Introduction
As a tech lawyer, I often work with clients who are entering into partnership agreements in the software space. One common area of concern for my clients is the use of SaaS, and how to properly structure a partnership agreement that involves it. In this blog post, I will provide specific sample verbiage clauses and a template partnership agreement with a focus on SaaS offerings. I will cover important topics such as the purpose and scope of the partnership, allocation of profits and losses, decision-making, and intellectual property transfers, among others. I hope that this information will be helpful to anyone considering entering into a partnership agreement in the tech industry.
Essential Provisions
Purpose and Scope of the Partnership:
“The purpose of this partnership is to offer [Partner Company’s] SaaS product in white label form to [Company’s] customers. [Partner Company] will provide all necessary support and services to [Company] to facilitate the offering of the SaaS product to [Company’s] customers. [Company] will be responsible for marketing and promoting the SaaS product to its customers and will receive a percentage of the revenue generated from the sales of the SaaS product.”
Duration and Termination of the Partnership:
It is essential to specify the length of the partnership and the conditions under which it can be terminated. This helps both parties plan and prepare for the future and can provide a clear exit strategy if necessary.
Sample clause: “This partnership will commence on the date of execution and will continue for a period of 3 years, unless otherwise terminated by either party with a 60-day written notice. The partnership may be terminated immediately if either party breaches any material terms of this agreement.”
Allocation of Profits and Losses:
It is essential to specify how profits and losses will be shared between the parties in the partnership. This helps to ensure that both parties are fairly compensated and helps to avoid disputes down the road.
Sample clause: “Profits and losses shall be allocated between the parties in proportion to their respective contributions to the partnership. [Company] will receive a percentage of the revenue generated from the sales of the SaaS product, as specified in Exhibit A attached to this agreement. Any losses incurred by the partnership shall be first allocated to the contributions of the parties, and any remaining losses shall be shared equally between the parties.”
Decision-Making:
It is important to specify how decisions within the partnership will be made and whether there will be a voting system in place. This helps to ensure that both parties have a say in the direction of the partnership and helps to avoid disputes.
Sample clause: “All major decisions regarding the partnership, including financial and business decisions, shall be made by a majority vote of the partners. Any partner may request a vote on a particular issue by providing written notice to the other partners. However, [Partner Company] shall have sole discretion in regards to [insert enumerated decisions].”
Capital Contributions:
It is essential to specify the initial capital contributions of each party and whether any additional contributions may be required in the future. This helps to ensure that the partnership has sufficient funds to operate and helps to avoid disputes over contributions.
Sample clause: “Each party shall contribute [insert amount] in initial capital to the partnership. Any additional capital contributions required by the partnership shall be made by the partners in proportion to their respective equity contributions.”
Intellectual Property Transfers:
In some cases, one party may have existing intellectual property that it wishes to transfer into the partnership. It is essential to specify the conditions under which this transfer can occur and whether it will be done through licensing or ownership transfer.
Sample clause: “Either party may transfer intellectual property into the partnership by licensing it to the partnership or transferring ownership to the partnership. Any such transfer must be approved in writing by the other party and shall be subject to the terms and conditions set forth in Exhibit B attached to this agreement.”
Insurance:
It is essential to specify the insurance coverage required by each party in the partnership to protect against potential liabilities. This helps to ensure that both parties are adequately protected and helps to avoid disputes over coverage.
Sample clause: “Each party will maintain, at its own expense, the coverage and limits listed on Schedule 8.4 for which such party is responsible, commencing as of the date that Partner intends to use the Services on behalf of Employers and Employees. Each party will provide a Certificate of Insurance (COI) reflecting the coverage and limits listed on Schedule 8.4 upon request; Partner acknowledges that Check’s receipt of the COI is a prerequisite to issuance of a production API key.”
Further Assurances/Cooperation:
It is essential to specify the level of cooperation and assistance required from both parties in the partnership to ensure that the partnership is successful. This helps to ensure that both parties are working towards the same goals and helps to avoid disputes.
Sample clause: “The parties will cooperate with one another and negotiate and enter into such additional agreements or provide additional documentation as may be reasonably necessary to fulfill the business understandings intended by this Agreement.”
Non-Solicitation of Employees:
In order to protect its workforce, it may be necessary for one party to prohibit the other from soliciting its employees. This helps to ensure that the partnership does not inadvertently disrupt the workforce of either party and helps to avoid disputes.
