Exhibit 10.1

July 10, 2006

Jenny J. Ming

Dear Jenny:

This letter confirms and constitutes the entire agreement between you and The
Gap, Inc. and all of its subsidiaries and affiliates (hereafter collectively
referred to as the “Company”) concerning the termination of your employment with
the Company (the “Agreement”).

 

1. TERMINATION OF EMPLOYMENT:

a. Resignation: You hereby resign your employment with the Company, including as
an officer of the Company and its direct and indirect subsidiaries, effective
October 15, 2006, unless you and the Company mutually agree to a termination
date other than October 15, 2006 or you violate any provision of section 3 below
prior to October 15, 2006 (the “Termination Date”).

b. Transition: Subject to the provisions of section 3 below, you will remain in
your current position as President, Old Navy at your current annual salary
($1,000,000) until the Termination Date. The Company shall indemnify and
continue to provide you with directors’ and officers’ liability insurance
coverage for events on or prior to the Termination Date, on a basis no less
favorable than that provided to any other former senior executive officer of the
Company.

c. Paid Time Off: On or before the Termination Date, you will be paid all of
your accrued and unused paid time off.

d. Benefits: Your current benefit plan coverages will end on the last day of the
month of your Termination Date, including health, dental, disability, AYCO
financial counseling and life insurance coverage, subject to continuation by you
pursuant to the provisions of COBRA and of this Agreement.

e. Stock: All unvested stock options as of the Termination Date will be canceled
on the Termination Date. All outstanding vested options as of the Termination
Date must be exercised within three months of the Termination Date. All unvested
cash payments associated with stock options you exchanged in connection with the
Company’s Offer to Exchange Certain Outstanding Options for New Options and Cash
Payments in November 2005 will be forfeited as of the Termination Date. If you
are currently contributing to the Employee Stock Purchase Plan (ESPP), your
participation in ESPP will end on the Termination Date, but the shares in your
brokerage account belong to you. Any cash balance you have in ESPP will be
refunded to you without interest approximately four to six weeks after the end
of the month of the Termination Date. If a purchase occurs before the
Termination Date, your balance will be used to purchase stock.

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Jenny J. Ming

July 10, 2006

Page 2

 

f. Deferred Compensation: If you have or are currently participating in the
Executive Deferred Compensation Plan or Supplemental Deferred Compensation Plan,
your account will be paid to you in accordance with plan documents. Any
deferrals after December 31, 2004 will be paid to you no sooner than April 16,
2007, in accordance with plan documents and the American Jobs Creation Act of
2004.

g. Merchandise Discount: Pursuant to Company policy, the Company will provide
you with one non-transferable Company employee discount card each year. You will
be entitled to the then existing standard corporate discount, but not the 50%
discount or any other discount applicable only to employees. In order to receive
your annual discount card, you must notify the Company’s Employee Relations
department at the beginning of each calendar year. You agree to be bound by the
Company policy regarding appropriate use of the discount card, and you
understand that the use of any discount card will be revoked if there is a
violation of the discount policy.

h. Company Property: On or before the Termination Date, you agree to return to
the Company all Company property, including all keys, building passes,
equipment, documents, materials or property of any description, or any
reproduction of such materials, containing or pertaining to any the Company’s
Confidential Information, as defined in section 3.a.

i. Expenses: You agree to reconcile all outstanding expenses by the Termination
Date.

 

2. THE COMPANY’S PROMISES TO YOU:

In consideration for the promises made by you in this Agreement, the Company
agrees to the following:

a. Income Continuation Payments: Subject to the conditions in this Agreement,
the Company will make income continuation payments to you (pursuant to the
direct deposit method as currently used or to another financial institution as
thereafter instructed by you in writing) based on your current annual salary
($1,000,000) between October 16, 2006 and April 15, 2008 (“Income Continuation
Period”) in the following manner and subject to the following restrictions:

 

  i. On or after April 16, 2007, you will be paid the lump sum gross amount of
$500,000.

 

  ii. For 52 weeks, from April 16, 2007 until April 15, 2008, the Company will
make bi-weekly payments to you of $38,461.54.

You agree that any and all payments are conditioned on the following:

 

  1) Your adherence to all the terms and conditions of this Agreement. Should
you breach or violate any term of this Agreement, all payments to you will cease
and you will forfeit all such payments, compensation and benefits under this
Agreement.

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Jenny J. Ming

July 10, 2006

Page 3

 

  2) In the event you engage in any Work from the Termination Date to April 15,
2007 with, for or as a Competitor, you will be paid only a prorated amount under
section 2.a.i. for the portion of time between the Termination Date and
April 15, 2007 in which you are not engaged in Work for a Competitor, and all
further payments to you will cease and you will forfeit all further payments,
compensation and benefits under this Agreement. As used in this section 2.a:
“Work” shall mean to directly or indirectly, in any capacity whether as
individual, owner, director, employee, partner, consultant, venture capitalist
or otherwise, engage or participate in any work or business activity for profit
or financial gain, or for compensation of any kind from any individual, business
entity or organization, other than passive investments in which you render no
services; “Competitor” shall mean any potential, new or existing business
engaged in the apparel or accessories industry.

 

  3) In the event you engage in any Work from April 16, 2007 to October 15,
2007: (i) with, for or as a Competitor with annual sales in excess of $100
million; or (ii) with, for, or as part of any new venture or start-up engaged in
the apparel or accessories industry with any direct or indirect third-party
financing or funding, all further payments to you will cease and you will
forfeit all further payments, compensation and benefits under this Agreement.

 

  4) In the event you engage in any Work from October 16, 2007 to April 15, 2008
with, for or as a Competitor with annual sales in excess of $100 million, all
further payments to you will cease and you will forfeit all further payments,
compensation and benefits under this Agreement.

 

  5) Subject to the restrictions above in this section 2.a., if you Work during
the Income Continuation Period, payments under this Agreement will be offset by
any such income from such Work, except that there will be no set-off for
compensation derived from your participation on any Board of Directors for a
company or organization that is not a Competitor (“non-Competitor Board work”).

 

  6) You agree to notify the Company within five days of your engagement in any
Work during the Income Continuation Period, with the exception of non-Competitor
Board work. Should payments cease or be reduced during the Income Continuation
Period, you will continue to be bound by the promises you make in this
Agreement.

b. COBRA Subsidy: On or after April 16, 2007, the Company will pay you a lump
sum equivalent of the amount of the Company’s contribution to the cost of
healthcare premiums (for the healthcare options in which you are currently
enrolled) for 18 months.

c. Transition Assistance: The Company will reimburse you promptly for up to
$15,000 total for the amount you spend on outplacement, legal or financial
advice related to this Agreement.

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Jenny J. Ming

July 10, 2006

Page 4

 

d. Financial Planning Assistance: On or after April 16, 2007, the Company will
pay you a lump sum equivalent of the amount of the Company’s contribution to the
cost of financial counseling from AYCO Company, in accordance with your current
plan offering, for 18 months.

e. Tax Withholding: You acknowledge and agree that all payments made pursuant to
this Agreement shall be subject to withholding of all applicable taxes.

 

3. YOUR PROMISES TO THE COMPANY:

In consideration for the benefits described in section 2 above, you agree to the
following:

a. Transition of Business: You agree to carry out the duties of your position as
President, Old Navy and an officer of the Company as agreed by you and the
Company Chief Executive Officer (“CEO”) through the Termination Date, including
but not limited to: work in good faith to ensure a successful transition; act in
the best interests of the Company; adhere to all Company policies and
procedures, including the Code of Business Conduct; maintain confidentiality of
Company trade secrets and proprietary information; and work on assignments or
projects as assigned by the CEO.

b. Confidentiality and Trade Secrets: You agree and acknowledge that because of
your position and employment with the Company, you have acquired confidential,
proprietary and non-public information related to the Company and its operations
(“Confidential Information”). You acknowledge that Confidential Information
constitutes valuable, special and unique assets of the Company, access and
knowledge of which were and are essential to the performance of your duties
during your employment up to the Termination Date. Except as required to perform
such duties through the Termination Date, and except as required by law or
process of law (in which case you will provide at least ten business days
advance written notice and reasonable opportunity for the Company to object to
any such disclosure) after the Termination Date, you agree not to directly or
indirectly (1) make use in any way of any Confidential Information or
(2) divulge, distribute or otherwise convey any Confidential Information to any
person or entity in any form. You also acknowledge and agree that this
obligation will survive and continue in full force beyond the Termination Date.

