Exhibit 10.1

Award No.                     

THE GAP, INC.

RESTRICTED STOCK UNIT AWARD AGREEMENT1

The Gap, Inc. (the “Company”) hereby grants to                  (the
“Employee”), an award (the “Award”) of Restricted Stock Units (each Restricted
Stock Unit shall be referred to as a “Stock Award”) which represent the right to
receive shares of the Company’s common stock, $0.05 par value (the “Shares”)
subject to the fulfillment of the vesting conditions and other conditions set
forth in the attached Appendix A. This Award is granted pursuant to The Gap,
Inc. 2006 Long-Term Incentive Plan (the “Plan”) and is subject to all of the
terms and conditions contained in this Restricted Stock Unit Award Agreement
(the “Agreement”), including the terms and conditions contained in the attached
Appendix A. The date of this Agreement is                 . Subject to the
provisions of Appendix A and of the Plan, the principal features of this Award
are as follows:

 

Number of Stock Awards:    ___________    Date of Grant:    ___________   
Date(s) Stock Awards Scheduled to Vest:    ___________   

As provided in the Plan and in this Agreement, this Award may terminate before
the scheduled vest date(s) of the Stock Awards. For example, if Employee’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 Stock Awards covered by this Award including those due to
changes in employment is contained in paragraphs 3 through 6 of Appendix A.

IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement,
in duplicate, to be effective as of the date first above written.

 

    THE GAP, INC. Dated: _____________       

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 Stock Awards, 3) not a term or condition of my employment with
the Company, and 4) made at the sole discretion of the Company.

 

    EMPLOYEE Dated: _____________   Signature:          Address:                
      

 

1

STOCK AWARDS GRANTED BY THE GAP, INC. ARE GOVERNED SOLELY BY THE LAWS OF THE
STATE OF CALIFORNIA AND THE UNITED STATES OF AMERICA

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APPENDIX A

TERMS AND CONDITIONS OF STOCK AWARD

1. Grant of Stock Awards. 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 Stock Awards 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 Stock Award
grants and that grants are made at the sole discretion of the Company.

2. Company’s Obligation to Pay. On any date, a Stock Award has a value equal to
the Fair Market Value of one Share. Unless and until a Stock Award 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 Stock Award. Prior to actual payment of any Shares pursuant to vested Stock
Awards, each Stock Award represents an unsecured obligation of the Company,
payable (if at all) only from the general assets of the Company.

3. Vesting of Stock Awards and Issuance of Shares.

 

  (a) Subject to paragraphs 4, 5 and 6, the Stock Awards subject to this
Agreement will vest as to the number of Stock Awards, and on the dates shown, on
the first page of this Agreement (each a “Vesting Date”), 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
Stock Awards. If Employee is not employed on such date(s), the Award shall
terminate, as set forth in paragraph 6.

 

  (b) Upon each Vesting Date, one Share shall be issued for each Stock Award
that vests on such Vesting Date, subject to the terms and provisions of the Plan
and this Agreement.

 

  (c) If the Committee, in its discretion, accelerates the vesting of the
balance, or some lesser portion of the balance, of the Stock Award, the payment
of such accelerated portion of the Stock Award nevertheless shall be made at the
same time or times as if such Stock Award 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)).

 

  (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 Stock Award in connection with Employee’s Termination of Service (other
than due to death and provided that such Termination of Service is a “separation
from service within the meaning of Section 409A) and if [ADD ONLY TO AGREEMENTS
TO NON-US EMPLOYEES: (i) Employee is subject to U.S. income tax, and (ii)]
Employee is a “specified employee” within the meaning of Section 409A at the
time of such Termination of Service, then any such accelerated Stock Awards
otherwise payable within the six (6) month period following Employee’s
Termination of Service instead will be paid on the date that is six (6) months
and one (1) day following the date of Employee’s Termination of Service, unless
the Employee dies following his or her Termination of Service, in which case,
the Stock Awards will be paid to the Employee’s estate as soon as practicable
following his or her death, subject to paragraph 7. Thereafter, such Stock
Awards shall continue to be paid in accordance with the requirements of
paragraph 3(c). For purposes of this Agreement, “Section 409A” means
Section 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 (“Section 409A”).

