Hi Guys My advice, based on running billing systems and a decent mark in Auditing at UTS, is don't build a billing model/process thats already broken or faulty. Trying to force an audit is probably terminal to the relationship. Also there is no guarantee that you would even know that you have a problem that you need to audit.
If its software as a service presumably each customer will get an account and there will be payment method either direct or indirect via the reseller. If a customer signs up, they put their own credit card or billing details in. Problem solved. Resellers can either be handled via an affiliate program or they are given their own login to facilitate setting up access for the customer and billed each month for all customers or given a rebate (if you bill customer directly). No customer account, no reseller earnings. Either way make your Software as a Service backend force the integrity of the billing system rather than rely on the threat of auditing after the fact, go ahead see if you can get them to agree to Audits but my personal preference would be to try to make the billing system manage this. Agree re Clawback - Definitely insert the right to take these customer direct or assign to another reseller if the Reseller experiences an insolvency event or change of control, ie if they go under, normally the liquidator/administrator treats the customers as assets and you may be required to continue to provide service or have to negotiate with the liquidator. Service Level Agreements and penalties. You may wish to force the reseller to offer the same terms that you offer your direct customers for SLA and have a hold harmless if they offer more Indemnities - need these, never know what resellers will promise a customer See below for a sample of what Postini (owned by Google) provides as a sample template agreement when you are considering signing up. Their service is a similar situation to what you are proposing, with the exception that there is a distributor as well as a provider and reseller, maybe use this as a starting point with your Lawyer. Rob Furguson at Sprusons have done a decent job for me in the past. MASTER SERVICES CONTRACT 1. Services. Reseller will provide to Customer the services (the Services ) specified in the Reseller Services Schedule (the Services ). Within three (3) business days of the date on which this Contract is signed by both parties, Customer will receive an email that will specify the process for activating Customer s account and access to the Services though an activation key ( Provisioning ). 2. Fees and Billing. Reseller will bill Customer for the Services as specified in the Reseller Services Schedule. 3. Term. The initial term of this Contract shall be twelve (12) months. At the end of the initial term, this Contract shall be renewed automatically for consecutive renewal terms of twelve (12) months, unless terminated by the either party by providing the other party written notice fifteen (15) days prior to the end of the applicable term delivered in accordance with Section 18, Notices . Reseller may revise its rates (including, but not limited to, the fee per Mailbox/Unit) with thirty (30) days prior written notice to Customer, effective for the following term. 4. Termination. Either party may terminate this Contract for cause upon written notice if the other party fails to cure any material breach of this Contract within thirty (30) days after receiving written notice of such breach; provided however that the period to cure a breach with respect to payment shall be ten (10) days. If Customer terminates this Contract for cause in accordance with this Section, Reseller shall refund to Customer any prepaid amounts applicable to the period following the effective date of termination. Other than as may be provided elsewhere in this Contract, such termination shall be customer s sole and exclusive remedy in case of a material breach of this Contract by Reseller. 5. Customer Obligations. During the term of this Contract, Customer shall have the following obligations, in addition to those set forth elsewhere in this Contract. 5.1 Customer is and will remain solely responsible for complying with all laws, rules and regulations regarding the management and administration of its email system, including but not limited to, obtaining any consent and/or acknowledgement from its employees and service providers (if applicable) in managing its email system. Customer acknowledges and agrees that Reseller s and Postini s responsibilities and liability do not extend to the internal management of Customer s email system and that Postini is merely a data-processor and does not control and is not responsible for the management or administration of Customer s email and/or its data. 5.2 Customer agrees that it shall not resell the Services or create or offer derivative versions of the Services either directly or through a third party. 5.3 For each mailbox for which Customer will be routing email through the Services, Customer shall establish an email account in the Postini Message Center. Customer shall not allow more than five (5) alternative addresses/aliases for each email account established in the Postini Message Center. 5.4 IF CUSTOMER FAILS TO COMPLY WITH THE OBLIGATIONS SET FORTH IN SECTION 5.2 AND/OR SECTION 5.3, RESELLER SHALL INFORM CUSTOMER THEREOF AND RESERVES THE RIGHT TO SUSPEND THE SERVICES UNTIL SUCH FAILURE IS REMEDIED. NOTWITHSTANDING THE FOREGOING, THE FAILURE OF CUSTOMER TO COMPLY WITH THE OBLIGATIONS SET FORTH IN THIS SECTION 5 MAY BE DEEMED A MATERIAL BREACH OF THIS AGREEMENT. 6. Warranty. 