Common use of Gain Sharing Clause in Contracts

Gain Sharing. (a) Within five (5) Business Days of the end of each fiscal month, and within forty-five (45) days of the end of each Program Year and the expiration or termination of the Operation Period, as applicable, The Gap, Inc. shall provide Bank with a statement and accounting of the amount of Net Domestic Sales (each a “Net Domestic Sales Statement”) for the applicable fiscal month or Program Year. Such Net Domestic Sales Statements shall be certified by an officer of The Gap, Inc. to be correct and calculated in accordance with generally accepted accounting principles. Within five (5) Business Days of the end of each fiscal month, and within forty-five (45) days after the end of each Program Year and the expiration or termination of the Operation Period, as applicable, The Gap, Inc. shall provide Bank with a statement and accounting of the aggregate Tender Items for the applicable fiscal month or Program Year. Within (A) fifteen (15) days of the end of each of the first three (3) Program Quarters of each Program Year, and (B) forty-five (45) days of the end of each Program Year, and the expiration or termination of the Operation Period, as applicable, Bank shall provide The Gap, Inc. with a year-to-date statement of the amount of Net Credit Card Sales for the applicable Program Year, which statement shall be certified by an officer of Bank to be correct. (b) Within ten (10) Business Days after Bank’s receipt of the Net Domestic Sales Statement in accordance with Section 3.07(a), Bank shall provide Retailers with a Monthly Gain Sharing Statement, a Quarterly Gain Sharing Statement or an Annual Gain Sharing Statement, as applicable, prepared as a combined single calculation for all of the Credit Card Programs, in accordance with Exhibit D. In the event of the termination of the Operation Period less than one month subsequent to the delivery of such a Gain Sharing Statement, Bank shall provide Retailers with a statement covering such subsequent period. (Such statements, together with Monthly Gain Sharing Statements, Quarterly Gain Sharing Statements and Annual Gain Sharing Statements are referred to herein collectively as “Gain Sharing Statements”). Each Gain Sharing Statement shall be certified by an officer of Bank to be correct and calculated in accordance with Exhibit D. In addition, subject to Applicable Law, Bank shall provide Retailers with at least [***] prior to making any accounting method change used to calculate the values in Exhibit D, and will provide to Retailers an explanation of the accounting method change as well as the projected impact of any such change. If requested by Retailers, Bank will provide a certification that the accounting method change [***]. The foregoing does not include [***]. (c) Coincident with the delivery of each Quarterly Gain Sharing Statement and the Annual Gain Sharing Statement, as applicable (or at such later time as directed in writing by Retailers, provided that such a deferral of payment would not have an adverse impact on Bank) Bank shall pay to The Gap, Inc. for its own account and for the account of its Affiliates, or to such other entity as directed in writing by Retailers, the amount computed as described in this Section 3.07(c) (“Gain Sharing Payment”) if such amount is a positive number. The Gain Sharing Payment for each Program Quarter of each Program Year shall be equal to the following: (i) For the first such Program Quarter, the Gain Sharing Payment will be calculated as follows: [***]. (ii) For the second such Program Quarter, the Gain Sharing Payment will be calculated as follows: [***]. (iii) For the third such Program Quarter, the Gain Sharing Payment will be calculated as follows: [***]. (iv) For the fourth such Program Quarter, the Gain Sharing Payment will be calculated as follows: [***]. (v) [***]. All of the quantities contemplated in clauses (i) through (iv) above shall be computed in accordance with Exhibit D. In no event shall any Retailer be obligated to make any payment to Bank under this Section 3.07 except as provided in Section 3.07(f) in the case of an overpayment. (d) The other Credit Card Program Agreements will contain gain sharing provisions similar to those contained in this Section 3.07. Retailers acknowledge that, for any Program Quarter, Bank will pay only one combined Gain Sharing Payment to The Gap, Inc. based on the consolidated results under all Credit Card Programs that are in effect during all or part of such Program Quarter, and that the payment of such combined “Gain Sharing Payment” shall constitute the payment of the “Gain Sharing Payment” under each of the Credit Card Program Agreements. Notwithstanding the foregoing, in the event that a Credit Card Program shall have been terminated during any Program Quarter, the Gain Sharing Payment, if any, for such Program Quarter shall be prorated as to the terminated Credit Card Program based on the number of actual days during such Program Quarter during which such Credit Card Program was in effect. From and after a Divestiture, the Affiliates of The Gap, Inc. that are the subject of the Divestiture shall no longer be taken into account for purposes of calculating the Gain Sharing Payment, but the Non-Divested Retailers shall continue to be taken into account for such purposes. (e) Upon request from The Gap, Inc. and at The Gap, Inc.’s sole cost and expense, Bank shall cause Bank’s outside accounting firm to review and deliver a certificate to The Gap, Inc. to the effect that the Gain Sharing Statement was calculated accurately and in accordance with Exhibit D. The rights set forth herein shall be in addition to the audit rights of the Retailers set forth in Section 9.02(g). (f) If any Gain Sharing Payment is a negative amount, Retailers shall pay to Bank the lesser of (1) the absolute value of any such amount, or (2) the amounts already paid to Retailers pursuant to Section 3.07(c) for the Program Year to date, within 15 days of Retailers’ receipt of the Gain Sharing Statement; provided, that if Retailers do not timely make such payment, Bank shall have the right to set off the applicable amount from settlement amounts otherwise due to Retailers under section 5.01. In addition, if, within forty-five (45) days after the end of any of the first three Program Quarters or one hundred twenty (120) days after the applicable Program Year end, Bank or Retailers discover that (i) any Gain Sharing Statement provided during such Program Quarter or Program Year, as applicable, contains any material errors, or (ii) as a result of the quarterly payments being made to Retailers pursuant to Section 3.07(c), Bank either over- or under-paid Retailers and, in either case, such discovery indicates that the amount of the Gain Sharing Payment (or the lack thereof) for such Program Quarter or Program Year, as applicable, was incorrect, then Bank and Retailers agree in good faith to recalculate the Gain Sharing Payment, including to correct any such errors. Bank shall pay to The Gap, Inc. any shortfall determined in the Gain Sharing Payment upon such recalculation, within 15 days of determining the amount of the shortfall and The Gap, Inc. shall refund to Bank any overpayment of the Gain Sharing payment upon such recalculation within 15 days of determining the amount of the overpayment. (g) The amount of credit reserves Bank may take into account in determining the Program P&L (i.e., that may be included as an expense of Bank) as of any date and for any Program Year (or portion thereof) shall be [***]: