DRS Draft Sole Source Contract_26-05 .pdf

State of Washington Department of Retirement Systems

DRAFT Sole Source Contract No. 26-05

IBM Corporation

Date October 1, 2026

Page 2 of 20 Draft Sole Source Contract 26-05

Table of Contents

Recitals 5

Agreement 5

1. Term

2. Sole Source

3. Scope – Included Services and Price

3.1 Sole Source Contract Scope 5

3.2 State’s Ability to Modify Scope of Contract 6

3.3 Price Ceiling 6

4. Contractor Representations and Warranties

4.1 Qualified to do Business 6

4.2 Suspension & Debarment 6

4.3 Wage Violations 6

4.4 Access To Data 6

4.5 Nondiscrimination 7

4.6 Procurement Ethics & Prohibition on Gifts 7

4.7 Statewide Payee Desk 7

4.8 Advertising and Endorsement 7

5. Performance of Services

5.1 Performance Requirements 7

5.2 Technology Equipment and Access 7

6. Invoicing & Payment

6.1 Contractor Invoice 8

6.2 Payment 8

6.3 No Additional Charges 8

6.6 Taxes/Fees 8

7. Contract Management

7.1 Contract Administration & Notices 9

7.2 Contractor Customer Service Representative 9

7.3 Legal Notices 9

8. Records Retention & Audits

8.1 Records Retention 10

8.2 Audit 10

8.3 Overpayment of Purchases 10

9. Insurance

9.1 Required Insurance 10

9.2 Workers Compensation 10

10. Claims

10.1 Assumption of Risks; Claims Between the Parties 11

Page 3 of 20 Draft Sole Source Contract 26-05

11. Dispute Resolution

12. Suspension & Termination; Remedies

12.1 Suspension & Termination for Default 11

12.2 Default 11

12.3 Remedies for Default 11

12.4 Governmental Termination 12

12.5 Termination Procedure 12

13. General Provisions

13.1 Time Is of the Essence 12

13.2 Compliance with Law 12

13.3 Integrated Agreement 13

13.4 Amendment or Modification 13

13.5 Authority 13

13.6 No Agency 13

13.7 Assignments 13

13.8 Binding Effect; Successors & Assigns 14

13.9 Public Information 14

13.10 Assignment of Antitrust Rights Regarding Purchased Services 14

13.11 Force Majeure 14

13.13 Severability 15

13.14 Waiver 15

13.15 Survival 15

13.16 Governing Law 15

13.17 Jurisdiction & Venue 15

13.18 Attorneys’ Fees 15

13.19 Fair Construction & Interpretation 15

13.20 Further Assurances 16

13.21 Exhibits 16

13.22 Captions & Headings 16

13.23 Electronic Signatures 16

13.24 Counterparts 16

Exhibit A Entire X Products 17

Exhibit C - Insurance Requirements 18

1. Insurance Obligation

1.1 Commercial General Liability Insurance 18

1.2 Professional Errors & Omissions Insurance 18

1.3 Crime Insurance 18

1.4 Workers’ Compensation Insurance 18

1.5 Employer’s Liability (Stop Gap) Insurance 19

2. Insurance Carrier Rating

3. Additional Insured

4. Certificate of Insurance

5. Primary Coverage

6. Subcontractors

Page 4 of 20 Draft Sole Source Contract 26-05

7. Waiver of Subrogation

8. Notice of Change or Cancellation

9. Extended Reporting Period

Page 5 of 20 Draft Sole Source Contract 26-05

Draft Sole Source Contract No. 26-05

International Business Machines Corporation

This Draft Sole Source Contract (“Contract”) is made and entered into by and between the State of Washington acting by and through the Washington State Department of Retirement Systems, a Washington State governmental agency (“DRS”) and International Business Machines Corporation.

(“Contractor”) and is dated as of October 1, 2026 and effective as provided in Section 2 (the “Effective Date”).

Recitals A. Under the provisions of RCW 39.36.140, this sole source contract award must be approved by the Washington State Department of Enterprise Services (DES). No work will commence, or payment be made under the terms of this Contract until it is approved by DES. In the event DES does not approve, the Contract will not be executed.

B. DRS has determined that entering into this Draft Sole Source Contract will meet the identified needs and be in the best interest of the State of Washington.

Agreement Now Therefore, in consideration of the mutual promises, covenants, and conditions set forth herein, the parties hereto hereby agree as follows:

1. Term

The term of this Contract will commence on the later of October 1, 2026 or the Effective Date and end, September 30, 2028; subject to mutual agreement, the term of the Contract may be extended for up to 1 additional year, provided that any such extension shall require a new Contractor quotation and a corresponding purchase order at Contractor’s then-current prices.