6.1 Reseller warrants that the Services will meet the requirements set forth in the Service Level Agreement attached hereto as Attachment 1. In the event of a breach of the foregoing warranty, as Customer s sole and exclusive remedy, Reseller will provide the remedy set forth in the SLA. 6.2 EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 6, RESELLER MAKES NO WARRANTIES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY OR NONINFRINGEMENT. Customer understands and acknowledges that there is no guarantee that all spam and all viruses will be eliminated and that legitimate email will not be occasionally quarantined as spam, and that the above warranty does not include any such promises. Further, Disaster Recovery services are provided only up to the spooling level selected by the Customer, and if such spooling level is exceeded, messages may bounce back to the sender. 7. Ownership. The Services and all intellectual property rights relating to the Services are and shall remain the exclusive property of Postini. 8. Confidentiality. 8.1 Reseller and Customer both acknowledge that in the course of this Contract, each party may have access to the other s Confidential Information. Confidential Information, as used in this Contract, means information not generally known to the public, in written, oral or any other form that a party designates as being confidential or that, under the circumstances surrounding disclosure, should be clear that it is confidential. For clarity, Customer s Confidential Information shall also include Customer s emails that are subject to the Services. 8.2 The obligations of this Section 8 shall not apply to Confidential Information that (i) was in the possession of, or was rightfully known by a receiving party, without an obligation to maintain its confidentiality, prior to the time of disclosure; (ii) is or becomes generally known to the public without violation of this Contract; or (iii) is obtained by a receiving party in good faith from a third party having the right to disclose it without an obligation of confidentiality. 8.3 Each party hereby agrees that during the term of this Contract and for a period of two (2) years after the expiration of this Contract, it will not make any such Confidential Information available to any third party and will not use the other s Confidential Information for any purposes other than to exercise its rights and perform its obligations under this Contract. Each party shall take all reasonable steps to ensure that the other s Confidential Information is not disclosed or distributed by its employees or agents in violation of the terms of this Contract, and in any event each party shall exercise the same prudent practice in preserving this information as it does to preserve its own Confidential Information. The foregoing obligations will not restrict either party from disclosing the other party s Confidential Information or the terms and conditions of this Contract pursuant to the order or requirement of a court or other governmental body, provided that the party required to make such disclosure gives prompt notice to the other party to enable it to contest such order or requirement. 9. Indemnity. Reseller, at its expense, shall indemnify, defend and hold harmless Customer against any losses, costs and damages arising from a claim by a third party against Customer that the Services, or any part thereof, infringe any U.S. intellectual property or proprietary rights of such third party or misappropriates any protected trade secret of such third party. Reseller s obligations under this Section 9 are subject to Customer providing Reseller with (i) prompt written notice of the claim, (ii) sole control over the defense or settlement (subject, in the case of settlement, to Customer s consent, which consent shall not be unreasonably withheld or delayed), and (iii) reasonable support and cooperation with regard to the defense. In the event that Reseller s right to provide the Services is enjoined or in Reseller s reasonable opinion is likely to be enjoined, Reseller may, at its expense, obtain the right to continue providing the Services, replace or modify the Services so that they become non-infringing but remain functionally equivalent, or if such remedies are not reasonably available, terminate this Contract without liability to Customer. 10. Limitation of Liability. EXCEPT REGARDING THE CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF USE, LOSS OF DATA OR LOSS OF GOODWILL), ARISING OUT OF OR IN CONNECTION WITH THIS CONTRACT OR THE PERFORMANCE OR OPERATION OF THE SERVICES, WHETHER SUCH LIABILITY ARISES FROM ANY CLAIM BASED UPON BREACH OF CONTRACT, BREACH OF WARRANTY, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR OTHERWISE, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. Except regarding the indemnity obligations under Section 9, Indemnity, in no event shall either party s liability for any damages hereunder exceed the amounts paid by Customer to Reseller during the twelve (12) month period preceding the causation of the damages. 11. Assignment. This Agreement may not be assigned by either party without the written consent of the other, except that Provider may assign this Agreement upon written notice to Distributor (i) pursuant to a merger or change of control, (ii) to an assignee of all or substantially all of such party s assets or (iii) to its parent company, affiliate or subsidiary. Any other assignment shall be null and void, except with the other party s prior written consent. 12. Governing Law and Dispute Resolution. This Agreement is governed by California law excluding California s choice of laws rules. FOR ANY DISPUTE RELATING TO THIS AGREEMENT, THE PARTIES CONSENT TO PERSONAL JURISDICTION IN, AND THE EXCLUSIVE VENUE OF, THE COURTS IN SANTA CLARA COUNTY, CALIFORNIA. 