advice and assistance with regard to any function such fiduciary has
under the Plan and delegate to one or more persons any fiduciary and/or
ministerial responsibility under the Plan, except for management and control
of Plan assets which may be delegated in accordance with Article 8.2. The
expenses of such persons shall be paid by the Trust if not paid by the
Employer.
10.5 Authority Outlined
(a) Board Authority
The Board shall have the power, authority and
discretion to amend and terminate the Plan, to appoint and remove members of
the Committee, to appoint and remove a Trustee and to establish the ratio of
Employer matching contributions under Article 4.3.
(b) Committee Authority
The Committee shall have all the power,
authority and discretion necessary to administer the Plan and control its
operation including, but not limited to the power, authority and discretion
to:
(i) Allocate the contributions made by
Participants and Employers;
(ii) Establish rules pertaining to
Participants' contributions and salary deferrals and their suspension and
withdrawals;
(iii) Determine the amount and allocation
of the Trust income or loss;
(iv) Direct the Trustee with respect to
additional valuations;
(v) Maintain separate Accounts for
Participants;
(vi) Furnish, and correct errors in,
statements or Accounts;
(vii) Direct the Trustee with respect to
distributions;
(viii) Direct the segregation of assets;
(ix) Direct distribution of the interests
of incompetent persons and minors;
(x) Construe the terms of the Plan and
determine questions thereunder;
(xi) Establish a funding policy;
(xii) Appoint and delegate duties to an
investment manager;
(xiii) Employ advisors and assistants and
delegate duties to one or more persons; and
(xiv) Direct the Trustee with respect to its
duties and investments.
The Committee's actions and determinations in accordance
with this Article shall be binding on all parties and shall be given the
greatest deference permitted by law.
(c) Trustee Authority
The Trustee shall have the authority in
accordance with the trust agreement to establish the fair market value of the
Trust Fund, to value segregated Accounts, to employ advisors, agents and
counsel, to hold the Trust assets and to render accounts of its administration
of the Trust.
10.6 Fiduciaries Not to Engage in Prohibited Transactions
A fiduciary shall not cause the Plan to engage in a
transaction if he or she knows or should know that such transaction
constitutes a prohibited transaction under section 406 of ERISA or section
4975 of the Code, unless such transaction is exempted under section 408 of
ERISA or section 4975 of the Code.
ARTICLE 11
COMMITTEE
11.1 Appointment of Committee
The Board shall appoint a Committee to manage and
administer this Plan in accordance with the provisions hereof, each member to
serve for such term as the Board may designate or until a successor member has
been appointed or until removal by the Board. Vacancies due to resignation,
death, removal or other cause shall be filled by the Board. Members shall
serve without compensation for Committee service. All reasonable expenses of
the Committee shall be paid by the Company.
11.2 Committee Operating Rules
The Committee shall act by agreement of a majority of its
members, either by vote at a meeting or in writing without a meeting. By such
action, it may authorize one or more members to execute documents on its
behalf and direct the Trustee in the performance of its duties hereunder. A
member of the Committee who is also a Participant hereunder shall not vote or
act upon any matter relating solely to himself. In the event of a deadlock
or other situation which prevents agreement of a majority of the Committee
members, the matter shall be decided by the Board.
11.3 Committee Powers
The Committee shall have the power and duty to do all
things necessary or convenient to effect the intent and purpose of this Plan
and, not inconsistent with any of the provisions thereof, whether or not such
powers and duties are specifically set forth herein, and, not in limitation
by an amplification of the foregoing, shall have the power to construe the
Plan and to determine all questions that shall arise hereunder, including,
particularly, directions to and questions submitted by the Trustee on all
matters necessary for it properly to discharge its power and duties.
Decisions of the Committee made in good faith upon any matters within the
scope of its authority shall be final and binding on the Employers, the
Trustee, Participants, their Beneficiaries and all others and shall be given
the greatest deference permitted by law. The Committee, at all times, in
making and carrying out its decisions and directions, shall act in a uniform
and non-discriminatory manner and may from time to time prescribe and modify
uniform rules of interpretation and administration.
11.4 Committee to Establish Funding Policy
The Committee shall establish a funding policy for the
Trust Fund bearing in mind both the short-run and long-run needs and goals of
the Plan. The Committee shall review such policy prior to the end of each
Plan Year for its appropriateness under the circumstances then prevailing.
The Funding policy shall be communicated to the investment manager of the
Trust Fund, if one shall have been appointed, so that the investment policy
of the Trust Fund can be coordinated with Plan needs.