2. Sole Source

The provisions of Chapter 39.26 RCW require the agency to file this sole source contract with the Department of Enterprise Services (DES) for approval. The effective date of this Contract is upon DES approval of the Contract, the fifteen (15th) working day after it is filed with DES, or as agreed between the parties, whichever is later. No work will commence, or payment be made under the terms of this contract until it is approved by DES. In the event DES does not approve, the contract will not be executed.

3. Scope – Included Services and Price

3.1 Sole Source Contract Scope

Pursuant to this Contract, Contractor is authorized to provide only those Products identified in Exhibit A –Quotation for the prices set forth in Exhibit B – Prices for Services. The applicable Quotation exclusively

Page 6 of 20 Draft Sole Source Contract 26-05 defines the quantities, start and end dates, service levels, support, and other obligations associated with the Products. The definition for IBM Agreement can be found in Section 13.3 herein.

3.2 State’s Ability to Modify Scope of Contract

Notwithstanding the foregoing, this Section shall not apply to Products already ordered. Products are ordered by product, quantity, and license metric under the Quotation, are billed upfront for the full subscription term, and are not subject to modification, reduction, or return during that term.

3.3 Price Ceiling

Although Contractor may offer lower prices to DRS, during the initial twenty four (24) month subscription term, Contractor agrees to provide the Products at no greater than the prices set forth in Exhibit B - Prices for Services.

4. Contractor Representations and Warranties

Contractor makes each of the following representations and warranties as of the effective date of this Contract and at the time of performance pursuant to this Contract. If, at the time of performance, Contractor cannot make such representations and warranties, Contractor shall not perform and shall, within three (3) business days notify DRS, in writing, of such breach. For clarity, the warranties applicable to the Products are exclusively those set forth in the IBM Agreement.

4.1 Qualified to do Business

Contractor represents and warrants that it is in good standing and qualified to do business in the State of Washington, that it is registered with the Washington State Department of Revenue and the Washington Secretary of State, that it possesses and shall keep current all required licenses and/or approvals, and that it is current, in full compliance, and has paid all applicable taxes owed to the State of Washington.

4.2 Suspension & Debarment

Contractor represents and warrants that neither it nor its principals or affiliates presently are debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in any governmental Contract by any governmental department or agency within the United States.

4.3 Wage Violations

Contractor represents and warrants that neither it nor its principals or affiliates presently are determined by a final order of the Washington Department of Labor and Industries or a Court, to be in willful violation of state wage laws.

4.4 Access To Data

Upon request and with reasonable and sufficient notice, and subject to applicable confidentiality obligations, the CONTRACTOR shall provide access to data generated under this contract to DRS, the Joint Legislative Audit and Review Committee, and the State Auditor at no additional cost, solely to the

Page 7 of 20 Draft Sole Source Contract 26-05 extent such data constitutes DRS Content and such access is available through the standard functionality or procedures specified in the IBM Agreement. This Section does not require Contractor to develop or provide additional functionality, reports, interfaces, tools, access methods, or data formats.

4.5 Nondiscrimination

a. Nondiscrimination Requirement. During the term of this Contract, Contractor, including any subcontractor, shall not discriminate on the basis enumerated at RCW 49.60.530(3). In addition, Contractor, including any subcontractor, shall give written notice of this nondiscrimination requirement to any labor organizations with which Contractor, or subcontractor, has a collective bargaining or other agreement.

b. Obligation to Cooperate. Contractor, including any subcontractor, shall cooperate and comply with any Washington state agency investigation regarding any allegation that Contractor, including any subcontractor, has engaged in discrimination prohibited by this Contract pursuant to RCW 49.60.530(3).

4.6 Procurement Ethics & Prohibition on Gifts

Contractor represents and warrants that it complies fully with all applicable procurement ethics restrictions including, but not limited to, restrictions against Contractor providing gifts or anything of economic value, directly or indirectly, to State employees.

4.7 Statewide Payee Desk

Contractor represents that it is registered with the Statewide Payee Desk, of which registration is a condition for payment.

4.8 Advertising and Endorsement

Contractor understands and acknowledges that neither DRS nor the State of Washington are endorsing Contractor’s services or suggesting that such services are the best or only solution to their needs.

Accordingly, Contractor represents and warrants that it shall make no reference to DRS or the State of Washington in any promotional material without the prior written consent of DRS.

5. Performance of Services

5.1 Performance Requirements

Contractor must ensure that its services are performed as required by this Contract, including, without limitation, the requirements set forth in Exhibit A – Quotation ; Provided, however, that the features, functions, availability, service levels, support, warranties, and performance obligations applicable to IBM Products are exclusively those set forth in the IBM Agreement.

5.2 Technology Equipment and Access

Contractor is responsible for providing all equipment and access required to perform services as defined in this contract, including but not limited to video conferencing ability using webinar platforms such as Microsoft Teams and Zoom. This Section is not applicable to the delivery of IBM software or Cloud Services products.

https://app.leg.wa.gov/RCW/default.aspx?cite=49.60

Page 8 of 20 Draft Sole Source Contract 26-05

6. Invoicing & Payment

6.1 Contractor Invoice

Contractor shall submit to DRS’ designated invoicing contact properly itemized invoices. Such invoices shall itemize the following:

a) Contract No 26-05

b) Contractor name, address, telephone number, and email address for billing issues (i.e., Contractor Customer Service Representative);

c) Contractor’s Federal Tax Identification Number;

d) Description of Services and Deliverables provided;

e) Net invoice Price for each Service or Deliverables;

f) Applicable taxes;

g) Total invoice amount; and

h) Payment terms, including any available prompt payment discounts.

Contractor’s invoices for payment shall reflect accurate Contract prices. Invoices will not be processed for payment until receipt of a complete invoice as specified herein. DRS shall have no obligation to pay invoiced amounts that it disputes in good faith based on a material failure of the Products to comply with this Contract, provided that DRS promptly gives Contractor written notice specifying the basis for the dispute and timely pays all undisputed amounts. DRS’ payment obligations for Products, including prepaid subscription charges, shall be governed by the IBM Agreement and shall not be contingent upon Contractor’s performance of obligations unrelated to the applicable Products. Invoices should be directed to the DRS Contract Manager and the DRS Accounts Payable Mailbox (drs.accountspayable@drs.wa.gov).

6.2 Payment

Payment is the sole responsibility of, and will be made by, DRS. Payment is due within thirty (30) days of invoice. If DRS fails to make timely payment(s), Contractor may invoice DRS in the amount of one percent (1%) per month on the amount overdue or a minimum of $1. Payment will not be considered late if a check or warrant is mailed within the time specified.

6.3 No Additional Charges

Unless otherwise specified herein, in the IBM Agreement, or in the Quotation, Contractor shall not include or impose any additional charges including, but not limited to, charges for shipping, handling, or payment processing. For clarity, this Section does not prohibit applicable taxes, usage or overage charges.

6.6 Taxes/Fees

DRS shall pay all applicable sales, use and similar transaction taxes imposed by any authority resulting from DRS acquisition in accordance with the IBM Agreement and Contractor shall collect and remit such taxes as required by applicable law. If DRS provides Contractor a valid certification of exemption from tax, then Contractor shall not invoice such tax.

Page 9 of 20 Draft Sole Source Contract 26-05

7. Contract Management

7.1 Contract Administration & Notices

Except for legal notices, the parties hereby designate the following contract manager as the respective single points of contact for purposes of contract administration for this Contract. DRS’ contract manager shall provide contract administrative oversight. Contractor’s contract manager shall be Contractor’s principal contact for invoice/billing activities under this Contract. The parties may change contract managers by written notice as set forth below.

Any notices required or desired shall be in writing and sent by U.S. mail, postage prepaid, or sent via email, and shall be sent to the respective addressee at the respective address or email address set forth below or to such other address or email address as the parties may specify in writing:

Contract Manager for DRS: Contract Manager for Contractor:

Name: Lisa Horne Name: Hayden Bily Address: PO Box 48380 Olympia, WA 98504 Address: 1999 Broadway Floor 42 Denver, CO 80202 Telephone Number: 360-790-3385 Telephone: 303-824-2317 Email: Lisa.Horne@drs.wa.gov Email: hayden.bily@ibm.com

Notices shall be deemed effective upon the earlier of receipt, if mailed, or, if emailed, upon transmission to the designated email address of said addressee.

7.2 Contractor Customer Service Representative

Contractor shall designate a customer service representative (and inform DRS of the same) who shall be responsible for addressing DRS’ issues pertaining to this Contract.

7.3 Legal Notices

Any legal notices required or desired shall be in writing and delivered by U.S. certified mail, return receipt requested, postage prepaid, or sent via email, and shall be sent to the respective addressee at the respective address or email address set forth below or to such other address or email address as the parties may specify in writing:

Legal Notice for DRS: Legal Notice for Contractor:

Name Wendy Kancianich Name International Business Machines Address PO Box 48380 Olympia, WA 98504 Address 1 New Orchard Road

Armonk, NY 10504-1722 Attention: Regional Counsel

Telephone Number 360-664-7231 Telephone Email wendy.kancianich@drs.wa.gov Email

Notices shall be deemed effective upon the earlier of receipt when delivered, or, if mailed, upon return receipt, or, if emailed, upon transmission to the designated email address of said addressee.

Page 10 of 20 Draft Sole Source Contract 26-05

8. Records Retention & Audits

8.1 Records Retention

Contractor shall maintain books, records, documents, and other evidence pertaining to this Contract to the extent and in such detail as shall adequately reflect performance and administration of payments and fees. Contractor shall retain such records for a period of six (6) years following expiration or termination of this Contract or final payment, whichever is later; Provided, however, that if any litigation, claim, or audit is commenced prior to the expiration of this period, such period shall extend until all such litigation, claims, or audits have been resolved.

8.2 Audit

DRS reserves the right to audit, or have a designated third-party audit, applicable records to ensure that Contractor has properly invoiced DRS. Accordingly, Contractor shall permit DRS and any other duly authorized agent of a governmental agency, to audit, inspect, examine, copy and/or transcribe Contractor’s books, documents, papers, and records directly pertinent to this Contract for the purpose of making audits, examinations, excerpts, and transcriptions. This right shall survive for a period of six

(6) years following expiration or termination of this Contract or final payment, whichever is later;

Provided, however, that if any litigation, claim, or audit is commenced prior to the expiration of this period, such period shall extend until all such litigation, claims, or audits have been resolved. Such audit shall be conducted during normal business hours in a manner that is not disruptive to Contractor’s normal business activities, upon thirty (30) days’ prior written notice, and no more than one time in a 12-month period. This Section applies only to records supporting amounts invoiced to DRS under this Contract and shall not extend to Contractor’s cost, pricing, or other internal financial records.

8.3 Overpayment of Purchases

Without limiting any other remedy available to DRS, Contractor shall reimburse DRS for any overpayments inconsistent with the terms of this Contract, at a rate of 100% of such overpayments, found as a result of the examination of the Contractor’s records.

9. Insurance

9.1 Required Insurance

During the Term of this Contract, Contractor, at its expense, shall maintain in full force and effect the insurance coverages set forth in Exhibit C– Insurance Requirements.

9.2 Workers Compensation

Contractor shall comply with applicable workers’ compensation statutes and regulations (e.g., RCW Title 51, Industrial Insurance). If Contractor fails to provide industrial insurance coverage or fails to pay premiums or penalties on behalf of its employees as may be required by law, DRS may terminate this Contract. This provision does not waive any of the Washington State Department of Labor and Industries (L&I) rights to collect from Contractor. In addition, Contractor waives its immunity under RCW Title 51 to the extent it is required to indemnify, defend, and hold harmless the State of Washington and its agencies, officials, agents, or employees.

Page 11 of 20 Draft Sole Source Contract 26-05

10. Claims

10.1 Assumption of Risks; Claims Between the Parties

Contractor assumes sole responsibility and all risks of personal injury or property damage to itself and its employees and agents in connection with Contractor’s operations under this Contract, except to the extent caused by the negligence or willful misconduct of DRS or its employees or agents. DRS has made no representations regarding any factor affecting Contractor’s risks. Contractor shall pay for all damage to any DRS’ property to the extent caused by the negligence or willful misconduct of Contractor or its agents.

11. Dispute Resolution

The parties shall cooperate to resolve any dispute pertaining to this Contract efficiently, as timely as practicable, and at the lowest possible level with authority to resolve such dispute. If, however, a dispute persists and cannot be resolved, it may be escalated within each organization. In such situation, upon notice by either party, each party, within five (5) business days shall reduce its description of the dispute to writing and deliver it to the other party. The receiving party then shall have three (3) business days to review and respond in writing. In the event that the parties cannot then agree on a resolution of the dispute, the parties shall schedule a conference between the respective senior manager of each organization to attempt to resolve the dispute. In the event the parties cannot agree, either party may resort to court to resolve the dispute.

12. Suspension & Termination; Remedies

12.1 Suspension & Termination for Default

DRS may suspend Contractor’s operations under this Contract only to the extent reasonably necessary to address a material default, after providing Contractor written notice and a reasonable opportunity to comply in accordance with the IBM Agreement. Suspension shall continue until the default is remedied to DRS’ reasonable satisfaction; Provided, however, that, if after , Contractor remains in default, DRS may terminate Contractor’s rights under this Contract.

12.2 Default

Each of the following events shall constitute default of this Contract by Contractor:

a) Contractor fails to perform or comply with any of the material terms or conditions of this Contract;

b) Contractor materially breaches any representation or warranty provided herein; or

c) Contractor enter into proceedings relating to bankruptcy, whether voluntary or involuntary.