13. Severability. If any provision is found unenforceable, it and any related provisions will be interpreted to best accomplish the unenforceable provision's essential purpose. 14. Survival. The rights and obligations of Reseller and Customer contained in this Section and in Section 8, Confidentiality, Section 9, Indemnity, and Section 10, Limitation of Liability, shall survive any expiration or termination of this Contract. 15. Waiver. The waiver by either party of any default or breach of this Contract shall not constitute a waiver of any other or subsequent default or breach. 16. Amendments. Modifications and amendments to this Contract shall be invalid, unless made in writing that is signed by duly authorized officers of each party hereto. 17. Force Majeure. Reseller shall not be liable for any failure or delay in its performance under this Contract due to causes beyond its reasonable control including, without limitation, Domain Name Server ( DNS ) issues outside the direct control of Reseller, labor strikes or shortages, riots, insurrection, fires, flood, storm, explosions, acts of God, war, terrorism, governmental action, labor conditions, earthquakes and material shortages. 18. Notices. All notices required to be sent under this Contract must be in writing and shall be delivered in person or shall be sent to Customer at the address specified on the Reseller Service Schedule and to Reseller at the address below. [Reseller to insert its notice information] Notices shall be deemed to have been given upon (i) the date actually delivered in person, (ii) the date transmitted via fax with confirmation of receipt thereof (iii) the day after the date sent by overnight courier or (iv) three (3) days following the date such notice was mailed by first class mail. Notices may be confirmed by email or fax. 19. Counterparts. This Contract may be executed in one or more counterparts including facsimile copies, which when and taken together upon proper delivery shall constitute a single instrument. 20. Archived Messages. If the Services in an Order contain archiving functionality, End User Messages shall be retained for up to the period set forth in the applicable Order (in the Services name), provided that Distributor renews the applicable Services in the Order with Provider for each year of such retention period. The retention period shall apply to all data archived under the Services for the applicable Order. Failure to renew the applicable Services during the retention period shall terminate Provider s obligation to retain any of End User s data or indexes for the applicable End User Order. Attachment 1 to Customer Agreement Service Level Agreement 1. Service Availability Commitment. The Email Services shall be operational at least 99.999% of the time in any given month during the term of the Agreement. The Operational Percentage means the percentage of the total time during any given month that the Email Services are not subject to an Outage. An outage ( Outage ) means that Reseller fails to apply filtering in accordance with Customer s configuration selection. Outage does not include service suspension (i) for reasons outside of Reseller s sphere of control (as described in Section 4 of this SLA) or (ii) during times of scheduled maintenance (as described in Section 5 of this SLA). If a dispute arises about whether or not an Outage occurred, Reseller shall make a determination in good faith based on its system logs, monitoring reports and configuration records, which Reseller shall make available for auditing by Customer at Customer s request. The Outage Percentage means the total duration of an Outage during a given month divided by the total time during such month. 2. Outage Reporting Process. Customer must inform Reseller s Customer Support Department in writing or by email within ten (10) business days of the time it first notices an Outage or first believes that there has been an Outage. Failure to comply with this requirement will forfeit Customer s right to receive a remedy for the Outage as described in Section 3 of this SLA. 3. Remedy. If the Operational Percentage is less than 99.999%, and if Customer has fulfilled all of its obligations under the Agreement and none of the exceptions in Section 4 of this SLA applies, Customer shall have the following sole and exclusive remedy: Reseller will provide Customer with a pro-rata credit on Customer s Email Services fee (on a per Customer End User basis) for the month in which the Outage occurred. The pro-rata credit shall be calculated by multiplying the Outage Percentage with Customer s total monthly Email Services fee to Reseller (for the applicable End User Order(s)) in the month during which the Outage occurred. For clarity, the Email Services fee for an applicable End User Order for a given month shall equal the following fee charged by Reseller to Customer for the applicable Order, as may be applicable, either (i) 100% of the Google Message Filtering fee for that month, (ii) 100% of the Google Message Security fee for that month or (iii) 33% of the Google Message Discovery fee for that month. Furthermore, if Customer experiences one (1) or more Outages in each of three (3) consecutive calendar months and/or three (3) or more Outages in any period of thirty (30) consecutive days, Customer can terminate the applicable End User Order(s) upon thirty (30) days prior written notice. 4. Exceptions. Customer shall not have any remedies under the Agreement, including this SLA, in connection with any circumstances addressed in Section 17, Force Majeure of the Customer Agreement. 5. Maintenance. To ensure optimal performance of the Services, Reseller reserves the right to perform unscheduled emergency maintenance at any time. Additionally, Reseller reserves the right to perform scheduled maintenance that is designed not to impact the Services at any time. Reseller will make all reasonable attempts to schedule maintenance events that are expected to have an impact on the Services between 10:00 p.m. Pacific Time on Fridays and 12:00 p.m. Pacific Time on Sundays. On Mon, Nov 10, 2008 at 6:15 PM, Mark Neely <[EMAIL PROTECTED]> wrote: > Nick, > > On top of Elias' comments, I would also add a warning to ensure there is a > very clearly drafted accounting clause; specifically, one that gives you the > right to open the reseller's books and conduct your own audit of sales etc., > to ensure you've been paid the appropriate revenues. You'd be surprised how > many licensing contracts forget to incorporate this right. > > This is a very contentious area, and you'll no doubt encounter fierce > opposition (no business likes openning their books), but without the right > to inspect the books (even if you, in practise, do not act on it) then you > really can never be certain you are receiving correct payment. > > Other issues to be addressed in the document: > > - Duraction: Self explanatory > - Territories: What territories can the reseller service? Is your company > barred from competing in those territories? > - Claw-back: On what basis is your company entitled to (a) > rescind/terminate the agreement and (b) take over the end-user relationships > (e.g. in the event the reseller goes broke etc.) > - Minimum sales figures: Is the reseller obliged to hit minimum sales > targets to keep their status as a reseller? > - Restrictions on use: What can't the reseller do (e.g. modify software, > assign reseller rights, license to customers other than on pre-approved > license terms etc.) > - Reseller obligations: What does the reseller have to do (e.g. commit to > marketing, promotions etc.). End user-support is a biggie here, so it should > be clear who is responsible etc. > - Limitation of liability: Given SaaS is subject to the usual tech > stability issues, there should be a clear statement of what your companies > is and is not responsible for, and the scope of any liabilities (e.g. > refunds etc.). > > FInally, you should give some thought as to what currency you want to > strike the deal in. The AU$ is a bit of a basketcase right now, but it will > improve. There might be good reason to do the deal in US$ (e.g. if that is > where most of your end-users and/or re-sellers will be etc.). Depending on > the kind of figures involved, you might want a 'windfall' clause (i.e. if > the currency discrepancy becomes so large there is a windfall to the > reseler, what happens then?). > > All that said, the best deals are the ones with the simplest terms. Make > sure you agree the commercial nature/scope of the deal fully before trying > to put a contract in place: your business objectives, not legal drafting > requirements, should be the primary factor here. > > Regards, > > Mark > > ----- > Mark Neely > Master Strategist > Infolution Pty Ltd > 'Beyond Strategy. Leading Change' > > e: [EMAIL PROTECTED] > m: +61 (0)412 0417 29 > skype: mark.neely > > Read my blogs --> www.infolution.com.au > www.neelyready.com > Connect on LinkedIn --> www.linkedin.com/in/markneely > > > ------------------------------ > *From:* [email protected] [mailto: > [EMAIL PROTECTED] *On Behalf Of *Elias Bizannes > *Sent:* Monday, 10 November 2008 3:20 PM > *To:* [email protected] > *Subject:* [SiliconBeach] Re: Reseller Agreements > > I've got a few clients specifically in this situation (ie, Verisign, Sage > software, Net Return - software as a service and use resellers) and whilst > I've reviewed many many agreements, the one thing I can say that is > consistent is how inconsistent they are! These agreements tend to not follow > a standard terms, and it's one of the most painful parts of my job when > reviewing my clients revenue streams because it needs to be looked at case > by case. > > Off the top of my head > - you need to specify when you are entitled to recognise revenue. Is it > when the product gets delivered to the end customer and an invoice is > raised? Perhaps you only issue invoices once an activation key is provided > to your partner? The way you are entitled to recognising revenue will affect > your financial reporting (especially if you report on an accruals basis like > most larger companies) and potentially tax. > - another issue is liability. Does the resellers customers interact with > you or them? > - how do you deal with refunds? Is the risk with you or the reseller? > - what fees does the reseller get? > - what incentives are there for the reseller? ie, discounts of targets, > bulk upfront purchases > - is there exclusivity for the reseller? If so, that's a business risk - > you don't want to rely on more than 10% of your revenue from one reseller. > > > On Mon, Nov 10, 2008 at 2:55 PM, Nick Holmes a Court <[EMAIL PROTECTED]>wrote: > >> Hey guys >> >> Does anyone have any templates or any advice on setting up Software >> Reseller Agreement Contracts/Legals? >> >> We are a Software as a Service company, what key issues should we be >> addressing in a reseller contract? >> >> Thanks for your help >> >> Nick > > > > > --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Silicon Beach Australia" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en -~----------~----~----~----~------~----~------~--~---