11.5 Committee May Retain Advisors
The Committee may from time to time or on a continuing
basis, retain such agents or advisors including, specifically, attorneys,
accountants, actuaries, investment counsel, consultants and administrative
assistants, as it considers necessary to assist it in the proper performance
of its duties. The expenses of such agents or advisors shall be paid by the
Employers, or, if not paid by the Employers, the Committee may direct that
such expenses be paid from the Trust Fund.
11.6 Claims Procedure
(a) Claim Must Be Submitted Within 60 Days
The Committee shall determine Participants', Alternate
Payees' and Beneficiaries' rights to benefits under the Plan. In the event
of a dispute over benefits, a Participant, Beneficiary or Alternate Payee
under Article 14.2 may file a written claim for benefits with the Committee,
provided that such claim is filed within 60 days of the date the Participant,
Beneficiary or Alternate Payee receives notification of the Committee's
determination.
(b) Requirements For Notice of Denial
If a claim is wholly or partially denied, the Committee shall
provide the claimant with a notice of denial, written in a manner calculated
to be understood by the claimant and setting forth:
(i) The specific reason(s) for such
denial;
(ii) Specific references to the pertinent
plan provisions on which the denial is based;
(iii) A description of any additional
material or information necessary for the claimant to perfect the claim with
an explanation of why such material or information is necessary; and
(iv) Appropriate information as to the
steps to be taken if the claimant wishes to submit his or her claim for
review. The notice of denial shall be given within a reasonable time period
but no later than 90 days after the claim is filed, unless special circumstances
require an extension of time for processing the claim. If such extension is
required, written notice shall be furnished to the claimant within 90 days of
the date of claim was filed stating the special circumstances requiring an
extension of time and the date by which a decision on the claim can be
expected, which shall be no more than 180 days from the date the claim was
filed. If no notice of denial is provided as herein described, the claimant
may appeal the claim though the claim had been denied.
(c) Claimant's Rights if Claim Denied
The claimant and/or his or her representative
may appeal the denied claim and may:
(i) Request a review upon written
application to the Committee;
(ii) Review pertinent documents; and
(iii) Submit issues and comments in
writing; provided that such appeal is made within 60 days of the date the
claimant receives notification of the denied claim.
(d) Time Limit on Review of Denied Claim
Upon receipt of a request for review, the
Committee shall within a reasonable time period but not later than 60 days
after receiving the request, provide written notification of its decision to
the claimant stating the specific reasons and referencing specific plan
provisions on which its decision is based, unless special circumstances
require an extension for processing the review. If such an extension is
required, the Committee shall notify the claimant of such special
circumstances and of the date, no later than 130 days after the original
date the review was requested, on which the Committee will notify the
claimant of its decision.
(e) No Legal Recourse Until Claims Procedure
Exhausted
In the event of any dispute over
benefits under this Plan, all remedies available to the disputing individual
under this Article 11.6 must be exhausted before legal recourse of any type
is sought.
11.7 Committee Indemnification
To the fullest extent permitted by law, the Employers
agree to indemnify, to defend, and hold harmless the members of the Committee,
individually and collectively, against any liability whatsoever for any action
taken or omitted by them in good faith in connection with this Plan and the
Trust or their duties hereunder and for any expenses or losses for which they
may become liable as a result of any such actions or non-actions unless
resultant from their own willful misconduct; and the Employers may purchase
insurance for the Committee to cover any of their potential liabilities with
regard to the Plan and Trust.
ARTICLE 12
TOP-HEAVY PLAN PROVISIONS
12.1 Definitions. For purposes of this Article 12, the
following words and phrases shall have the following meanings:
(a) "Key Employee" means, with respect to a Plan
Year, any Employee or former Employee who, at any time during the Plan Year
or during any of the four preceding Plan Years is or was:
(i) An officer and any Employee with the
authority of an officer of an Employer with Compensation of more than 1.5
times the applicable limit under Code section 415(c)(1)(A) for the applicable
Plan Year; or
(ii) One of the 10 Employees who (a) own
(or are considered as owning within the meaning of section 318 of the Code)
the largest interests in an Employer or Affiliate, provided that such
ownership is at least 1/2% and (b) have annual Compensation from an Employer
greater than the dollar limitation under Code section 415(c)(1)(A) for the
applicable Plan Year; or
(iii) A 5% shareholder of an Employer or an
Affiliate (or an individual considered to be a 5% shareholder within the
meaning of section 318 of the Code); or
(iv) A 1% shareholder of an Employer or an
Affiliate (or an individual considered to be a 1% shareholder within the
meaning of section 318 of the Code) with total annual compensation (as defined
in regulations under section 415 of the Code) from Employers or Affiliates of
more than $150,000 for any Plan Year of such 1% ownership.