12.3 Remedies for Default

a) DRS’ rights to suspend and terminate Contractor’s rights under this Contract are in addition to all other available remedies.

b) In the event of termination for default, DRS may exercise any remedy provided by law including, without limitation, the right to procure replacement services. In such event, Contractor shall be liable to DRS for damages as authorized by law including, but not limited to, any price difference between the Contract price and the replacement or cover price as well as any administrative

Page 12 of 20 Draft Sole Source Contract 26-05 and/or transaction costs directly related to such replacement procurement – e.g., the cost of the competitive procurement, subject to all applicable limitations of and exclusions from liability set forth in the IBM Agreement.

12.4 Governmental Termination

a) Termination for Withdrawal of Authority. DRS may suspend or terminate this Contract if, during the term hereof, DRS’ procurement authority is withdrawn, reduced, or limited such that DRS, in its judgment, would lack authority to enter into this Contract; Provided, however, that such suspension or termination for withdrawal of authority shall only be effective upon twenty (20) days prior written notice; and Provided further, that such suspension or termination for withdrawal of authority shall not relieve DRS from payment for products or services already ordered as of the effective date of such notice. Any order in effect as of such suspension or termination shall remain in effect through its applicable subscription term and shall continue to be governed by the IBM Agreement, unless otherwise terminated in accordance with the IBM Agreement. Except as stated in this provision, in the event of such suspension or termination for withdrawal of authority, DRS shall not have any obligation or liability to Contractor.

b) Termination for Public Convenience. DRS, for public convenience, may terminate this Contract;

Provided, however, that such termination for public convenience must, in DRS’ judgment, be in the best interest of the State of Washington; and Provided further, that such termination for public convenience shall only be effective upon sixty (60) days prior written notice; and Provided further, that such termination for public convenience shall not relieve DRS from payment for products or services already ordered as of the effective date of such notice. Any order in effect as of the effective date of such termination shall remain in effect through its applicable subscription term and shall continue to be governed by the IBM Agreement, unless otherwise terminated in accordance with the IBM Agreement. Except as stated in this provision, in the event of such termination for public convenience, DRS shall not have any obligation or liability to Contractor.

12.5 Termination Procedure

Regardless of basis, in the event of suspension or termination (in full or in part), the parties shall cooperate to ensure an orderly and efficient suspension or termination. Charges paid for the then-current subscription term are non-refundable, and any unpaid charges for that term shall become immediately due, except to the extent that a credit or refund is expressly required by the IBM Agreement. DRS’ right to use the Products shall end on expiration or termination of the applicable order in accordance with the IBM Agreement.

13. General Provisions

13.1 Time Is of the Essence

Time is of the essence solely with respect to any date expressly identified as a firm commitment in the applicable Quotation. For all other obligations, Contractor shall perform within the time periods specified in the IBM Agreement.

13.2 Compliance with Law

Contractor shall comply with all applicable laws relating to Contractor as an IT service provider.

Page 13 of 20 Draft Sole Source Contract 26-05

13.3 Integrated Agreement

Except as set forth below, this Contract constitutes the entire agreement and understanding of the parties with respect to the subject matter and supersedes all prior negotiations, representations, and understandings between them. There are no representations or understandings of any kind not set forth herein.

The Quotation, the IBM Client Relationship Agreement (z126-6548) (“CRA”), and Contractor’s Data Processing Addendum (“DPA”) at ibm.com/dpa together with the DPA Exhibit at ibm.com/terms/?id=DPA-Exhibit_TSS (collectively, the “IBM Agreement”) are incorporated into and made a part of this Contract and are not superseded by this Section. In the event of any conflict between this Contract and the IBM Agreement with respect to the license granted in the Products, the provision, operation, access to, support of, and use of the Products, subscription quantities, license metrics, service levels, suspension rights, ownership of Contractor’s intellectual property, warranties and warranty disclaimers, indemnification, limitation of liability, confidentiality, information security, or the processing of personal data, the IBM Agreement shall control. In the event of a conflict among the documents comprising the IBM Agreement, Contractor’s DPA together with the DPA Exhibit shall control solely with respect to the processing of personal data; otherwise, the order of precedence shall be as established in the CRA.

13.4 Amendment or Modification

Except as set forth herein, this Contract may not be amended or modified except in writing and signed by a duly authorized representative of each party; Provided, however, that the IBM Agreement may be modified in accordance with its terms, including through non-retroactive changes applicable to new orders, renewals, and ongoing or continuous offerings following any notice required thereunder, and any such permitted modification shall not require a separate amendment to this Contract. Provided further, that nothing in this Section shall be construed to permit any change to the terms and conditions that govern the Products ordered, the quantities or license metrics thereof, the scope of Services, or the price ceiling set forth in Section 3.3 This Section applies solely to the terms and conditions governing the IBM Agreement generally, and not to any change in the identity, quantity, configuration, or functionality of the Products or Services ordered by DRS.

13.5 Authority

Each party to this Contract, and each individual signing on behalf of each party, hereby represents and warrants to the other that it has full power and authority to enter into this Contract and that its execution, delivery, and performance of this Contract has been fully authorized and approved, and that no further approvals or consents are required to bind such party.

13.6 No Agency

The parties agree that no agency, partnership, or joint venture of any kind shall be or is intended to be created by or under this Contract. Neither party is an agent of the other party nor authorized to obligate it.

13.7 Assignments

Neither party may assign its rights under this Contract without the other’s prior written consent and the non-assigning party may consider any attempted assignment without such consent to be void; Provided, Page 14 of 20 Draft Sole Source Contract 26-05 however, that, if Contractor provides written notice to DRS within thirty (30) days, Contractor may assign its rights under this Contract in full to any parent, subsidiary, or affiliate of Contractor that controls or is controlled by or under common control with Contractor, is merged or consolidated with Contractor, or purchases a majority or controlling interest in the ownership or assets of Contractor.

Notwithstanding the foregoing, Contractor may assign its right to receive payments without DRS’ prior written consent. For clarity, IBM will remain as the billing and collecting agent, interfacing with DRS.

Any such assignment shall not affect, diminish, or impair DRS' rights of setoff, recoupment, or good-faith dispute of invoiced amounts under Section 6.1, which DRS may assert against any assignee to the same extent it could have asserted them against Contractor. Unless otherwise agreed, Contractor guarantees prompt performance of all obligations under this Contract notwithstanding any prior assignment of its rights.

13.8 Binding Effect; Successors & Assigns

This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

13.9 Public Information

This Contract and all related documents are subject to public disclosure as required by Washington’s Public Records Act, RCW 42.56. DRS shall notify Contractor in writing at least ten (10) business days before disclosing any Contractor pricing or other information designated by Contractor as confidential or proprietary, and shall afford Contractor a reasonable opportunity to seek a protective order or to identify information for redaction, to the extent permitted by law.

13.10 Assignment of Antitrust Rights Regarding Purchased Services Contractor irrevocably assigns to DRS, on behalf of the State of Washington, any claim for relief or cause of action which the Contractor now has or which may accrue to the Contractor in the future by reason of any violation of state or federal antitrust laws in connection with any services provided in Washington for the purpose of carrying out the Contractor’s obligations under this Contract, including, at DRS’ option, the right to control any such litigation on such claim for relief or cause of action. This provision shall not be construed as assigning any right to defend such claims to the extent that Contractor is alleged to have engaged in any anticompetitive practices.

13.11 Force Majeure

Except for payment of sums due, neither party shall be liable to the other or deemed in breach under this Contract if, and to the extent that, such party's performance of this Contract is prevented by reason of force majeure. The term “force majeure” means an occurrence that causes a delay that is beyond the control of the party affected and could not have been avoided by exercising reasonable diligence. Force majeure shall include acts of God, war, riots, strikes, fire, floods, epidemics, or other similar occurrences. If either party is delayed by force majeure, said party shall provide written notification within forty-eight (48) hours. The notification shall provide evidence of the force majeure to the reasonable satisfaction of the other party. Such delay shall cease as soon as practicable and written notification of same shall likewise be provided. So far as consistent with the rights reserved below, the time of completion shall be extended by Contract amendment for a period of time equal to the time that the results or effects of such delay prevented the delayed party from performing in accordance with this Contract. Notwithstanding any provision to the contrary, in the event that a Contractor-declared force majeure event lasts for more than thirty (30 days), DRS shall have the right to terminate

Page 15 of 20 Draft Sole Source Contract 26-05 the Contract and/or purchase the services set forth in this Contract; Provided, however, that in such event, Contractor shall not be liable to DRS for any price difference for such services.

13.13 Severability

If any provision of this Contract is held to be invalid or unenforceable, such provision shall not affect or invalidate the remainder of this Contract, and to this end the provisions of this Contract are declared to be severable. If such invalidity becomes known or apparent to the parties, the parties agree to negotiate promptly in good faith in an attempt to amend such provision as nearly as possible to be consistent with the intent of this Contract.

13.14 Waiver

Failure of either party to insist upon the strict performance of any of the terms and conditions hereof, or failure to exercise any rights or remedies provided herein or by law, or to notify the other party in the event of breach, shall not release the other party of any of its obligations under this Contract, nor shall any purported oral modification or rescission of this Contract by either party operate as a waiver of any of the terms hereof. No waiver by either party of any breach, default, or violation of any term, warranty, representation, contract, covenant, right, condition, or provision hereof shall constitute waiver of any subsequent breach, default, or violation of the same or other term, warranty, representation, contract, covenant, right, condition, or provision.

