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<SEC-DOCUMENT>0001193125-10-134113.txt : 20100920
<SEC-HEADER>0001193125-10-134113.hdr.sgml : 20100920
<ACCEPTANCE-DATETIME>20100607190221
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-10-134113
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20100607

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GAP INC
		CENTRAL INDEX KEY:			0000039911
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-FAMILY CLOTHING STORES [5651]
		IRS NUMBER:				941697231
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		TWO FOLSOM STREET
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94105
		BUSINESS PHONE:		4159524400

	MAIL ADDRESS:	
		STREET 1:		TWO FOLSOM STREET
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94105

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GAP STORES INC
		DATE OF NAME CHANGE:	19850617
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>Correspondence Letter</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">[GAP INC. LOGO] </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">June&nbsp;7, 2010 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Via EDGAR&nbsp;&amp;
Federal Express </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Assistant Director </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Division of Corporation
Finance </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mail Stop 3561 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United
States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">Re:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>The Gap, Inc. File No.&nbsp;001-07562</U> </FONT></TD></TR></TABLE>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Form 10-K for the Fiscal Year Ended January&nbsp;30, 2010</U> </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Definitive Proxy Statement on Schedule 14A, filed April&nbsp;6, 2010</U> </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dear Mr.&nbsp;Reynolds: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Thank you for your
letters dated May&nbsp;11, 2010 and May&nbsp;19, 2010, which were addressed to our Chairman and Chief Executive Officer, Glenn Murphy. As Vice President and Deputy General Counsel of The Gap, Inc. (the Company), I am responding to your letters. Our
response to the May&nbsp;11, 2010 letter begins on this page. Our response to the May&nbsp;19, 2010 letter begins on page 7. We have repeated your comments below and have responded to them with the actions we propose to take in our future filings.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>May&nbsp;11, 2010 Comment Letter </I></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Consolidated Financial Statements </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Notes to Consolidated Financial Statements </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Note 1 &#150; Organization and Summary of Significant Accounting Policies </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Classification of Expenses, page 42 </U></B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>1.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note that you classify merchandise handling and receiving expenses and distribution center general and administrative expenses as a component of Operating
Expenses. In order to enhance an investor&#146;s understanding of these expenses, please confirm in future Exchange Act filings you will disclose the amount incurred in each year for which financial statements are presented.</B>
</FONT></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We continually review our Exchange Act filings to ensure the information disclosed is meaningful to our investors. In doing this, we take into
consideration the questions received or the information requested from our investors beyond what is required to be disclosed. As an example, our investors are focused on free cash flow, store count, comparable store sales, and square footage
information and we include this additional disclosure in our Form 10-Qs and 10-Ks. We generally do not receive questions or requests for information on merchandise handling and receiving costs and distribution center general and administrative
expenses (collectively &#147;DC Expenses&#148;) from our investors or analysts and, accordingly, we have concluded that this additional disclosure would not meaningfully enhance an investor&#146;s understanding of our business. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We acknowledge that the classification of DC Expenses varies across the apparel retail industry; however, DC expenses have not fluctuated significantly
over the last three years in total, as a percent of sales, or as a percent of operating expenses. For reference, DC Expenses during the last three fiscal years represented approximately 2% of net sales and 6% of operating expenses. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">For these reasons, we do not believe the disclosure of DC Expenses would enhance our investors&#146; understanding of our results of operations.