A Beneficiary of a Key Employee shall be considered to be a Key Employee.
Notwithstanding the above, the Committee shall be guided by the provisions of
applicable law, regulations and guidelines in determining Key Employees for
any Plan Year and shall maintain records adequate to determine Key Employees
for any Plan Year.
(b) "Top-Heavy Plan" means the Plan during a Plan
Year in which the aggregate value of the Accounts of Key Employees exceeds 60%
of the aggregate value of all Accounts under the Plan as of the Determination
Date for such Plan Year.
(i) Required Aggregation To Determine Top-
Heaviness
If (1) a Key Employee is a Participant
in this Plan for any Plan Year and one or more Employers maintain or have
maintained any other qualified plan or plans (including terminated plans) in
which a key employee is a participant for such Plan Year or (2) one or more
Employers maintain or have maintained any other plans (including terminated
plans) which enable this Plan to meet the requirements of Code section
401(a)(4) or 410 for any Plan Year, then this Plan's top-heaviness shall be
determined for such Plan Year by aggregating the accounts and/or present value
of accrued benefits of participants in this Plan and all such plans.
(ii) Permissive Aggregation to Determine
Top Heaviness
If one or more Employers maintains
or have maintained any plans (including terminated plans) other than
the one described in (i) above, the Committee may aggregate the accounts
and/or present value of accrued benefits of participants in any such plan with
those of this Plan to determine whether this Plan is a Top-Heavy Plan for any
Plan Year, provided that the requirements of Code sections 401(a)(4) and 410
would continue to be met by treating this Plan, any plan that must be
aggregated with the Plan under (1) above and any other plan referred to in
this sentence as one unit. In determining top-heaviness and the aggregate
value of accounts and/or accrued benefits under this Article, the Committee
shall be guided by the provisions of applicable law, regulations and
guidelines.
(c) "Determination Date" means, with respect to any
Plan Year, the last day of the preceding Plan Year.
12.2 Application
The provisions of this Article 12 shall apply only in the
case of a Plan Year in which the Plan is a Top-Heavy Plan.
12.3 Special Employer Contribution
A special Employer contribution shall be made which is
equal to 3% of the W-2 compensation received (but not in excess of $200,000)
by each Eligible Employee while he or she was eligible to Participate during
such year whether he or she did or did not elect to Participate and regardless
of whether he or she remained an Eligible Employee at the end of the Plan
Year. Such contribution shall be allocated to the Regular Employer Account
of each such Eligible Employee.
12.4 Vesting
The vesting schedule in Article 6.2 shall become as
follows for all future Plan Years:
Period of Service Vested Percentage
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
ARTICLE 13
AMENDMENT, TERMINATION AND MERGER
13.1 Company May Amend Plan
(a) The Company reserves the right to amend this
Plan to any extent and in any manner deemed advisable by action of the Board.
The Employers, the Trustee, all Participants, their Beneficiaries and all
other persons having any interest hereunder shall be bound by any such
amendment; provided, however, that no amendment shall:
(1) Except as provided in Articles 13.4
and 13.5, cause or permit any part of the principal or income of the Trust to
revert to the Employers or to be used for, or be diverted to, any purpose
other than the exclusive benefit of Participants or their Beneficiaries; or
(2) Adversely affect the then accrued
benefits of any Participants; or
(3) Eliminate an optional form of
distribution for Account balances accrued before such amendment.
(b) If the vested percentage of any Participant who
is credited with at least a three-year Period of Service would be less (as to
future contributions) as the result of either an amendment to the Plan or the
Plan's becoming and thereafter ceasing to be a Top-Heavy Plan, then each such
Participant should have his or her vested percentage determined under the Plan
without regard to the amendment or cessation.
13.2 Company May Terminate Plan or Discontinue Contributions
The Company has established the Plan with the bona fide
intention and expectation that the Plan will continue indefinitely, and that
Employers will be able to make contributions indefinitely, but the Employers
shall be under no obligation to continue their contributions or to maintain
the Plan for any given length of time and may, in their sole discretion,
completely discontinue their contributions and the Company may, in its sole
discretion, terminate the Plan at any time without any liability whatsoever.