13.15 Survival

All representations, warranties, covenants, agreements, and indemnities set forth in or otherwise made pursuant to this Contract shall survive and remain in effect following the expiration or termination of this Contract, Provided, however, that nothing herein is intended to extend the survival beyond any applicable statute of limitations periods.

13.16 Governing Law

The validity, construction, performance, and enforcement of this Contract shall be governed by and construed in accordance with the laws of the State of Washington, without regard to its choice of law rules.

13.17 Jurisdiction & Venue

In the event that any action is brought to enforce any provision of this Contract, the parties agree to submit to exclusive jurisdiction in Thurston County Superior Court for the State of Washington and agree that in any such action venue shall lie exclusively at Olympia, Washington.

13.18 Attorneys’ Fees

In the event of litigation or other action brought to enforce the terms of this Contract or alternative dispute process, each party agrees to bear its own attorneys’ fees and costs.

13.19 Fair Construction & Interpretation

The provisions of this Contract shall be construed as a whole according to their common meaning and not strictly for or against any party and consistent with the provisions contained herein in order to achieve the objectives and purposes of this Contract. Each party hereto and its council has reviewed and revised this Contract and agrees that the normal rules of construction to the effect that any

Page 16 of 20 Draft Sole Source Contract 26-05 ambiguities are to be resolved against the drafting party shall not be construed in the interpretation of this Contract. Each term and provision of this Contract to be performed by either party shall be construed to be both a covenant and a condition.

13.20 Further Assurances

In addition to the actions specifically mentioned in this Contract, the parties shall each do whatever may reasonably be necessary to accomplish the transactions contemplated in this Contract including, without limitation, executing any additional documents reasonably necessary to effectuate the provisions and purposes of this Contract; Provided, however, that this Section shall not expand either party's substantive obligations, modify the IBM Agreement, or require Contractor to provide additional Products, services, functionality, assistance, certifications, or compliance commitments, or to incur material additional costs, except as expressly agreed by the parties in a written amendment or applicable Transaction Document.

13.21 Exhibits

All exhibits referred to herein are deemed to be incorporated in this Contract in their entirety.

13.22 Captions & Headings

The captions and headings in this Contract are for convenience only and are not intended to, and shall not be construed to, limit, enlarge, or affect the scope or intent of this Contract nor the meaning of any provisions hereof.

13.23 Electronic Signatures

An electronic signature or electronic record of this Contract or any other ancillary agreement shall be deemed to have the same legal effect as delivery of an original executed copy of this Contract or such other ancillary agreement for all purposes.

13.24 Counterparts

This Contract may be executed in any number of counterparts, each of which shall be deemed an original and all of which counterparts together shall constitute the same instrument which may be sufficiently evidenced by one counterpart. Execution of this Contract at different times and places by the parties shall not affect the validity thereof so long as all the parties hereto execute a counterpart of this Contract.

Executed by the persons signing below who warrant that they have the authority to execute the contract.

DRS: Contractor:

Signed Name Signed Name

Printed Name Kathryn Leathers Printed Name

Date Date

Page 17 of 20 Sole Source Contract 26-05

Exhibit A Entire X Products The Table below lists the amount DRS shall pay for Entire X software products and licensing metrics

Page 18 of 20 Sole Source Contract 26-05

Exhibit C - Insurance Requirements

1. Insurance Obligation

During the Term of this Contract, Contractor shall possess and maintain in full force and effect, at Contractor’s sole expense, the following insurance coverages.

The insurance coverage limits set forth herein are the minimum. Contractor’s insurance coverage shall be no less than the minimum amounts specified. Coverage in the amounts of these minimum limits, however, shall not be construed to relieve Contractor from liability in excess of such limits; Provided, however, that nothing in this Exhibit C shall expand Contractor’s liability, indemnification obligations, or available remedies beyond those set forth in the IBM Agreement. The provisions of this Exhibit C are subject to the other rights and obligations of the parties in this Contract.

1.1 Commercial General Liability Insurance

Commercial general liability insurance (and, if necessary, commercial umbrella liability insurance) covering bodily injury, property damage, products/completed operations, personal injury, and advertising injury liability on an ‘occurrence form’ that shall be no less comprehensive and no more restrictive than the coverage provided by Insurance Services Office (ISO) under the most recent version of form CG 00 01 in the amount of not less than $2,000,000 per occurrence and $4,000,000 general aggregate. This coverage shall include blanket contractual liability coverage. This coverage shall include a cross-liability clause or separation of insured condition. Commercial general liability policy limits may be met through a combination of primary and umbrella or excess liability insurance.