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Consolidated Financial Statements </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Notes to Consolidated Financial Statements </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Note 12 &#150; Income Taxes, page 61 </U></B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note your footnote disclosure states that you intend to utilize the undistributed earnings of your foreign subsidiaries in your foreign operations for an
indefinite period of time except as it relates to the recently repatriated earnings from your Canadian and Japanese subsidiaries. Considering that you have repatriated earnings from your Canadian subsidiaries in each of the past three fiscal years
and from your Japanese subsidiaries in each of the past two fiscal years, please tell us the factors considered by management in its conclusion that the undistributed earnings of your foreign subsidiaries will not be repatriated, especially in
relation to your Canadian and Japanese subsidiaries. Your response should also outline your plans for the permanent reinvestment of the undistributed earnings of your foreign subsidiaries. Refer to FASB ASC 740-30-25-17.</B>
</FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Gap, Inc. has generated cash from operating activities in excess of $1.4 billion in each of the last three fiscal years. As of January&nbsp;30, 2010,
there was no debt outstanding. Cash and cash equivalents totaled $1.7 billion or more at the end of each of the last three fiscal years. From a domestic perspective, at the end of each of the last three fiscal years, we had cash and cash equivalent
balances in excess of $1 billion and, accordingly, we did not require the repatriation of foreign earnings for domestic operating purposes in these three years. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">2 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">As disclosed in our fiscal year 2009 Form 10-K, we had undistributed earnings in our foreign
subsidiaries as of January&nbsp;30, 2010 of approximately $1.1 billion which we had determined to be permanently reinvested. If we had determined these undistributed earnings were not permanently reinvested, the deferred tax liability as of
January&nbsp;30, 2010 would have been approximately $148 million, of which Hong Kong represented approximately $90 million, Japan represented approximately $40 million with the remaining balance primarily represented by European countries. Based on
the availability of foreign tax credits, there was minimal potential net tax liability associated with the undistributed earnings of Canada as of January&nbsp;30, 2010. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The total amount of undistributed earnings has not decreased over the last three fiscal years as we require a base level of undistributed earnings to
maintain and grow our business. We have repatriated earnings from our Canadian subsidiaries in each of the past three fiscal years and from our Japanese subsidiary in each of the past two fiscal years; however, our Canadian and Japanese operations
have generated earnings over these fiscal years in excess of the undistributed earnings we had determined to be permanently reinvested. Overall, we have not repatriated earnings that we had previously considered a permanent reinvestment.</FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In our review of the undistributed earnings balances of our foreign subsidiaries, we consider the current cash balances, local retained earnings
requirements, and cash flow forecasts in order to determine the amount of undistributed earnings that is a permanent reinvestment. The cash flow forecasts incorporate future operating plans, long-term capital requirements, growth initiatives, and
historical experience. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We have publicly announced our priority to focus on growing our international business through store openings, new
concepts, and new regions and we have considered the funding needed for these international investments in our foreign cash flow forecasts. In addition, we determine the capital expenditures required to maintain our current retail business such as
store remodels, information technology projects, and distribution center build-outs. We also consider the working capital requirements of the foreign subsidiaries by ensuring we have adequate cash on hand to fund the build-up of inventory for
holiday season. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Hong Kong </U></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Hong Kong, we have a number of growth initiatives planned for fiscal year 2010 and beyond including plans to open stores and offer online
shopping in Hong Kong and China within the next year. In addition, there are significant adverse tax consequences associated with the repatriation of Hong Kong earnings to the United States. Accordingly, we have concluded that the undistributed
earnings in Hong Kong are a permanent reinvestment in the business. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Japan </U></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Japan, we have a number of growth initiatives planned for fiscal year 2010 and beyond including the opening of new stores and the
introduction of online shopping to customers in Asia. We have concluded that the earnings to be used to fund these initiatives are a permanent reinvestment in the business. Note that although the undistributed earnings balance in Japan subsequent to
the $83 million repatriation was approximately $328 million, the remaining cash balance was approximately $105 million. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">3 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Europe </U></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Our European subsidiaries have historically operated in a cash negative position and, accordingly, any balance of undistributed earnings is considered a
permanent reinvestment in the business. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><U>Canada </U></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Canada, we have a number of growth initiatives planned for fiscal year 2010 and beyond including the opening of new stores and the
