Gap (GPS)

Item 1.01. Entry into a Material Definitive Agreement

At the Company’s annual meeting of the shareholders on May 10, 2005, the shareholders of the Company approved the Executive Management Incentive Compensation Award Plan (the “Executive MICAP”), as adopted by the Company’s Board of Directors on January 25, 2005. The Executive MICAP amends and restates the Executive Management Incentive Cash Award Plan approved by the shareholders at the 2004 annual meeting of the shareholders. The Executive MICAP was submitted to the shareholders for approval in order for awards granted under the Executive MICAP to qualify for tax deductibility pursuant to Section 162(m) of the Internal Revenue Code. A copy of the Executive MICAP is attached hereto as Exhibit 10.1.

Item 1.01 Entry into a Material Definitive Agreement

On May 6, 2005, we entered into separate $125 million 3-Year Letter of Credit Agreements and $100 million 364-Day Letter of Credit Agreements (collectively, the “New LC Agreements”) with each of Citibank, N.A., Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank. The New LC Agreements replace the existing Letter of Credit Agreements, dated as of June 23, 2003, among the Company and the LC Subsidiaries named therein on the one hand and each of Citibank, N.A., Bank of America, N.A., HSBC Bank USA, National Association and JPMorgan Chase Bank on the other hand (as amended, the “Existing LC Agreements”), respectively. All letters of credit outstanding under the Existing LC Agreements are now deemed and will be treated as if issued under the New LC Agreements.

Unlike the Existing LC Agreements, the New LC Agreements are unsecured. However, the New LC Agreements contain financial and other covenants substantially similar to those included in our $750 million five-year unsecured revolving credit facility dated August 30, 2004, including, but not limited to, limitations on liens and subsidiary debt as well as the maintenance of two financial ratios—a fixed charge coverage ratio and a leverage ratio. A violation of these covenants could result in a default under the New LC Agreements, which would permit the participating banks to terminate our ability to request letters of credit and require the immediate posting of cash collateral in support of any outstanding letters of credit. In addition, such a default could, under certain circumstances, permit the holders of our outstanding unsecured debt to accelerate payment of such obligations.

Item 1.01 Entry into a Material Definitive Agreement

On April 15, 2005, The Gap, Inc. (the “Company”) entered into an agreement with Cynthia Harriss as President of the Company’s Gap brand. Under the agreement, the Company will pay Ms. Harriss an annual salary of $750,000, with an annual bonus potential of 0-150% of Ms. Harriss’ base salary. The agreement also provides for certain long-term incentive awards. The agreement is attached hereto as Exhibit 10.1 under Item 9.01.

Item 1.01. Entry into a Material Definitive Agreement

On April 13, 2005, The Gap, Inc. (the “Company”) entered into an agreement with Anne B. Gust, the Company’s Executive Vice President, Chief Administrative Officer and Chief Compliance Officer, regarding her separation from the Company. A copy of this agreement is attached hereto as Exhibit 10.1.

Item 1.01. Entry into a Material Definitive Agreement

Determination of Cash Bonuses and Base Salaries

On March 11, 2005, the Compensation and Management Development Committee of the Board of Directors of Gap Inc. (the “Committee”) determined the annual base salary and cash bonus payable to each executive officer, including awards payable under the Executive Management Incentive Cash Award Plan for performance during the 2004 fiscal year. A summary of the cash bonus and annual salary payable to Donald G. Fisher and each of the named executive officers is attached as Exhibit 10.1.

Grant of Stock Options to Paul Pressler

On March 11, 2005, the Committee granted to Paul Pressler options to purchase 500,000 shares of common stock of Gap Inc. at an exercise price of $22.42 per share, the fair market value of one share of Gap Inc. common stock on the date of grant. These options vest in four equal installments beginning on the first anniversary of the date of grant, assuming continued employment with Gap Inc.

On March 11, 2005, the Committee also granted to Paul Pressler options to purchase 1,000,000 shares of common stock of Gap Inc. at an exercise price of $22.42 per share, the fair market value of one share of Gap Inc. common stock on the date of grant. Fifty-percent of these options vest on March 11, 2010, assuming continued employment with Gap Inc. and subject to the attainment of a specified aggregate earnings per share growth target for the period beginning fiscal year 2005 and ending fiscal year 2009. The remaining fifty-percent vest on March 11, 2011, assuming continued employment with Gap Inc. and subject to the attainment of a specified aggregate earnings per share growth target for the period beginning fiscal year 2005 and ending fiscal year 2010.

All options granted to Paul Pressler will be issued pursuant to the Company’s 1996 Stock Option and Award Plan.

Adoption of Performance Goals for Paul Pressler for Fiscal 2005 Cash and Performance Unit Awards

On March 11, 2005, the Committee also named Paul Pressler as a participant eligible to earn cash and performance unit awards under the Executive Management Incentive Compensation Award Plan (“Executive MICAP”), as amended January 25, 2005 (subject to shareholder approval), based on performance during the 2005 fiscal year and established performance goals and target award percentages for Mr. Pressler.

The cash award payable under Executive MICAP to Mr. Pressler will be based on the financial performance of Gap Inc. The financial performance of Gap Inc. shall be based on the achievement of the following objective performance goals (each as defined in the Executive MICAP): 70% depends on the Earnings of Gap Inc.; 20% depends on the Economic Profit of Gap Inc.; and 10% depends on the Free Cash Flow of Gap Inc. The base target award percentage

(as a percentage of base salary) for the cash award for Mr. Pressler is as set forth below. The actual cash award payable under the Executive MICAP to Mr. Pressler can range from 0 to 250% of his base salary depending upon the extent to which the financial performance of Gap Inc. meets, exceeds or is below target.

