Document:

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                                                                   EXHIBIT 10.1

                                 THE GAP, INC.
                NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
                     AMENDED AND RESTATED OCTOBER 30, 2001

   THE GAP, INC., hereby adopts The Gap, Inc. Nonemployee Director Deferred
Compensation Plan, as follows:

                                      1
                       BACKGROUND, PURPOSE AND DURATION

   1.1 Effective Date. The Plan is effective as of August 26, 1997.

   1.2 Purpose of the Plan. The Plan is intended to increase incentive and to
encourage Share ownership on the part of directors of the Company who are
employees of neither the Company nor of any Affiliate, and to provide such
directors with the opportunity to defer compensation on a pre-tax basis. The
Plan also is intended to further the growth and profitability of the Company.

                                      2
                                  DEFINITIONS

   The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

   2.1 "Affiliate" means any corporation or any other entity (including, but
not limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

   2.2 "Board" means the Board of Directors of the Company.

   2.3 "Company" means The Gap, Inc., a Delaware corporation, or any successor
thereto.

   2.4 "Compensation" means a Nonemployee Director's quarterly cash retainer
for serving as a Nonemployee Director. A Participant's Compensation shall not
include any other type of remuneration.

   2.5 "Director" means any individual who is a member of the Board.

   2.6 "Disability" means the permanent and total disability of the
Participant, as determined by the Board in its discretion in accordance with
uniform and nondiscriminatory standards adopted by the Board from time to time.

   2.7 "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

   2.8 "Fair Market Value" means the arithmetic mean of the highest and lowest
quoted per Share selling prices for Shares on the relevant date, as quoted in
the New York Stock Exchange Composite Transactions Index published in the Wall
Street Journal, or if there were no sales on such date, the arithmetic mean of
the highest and lowest quoted selling prices on the nearest day after the
relevant date, as determined by the Committee.

   2.9 "Fiscal Quarter" means a fiscal quarter of the Company.

   2.10 "Fiscal Year" means the fiscal year of the Company.

   2.11 "Grant Date" means, with respect to an Option, the date on which the
Option was granted.

   2.12 "Nonemployee Director" means a Director who is an employee of neither
the Company nor of any Affiliate.

   2.13 "Option" means an option to purchase Shares granted pursuant to
Sections 5.2 and 5.3.

                                      1

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   2.14 "Option Agreement" means the written agreement setting forth the terms
and provisions applicable to each Option granted under the Plan.

   2.15 "Participant" means a Nonemployee Director who has elected to make
Compensation deferrals under the Plan and to receive an Option in lieu of such
Compensation.

   2.16  "Plan" means The Gap, Inc. Nonemployee Director Deferred Compensation
Plan, as set forth in this instrument and as hereafter amended from time to
time.

   2.17 "Retirement" means termination of service on the Board on account of
retirement pursuant to The Gap, Inc. Nonemployee Director Retirement Plan.

   2.18 "Rule 16b-3" means Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended, and any future regulation amending, supplementing or
superseding such regulation.

   2.19 "Shares" means the shares of the Company's common stock, $0.05 par
value.

   2.20 "Termination of Service" means a cessation of the Participant's service
on the Board for any reason.

                                      3
                                ADMINISTRATION

   3.1 Authority of the Board. The Plan shall be administered by the Board. It
shall be the duty of the Board to administer the Plan in accordance with the
Plan's provisions. The Board shall have all powers and discretion necessary or
appropriate to administer the Plan and to control its operation, including, but
not limited to, the power to (a) interpret the Plan and the Options, (b) adopt
rules for the administration, interpretation and application of the Plan as are
consistent therewith, (c) interpret, amend or revoke any such rules, and (d)
adopt such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Nonemployee Directors who are foreign nationals or
employed outside of the United States.

   3.2 Delegation by the Board. The Board, in its sole discretion and on such
terms and conditions as it may provide, may delegate all or any part of its
authority and powers under the Plan to one or more Directors or officers of the
Company; provided, however, that the Board may not delegate its authority and
powers in any way which would jeopardize the Plan's qualification under Rule
16b-3.

   3.3 Decisions Binding. All determinations and decisions made by the Board,
and any delegate of the Board pursuant to the provisions of the Plan shall be
final, conclusive, and binding on all persons, and shall be given the maximum
deference permitted by law.

                                      4
                          SHARES SUBJECT TO THE PLAN

   4.1 Number of Shares. Subject to adjustment as provided in Section 4.3, the
total number of Shares available for grant under the Plan shall not exceed
675,000. Shares issued under the Plan shall be treasury Shares only.

   4.2 Lapsed Options. If an Option terminates, expires, or lapses for any
reason, any Shares subject to such Option again shall be available to be the
subject of an Option.
   4.3 Adjustments in Options and Authorized Shares. 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 Board shall
adjust the number and class of Shares which may be delivered under the Plan,
and the number, class, and Exercise Price of Shares

                                      2

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subject to outstanding Options, as the Board (in its sole discretion) shall
determine to be appropriate to prevent the dilution or diminution of such
Options. Beginning October 28, 1998 any such adjustments by stock dividend or
split-up shall not apply to the future grants provided by Section 5.
Notwithstanding the preceding, the number of Shares subject to any Option
always shall be a whole number.

                                      5
                      COMPENSATION DEFERRALS AND OPTIONS

   5.1 Elections by Nonemployee Directors. Each Nonemployee Director's decision
to become a Participant shall be entirely voluntary.

   5.1.1 Current Nonemployee Directors. A Nonemployee Director who is such on
August 26, 1997, may elect to become a Participant in the Plan by electing, no
later than October 31, 1997, to defer receipt of all of his or her Compensation
in exchange for an Option. An election under this Section 5.1.1 to make
Compensation deferrals shall be effective for the remainder of the 1997 Fiscal
Year (beginning with the quarterly payment that would be made for and in the
fourth quarter ending January 31, 1998) and for each succeeding Fiscal Year,
until changed by the Nonemployee Director in accordance with such procedures as
the Board (in its discretion) may specify from time to time.

   5.1.2 New Nonemployee Directors. A Nonemployee Director who first becomes
such after August 26, 1997, may elect to become a Participant in the Plan by
electing, within thirty (30) days of the date on which he or she first becomes
a Nonemployee Director, to defer receipt of all of his or her Compensation in
exchange for an Option. An election under this Section 5.1.2 to make
Compensation deferrals shall be effective for the remainder of the Fiscal Year
in which the election is made and for each succeeding Fiscal Year, until
changed by the Nonemployee Director in accordance with such procedures as the
Board (in its discretion) may specify from time to time.

   5.1.3 Timing and Form of Elections. Notwithstanding any contrary provision
of the Plan, the Board (in its sole discretion) shall determine the manner and
deadlines for Participants to make elections under the Plan.

   5.2 Terms of Options.

   5.2.1 Grant Date of Options. Each Option shall be granted on the last
business day of the Fiscal Quarter in which the Compe2.15 "Participant" means a
Nonemployee Director who has elected to make Compensation deferrals under the
Plan and to receive an Option in lieu of such Compensation. ation deferred by
the Nonemployee Director otherwise would have been paid to him or her.

   5.2.2 Option Agreement. Each Option shall be evidenced by a written stock
option agreement which shall be executed by the Participant and the Company.

   5.2.3 Exercisability. Each Option shall be fully exercisable on its Grant
Date.

   5.2.4 Not Incentive Stock Options. Options granted under the Plan are not
incentive stock options intended to meet the requirements of section 422 of the
Internal Revenue Code of 1986, as amended.

   5.2.5 Exercise. Options shall be exercised by the Participant's delivery of
a written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares. Upon the exercise of any
Option, the Exercise Price shall be payable to the Company in full in cash or
its equivalent. The Board, in its sole discretion, also may permit exercise (a)
by tendering previously acquired Shares having an aggregate Fair Market Value
at the time of exercise equal to the total Exercise Price, or (b) by any other
means which the Board, in its sole discretion, determines to both provide legal
consideration for the Shares, and to be consistent with the purposes of the
Plan. As soon as administratively practicable after receipt of a written
notification of exercise and full payment for the Shares purchased, the Company
shall deliver to the Participant (or the Participant's designated broker),
Share certificates (which may be in book entry form) representing such Shares.

                                      3

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   5.3 Additional Terms of Options.