introduction of online shopping to customers in Canada. In addition, we have plans to remodel approximately 30 stores in Canada, primarily Old Navy, in fiscal year 2010 and to continue our remodeling efforts in subsequent years. We have concluded
that the earnings to be used to fund these initiatives are a permanent reinvestment in the business. Note that the retained earnings balance in Canada subsequent to the $117 million repatriation was approximately $59 million. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Based on the above, we believe the balance of undistributed earnings in our foreign subsidiaries is a permanent reinvestment and, accordingly, no
deferred tax liability has been recorded with respect to these balances. In order to better describe our intent to fully utilize the undistributed earnings of our foreign subsidiaries in our foreign operations for an indefinite period of time, we
propose modifying our disclosure in future annual filings as follows: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In future annual filings we plan to include disclosure similar to the
following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Except as noted below and where required by U.S. tax law, no provision was made for U.S. income taxes on the
undistributed earnings of our foreign subsidiaries as we intend to utilize those earnings in the foreign operations for an indefinite period of time. Such undistributed earnings of foreign subsidiaries as of January xx, 20xx and January xx, 20xx was
approximately $x billion and $x billion, respectively. If we had not intended to utilize the undistributed earnings in our foreign operations for an indefinite period of time, the deferred tax liability as of January xx, 20xx and January xx, 20xx
would have been approximately $xx million and $xx million, respectively. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">To the extent current earnings are in excess of our required level
of undistributed earnings we plan to include disclosure similar to the following: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">During fiscal 20xx, we assessed the
forecasted cash needs and overall financial position of our foreign subsidiaries. As a result, we determined that approximately $xx million was in excess of the amount we expect to utilize in our foreign operations for an indefinite period of time
and, accordingly, we have established a deferred tax liability for U.S. income taxes with respect to such earnings as of January xx, 20xx and have recorded related tax expense of $x million. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">4 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Item&nbsp;15. Exhibits, Financial Statement Schedules </U></B></FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>3.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note that you failed to include the exhibits or schedules to some of your filed exhibits. Please file a complete copy of Exhibits 10.1, 10.3, 10.5, 10.7, 10.10,
10.13, 10.14, 10.15, 10.16 and 10.101 with your next Exchange Act report</B> </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibit 10.1, Credit Agreement, dated as of August&nbsp;30, 2004, filed as Exhibit 10.1 to Registrant&#146;s Form 8-K on September&nbsp;2,
2004, we acknowledge the Staff&#146;s comment and will re-file the Credit Agreement in its entirety as an exhibit to our quarterly report on Form 10-Q for the fiscal quarter ended May&nbsp;1, 2010. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibits 10.3 and 10.5, the 3-Year Letter of Credit (&#147;LC&#148;) Agreements, dated May&nbsp;6, 2005, with Bank of America and
JPMorgan Chase Bank, respectively, we advise the Staff that we entered into amendments to each of these 3-Year LC Agreements to change the termination date from May&nbsp;6, 2008 to May&nbsp;18, 2007. These amendments were filed as Exhibits 10.4 and
10.5 to Registrant&#146;s Form 8-K on May&nbsp;24, 2007. As a result, these two 3-Year LC Agreements were terminated more than two years prior to the filing of our Annual Report on Form 10-K and, we believe, are no longer material an investor&#146;s
understanding of the Company or required to be filed pursuant to Item&nbsp;601(b)(10)(i) of Regulation S-K. In light of this, the Company will no longer include these agreements as exhibits to its periodic reports going forward. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibits 10.7 and 10.10, the 3-Year LC Agreements, dated May&nbsp;6, 2005, with HSBC Bank USA, National Association, and Citibank, N.A.,
we acknowledge the Staff&#146;s comment and will re-file Exhibits 10.7 and 10.10 in their entirety as exhibits to our quarterly report on Form 10-Q for the fiscal quarter ended May&nbsp;1, 2010. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibits 10.13, 10.14, 10.15 and 10.16, the 365-Day LC Agreements, dated May&nbsp;6, 2005, with Bank of America, JPMorgan Chase Bank,
HSBC Bank USA, National Association, and Citibank, N.A., respectively, we advise the Staff that these agreements terminated in May 2006. As a result, these four 365-Day LC Agreements were terminated more than two years prior to the filing of our
Annual Report on Form 10-K and, we believe, are no longer material to an investor&#146;s understanding of the Company or required to be filed pursuant to Item&nbsp;601(b)(10)(i) of Regulation S-K. In light of this, the Company will no longer include
these agreements as exhibits to its periodic reports going forward. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibit 10.101, we acknowledge the Staff&#146;s comment
and will re-file Exhibit 10.101, including its attachment, as an exhibit to our quarterly report on Form 10-Q for the fiscal quarter ended May&nbsp;1, 2010. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">5 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>4.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note that you have filed form of agreements for the Performance Share Agreements, such as Exhibits 10.82 and 10.85, which have omitted the performance goals.