Sample clause: “During the period commencing on the Effective Date and ending one (1) year following the Termination Date, Partner shall not, without the Partner Company’s prior written consent, directly or indirectly, solicit or encourage any person to leave Partner Company’s employment, provided that general employment listings shall not be considered solicitation.”
Managed Services:
In some cases, one party may offer additional managed services or support to the other. It is essential to specify the terms and conditions under which these services will be provided, including any fees and costs associated with them. This helps to ensure that both parties are clear on the expectations and responsibilities associated with these services.
Third-Party Integrations:
In some cases, one party may offer third-party software platforms or services to the other. It is essential to specify the terms and conditions under which these integrations will be provided, including any fees and costs associated with them. This helps to ensure that both parties are clear on the expectations and responsibilities associated with these integrations.
Sample clause: “If Partner elects, in its sole discretion, to utilize any third-party software platforms or services offered by Partner Company, the parties shall agree to the terms of the integration and use of those services in the attached Exhibit A, and all such schedules, including all updates, shall be fully incorporated herein.”
Frequently Asked Questions
What is a SaaS partnership agreement?
A SaaS partnership agreement is a legally binding contract between two companies that have entered into a partnership to offer SaaS (Software as a Service) products to their customers. The agreement outlines the terms of the partnership, including the responsibilities of each party, the allocation of profits and losses, and the rights and obligations of each party with respect to the SaaS products.
Why is it important to have a SaaS partnership agreement in place?
A SaaS partnership agreement is important because it helps to establish the terms and conditions of the partnership, ensuring that both parties are clear on their roles and responsibilities. It also helps to protect the interests of both parties by clearly outlining the rights and obligations of each party with respect to the SaaS products.
What should be included in a SaaS partnership agreement?
A SaaS partnership agreement should include details on the purpose of the partnership, the responsibilities of each party, the allocation of profits and losses, the rights and obligations of each party with respect to the SaaS products, and any other relevant terms and conditions. It should also include provisions for dispute resolution, confidentiality, and indemnification.
Can a SaaS partnership agreement be modified or terminated?
Yes, a SaaS partnership agreement can be modified or terminated in accordance with the terms of the agreement. In some cases, the agreement may include provisions for early termination or allow for amendments to be made with the mutual consent of both parties.
What is the role of confidentiality in a SaaS partnership agreement?
Confidentiality is an important aspect of any partnership, including a SaaS partnership. The partnership agreement should include provisions requiring both parties to maintain the confidentiality of any confidential information shared between them. This may include financial information, customer data, and business plans, among other things. It is important to carefully review the terms of the confidentiality provisions in the partnership agreement to understand the obligations of each party.
What is the role of indemnification in a SaaS partnership agreement?
Indemnification is a provision in a partnership agreement that requires one party to compensate the other party for any losses or damages that may arise as a result of the actions or omissions of the indemnifying party. In a SaaS partnership, the indemnification provision may be used to protect one party from any losses or damages that may result from the other party’s breach of the partnership agreement or any other wrongful conduct. It is important to carefully review the terms of the indemnification provision in the partnership agreement to understand the obligations of each party.
What is the role of non-disparagement in a SaaS partnership agreement?
Non-disparagement provisions in a SaaS partnership agreement are designed to prevent one party from making negative or derogatory comments about the other party. This may be important in order to maintain the reputation and integrity of the partnership and protect the interests of both parties. It is important to carefully review the terms of the non-disparagement provision in the partnership agreement to understand the obligations of each party.
What is the role of publicity in a SaaS partnership agreement?
Publicity provisions in a SaaS partnership agreement are designed to regulate how the parties may publicize the partnership and the SaaS products. These provisions may include guidelines on how the parties may use each other’s logos, trademarks, and other branding elements in marketing materials, as well as restrictions on what information the parties may publicly disclose about the partnership and the products. It is important to carefully review the terms of the publicity provisions in the partnership agreement to understand the rights and obligations of each party.
What is the role of severability in a SaaS partnership agreement?
Severability provisions in a SaaS partnership agreement are designed to ensure that if any portion of the agreement is found to be invalid or unenforceable, the remaining portions of the agreement will remain in effect. This helps to protect the overall integrity of the agreement and ensures that the parties are still bound by the terms of the agreement. It is important to carefully review the terms of the severability provisions in the partnership agreement to understand the rights and obligations of each party.
