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From GPLv3 Wiki

A malicious manufactorer makes a router that runs Linux. They build the device, and distribute it to stores without the source code, thus violating the GPL. The stores agree to hold it for 60 days, and then put it on store shelves.

The manufacturer claims that they were going to distribute the source code with the product. However since they failed to do this 60 days ago, they are now immune as per the termination section. Therefore they do not have to distribute the source.