Please file the executed agreements.</B> </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibit 10.82, Form of Performance Share Agreement for Executives under the 2006 Long-Term Incentive Plan, we advise the Staff that we
have only used this form once, in connection with a grant of performance shares to Glenn Murphy, our Chief Executive Officer, in July 2007. The performance goals related to that grant have been fully disclosed in the Compensation Discussion and
Analysis sections of our Proxy Statements for our 2008, 2009 and 2010 Annual Meeting (see, for example, page 34 of our Definitive Proxy Statement on Schedule 14A, filed April&nbsp;6, 2010). As a result, and in accordance with Instruction 1 to
Item&nbsp;601(b)(10) of Regulation S-K, we do not plan to file the executed version of Mr.&nbsp;Murphy&#146;s agreement since there are no provisions in his agreement that have not otherwise been disclosed and that are necessary to an
investor&#146;s understanding of Mr.&nbsp;Murphy&#146;s compensation under the agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">With respect to Exhibit 10.85, Form of Performance
Share Agreement under the 2006 Long-Term Incentive Plan, we advise the Staff that we have used this form only in connection with grants of performance shares to certain of our senior executives in March 2010. Rather than filing the executed versions
of each of those Performance Share Agreements, we plan to file a Form of Performance Share Agreement that would include the complete Performance Goals section of the agreement, as an exhibit to our quarterly report on Form 10-Q for the fiscal
quarter ended May&nbsp;1, 2010, in accordance with Instruction 1 to Item&nbsp;601(b)(10) of Regulation S-K. A copy of that Form of Performance Share Agreement is attached to this letter as Exhibit A. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Definitive Proxy Statement on Schedule 14A filed April&nbsp;6, 2010 </U></B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Executive Compensation and Related Information, page 27 </U></B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>5.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note that 25% of your bonus compensation was based upon individual objectives for most of your NEOs. In future filings, please disclose the individual objectives
considered for each of the NEOs.</B> </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">We have provided disclosure in the Compensation Discussion and Analysis section of our Proxy Statement regarding our overall compensation program,
including the individual objectives component of the annual cash incentive program for senior executives. As part of this disclosure, we have summarized a number of these individual objectives (see pages 32-33 of our Definitive Proxy Statement on
Schedule 14A filed April&nbsp;6, 2010). However, we have not listed or quantified all of the specific subjective goals set for our senior executives under the individual objectives component because achievement of those objectives was not material
to their overall compensation. In addition, as we noted in our Proxy Statement (page 32), the extent to which these goals were achieved and the ultimate weighting of each goal was assessed subjectively by our Chief Executive Officer. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">6 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The overall compensation of our NEOs consists of a number of components, including base salary, an
annual cash incentive bonus, a variety of long-term equity based incentives, and a number of perquisites and other benefits. As a result, while 25% of the annual cash incentive bonus for most of our NEOs was based upon a number of individual
objectives, the individual objective component was a much smaller percentage of overall compensation, and the value of any one individual objective was even smaller. Accordingly, achievement of no individual objective by itself was material to an
executive&#146;s overall compensation. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Please note that our disclosure is consistent with our February&nbsp;29, 2008 response to the
Staff&#146;s January&nbsp;29, 2008 comment letter to the Company regarding the disclosure of performance based compensation. In that letter (footnote 1), we stated that &#147;[a]s was the case in our 2007 Proxy Statement, we plan to summarize these
subjective factors in our 2008 Proxy Statement.&#148; </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>May&nbsp;19, 2010 Comment Letter </I></B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>General </U></B></FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>1.</B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>We note that you have not included any disclosure in response to Item&nbsp;402(s) of Regulation S-K. Please advise us of the basis for your conclusion that
disclosure is not necessary and describe the process you undertook to reach that conclusion.</B> </FONT></TD></TR></TABLE> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>Our Response </U></B>
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-right:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2">In connection with the preparation of our Proxy Statement for our 2010 Annual Meeting of Shareholders, and in response
to&nbsp;Item&nbsp;402(s) of Regulation S-K, management conducted a comprehensive overall review of each of the Company&#146;s compensation policies and practices for the purpose of determining whether any of those policies and practices are
reasonably likely to have a material adverse effect on the Company. As a part of this review, each of the Company&#146;s compensation policies and practices were compared to a number of specific factors that could potentially increase risk,
including the specific factors that the SEC has identified as potentially triggering disclosure. The Company balanced these factors against a variety of mitigating factors. Examples of just some of the mitigating factors are (i)&nbsp;compensation