Confidential Information includes trade secrets and other confidential,
proprietary or non-public business, financial, technical, strategic, design,
marketing, legal, personnel or other information, whether or not your work
product, in written, graphic, oral or other tangible or intangible forms,
including, but not limited to: strategic plans; presentations; research;
specifications; records; data; computer programs; drawings; designs or models;
vendor, supplier, business partner or customer names, lists or other
information; business, marketing, financial, real estate or other plans,
studies, analyses, projections or reports; employee names, lists, organizational
charts or other employee information; communications by or to attorneys
(including attorney client privileged communications), memoranda and other
materials prepared by attorneys or under their direction (including attorney
work product), and software systems and processes. Any information that is not
readily or properly available to the public shall be considered to be a trade
secret and confidential and proprietary.

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Jenny J. Ming

July 10, 2006

Page 5

 

c. Abide by Company Policies: You agree to abide by and comply with all
applicable Company policies including, but not limited to, those contained in
the Code of Business Conduct. You agree that you will comply with the Company’s
Securities Law Compliance Manual, until the earlier of (i) the next date that
the Company lifts the “blackout period” for executive officers and directors
after the Termination Date; or (ii) ten weeks after the Termination Date.
Notwithstanding the above, you hereby acknowledge that you shall remain at all
times subject to all federal and state securities laws, including insider
trading laws, as they may apply. You shall continue to seek and rely upon your
own legal counsel in connection with such matters, including with respect to
Section 16 of the Securities Exchange Act of 1934, as amended, and the
Hart-Scott-Rodino Antitrust Improvements Act, as amended, with respect to your
ownership and/or acquisition of Company stock.

d. Release: You hereby release and discharge the Company, its current and former
officers, directors, employees, representatives, attorneys, subsidiaries,
insurers, predecessors, affiliates, successors, and agents from any and all
claims, liabilities or obligations of every kind and nature, whether now known
or unknown, suspected or unsuspected, which you ever had, or now have, including
but not limited to all claims arising out of or in connection with your
employment or termination of employment, work or services for the Company. This
release includes all federal and state statutory claims, federal and state
common law claims (including those for contract and tort), and claims under any
federal or state anti-discrimination statute or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964 (as amended), the Age
Discrimination in Employment Act, 42 U.S.C. sections 1981 and 1983, the Employee
Retirement Income Security Act of 1974, the Americans with Disabilities Act, the
California Constitution, the California Fair Employment and Housing Act, the
California Unfair Competition Act (California Business and Professions Code
section 17200 et seq.), the California Unruh Act, and the California Labor Code.

You also understand that Section 1542 of the Civil Code of the State of
California provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected the settlement with the debtor;”

and in signing this Agreement, you hereby waive and relinquish all rights you
may have under Section 1542 of the Civil Code of the State of California, or any
similar statute or law.

e. Non-Solicitation: During the Income Continuation Period, you will not
directly or indirectly solicit or otherwise induce employees of the Company to
become employed by you or any business with which you are affiliated; nor will
you directly or indirectly solicit or induce employees of the Company to leave
the Company. The parties agree and acknowledge that this provision is not
intended to prevent general job postings by any of your subsequent employers
regarding availability of positions.

f. Nondisparagement: You agree not to make any statements or comments, oral or
written, which in any way criticize, denigrate, disparage or defame the
reputation of the Company or any of its officers, employees or directors. The
foregoing notwithstanding, you will not be precluded, and

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Jenny J. Ming

July 10, 2006

Page 6

 

it will not be deemed a violation of this provision, from providing information
or making statements or comments which you believe in good faith to be
true before any regulatory or administrative agency, governmental body or court
of law when called upon to do so.

g. Cooperation: You agree to be reasonably available to the Company during the
Income Continuation Period to respond to requests for information concerning
matters, facts or events relating to the Company or any Company entity about
which you may be knowledgeable.