   5.3.1 Number of Shares. The number of Shares subject to each Option shall be
937. However, if the Exercise Price per Share as calculated in Section 5.3.2 is
equal to 25% of the Fair Market Value per Share on the applicable Grant Date,
beginning October 30, 2001, the number of Shares covered by each Option shall
equal (a), divided by the quantity of (b) minus (c). For purposes of this
Section 5.3.1, (a) shall equal the amount of the Participant's Compensation
deferrals for the Fiscal Quarter which includes the Grant Date, (b) shall equal
the Fair Market Value per Share on the applicable Grant Date, and (c) shall
equal 25% of the Fair Market Value per Share on the applicable Grant Date as
determined in Section 5.3.2. For example, if the Participant's Compensation
deferrals for the Fiscal Quarter are $9,000, the Fair Market Value per Share is
$12.00 and the Exercise Price per Share is $3.00 (25% of $12.00), the number of
shares subject to each Option will equal 1,000 (i.e. $9,000 divided by the
quantity of $12.00 minus $3.00). In no event shall the amount of Shares subject
to the Option with respect to any Fiscal Quarter exceed 2,500 Shares.
Additional amounts will be paid in cash. For example, if the Participant's
Compensation deferrals for the Fiscal Quarter are $17,000, the Fair Market
Value per Share is $8.00 and the Exercise Price per Share is $2.00 (25% of
$8.00), the number of shares subject to each Option will be limited to 2,500
($17,000 divided by the quantity of $8.00 minus $2.00 equals 2,833). The
remaining $2,000 (i.e. $8.00 minus $2.00 multiplied by 333 Shares) will be paid
in cash.

   5.3.2 Exercise Price. The Exercise Price per Share for the Shares subject to
each Option shall equal (a) minus (b), divided by (c). For purposes of this
Section 5.3.2, (a) shall equal the Fair Market Value of such Shares on the
applicable Grant Date, (b) shall equal the amount of the Participant's
Compensation deferrals for the Fiscal Quarter which includes the Grant Date,
and (c) shall equal 937. For example, if the Fair Market Value of the Shares
covered by an Option is $12,181and the Participant's Compensation deferrals for
the Fiscal Quarter are $9,000, the Exercise Price per Share will equal $3.39
(i.e., $12,181minus $9,000, divided by 937). However, in no event shall the
Exercise Price per Share be less than 25% of the Fair Market Value per Share on
the applicable Grant Date. In such an event, the Exercise Price per Share
subject to each Option shall equal 25% of the Fair Market Value per Share on
the applicable Grant Date and the number of Shares subject to the Option shall
be increased in accordance with Section 5.3.1.

   5.3.3 Expiration of Options. Each Option shall terminate upon the first to
occur of the following events:

      (a) The expiration of seven (7) years from the Grant Date; or

      (b) The expiration of three (3) months from the date of the Participant's
   Termination of Service for a reason other than death, Disability or
   Retirement; or

      (c) The expiration of three (3) years from the date of the Participant's
   Termination of Service by reason of Disability or Retirement.

   5.3.4 Death of Participant.  Notwithstanding Section 5.3.3, if a Director
dies prior to the expiration of his or her Option pursuant to Section 5.3.3,
such Option shall terminate three (3) years after the date of his or her death.

                                      6
                                 MISCELLANEOUS

   6.1 No Effect on Service. Neither the establishment or maintenance of the
Plan, nor any action of the Company or the Board, shall be held or construed to
confer upon any individual any right to continue as a member of the Board.

   6.2 Indemnification. Each person who is or shall have been a member of the
Board shall be indemnified and held harmless by the Company against and from
(a) any loss, cost, liability, or expense that may be imposed

                                      4

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upon or reasonably incurred by him or her in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action taken or failure to act
under the Plan or any Option Agreement, and (b) from any and all amounts paid
by him or her in settlement thereof, with the Company's approval, or paid by
him or her in satisfaction of any judgment in any such claim, action, suit, or
proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.
   6.3 Successors. All obligations of the Company under the Plan, with respect
to Options granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business or assets of the Company.

   6.4 Beneficiary Designations. If permitted by the Board, a Participant under
the Plan may name a beneficiary or beneficiaries to whom any vested Option
shall be paid in the event of the Participant's death. Each such designation
shall revoke all prior designations by the Participant and shall be effective
only if given in a form and manner acceptable to the Board. In the absence of
any such designation, any vested Option remaining unexercised and unexpired at
the Participant's death shall be paid to the Participant's estate and, subject
to the terms of the Plan and of the Option Agreement, any unexercised vested
Option may be exercised by the administrator or executor of the Participant's
estate.