1.2 Professional Errors & Omissions Insurance

Professional Errors & Omissions insurance covering actual or alleged breach of duty, neglect, error, misstatement, misleading statements or omission, solely for acts or omissions committed by Contractor in providing services for DRS, with a minimum per claim and aggregate limit of $5,000,000. Coverage includes network security and privacy liability. DRS shall not be included as an additional insured or loss payee under this policy, and this policy shall not be primary and non-contributory nor provide waiver of subrogation.

1.3 Crime Insurance

Crime / Employee Fidelity insurance covering loss of money, securities and other tangible property belonging to DRS resulting directly from a fraudulent or dishonest act by a Contractor employee, by any means including via a computer. DRS shall be included as a loss payee under this policy. Limits of liability shall not be less than $1,000,000 per claim.

1.4 Workers’ Compensation Insurance

Contractor shall comply with applicable Workers’ Compensation or Industrial Accident insurance providing benefits as required by law.

Page 19 of 20 Sole Source Contract 26-05

1.5 Employer’s Liability (Stop Gap) Insurance

Employer’s liability insurance (and, if necessary, commercial umbrella liability insurance) with limits not less than $1,000,000 each accident for bodily injury by accident, $1,000,000 each employee for bodily injury by disease, and $1,000,000 bodily injury by disease policy limit.

2. Insurance Carrier Rating

Coverages provided by the Contractor must be underwritten by insurance companies rated A- Class VII or better in the most recently published edition of Best’s Insurance Rating.

3. Additional Insured

Only with respect to liability arising out of this Contract, Contractor’s Commercial General Liability insurance shall include the State of Washington and DRS as additional insureds, with severability of interests, solely to the extent provided under Contractor’s automatic additional insured endorsement.

That policy contains an automatic additional insured endorsement, and no scheduling of DRS to the policy is required.

4. Certificate of Insurance

Prior to execution of the Contract, Contractor shall furnish to DRS, as evidence of the insurance coverage required by this Contract, a certificate of insurance satisfactory to DRS that insurance, in the above-stated kinds and minimum amounts, has been secured. In addition, Contractor shall furnish to DRS an updated certificate of insurance promptly following each annual renewal of coverage. Failure to maintain or provide proof of insurance, as required, may constitute grounds for termination following written notice and a reasonable opportunity to cure. All certificates of insurance shall reference the Contract number stated on the cover of this Contract. All certificates of Insurance and any related insurance documents shall be delivered to DRS by U.S. mail, postage prepaid, or sent via email, and shall be sent to the address or email address set forth below or to such other address or email address as DRS may specify in writing:

US Mail: Email:

Contracts & Procurement – Sole Source Contract Insurance Cert Contract No. 26-05 Attn: Wendy Kancianich

DRS

PO Box 48380 Tumwater WA 98501 drs.contractcomp@drs.wa.gov

NOTE: For email, the Subject line must state:

Sole Source Contract Insurance Certificate – Contract No 26-05

5. Primary Coverage

Contractor’s Commercial General Liability insurance shall apply as primary and shall not seek contribution from any insurance or self-insurance maintained by, or provided to, the additional insureds listed above including, at a minimum, the State of Washington and/or any Purchaser. All insurance or self-insurance of the applicable additional insured shall be excess of such Commercial General Liability coverage.

Page 20 of 20 Sole Source Contract 26-05

6. Subcontractors

Contractor shall include all subcontractors as insureds under all required insurance policies.

Alternatively, prior to utilizing any subcontractor, Contractor shall cause any such subcontractor to maintain insurance that is commercially reasonable and appropriate for the nature of their activities.

Failure of any subcontractor to comply with insurance requirements shall not expand Contractor’s liability or responsibility beyond that set forth in the IBM Agreement. This Section applies only to subcontractors that materially support Contractor’s performance under this Contract.

7. Waiver of Subrogation

With respect to the Commercial General Liability insurance policy, Contractor waives all rights of subrogation against the State of Washington and any Purchaser for the recovery of damages to the extent such damages are or would be covered by the insurance specified herein.

8. Notice of Change or Cancellation

There shall be no cancellation, material change, exhaustion of aggregate limits, or intent not to renew insurance coverage, either in whole or in part, without at least sixty (60) days prior written Legal Notice by Contractor to DRS. Failure to provide such notice, as required, shall constitute default by Contractor.

Any such written notice shall include the Contract number stated on the cover of this Contract.

9. Extended Reporting Period

If any required insurance coverage is on a claims-made basis (rather than occurrence), Contractor shall maintain such coverage for a period of no less than three (3) years following expiration or termination of the Contract, provided such coverage remains commercially available in the marketplace.