This excerpt taken from the GPS 10-Q filed Jun 9, 2009.
25.4 Failed Acceptance Testing
As to an individual Statement of Work, if Gap makes a good faith determination that a tested component and/or module has not successfully completed an Acceptance Test, Gap shall promptly notify Supplier in writing of such failure (hereinafter Notice of Failure), specifying with as much detail as possible the manner in which the component and/or module failed to pass an applicable Acceptance Test. Supplier shall immediately commence all reasonable efforts to complete, as quickly as possible, such necessary corrections, repairs and modifications to the applicable component and/or module as will permit the component and/or module to be ready for retesting. Supplier shall notify Gap when such corrections have been completed, and the Acceptance Tests shall begin again. If, after applicable Acceptance Tests are completed for a third time, Gap makes a good faith determination that the tested component and/or module again fails to pass the applicable Acceptance Test, Gap shall promptly notify Supplier in writing specifying in the Notice of Failure its election either to: (1) afford Supplier the opportunity to repeat the correction and modification process as set forth above, or (2) depending on the nature and extent of the failure, and the parts of the Statement of Work impacted by such failure, in Gaps sole judgment, (a) terminate that portion of the tested component and/or module associated with the Statement of Work in accordance with Section 33.2 (Termination for Cause by Gap) as a non-curable default, or (b) if the failure to pass the applicable Acceptance Test materially impacts the function to Gap of the Statement of Work as a whole, terminate the entire Statement of Work. The foregoing correct and modify procedure shall be repeated until Supplier, based on Gaps good faith determination, passes the applicable Acceptance Test, Gap elects to terminate the tested component and/or module or Statement of Work as set forth above, or the Parties agree otherwise. In the event of a termination under this Section 25.4 (Failed Acceptance Testing), Supplier shall credit to Gap, within * of written notice of termination, *. In the event Gap retains any portion of a tested component and/or module associated with the
Gap Confidential and Proprietary Information
Statement of Work, Gap shall pay Supplier for such retained tested component and/or module. In the event Gap exercises its remedies under this Section 25.4 (Failed Acceptance Tests), such remedy shall be Gaps sole and exclusive remedy for termination and damages for the failure to meet the Acceptance Tests as to such terminated tested component and/or module and/or Statement of Work (as applicable).