policies and practices are structured similarly across business units; (ii)&nbsp;the risk of declines in performance in our largest business units is well understood and managed; (iii)&nbsp;incentive compensation expense is not a significant
percentage of any significant unit&#146;s revenues; (iv)&nbsp;for executives, a significant portion of variable pay is delivered through long-term incentives which carry vesting schedules over multiple years; (v)&nbsp;a mix of compensation vehicles
is used; (vi)&nbsp;stock ownership requirements for executives are in place; (vii)&nbsp;incentive plans are capped at all levels; (viii)&nbsp;threshold levels of performance must be achieved for the bulk of variable pay opportunities; and
(ix)&nbsp;a clawback policy with respect to financial </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">7 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mr. John Reynolds </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">United States Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">
restatements is in place. Management&#146;s assessment was also presented to the Company&#146;s Chief Compliance Officer. As a result of management&#146;s review, the Company determined that its
policies and practices are not reasonably likely to have a material adverse effect on the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">In accordance with your request, we
acknowledge that: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">the Company is responsible for the adequacy and accuracy of the disclosure in the filing; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the
filing; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">the Company may not assert staff comments as a defense in any proceedings initiated by the Commission or any person under the federal securities laws
of the United States. </FONT></P></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Please contact me directly at (415) 427-2139 if you have any questions. You may also reach me via fax
at (415) 427-7475. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sincerely, </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD WIDTH="100%"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">/s/ Thomas J. Lima</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Thomas J. Lima</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Vice President and Deputy General Counsel</FONT></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">cc:&nbsp;&nbsp;&nbsp;&nbsp;Damon Colbert </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">8 </FONT></P>


<p Style='page-break-before:always'>
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<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="50%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Award No. <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Exhibit A</B></FONT></TD></TR></TABLE> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>THE GAP,
INC. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px;padding-bottom:0px;" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PERFORMANCE SHARE
AGREEMENT<FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">1</SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2"> </FONT></B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Gap, Inc. (the &#147;Company&#148;) hereby grants to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (the &#147;Employee&#148;), an award (the &#147;Award&#148;) of Performance Shares, which represent the right to receive
shares of the Company&#146;s common stock, $0.05 par value (the &#147;Shares&#148;) subject to the fulfillment of performance and vesting conditions and the other conditions set forth in the attached Appendix A. This Award is granted pursuant to The
Gap, Inc. 2006 Long-Term Incentive Plan (the &#147;Plan&#148;) and is subject to all of the terms and conditions contained in this Performance Share Agreement (the &#147;Agreement&#148;), including the terms and conditions contained in the attached
Appendix A. The date of this Agreement is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (the &#147;Date of Grant&#148;). Subject to the provisions of Appendix A and of
the Plan, the principal features of this Award are as follows: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Number of Performance Shares at Threshold Performance: </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Number of Performance Shares at Target Performance: </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Maximum Number of Performance Shares: </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Performance Goals: </B>The actual number of Shares to be earned under this Award will be determined based on (1)&nbsp;attainment of annual division or
corporate earnings goals over 3 years, and (2)&nbsp;achievement of Company cumulative earnings goals for the same 3 years. In both cases, the earnings goals and the extent to which they have been achieved will be determined by the Compensation and
Management Development Committee (the &#147;Committee&#148;) of the Board of Directors, in its sole discretion. In addition, the number of Shares earned under this Award may be further reduced at the Committee&#146;s discretion. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Date(s) Performance Shares Scheduled to Vest: </B>To the extent that the Performance Goals described above are achieved and Shares are earned, as
determined and certified by the Committee, then (1)&nbsp;50% of the earned Shares shall be paid on the date in <B></B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
that the Committee certifies attainment (the &#147;Certification Date&#148;), and (2)&nbsp;the remaining 50% of the earned Shares shall vest on the one year anniversary of the Certification Date. Notwithstanding the foregoing, if the Employee is
demoted to a lower Company salary grade before the end of fiscal year <B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B>, Employee shall forfeit his or her Award. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">As provided in the Plan and in this Agreement, this Award may terminate before the scheduled vest date(s) of the Performance Shares. For example, if
