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20. LOSS LEADER: If this contract involves the furnishing of equipment, materials, or <br />supplies then the following statement is incorporated: It is unlawful for any person <br />engaged in business within this state to sell or use any article or product as a "loss <br />leader" as defined in Section 17030 of the Business and Professions Code. (PCC <br />10344(e).) <br />21. GENERATIVE Al DISCLOSURE OBLIGATIONS: <br />a. The following terms are in addition to the defined terms and shall apply to <br />the Contract: <br />1) "Generative Al (GenAl)" means an artificial intelligence system that can <br />generate derived synthetic content, including text, images, video, and audio <br />that emulates the structure and characteristics of the system's training data. <br />(Gov. Code § 11549.64.) <br />b. Contractor shall immediately notify the State in writing if it: (1) intends to <br />provide GenAl as a deliverable to the State; or (2), intends to utilize GenAl, <br />including GenAl from third parties, to complete all or a portion of any <br />deliverable that materially impacts: (i) functionality of a State system, (ii) risk <br />to the State, or (iii) Contract performance. For avoidance of doubt, the term <br />"materially impacts" shall have the meaning set forth in State Administrative <br />Manual (SAM) § 4986.2 Definitions for GenAl. <br />C. Notification shall be provided to the State designee identified in this <br />Contract. <br />d. At the direction of the State, Contractor shall discontinue the provision to the <br />State of any previously unreported GenAl that results in a material impact to <br />the functionality of the System, risk to the State, or Contract performance, as <br />determined by the State. <br />e. If the use of previously undisclosed GenAl is approved by the State, then <br />Contractor will update the Deliverable description, and the Parties will <br />amend the Contract accordingly, which may include incorporating the GenAl <br />Special Provisions into the Contract, at no additional cost to the State. <br />The State, at its sole discretion, may consider Contractor's failure to disclose <br />or discontinue the provision or use of GenAl as described above, to <br />constitute a material breach of Contract when such failure results in a <br />material impact to the functionality of the System, risk to the State, or <br />Contract performance. The State is entitled to seek any and all remedies <br />available to it under law as a result of such breach, including but not limited <br />to termination of the contract. <br />