In the event of the earlier of: (a) the termination of this Plan, or (b) the
complete discontinuance of contributions hereunder, the full value of the
Accounts of all Participants of the Plan shall become fully vested and
nonforfeitable. In the event of partial termination of this Plan, the full
value of the Accounts of the Participants involved in the partial termination
shall become fully vested and non-forfeitable.
13.3 Action Required Upon Plan Termination
Upon the termination of this Plan and after payment of all
expenses of the Trust, including any compensation then due the Trustee and
agents of the Committee, the Trust assets and all Participants' Accounts shall
be revalued according to the procedures provided in Article 7. The Trustee
shall hold and distribute such Accounts as directed by the Committee in
accordance with the provisions of Article 9. Upon such termination, if The
Gap, Inc. has ceased to exist, all rights, powers, and duties to be exercised
or performed by the Board shall thereafter be exercised or performed by the
Committee, including the filling of vacancies on the Committee and the
amending of the Plan. In the event the Committee is unable to perform, all
rights, powers and duties shall be performed by the Trustee.
13.4 Contributions By Employers Conditioned upon Deductibility
Notwithstanding any other provision of the Agreement to the
contrary, it is specifically understood that the Employers' obligations to
make contributions hereunder is conditioned upon the deductibility of such
contributions under section 404 of the Code,. To the extent the deduction of
any contribution is disallowed, the Employer shall be entitled to recover from
the Trustee the then value of the contributions for which a deduction has not
been allowed; provided that such recovery can only be made within one year of
the disallowance of the deduction.
13.5 Mistake of Fact
If a contribution is made by an Employer through a mistake
of fact, such contribution shall be returned to the Employer; provided that
such return can only occur if it is within one year of the payment of such
contribution.
13.6 Nonreversion of Assets
Except as provided in Articles 13.4 and 13.5, in no event
shall any part of the principal or income of the Trust revert to the Employers
or be used for or diverted to any purpose other than the exclusive benefit of
Participants or their Beneficiaries.
13.7 Merger or Consolidation Cannot Reduce Benefits
In no event shall this Plan be merged or consolidated
with any other Plan, nor shall there by any transfer of assets or liabilities
from this Plan to any other Plan unless immediately after such merger,
consolidation or transfer, each Participant's benefits, if such other Plan
were then to terminate, are at least equal to or greater than the benefits
which the Participant would have been entitled to had this Plan been
terminated immediately before such merger, consolidation or transfer.
ARTICLE 14
ASSIGNMENTS
14.1 No Assignment
Except as provided below and in Article 8.3 regarding
loans, the interest herein, whether vested or not, of any Participant or
Beneficiary, shall not be subject to alienation, assignment, pledging,
encumbrance, attachment, garnishment, execution, sequestration, or other legal
or equitable process, or transferability by operation of law in the event of
bankruptcy, insolvency or otherwise.
14.2 Qualified Domestic Relations Order Permitted
The provisions of Article 14.1 above shall not prevent the creation,
assignment or recognition of the right of an Alternate Payee to a benefit
payable with respect to a Participant pursuant to a Qualified Domestic
Relations Order ("QDRO") within the meaning of section 414(p)(1)(A) of the
Code. The following definitions, rules and procedures apply to a QDRO:
(a) QDRO Regulations
(i) A QDRO must clearly specify:
(1) The name and last known
mailing address (if any) of the Participant and each Alternate Payee covered
by the order (unless such address is otherwise available to the Committee);
(2) The amount of percentage of
the Participant's benefits to be paid by the Plan to each such Alternate Payee
(or the manner in which such amount or percentage is to be determined);
(3) The number of payments or the
period to which the order applies; and
(4) Each plan to which the order
applies.
(ii) A QDRO may not require the Plan to
provide any type, form or option of benefit not otherwise provided by the Plan
(except as provided in (b) below);
(iii) A QDRO may not require the Plan to
provide increased benefits; and
(iv) A QDRO may not require benefits to be
paid to an Alternate Payee which are required to be paid to a different
Alternate Payee under another QDRO.
(b) Payments May Occur Before Termination of Service
Payment may be made to an Alternate Payee
pursuant to a QDRO at any time beginning as soon as practicable after the
QDRO determination is made, regardless of whether the distribution, if made
to a Participant at the time specified in the QDRO, would be otherwise
permitted under the terms of the Plan.