   6.5 Nontransferability of Options. No Option granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will, by the laws of descent and distribution, or to the limited
extent provided in Section 6.4. All rights with respect to an Option granted to
a Participant shall be available during his or her lifetime only to the
Participant.

   6.6 No Rights as Stockholder. Except to the limited extent provided in
Sections 6.4 and 6.5, no Participant (nor any beneficiary) shall have any of
the rights or privileges of a stockholder of the Company with respect to any
Shares issuable pursuant to an Option, unless and until certificates
representing such Shares shall have been issued, recorded on the records of the
Company or its transfer agents or registrars, and delivered to the Participant
(or beneficiary).

   6.7 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Option (or exercise thereof), the Company shall have the power
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FUTA obligation) required to be withheld with
respect to such Option (or exercise thereof).

   6.8 Withholding Arrangements. The Board, in its sole discretion and pursuant
to such procedures as it may specify from time to time, may permit or require a
Participant to satisfy all or part of the tax withholding obligations in
connection with an Option by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount required to be withheld. The
amount so withheld shall not exceed the amount determined by using the minimum
federal, state, local or foreign jurisdiction statutory withholding rates
applicable to the Participant with respect to the award on the date that the
amount of tax to be withheld is to be determined. The Fair Market Value of the
Shares to be withheld or delivered shall be determined as of the date that the
taxes are required to be withheld.

                                      5

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                                      7
                     AMENDMENT, TERMINATION, AND DURATION

   7.1 Amendment, Suspension, or Termination.  The Board, in its sole
discretion, may amend or terminate the Plan, at any time and for any reason.
The amendment or termination of the Plan shall not, without the consent of the
Participant, alter or impair any rights or obligations under any Option
theretofore granted to such Participant.
   7.2 Duration of the Plan. The Plan shall commence on the date specified
herein, and subject to Section 7.1 (regarding the Board's right to amend or
terminate the Plan), shall remain in effect thereafter.

                                      8
                              LEGAL CONSTRUCTION

   8.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

   8.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

   8.3 Requirements of Law. The granting of Options and the issuance of Shares
pursuant to the exercise of Options shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

   8.4 Compliance with Rule 16b-3. All transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of the Plan, an Option Agreement or action by the Board fails to
so comply, it shall be deemed null and void, to the extent deemed advisable by
the Board. Notwithstanding any contrary provision of the Plan, if the Board
specifically determines that compliance with Rule 16b-3 no longer is required,
all references in the Plan to Rule 16b-3 shall be null and void.

   8.5 Governing Law. The Plan and all Option Agreements shall be construed in
accordance with and governed by the laws of the State of California.

   8.6 Captions. Captions are provided herein for convenience only, and shall
not serve as a basis for interpretation or construction of the Plan.

                                          EXECUTION

                                          By:    /S/ LAURI M. SHANAHAN
                                             __________________________________
                                                 Senior Vice President,
                                                     General Counsel

Dated: October 30, 2001

                                      6<PAGE>

                                                                   EXHIBIT 10.2
                                                           Amended and Restated
                                                                      Grant No.

                                 THE GAP, INC.
                     NON-QUALIFIED STOCK OPTION AGREEMENT
Amended and Restated October 19, 2001 to reflect the original intent of the
                                    parties

   The Gap, Inc. (the "Company") hereby grants to     (the "Employee"), a stock
option under The Gap, Inc. 1996 Stock Option and Award Plan (the "Plan"), to
purchase shares of common stock of the Company, $0.05 par value ("Shares").
This option is subject to all of the terms and conditions contained in this
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 option are as
follows:

<TABLE>
<C>                              <S>
                Number of Shares
   Purchasable with this Option:

                                 -

                Price per Share:

                                 -

        Date Option was Granted:

                                 -

                  Date Option is
Scheduled to become Exercisable:

                                 -
     Latest Date Option Expires:

                                 -
</TABLE>

   As provided in the Plan and in this Agreement, this option may terminate
before the date written above, including before the option becomes exercisable
or is exercised. For example, if Employee's employment ends before the date
this option becomes exercisable, this option will terminate at the same time as
Employee's employment terminates. See paragraphs 5, 6 and 7 of Appendix A for
further information concerning how changes in employment affect termination of
this option. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE
SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.