Employee&#146;s employment ends before the date this Award vests, this Award will terminate at the same time as such termination. Important additional information on vesting and forfeiture of the Performance Shares covered by this Award including
those due to changes in employment, including retirement, is contained in paragraphs 3 through 6 of Appendix&nbsp;A. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">IN WITNESS WHEREOF, the
Company and the Employee have executed this Agreement, in duplicate, to be effective as of the date first above written. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD WIDTH="47%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="46%"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">THE GAP, INC.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Glenn K. Murphy</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chairman and Chief Executive Officer</FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">My signature below
indicates that I understand that this Award is 1) subject to all of the terms and conditions of this Agreement (including the attached Appendix A) and of the Plan, 2) not considered salary, nor is it a promise for future grants of Performance
Shares, 3) not a term or condition of my employment with the Company, and 4)&nbsp;made at the sole discretion of the Company. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD WIDTH="43%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="43%"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">EMPLOYEE:</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated:
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Signature:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Address:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:10%">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">1</SUP></FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex"></SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2">PERFORMANCE SHARES
GRANTED BY THE GAP, INC. ARE GOVERNED SOLELY BY THE LAWS OF THE STATE OF CALIFORNIA AND THE UNITED STATES OF AMERICA </FONT></P></TD></TR></TABLE>

<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>APPENDIX A </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>TERMS AND CONDITIONS OF PERFORMANCE SHARES </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">1. <U>Grant of Performance Shares</U>. The Company hereby grants to the Employee as a separate incentive in connection with his or her
employment and not in lieu of any salary or other compensation for his or her services, an Award with respect to the number of Performance Shares set forth on page 1 of this Agreement, subject to all the terms and conditions in this Agreement and
the Plan. Employee understands and agrees that this Award does not guarantee any future Performance Share grants and that grants are made at the sole discretion of the Company. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">2. <U>Company&#146;s Obligation to Pay</U>. On any date, a Performance Share has a value equal to the Fair Market Value of one Share.
Unless and until a Performance Share has vested in accordance with the vesting schedule set forth on the first page of this Agreement, the Employee will have no right to payment of a Share with respect to the Performance Share. Prior to actual
payment of any Shares pursuant to vested Performance Shares, each Performance Share represents an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">3. <U>Vesting of Performance Shares and Issuance of Shares</U>. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) Subject to paragraphs 4, 5 and 6, the Performance Shares subject to this Agreement will vest as to the number of Performance Shares,
and on the dates shown, on the first page of this Agreement (each a &#147;Vesting Date&#148;), but in each case, only if the Employee has been continuously employed by the Company or by one of its Affiliates from the date of this Award until the
applicable Vesting Date of the Performance Shares. If Employee is not employed on such date(s), the Award shall terminate, as set forth in paragraph 6. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) Upon each Vesting Date, one Share shall be issued for each Performance Share that vests on such Vesting Date, subject to the terms
and provisions of the Plan and this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) If the Committee, in its discretion, accelerates the vesting of the
balance, or some lesser portion of the balance, of the Performance Shares, the payment of such accelerated Performance Shares nevertheless shall be made at the same time or times as if such Performance Shares had vested in accordance with the
vesting schedule set forth on the first page of this Agreement (whether or not the Employee remains employed by the Company or by one of its Affiliates as of such date(s)). </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d) Notwithstanding the foregoing, if the Committee, in its discretion, accelerates the vesting of the balance, or some lesser portion of
the balance, of the Performance Shares in connection with Employee&#146;s Termination of Service (other than due to death and provided that such Termination of Service is a &#147;separation from service&#148; within the meaning of Section&nbsp;409A)
and if Employee is a &#147;specified employee&#148; within the meaning of Section&nbsp;409A at the time of such Termination of Service, then any such accelerated Performance Shares otherwise payable within the six (6)&nbsp;month period following
Employee&#146;s Termination of Service instead will be paid on the date that is six (6)&nbsp;months and one (1)&nbsp;day following the date of Employee&#146;s Termination of Service, unless the Employee dies following his or her Termination of
Service, in which case, the accelerated Performance Shares will be paid to the Employee&#146;s estate as soon as practicable following his or her death, subject to paragraph&nbsp;7. Thereafter, such Performance Shares shall continue to be paid in