(c) QDRO Determinations
The Committee shall establish reasonable
procedures to determine whether a domestic relations order is a QDRO and to
administer distributions under a QDRO. If any domestic relations order
meeting the requirements of (a)(i) and (ii) above is received by the Plan, the
Committee shall (1) promptly notify the Participant and any Alternate Payee
that the order has been received and of the Plan's procedures for determining
whether the order is a QDRO, and (2) shall determine within a reasonable
period after receipt of the order whether it is a QDRO and notify the
Participant and each Alternate Payee of the Committee's determination.
(d) Segregation of Alternate Payee's Account
During any period in which the issue of whether
a domestic relations order is a QDRO is being determined by the Committee, a
court of competent jurisdiction or otherwise, the Committee shall segregate
the amounts which would have been payable to the Alternate Payee during such
period if the order had been determined to be a QDRO. If the order, or a
modification of the order, is determined within 18 months to be a QDRO, the
Committee shall pay the segregated amounts (as adjusted by attributable
investment income or loss), in accordance with the Plan's provisions, to the
entitled individual(s). If, within 18 months, the order is determined not to
be a QDRO or its status as a QDRO is not resolved, the Committee shall pay the
segregated amounts (as adjusted by attributable investment income or loss) to
the individual(s) who would have been entitled to receive such amounts absent
such order. Any determination that an order is a QDRO made after the close
of the 18-month period shall be applied prospectively only.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officers on this 23rd day of February, 1993.
THE GAP, INC.
By
Title: Vice President Taxes and Treasurer
APPENDIX A
EMPLOYERS
Employer Legal Name Internal Revenue Service Identification Number
The Gap, Inc. 94-1697231
Banana Republic, Inc. 94-2545023
The Fisher Gap Stores, Inc. 94-2222637
Gap (Puerto Rico) Inc. 77-0177249
GAPSHARE LOAN POLICY
APPENDIX B
The Participant loan program will be administered in a uniform and
nondiscriminatory manner by the Committee, according to the following policy
and procedures; which shall be a part of the Plan. The Committee shall retain
the authority to modify this policy and procedure without amending the Plan.
(1) Application Procedure. A Participant may apply for a loan from the
Plan through the Benefits Department. Loan applications will be
reviewed by the Committee and processed as soon as administratively
feasible after the application is received. The Committee may reject
a loan application if sufficient liquidity is not available in the
Trust to make such loan without loss to other Plan Participants.
(2) Promissory Note. The terms of any loan made under this Appendix B
shall be evidenced by a promissory note signed by the Participant and
such terms shall satisfy the requirements of this Appendix.
(3) Limitations. Loans are available for any purposes but are only
available to active Employees of The Gap, Inc. A Participant may
borrow up to 50% of his or her vested Account balance, based on
available records. He or she may never have more than two
outstanding loans at any one time. Loans will not be made in amounts
less than $1,000. No more than $50,000 may be outstanding on any
combination of loans in any twelve month period. The required
periodic payment cannot exceed the Participant's net rate of pay per
pay period. A Participant will not be approved for a second loan if
the first loan is in default. A Participant must wait ninety days
after repaying a second loan before a new second loan may be made.
(4) Interest Rate. The interest rate must be comparable to the prevailing
interest rate being charged for similar purpose loans by
institutional lenders in the geographic area where the Participant
resides. The formula is currently set at the prime rate plus 1%.
Once the appropriate interest rate has been determined, it remains
fixed for the term of the loan. Variable rate, adjustable rate or
floating rate loans are not granted by GapShare. The Committee will
review the formula at least annually, and will revise the formula to
be used by the Plan if necessary to ensure that the interest rate on
the new loans meets the requirements of this Appendix B.
(5) Security for Loan. No more than 50% of the Participant's vested
Account balance in this Plan, at the time the loan is made, shall be a
security for the loan. No additional collateral or other form of
collateral (such as other loans to the Participant) will be accepted
or allowed to secure the loan.
(6) Default. A loan shall be in default if the Participant fails to make
principal and/or interest payments pursuant to the promissory note
for a period of three months. After the borrower has been contacted
and the default has not been cured, the Committee shall reduce the
amount credited to the Participant's Account by the amount required
to cure the default and shall credit such reduced amount to a
separate suspense account for the Participant. The amount credited
to the suspense account shall be reported as a deemed distribution
to the Participant for the year of the default. The suspense account
shall be increased annually with interest at the rate that applies
to the loan for the period from the date of default until the first
date the Participant could receive a distribution from the Plan. The
Participant's benefits from the Plan as of such distribution date
shall be reduced by the amount then credited to the suspense account
and only the remaining benefits shall be available for distribution
in accordance with the Plan.