The award payable in performance units, issued pursuant to the Company’s 1996 Stock Option and Award Plan, to Mr. Pressler under Executive MICAP will be based 100% on year-over-year growth in Earnings Per Share of Gap Inc. (as defined in the Executive MICAP). The base target award percentage (as a percentage of base salary) for the performance unit award for Mr. Pressler is as set forth below. The actual performance unit award payable under the Executive MICAP can have a value that ranges from 0% to 100% of Mr. Pressler’s base salary depending upon the extent to which the growth in Earnings Per Share for Gap Inc. meets, exceeds or is below target. In determining the number of performance units awarded to Mr. Pressler, the value of each performance unit shall equal the average of the high and low prices at which a share of the Company’s common stock traded on the date of award, rounded down to the nearest whole unit. Each performance unit award will be granted pursuant to the Gap Inc. Stock Award Agreement and will be subject to vesting as determined by the Committee on the date of award.

Gap Inc. Stock Award Agreement

On March 11, 2005, the Committee modified the form of the Gap Inc. Stock Award Agreement pursuant to which the Company shall grant performance units issued under the Company’s 1996 Stock Option and Award Plan. Under the agreement, the Company shall designate the applicable vesting date for each performance unit and will issue one share of common stock of the Company upon vesting of each performance unit. A copy of the modified form of the Gap Inc. Stock Award Agreement is attached hereto as Exhibit 10.2.

Item 1.01. Entry into a Material Definitive Agreement

Adoption of the Executive Management Incentive Compensation Award Plan

On January 25, 2005, the Board of Directors, upon the recommendation of its Compensation and Management Development Committee (the “Compensation Committee”), adopted the Executive Management Incentive Compensation Award Plan (the “Executive MICAP”). The Executive MICAP amends and restates the Executive Management Incentive Cash Award Plan approved by the shareholders at the 2004 annual meeting of shareholders. Changes to the Executive MICAP include the addition of Earnings Per Share and other new performance goals that may be used in making awards and the designation of stock-based and stock denominated units as acceptable forms of tender with which awards may be paid. The Executive MICAP will be submitted to the shareholders for approval at the 2005 annual meeting of shareholders in order for awards granted under the Executive MICAP to qualify for tax deductibility pursuant to Section 162(m) of the Internal Revenue Code. A copy of the Executive MICAP is attached hereto as Exhibit 10.1.

Adoption of Performance Goals for Fiscal 2005 Cash and Performance Unit Awards

On January 24 and 25, 2005, the Compensation Committee named those executive officers set forth below as participants eligible to earn cash and performance unit awards under the Executive MICAP based on performance during the 2005 fiscal year and established performance goals and target award percentages for each participant.

Cash Awards. The cash award payable under Executive MICAP to the named participants will be based on the financial performance of Gap Inc. and/or a division of the company. The weighting between the Gap Inc. and division financial performance goals as well as the base target award percentage (as a percentage of base salary) for cash awards for each named participant is as set forth below. The financial performance of a division or Gap Inc., as applicable, shall be based on the achievement of the following objective performance goals (each as defined in the Executive MICAP): 70% depends on the Earnings of the division or Gap Inc.; 20% depends on the Economic Profit of the division or Gap Inc.; and 10% depends on the Free Cash Flow of the division or Gap Inc. Actual cash awards payable under the Executive MICAP can range from 0 to 150% (0 to 100% for Donald G. Fisher) of a participant’s base salary depending upon the extent to which the financial performance of a division and/or Gap Inc. meets, exceeds or is below target.

Performance Unit Awards. Awards payable in performance units, issued pursuant to the Company’s 1996 Stock Option and Award Plan, to the named participants under Executive MICAP will be based 100% on year-over-year growth in Earnings Per Share of Gap Inc. (as defined in the Executive MICAP). The base target award percentage (as a percentage of base salary) for performance unit awards for each named participant is as set forth below. Actual performance unit awards payable under the Executive MICAP can have a value that ranges from 0 to 60% of a participant’s base salary depending upon the extent to which the growth in Earnings Per Share for Gap Inc. meets, exceeds or is below target. In determining the number of performance units awarded to each participant, the value of each performance unit shall equal the

average of the high and low prices at which a share of the Company’s common stock traded on the date of award, rounded down to the nearest whole unit. Each performance unit award will be granted pursuant to the Gap Inc. Stock Award Agreement (as described below) and will be subject to vesting as determined by the Compensation Committee on the date of award.

Gap Inc. Stock Award Agreement

On January 24, 2005, the Compensation Committee approved the form of the Gap Inc. Stock Award Agreement pursuant to which the Company shall grant performance units issued under the Company’s 1996 Stock Option and Award Plan. Under the agreement, the Company shall designate the applicable vesting date for each performance unit and will issue one share of common stock of the Company upon vesting of each performance unit. A copy of the form of the Gap Inc. Stock Award Agreement is attached hereto as Exhibit 10.2.

Automatic Grants of Stock Options to Non-Employee Directors

On January 25, 2005, the Board of Directors, pursuant to the authority set forth in Section 9.1.3 of the Company’s 1996 Stock Option and Award Plan changed the annual automatic stock option grant made to Non-employee Directors pursuant to Section 9.1.2 from an option to purchase 3,750 shares to an option to purchase 7,500 shares.

Item 1.01. Entry into a Material Definitive Agreement

On January 6, 2005, The Gap, Inc. (the “Company”) suspended the use of the Nonemployee Director Deferred Compensation Plan (the “Plan”) and any further deferrals or grants of stock options under the Plan.