   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: ________________________________________________________________________
                                          _____________________________________
                                          Millard S. Drexler
                                          President and Chief Executive Officer

   For good and valuable consideration, the receipt of which is hereby
acknowledged, my signature below indicates that I understand that this option
is subject to all of the terms and conditions of this Agreement (including the
attached Appendix A) as amended and restated to reflect the original intent of
the parties that the options would not be accelerated upon retirement absent
involuntary termination and of the Plan.

                                          EMPLOYEE

Dated: ________________________________________________________________________
                                                 ______________________________

                                          Address: ____________________________

                                                 ______________________________

                                                 ______________________________

                                          Social Security No.: ________________

<PAGE>

                                  APPENDIX A
              TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION
                     Amended and Restated October 19, 2001

   1. Grant of Option. The Company hereby grants to Employee under the Plan, 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, a non-qualified
stock option to purchase, on the terms and conditions set forth in this
Agreement and the Plan, all or any part of the number of Shares set forth on
page 1 of this Agreement. The option granted hereby is not intended to be an
Incentive Stock Option within the meaning of Section 422 of the Code.

   2. Exercise Price. The purchase price per Share (the "Option Price") shall
be equal to the price set forth on page 1 of this Agreement. The Option Price
shall be payable in the legal tender of the United States.

   3. Number of Shares. The number and class of Shares specified in paragraph 1
above, and/or the Option Price, are subject to appropriate adjustment in the
event of changes in the capital stock of the Company by reason of stock
dividends, split-ups or combinations of shares, reclassifications, mergers,
consolidations, reorganizations or liquidations. Subject to any required action
of the stockholders of the Company, if the Company shall be the surviving
corporation in any merger or consolidation, the option granted hereunder (to
the extent that it is still outstanding) shall pertain to and apply to the
securities to which a holder of the same number of Shares that are then subject
to the option would have been entitled. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments
shall be made by the Compensation and Stock Option Committee of the Company's
Board of Directors (the "Committee"), whose determination in that respect shall
be final, binding and conclusive.

   4. Commencement of Exercisability. Except as otherwise provided in this
Agreement, the right to exercise the option awarded by this Agreement shall
accrue as set forth on page 1 of this Agreement, assuming that Employee is
still employed with the Company or an Affiliate through such date(s). If
Employee is not employed on such date(s), the option shall terminate, as set
out in paragraph 7.

   5. Postponement of Exercisability. Notwithstanding paragraph 4 or any other
provision of this Agreement, prior to the date this option is scheduled to
become exercisable, the Committee, in its sole discretion, may determine that
the right to exercise the option awarded by this Agreement shall accrue on a
date later than such date. The Committee shall exercise its power to postpone
the commencement of exercisability only if the Committee, in its sole
discretion, determines that Employee has taken a personal leave of absence (as
defined from time to time by the Committee) since the date of this Agreement.
The duration of the period of postponement shall equal the duration of the
personal leave of absence. If Employee does not return from the personal leave
of absence, the option shall terminate as set out in paragraph 7.

   6. Elimination of Exercisability. Notwithstanding paragraph 4 or any other
provision of this Agreement, prior to the date this option is scheduled to
become exercisable, the Committee, in its sole discretion, may determine that
the right to exercise the option awarded by this Agreement shall never accrue
as to all or part of the Shares specified in paragraph 1 (and as adjusted
pursuant to paragraph 3, if appropriate), in which case the option shall
terminate as to such Shares. The Committee shall exercise such power only if
the Committee, in its sole discretion, determines that (a) Employee's
employment with the Company or an Affiliate has been reduced to less than a
full-time basis, and/or (b) Employee has transferred to a position which, under
the Committee's then existing policy, normally would not qualify Employee to be
granted options under the Plan or to be granted the number of options granted
under this Agreement.