What is the role of assignment in a SaaS partnership agreement?
Assignment provisions in a SaaS partnership agreement are designed to regulate the rights and obligations of the parties with respect to transferring their rights and obligations under the agreement to a third party. These provisions may include restrictions on the ability of one party to transfer its rights and obligations to another party without the consent of the other party, as well as provisions governing the process for transferring the rights and obligations under the agreement. It is important to carefully review the terms of the assignment provisions in the partnership agreement to understand the rights and obligations of each party.
What is the role of waiver in a SaaS partnership agreement?
Waiver provisions in a SaaS partnership agreement are designed to regulate the ability of the parties to waive their rights or obligations under the agreement. These provisions may include restrictions on the ability of one party to waive its rights or obligations without the consent of the other party, as well as provisions governing the process for waiving rights or obligations under the agreement. It is important to carefully review the terms of the waiver provisions in the partnership agreement to understand the rights and obligations of each party.
What is the role of governing law in a SaaS partnership agreement?
Governing law provisions in a SaaS partnership agreement are designed to specify which jurisdiction’s laws will apply to the interpretation and enforcement of the agreement. These provisions may be important in cases where the parties are located in different states or countries and there may be differences in the laws that apply to the agreement. It is important to carefully review the terms of the governing law provisions in the partnership agreement to understand which laws will apply to the partnership.
SaaS Partnership Agreement Template
This SaaS Partnership Agreement outlines the terms of a partnership between the Company and the Partner Company to offer the Partner Company’s SaaS products to the Company’s customers in white-label form. The partnership will last for a specified number of years, with provisions for termination by either party. Profits and losses will be allocated according to an agreed-upon formula, and management decisions will be made mutually by the parties.
No initial capital contributions are required, but future contributions may be necessary as agreed upon in writing. Intellectual property transfers will be detailed in an attached IP Transfer Agreement. Both parties must maintain specified insurance coverage, and cooperate in providing necessary documentation.
The Company agrees not to solicit the Partner Company’s employees without written consent, and both parties may choose to utilize additional managed services, support, or third-party integrations. Both parties warrant they have the authority to enter the agreement and will comply with applicable laws, while also disclaiming all implied warranties and limiting liability.
Each party will indemnify the other against third-party claims and maintain confidentiality. They also agree to refrain from making disparaging statements about each other and allow for the use of each other’s name and logo for marketing purposes, subject to approval.
The Agreement may not be assigned without written consent and is governed by the laws of a specified state.
SaaS Partnership Agreement
This SaaS Partnership Agreement (the “Agreement”) is made and entered into as of [insert effective date] by and between [insert company name] (the “Company”) and [insert partner company name] (the “Partner Company”).
- Purpose and Scope of the Partnership:
The purpose of this Agreement is to establish a partnership between the Company and the Partner Company for the purpose of offering the Partner Company’s SaaS products in white label form to the Company’s customers. The scope of the partnership will include the use of the Partner Company’s APIs, API keys, servers, and software as necessary to obtain and use the SaaS products, and the sending of customer data to the Partner Company’s servers.
- Duration and Termination of the Partnership:
This Agreement will commence on the effective date and will continue for a period of [insert number] years, unless terminated earlier by either party upon [insert number] days’ written notice. The Agreement may also be terminated immediately upon the occurrence of any material breach of this Agreement by either party. A material breach is defined as a breach that significantly affects the rights or obligations of the non-breaching party.
Upon termination of this Agreement, all rights and obligations of the parties under this Agreement will immediately cease, except for any obligations that by their nature are intended to survive termination, including but not limited to the provisions regarding Confidentiality, Mutual Confidentiality, Non-Disparagement, Publicity, Indemnification, and Limitation of Liabilities.
- Allocation of Profits and Losses:
The profits and losses of the partnership will be allocated as follows: _____________. Any profits or losses will be calculated on a quarterly basis and distributed to the parties accordingly.
- Decision-Making:
Decisions related to the management and operation of the partnership will be made by mutual agreement of the parties. In the event that the parties are unable to reach a mutual agreement, certain enumerated decisions will be made solely by the Partner Company as specified in the attached IP Transfer Agreement. The parties agree to meet at least [insert frequency] to discuss the progress and operation of the partnership and to make any necessary decisions.
