Negotiating Software as a Service Contracts Guidance for Corporate and Technology Counsel for Structuring Effective SaaS Agreements Presented by Kristie Prinz, The Prinz Law Office, Silicon Valley, CA

I. Drafting and Negotiating Key Provisions in the SaaS Agreement D.Service Level Agreement 1. Uptime Guarantee (a) What are the exclusions? (b) Can the guarantee be implemented? (c) Is the guarantee realistic? ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 2

I. Drafting and Negotiating Key Provisions in the SaaS Agreement D.Service Level Agreement 2. Service Credit (a) Is the service credit calculation clear and easy to apply? (b) Is the payment of a service credit an acknowledgement of a material breach? (c) Effect of issuance of multiple service credits ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 3

I. Drafting and Negotiating Key Provisions in the SaaS Agreement D.Service Level Agreement 3. Technical Support Response Times (a) Guarantee or target? (b) Which party determines urgency level? (c) Resolution to support issue or response only? ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 4

I. Drafting and Negotiating Key Provisions in the SaaS Agreement D.Service Level Agreement 4. System Responsiveness Guarantees (a) How do you measure responsiveness of web-based system vs. Internet connection speed? (b) Realistic guarantee? ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 5

I. Drafting and Negotiating Key Provisions in the SaaS Agreement E. Warranties and Limitations 1. Warranties (a) IP Warranty (i) Parameters (ii) Exclusions (iii) Options in Material Breach ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 6

I. Drafting and Negotiating Key Provisions in the SaaS Agreement E. Warranties and Limitations 1. Warranties (b) Performance Warranties (i) Parameters (ii) Exclusions (iii) Options in Material Breach ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 7

I. Drafting and Negotiating Key Provisions in the SaaS Agreement E. Warranties and Limitations 2. Limitations of Liability (a) Unlimited vs. Fixed/Capped (b) Parameters of Liability Limits (i) Type of Claim (ii) Fixed Level vs. Multiple of Specified Fees ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 8

I. Drafting and Negotiating Key Provisions in the SaaS Agreement F. Indemnification 1. Negotiated Indemnifications (a) Intellectual Property & Trade Secrets (b) Acts of Employees (c) Data Breach (d) Other 2. Negotiation Points ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 9

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 1. Implementation Services (a) Defining Scope of Work (b) Establishing a Realistic Timetable (c) Defining Customer Obligations (d) Data Importation Issues (e) Defining Customization Milestones ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 10

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 2. Training Services (a) Defining Scope of Services Offered (b) Structuring Training Service Fees (c) Setting Parameters (d) Defining Cancellation Policy (e) Defining Travel Policy ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 11

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 3. Customization Services (a) Defining Customizations Required (b) Defining Scope of Work, Timetable for Completion, and Milestones (c) Structuring Customization Fees and Payment Schedule ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 12

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 4. Subscription Fees (a) Structuring Subscription Fees (b) Selection of a Start Date (c) Providing for Addition or Reduction of Users during Subscription Term ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 13

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 4. Subscription Fees (c) Defining Rate Increase Policy (d) Defining Continuation of Services Policy in Event of Non-Payment (e) Defining Renewal Policy ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 14

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 5. Termination (a) Defining Termination Policy (b) Defining Policy for Expungement of Data (c) Defining Data Transitioning Service Policy and Fees ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 15

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 6. Disaster Recovery Policy (a) Defining disaster recovery plan (b) Defining timetable for recovery in the event of loss of services in disaster ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 16

I. Drafting and Negotiating Key Provisions in the SaaS Agreement G. Other Critical Provisions 7. Personal Health Information Security (a) Data breach notification obligations (b) Establishing parameters on reimbursement costs (c) Defining indemnification obligation ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 17

II. Legal Developments and Business Trends B. Business Trends 1. Consequences of Increasing Data Breach Incidents (a) Indemnification and limitation of liability negotiations (b) New focus on requiring insurance ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 18

II. Legal Developments and Business Trends B. Business Trends 2. Insurance Negotiations (a) Commercial General Liability (b) Errors and Omissions (c) Employee Liability (d) Automobile Liability (e) Cyberinsurance ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 19

Contact Information: Kristie D. Prinz, Esq. The Prinz Law Office Silicon Valley Locations: Los Gatos: 20 S. Santa Cruz Avenue, Suite 300 Los Gatos, CA Sunnyvale:1250 Oakmead Parkway, Suite 210 Sunnyvale, CA Telephone: Website: Software Law Blog: ©2015 The Prinz Law Office. All rights reserved. The Prinz Law Office | Silicon Valley, CA | Los Angeles, CA | Orange County, CA | San Diego, CA 20