   7. Termination of Option. In the event that Employee's employment with the
Company or an Affiliate terminates for any reason (including Retirement (as
defined in the Plan)) other than death or involuntary termination, this option
shall immediately thereupon terminate, except that Employee shall have up to
the Maximum Term of the Option (as defined in paragraph 15 of this Appendix A)
to exercise any unexercised

<PAGE>

portion of the option which is then exercisable. In the event Employee is
involuntarily terminated, Employee may, within the Maximum Term of the Option,
exercise any unexercised portion of the option (whether or not exercisable). In
the event that Employee shall die while in the employ of the Company or an
Affiliate, any unexercised portion of the option (whether or not exercisable)
may be exercised by Employee's beneficiary or transferee, as hereinafter
provided, for a period of one (1) year after the date of Employee's death or
within ten (10) years from the date of this Agreement, whichever shall first
occur. Notwithstanding the preceding two sentences, in the event that within
one year of the date of this Agreement, Employee's employment with the Company
or an Affiliate terminates for any reason, this option shall immediately
thereupon terminate.

   8. Persons Eligible to Exercise. The option shall be exercisable during
Employee's lifetime only by Employee. The option shall be non-transferable by
Employee other than by a beneficiary designation made in a form and manner
acceptable to the Committee, or by will or the applicable laws of descent and
distribution.

   9. Death of Employee. To the extent exercisable after Employee's death, the
option shall be exercised only by Employee's designated beneficiary or
beneficiaries, or if no beneficiary survives Employee, by the person or persons
entitled to the option under Employee's will, or if Employee shall fail to make
testamentary disposition of the option, his or her legal representative. Any
transferee exercising the option must furnish the Company (a) written notice of
his or her status as transferee, (b) evidence satisfactory to the Company to
establish the validity of the transfer of the option and compliance with any
laws or regulations pertaining to said transfer, and (c) written acceptance of
the terms and conditions of the option as prescribed in this Agreement.

   10. Exercise of Option. The option may be exercised by the person then
entitled to do so as to any Shares which may then be purchased (a) by giving
written notice of exercise to the Company, specifying the number of full Shares
to be purchased and accompanied by full payment of the purchase price thereof
(and the amount of any income tax the Company determines is required to be
withheld by reason of such exercise), and (b) by giving satisfactory assurances
in writing if requested by the Company, signed by the person exercising the
option, that the Shares to be purchased upon such exercise are being purchased
for investment and not with a view to the distribution thereof.

   11. No Rights of Stockholder. Neither Employee nor any person claiming under
or through said Employee shall be or have any of the rights or privileges of a
stockholder of the Company in respect of any of the Shares issuable upon the
exercise of the option, unless and until certificates representing such Shares
shall have been issued, recorded on the records of the Company or its transfer
agents or registrars, and delivered to Employee.

   12. No Right to Continued Employment. Employee understands and agrees that
this Agreement does not impact in any way the right of the Company, or the
Affiliate employing Employee, as the case may be, to terminate or change the
terms of the employment of Employee at any time for any reason whatsoever, with
or without good cause. Employee understands and agrees that his or her
employment is "at-will" and that either the Company or Employee may terminate
Employee's employment at any time and for any reason. 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 Employee.

   13. Addresses for Notices. Any notice to be given to the Company under the
terms of this Agreement shall be addressed to the Company, in care of its Law
Department, at The Gap, Inc., One Harrison, San Francisco, California 94105, or
at such other address as the Company may hereafter designate in writing. Any
notice to be given to Employee shall be addressed to Employee at the address
set forth beneath Employee's signature hereto, or at such other address as
Employee may hereafter designate in writing. Any such notice shall be deemed to
have been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified and deposited, postage and
registry fee prepaid, in a United States post office.

<PAGE>

   14. Non-Transferability of Option. Except as otherwise herein provided, the
option herein granted and the rights and privileges conferred hereby shall not
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of said option, 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, said option and the rights and
privileges conferred hereby shall immediately become null and void.

   15. Maximum Term of Option. Notwithstanding any other provision of this
Agreement, this option is not exercisable after the expiration of ten (10)
years from the date of this Agreement.

   16. Binding Agreement. Subject to the limitation on the transferability of
the option contained herein, this Agreement shall be binding upon and inure to
the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.

   17. Plan Governs. This Agreement is subject to all 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
shall govern. Terms used and not defined in this Agreement shall have the
meaning set forth in the Plan.

   18. Committee Authority. The Committee shall 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. All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
binding upon Employee, the Company and all other interested persons. No member
of the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.

   19. Captions. Captions provided herein are for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.
   20. Modifications to this Agreement. This Agreement constitutes the entire
understanding of the parties on the subjects covered. 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 contract executed by a duly authorized officer of the Company.

   21. Agreement Severable. In the event that any provision in this Agreement
shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.

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