(7) Loan Repayment. All loans shall be repaid by payroll deduction or,
if the Participant is a deferred terminee or on approved leave of
absence or on a layoff while an employee of The Gap, Inc. or an
Affiliate, at least monthly by personal check. The term of a loan
shall not exceed five years, provided that a loan determined by the
Committee to be for the purpose of purchasing the Participant's
principal residence may be for a term not to exceed fifteen years.
(8) Deferred Terminees. A terminated Participant whose receipt of his or
her benefits from GapShare has been deferred must either repay the
entire outstanding balance of principal and interest on any loan(s)
upon termination or have the loan(s) re-amortized for payments to be
made on a monthly basis. The Participant will make these repayments
to the Trustee by personal check. If the Participant fails to make
a payment when due, the loan will be in default and will be treated
in accordance with Section (6) above.
(9) Leaves of Absence. The Participant must, while on an approved leave
of absence or layoff, make repayments to the Trustee on an at least
monthly basis. The amount of the monthly payments will be equal to
the aggregate amount of payroll deduction payments which would have
been made during the month. Upon return from leave, the
Participant's payroll deductions for loan repayments will be
reinstated.
(10) Administrative Fee. For loans made before July 1, 1992, a $75 set-up
fee and $40 annual administrative fee will be charged. For loans
made or reamortized on or after July 1, 1992, a $50 set-up fee will
be charged. The Participant will have the proceeds of the loan
reduced by this amount.
AMENDMENT NO. 1 TO GAPSHARE
(As Amended and Restated Effective January 1, 1989)
THE GAP, INC., having established the amended and restated GapShare
(the "Plan"), effective as of January 1, 1989, hereby further amends the Plan,
effective as of January 1, 1989, as follows:
1. Section 2.18 shall be amended to read as follows:
"Employee" means any person in the employ of one of the
Employer or Affiliates including officers, but excluding
directors who are not in the employ of one of the Employers
or Affiliates. "Employee" shall include leased employees
(within the meaning of section 414(n) of the Code); provided,
however, that if leased employees constitute less than 20%
of the Employer's or Affiliate's non-highly compensated work
force (within the meaning of section 414(n)(1)(C)(ii) of the
Code), the term "Employee" shall not include those leased
employees who are covered by a plan described in section
414(n)(5) of the Code.
2. Section 3.1 shall be amended by adding the following
subsection (iv) to the end of that Section:
and (iv) any leased employee (within the meaning of section
414(n) of the Code).
IN WITNESS WHEREOF, the GapShare Retirement Committee, by its
duly authorized officer, has executed this Amendment No. 1 on the date
indicated below.
GAPSHARE RETIREMENT COMMITTEE
Date: , 1993 By
AMENDMENT NO. 2 TO GAPSHARE
(As Amended and Restated Effective January 1, 1989)
THE GAP, INC., having established and restated GapShare (the
"Plan"), effective as of January 1, 1989, hereby further amends the Plan,
effective as of October 1, 1993, as follows:
1. Section 9.8(e)(i) shall be amended to read:
"Amounts may not be withdrawn which would include employer
matching contributions made in the preceding 24 months."
IN WITNESS WHEREOF, the GapShare Retirement Committee, by its
duly authorized officer, has executed this Amendment No. 2 on the date
indicated below.
GAPSHARE RETIREMENT COMMITTEE
Date: , 1993 By
AMENDMENT NO. 3 TO GAPSHARE
(As Amended and Restated Effective January 1, 1989)
THE GAP, INC., having established the amended and restated
GapShare (the "Plan"), effective as of January 1, 1989, hereby further amends
the Plan, effective as of January 1, 1994, as follows:
1. Section 2.15 shall be amended by deleting the phrase "resulting
in the termination of his or her service with his or her Employer" from the
first sentence.
2. Section 6.1(a) shall be amended to read as follows:
(a) Vesting at Age 60, Death or Disability
The entire value of a Participant's Account shall
become fully vested when the Participant attains age 60 while
an Employee or upon his or her death or Disability while an
Employee.
IN WITNESS WHEREOF, The Gap, Inc., by its duly authorized
officer, has executed this Amendment No. 3 on the date indicated below.
THE GAP, INC.
Date: , 1994 By