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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. Cade § 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 /> f. 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 />