accordance with the requirements of paragraph 3(c). For purposes of this Agreement, &#147;Section 409A&#148; means Section&nbsp;409A of the U.S. Internal Revenue Code of 1986, as amended, and any final Treasury Regulations and other Internal Revenue
Service guidance thereunder, as each may be amended from time to time (&#147;Section 409A&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(e) It is the intent of
this Agreement to comply with the requirements of Section&nbsp;409A so that none of the Performance Shares granted under this Agreement or the Shares issued in payment thereof will be subject to the additional tax imposed under Section&nbsp;409A,
and any ambiguities herein will be interpreted to so comply. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(f) No fractional Shares shall be issued under this Agreement.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">4. <U>Death</U>.&nbsp;In the event of the Employee&#146;s death, the remaining Performance Shares shall automatically and
with no exercise of discretion by the Committee become fully vested on the date of death, provided that the Performance Goals have been achieved as of the date of death. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">5. <U>Retirement</U>. </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; text-indent:8%;padding-bottom:0px;"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a) A portion of the remaining Performance Shares automatically and with no exercise of discretion by the Committee
shall become fully vested and applicable taxes shall be withheld by the Company or its designated Affiliate in accordance with paragraph 7 at the following time: (i)&nbsp;if the Performance Goals have been achieved before the Employee reaches Normal
Retirement Age (as defined in GapShare or any successor retirement plan), on the later of the date the Employee reaches Normal Retirement Age or
November&nbsp;15</FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">th</SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2"> of the
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year in which Normal Retirement Age is reached; or (ii)&nbsp;if Normal Retirement Age is reached before the Performance Goals are achieved, on the later of the date the Performance Goals are
achieved or November&nbsp;15</FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><SUP STYLE="vertical-align:baseline; position:relative; bottom:.8ex">th</SUP></FONT><FONT STYLE="font-family:Times New Roman" SIZE="2"> of the year in which the
Performance Goals are achieved. The portion of the remaining Performance Shares that vests in accordance with the preceding sentence shall have an aggregate market value sufficient to pay any taxes required to be withheld by the Company solely as a
result of (a)&nbsp;the Employee&#146;s becoming eligible to receive shares of common stock upon Retirement pursuant to paragraph 5(b), and (b)&nbsp;the vesting of such portion of the remaining Performance Shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b) In the event of Retirement (as defined in the Plan), the remaining Performance Shares automatically and with no exercise of
discretion by the Committee shall become fully vested on the date of Retirement, provided that the Performance Goals have been achieved on or before the date of Retirement. If Employee is a &#147;specified employee&#148; within the meaning of
Section&nbsp;409A at the time of Employee&#146;s Retirement then the payment of such accelerated Performance Shares will not be made until the date six (6)&nbsp;months and one (1)&nbsp;day following the date of Employee&#146;s Retirement.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">6. <U>Termination of Service</U>. Notwithstanding any contrary provision of this Agreement, the balance of the Performance
Shares that have not vested pursuant to paragraphs 3, 4 or 5 will be forfeited and cancelled automatically at the time of the Employee&#146;s Termination of Service. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">7. <U>Withholding Taxes</U>. The Employee agrees that the Company will withhold a portion of the Shares scheduled to be issued pursuant
to vested Performance Shares that have an aggregate market value sufficient to pay the federal, state and local income, employment and any other applicable taxes required to be withheld by the Company or its designated Affiliate. The Company will
only withhold whole Shares and therefore the Employee also authorizes deduction without notice from salary or other amounts payable to the Employee of cash in an amount sufficient to satisfy the Company&#146;s remaining tax withholding obligation.
Notwithstanding the previous two sentences, the Employee, if the Company in its sole discretion so agrees, may elect to furnish to the Company written notice, no more than 30 days and no less than 5 days in advance of a scheduled Vesting Date (or
other required withholding event), of his or her intent to satisfy the tax withholding requirement by remitting the full amount of the tax withholding to the Company on the scheduled Vesting Date (or other required withholding event). In the event
that Employee provides such written notice and fails to satisfy the tax withholding requirement by the Vesting Date (or other required withholding event), the Company shall satisfy the tax withholding requirement pursuant to the first two sentences
of this paragraph. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">8. <U>Beneficiary Designation</U>. Any distribution or delivery to be made to the Employee under this
Agreement will, if the Employee is then deceased, be made to the Employee&#146;s designated beneficiary, or if no such beneficiary survives the Employee, the person or persons entitled to such distribution or delivery under the Employee&#146;s will
or, if the Employee should fail to make testamentary disposition of such property, the executor of his or her estate. In order to be effective, a beneficiary designation must be made by the Employee in a form and manner acceptable to the Company.