- Capital Contributions:
There will be no initial capital contributions required for the formation of the partnership. However, either party may be required to contribute additional capital in the future as deemed necessary by a majority vote for the proper operation and management of the partnership. If a party is required to make a capital contribution, the amount and terms of the contribution will be agreed upon by the parties in writing.
- Intellectual Property Transfers:
Partner will transfer certain intellectual property into the partnership pursuant to the IP Transfer Agreement attached to this Agreement. The terms of the transfer, including any royalties or licensing fees, will be set forth in the attached IP Transfer Agreement.
- Insurance:
Each party will maintain, at its own expense, the coverage and limits listed on Schedule 3.1 for which such party is responsible, commencing as of the date that the Company intends to use the SaaS products on behalf of its customers. Each party will provide a Certificate of Insurance (COI) reflecting the coverage and limits listed on Schedule 3.1 upon request; the Company acknowledges that the Partner Company’s receipt of the COI is a prerequisite to issuance of a production API key.
- Further Assurances/Cooperation:
The parties will cooperate with one another and negotiate and enter into such additional agreements or provide additional documentation as may be reasonably necessary to fulfill the business understandings intended by this Agreement.
- Non-Solicitation of Partner Company Employees:
During the period commencing on the effective date and ending one (1) year following the termination date, the Company shall not, without the Partner Company’s prior written consent, directly or indirectly, solicit or encourage any person to leave the Partner Company’s employment, provided that general employment listings shall not be considered solicitation.
- Managed Services:
If the Company elects, in its sole discretion, to utilize any Partner Company-managed services or support in addition to the services set forth in this Agreement, the parties shall agree to the scope and duration of those services, and all related fees and costs, in a schedule attached here as Schedule 10.1 and updated as specified in the schedule or otherwise needed. Such schedule, including all updates, shall be fully incorporated into this Agreement. All terms and conditions set forth in this Agreement shall apply.
- Third-Party Integrations:
If the Company elects, in its sole discretion, to utilize any third-party software platforms or services offered by the
Partner Company, the parties shall agree to the terms of the integration and use of those services in the attached Schedule(s) 11.1, and all such schedules, including all updates, shall be fully incorporated into this Agreement.
- Mutual Warranties:
The Company and the Partner Company each represent and warrant to the other that: (a) it has the authority to enter into this Agreement, to grant the rights granted by it under this Agreement, and to perform its obligations under this Agreement; and (b) it will comply with all applicable laws and regulations that may be in effect during the term of this Agreement as they apply to such party’s obligations under this Agreement. The Company and the Partner Company each further represent and warrant that their respective products and services, and their use as contemplated by this Agreement, do not and will not infringe upon the intellectual property rights of any third party.
- Limitation of Warranties and Liabilities:
THE COMPANY AND THE PARTNER COMPANY EACH DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
- Indemnification:
The Company and the Partner Company each agree to indemnify, defend, and hold harmless the other party and its affiliates, officers, directors, employees, and agents from any and all third party claims, demands, causes of action, damages, losses, or expenses (including reasonable attorneys’ fees and costs) arising out of or in connection with this Agreement or the use of the products or services provided under this Agreement.
- Mutual Confidentiality:
The parties acknowledge that during the term of this Agreement, they may have access to confidential and proprietary information of the other party. The parties agree to maintain the confidentiality of such information and to use it only for the purposes of this Agreement.
- Non-Disparagement:
The parties agree that they will not make any negative or disparaging statements about the other party or its affiliates, officers, directors, employees, or agents.
- Publicity:
The Partner Company agrees that the Company may use the Partner Company’s name and logo in its marketing and promotional materials, subject to the Partner Company’s prior written approval.
- Severability:
If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions will remain in full force and effect.
- Assignment:
This Agreement may not be assigned by either party without the prior written consent of the other party.
- Waiver:
The failure of either party to exercise any right provided for herein will not be deemed a waiver of any further rights hereunder.
- Prevailing Language:
This Agreement is written in English, which language will be controlling in all respects. All communications made or notices given pursuant to this Agreement will be in the English language.
- Governing Law:
This Agreement will be governed by and construed in accordance with the laws of the State of [insert state], without giving effect to any principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the effective date set forth above.
[Insert company name]
By: [insert signature] Title: [insert title]
[Insert partner company name]
By: [insert signature] Title: [insert title]