 

  (e) It is the intent of this Agreement to comply with the requirements of
Section 409A so that none of the Shares subject to the Stock Award granted under
this Agreement will be subject to the additional tax imposed under Section 409A,
and any ambiguities herein will be interpreted to so comply.

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  (f) No fractional Shares shall be issued under this Agreement.

4. Death. In the event of the Employee’s death, the remaining Stock Awards shall
automatically and with no exercise of discretion by the Committee become fully
vested on the date of death. Notwithstanding the previous sentence, if in the
event that within one year of the date of this Agreement, Employee dies, this
Stock Award shall immediately thereupon terminate.

5. Retirement.

(a) A portion of the remaining Stock Awards 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 on the later of the date that the Employee reaches Normal Retirement
Age (as defined in GapShare or any successor retirement plan) or November 15th
of the year in which Normal Retirement Age is reached. The portion of the
remaining Stock Awards 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) the Employee’s becoming
eligible to receive shares of common stock upon Retirement pursuant to
paragraph 5(b), and (b) the vesting of such portion of the remaining Stock
Awards.

(b) In the event of Retirement (as defined in the Plan), the remaining Stock
Awards automatically and with no exercise of discretion by the Committee shall
become fully vested on the date of Retirement. Notwithstanding any other
provision of this paragraph 5, if in the event that within one year of the date
of this Agreement, Employee terminates employment due to Retirement, no portion
of this Stock Award will vest and this Stock Award shall immediately thereupon
terminate. If [ADD ONLY TO AGREEMENTS TO NON-US EMPLOYEES:(i) Employee is
subject to U.S. income tax, and (ii)] Employee is a “specified employee” within
the meaning of Section 409A at the time of Employee’s Retirement then the
payment of such accelerated Stock Awards will not be made until the date six
(6) months and one (1) day following the date of Employee’s Retirement.

6. Termination of Service. Notwithstanding any contrary provision of this
Agreement, the balance of the Stock Awards that have not vested pursuant to
paragraphs 3, 4 or 5 will be forfeited and cancelled automatically at the time
of the Employee’s Termination of Service.

7. Withholding Taxes. The Employee agrees that the Company will withhold a
portion of the Shares scheduled to be issued pursuant to vested Stock Awards
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’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.

8. Beneficiary Designation. 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’s designated beneficiary, or if no such beneficiary survives the
Employee, the person or persons entitled to such distribution or delivery under
the Employee’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) written notice of his or her status as transferee, and (b) evidence
satisfactory to the Company to establish the validity of the transfer and
compliance with any laws or regulations pertaining to said transfer.

9. Conditions to Issuance of Shares. 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

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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.

10. Rights as Stockholder. 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 Stock Award 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.

11. Changes in Stock. 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 Stock Awards subject to the Award, in
such manner as the Committee (in its sole discretion) shall determine to be
appropriate.

12. Plan Governs. 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.

13. Committee Authority. 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 Stock Award 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.

14. No Modification of At-Will Status. 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 “at-will” and that either the Company or the Employee may
terminate the Employee’s employment at any time and for any reason. The Employee
also understands and agrees that his or her “at-will” status can only be changed
by an express written contract signed by an authorized officer of the Company
and the Employee.

15. Non-Transferability of Award. Except as otherwise herein provided, the Stock
Awards 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 Stock Award, 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 Stock Award and the rights and privileges conferred
hereby will immediately become null and void.

16. Binding Agreement. Subject to the limitation on the transferability of the
Stock Award 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.

17. Addresses for Notices. 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.

18. Captions. Captions provided herein are for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

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19. Agreement Severable. 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.

20. Modifications to the Agreement. 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.

21. Amendment, Suspension or Termination of the Plan. 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.

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