h. Execution of Documents: Prior to the Termination Date and during the Income
Continuation Period, upon request by the Company’s General Counsel, you will
execute all documents required by the Company related to your employment,
transition or termination of employment by or affiliation with the Company, its
affiliates, and direct and indirect subsidiaries, including without limitation
Directors and Officers questionnaires in connection with the Company’s
disclosure obligations under the Securities Exchange Act of 1934, as amended,
and the regulations thereunder, and the Securities Act of 1933, as amended, and
the regulations thereunder.

i. Execution of New Release of Claims: You agree that on or within one week
after the Termination Date, you will execute a new release and waiver of claims
as attached in Appendix 1.

j. Consideration: You understand and agree that the payments and benefits
provided in this Agreement are in excess of any earned wages, commissions,
bonuses, compensation, benefits and any other amounts due and owing to you, and
are valuable consideration for the promises that you make in this Agreement,
including without limitation the Release attached as Appendix 1. You further
agree that with the exception of the payments and benefits described in this
Agreement, you are owed no wages, commissions, bonuses, compensation, or
benefits.

 

4. MISCELLANEOUS

a. The intent of this Agreement is to mutually, amicably and finally resolve and
compromise all issues and claims related to your employment and termination. The
execution of this Agreement shall not in any way be considered an admission of
liability on the part of the Company.

b. If there is any dispute over the terms, enforcement or obligations under this
Agreement, the prevailing party shall be entitled to recover from the other
party reasonable attorneys fees and/or costs incurred to enforce this Agreement.

c. In the event that any provision or portion of this Agreement is determined to
be invalid or unenforceable, the remaining provisions shall be unaffected and
shall remain in full force and effect.

d. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of California.

e. This Agreement constitutes our entire agreement regarding your termination
and supersedes any previous agreements or understandings, if any, between us.
This is a legally binding Agreement. You are advised to consult with an attorney
prior to signing the Agreement. You have 21 days to consider this Agreement, but
you may sign it sooner. If after carefully reviewing this

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Jenny J. Ming

July 10, 2006

Page 7

 

Agreement, it correctly sets forth our agreement, please acknowledge this by
signing both original Agreements where indicated below. After signing this
Agreement you may revoke it within seven days. In order to do so, you must
notify the Company in writing within seven days after the date you sign this
Agreement that you intend to revoke it or you will be forever bound by the terms
of this Agreement. This Agreement will not be effective until the seven-day
period has elapsed.

 

Sincerely,

   

Agreed to this 10 day of July, 2006

The Gap, Inc.

   

By:

 

/s/ Lauri M. Shanahan

      /s/ Jenny J. Ming  

Lauri M. Shanahan

      Jenny J. Ming  

Executive Vice President and

General Counsel

     

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Jenny J. Ming

July 10, 2006

Page 8

 

APPENDIX 1

RELEASE OF CLAIMS

(to be signed on or within one week after Termination Date)

I hereby release and discharge the The Gap, Inc. and all of its subsidiaries and
affiliates (hereafter collectively referred to as the “Company”), its current
and former officers, directors, employees, representatives, attorneys,
subsidiaries, insurers, predecessors, affiliates, successors, and agents from
any and all claims, liabilities or obligations of every kind and nature, whether
now known or unknown, suspected or unsuspected, which I ever had, or now have,
including but not limited to all claims arising out of or in connection with my
employment or termination of employment, work or services for the Company. This
release includes all federal and state statutory claims, federal and state
common law claims (including those for contract and tort), and claims under any
federal or state anti-discrimination statute or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964 (as amended), the Age
Discrimination in Employment Act, 42 U.S.C. sections 1981 and 1983, the Employee
Retirement Income Security Act of 1974, the Americans with Disabilities Act, the
California Constitution, the California Fair Employment and Housing Act, the
California Unfair Competition Act (California Business and Professions Code
section 17200 et seq.), the California Unruh Act, and the California Labor Code.

I understand that Section 1542 of the Civil Code of the State of California
provides as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected the settlement with the debtor;”

and in signing this Agreement, I hereby waive and relinquish all rights I may
have under Section 1542 of the Civil Code of the State of California, or any
similar statute or law.

I understand that I may revoke this Release within seven day of signing it, and
that I must notify the Company in writing within seven days of my intent to do
so.

 

Agreed to this          day of                     , 2006

    Jenny J. Ming