Any transferee must furnish the Company with (a)&nbsp;written notice of his or her status as transferee, and (b)&nbsp;evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations
pertaining to said transfer. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">9. <U>Conditions to Issuance of Shares</U>. The Shares deliverable to the Employee on the
Vesting Date(s) may be either previously authorized but unissued Shares or issued Shares that have been reacquired by the Company. The Company shall not be required to issue any Shares hereunder so long as the Company reasonably anticipates that
such issuance will violate Federal securities law or other applicable law; provided however, that in such event the Company shall issue such Shares at the earliest possible date at which the Company reasonably anticipates that the issuance of the
shares will not cause such violation. For purposes of the previous sentence, any issuance of Shares that would cause inclusion in gross income or the application of any penalty provision or other provision of the Internal Revenue Code shall not be
treated as a violation of applicable law. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">10. <U>Rights as Stockholder</U>. Neither the Employee nor any person claiming
under or through the Employee will have any of the rights or privileges of a stockholder of the Company in respect of any Performance Share unless and until Shares have been issued in accordance with paragraph 3, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Employee. Except as provided in paragraph 11, after such issuance, recordation, and delivery, the Employee will have all the rights of a stockholder of the Company with respect to
voting such Shares and receipt of dividends and distributions on such Shares. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">11. <U>Changes in Stock</U>. In the event of
any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, the Committee shall adjust the
Performance Shares subject to the Award, in such manner as the Committee (in its sole discretion) shall determine to be appropriate. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">12. <U>Plan Governs</U>. This Agreement is subject to all the terms and provisions of the Plan. In the event of a conflict between one or
more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Terms used in this Agreement that are not defined in this Agreement will have the meaning set forth in the Plan. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">13. <U>Committee Authority</U>. The Committee will have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any
portion of the Performance Share has vested). All actions taken and all interpretations and determinations made by the Committee in good faith will be final and binding upon the Employee, the Company and all other interested persons. No member of
the Committee will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">14. <U>No Modification of At-Will Status</U>. The Employee understands and agrees that this Agreement does not impact in any way the
right of the Company, or the Affiliate employing the Employee, as the case may be, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. The Employee understands and
agrees that his or her employment is &#147;at-will&#148; and that either the Company or the Employee may terminate the Employee&#146;s employment at any time and for any reason. The Employee also understands and agrees that his or her
&#147;at-will&#148; status can only be changed by an express written contract signed by an authorized officer of the Company and the Employee. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">15. <U>Non-Transferability of Award</U>. Except as otherwise herein provided, the Performance Shares herein granted and the rights and
privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of such Performance Share, or of any right or privilege conferred hereby, contrary to the provisions hereof, or upon any attempted sale under any execution, attachment or similar process
upon the rights and privileges conferred hereby, such Performance Share and the rights and privileges conferred hereby will immediately become null and void. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">16. <U>Binding Agreement</U>. Subject to the limitation on the transferability of the Performance Share contained herein, this Agreement
shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the Employee and the Company. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">17. <U>Addresses for Notices</U>. Any notice to be given to the Company under the terms of this Agreement will be addressed to the
Company, in care of its Legal Department, at The Gap, Inc., Two Folsom, San Francisco, California 94105, or at such other address as the Company may hereafter designate in writing. Any notice to be given to the Employee will be addressed to the
Employee at the address set forth on the records of the Company. Any such notice will be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, and deposited, postage prepaid, in a United States
post office. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">18. <U>Captions</U>. Captions provided herein are for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">19. <U>Agreement Severable</U>. In the event that any provision in this
Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">20. <U>Modifications to the Agreement</U>. This Agreement constitutes the entire understanding of the parties on the subjects covered.
The Employee expressly warrants that he or she is not accepting this Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Agreement or the Plan can be made only in an express
written agreement executed by a duly authorized officer of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:8%"><FONT STYLE="font-family:Times New Roman" SIZE="2">21. <U>Amendment, Suspension or Termination of the
Plan</U>. By accepting this Award, the Employee expressly warrants that he or she has received a right to an equity based award under the Plan, and has received, read, and understood a description of the Plan. The Employee understands that the Plan
is discretionary in nature and may be modified, suspended, or terminated by the Company at any time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">*** </FONT></P>
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