Partner Program

PROGRAM OVERVIEW

The Company Partner Program (Program) serves as the foundation for us to work with our business partners in a consistent, predictable and reliable way – supporting our objective of having the majority of our business channel-driven.

The Program is designed to support reseller partners (Partners) with the necessary marketing, selling and support tools for our product and service solutions. We help our Partners increase customer satisfaction, drive incremental revenue, and maximize profitability. We will reward Partners with increased benefits and additional resources as their commitment to us grows.

Program Tiers

The Program is composed of three enrollment tiers – Silver, Gold and Platinum, with each tier offering a rich set of benefits and appropriate requirements. At each annual renewal, Partners may be subject to reclassification within the Program.

PRODUCTS, PRICING AND TERRITORY

Products

The Products consist of and include all SecureAuth offered software products and cloud services.

The Company has sole discretion in selecting the methods by which it markets, distributes, and sells its Products. In the event that the Company (a) offers successor products to or migration products from the Products currently offered, or (b) elects to offer new products or third party products via its indirect sales channels within Partner’s Territory, the Partner will be entitled to market, sell, and service those products, provided that the Partner: (i) is not in breach of the Reseller Agreement; (ii) complies with all Company policies relative to the Products and such third party products; and (iii) is in compliance with all policies applicable to the Partner Program.

Pricing

Current pricing is available via the Company’s standard price lists and order form(s) available on the Partner Portal. All requests for discounts must be submitted to the Company prior to an order being placed. Any approved discounts or promotional incentives should be noted on a completed order form specific to the End User customer in the comments section and submitted to the Company for final review and approval. Discounts must be discussed and approved in advance with the Company.

Territory

The standard Territory for the Partner Program is the United States. Exceptions may be considered on a case-by-case basis, but must be approved in advance.

MARGIN STRUCTURE, ACCOUNTING & FINANCIAL MANAGEMENT

Product Sales Margins

Margin on license sales (Product Sales Margins or PSM) will be based on the following criteria:

1. License revenue will be net license revenue received by the Company, subject to all Company revenue recognition and credit and return policies, and net of any credits or refunds. Professional Services (also known as consulting services), Support, and training fees will not be considered as part of the calculation.
2. Revenue performance will be measured on an annual, calendar year basis (within the Term).
3. At its sole discretion, the Company may review a Partner’s performance prior to the end of the calendar year (Term), but only for the purposes of considering a Partner Program promotion. Partner Program promotion will not be retroactive.
4. All net license revenue counts toward the PSM levels, including net license revenue for Third Party Product and/or OEM Products purchased via the Company subject to existing or future Third Party Product / OEM restricted margin levels.

NOTE: In selling opportunities where the initial, qualified lead comes from the Company, the deal registration benefit does not apply. For qualifying details on deal registration, please refer to the deal registration section below.

General Services Administration (GSA) Pricing

For all transactions utilizing GSA pricing and sold to an authorized GSA entity, Partner is eligible for a 5% maximum margin; the preceding margin structures detailed in tables within this Exhibit apply to commercial and / or state, local and education (collectively known as SLED) opportunities only.

Support (Maintenance) Commission

Reseller may be eligible for a renewal margin, based on its Partner Tier, on Support when Support is renewed after the initial Support and/or subscription license term. For all accounts where a Partner is engaged and working with the Company, the Company will invoice and collect for the Support from the Reseller – not from the End User directly. If in arrears on payments due to the Company for Support, the Partner will have its Partner Program benefits suspended. The Company retains the right to terminate the Partner if payment reconciliation is not made in accordance with the terms of the Reseller Agreement. If the End User requests to have its Support renewal through another authorized Partner, then the incumbent Partner will be protected on its margin by the Company, meaning that the Company will not provide a margin advantage to a new Partner working in the End User account.

Incumbency

When an End User account is considering and/or chooses to procure its Support renewal from a different Partner in the Partner Program (different from the one the End User purchased initial software licenses and/or prior Support renewals from), the incumbent Partner will maintain up to, but not in excess of, a five percent (5%) margin advantage. However, in no case will the Company provide a renewal margin greater than what is stated in the Program terms.

Parenting

In the event that any End User wishes to enter into transactions with subsidiaries or Affiliates (including a parent or sister/related entities) of registered End Users located outside of the Territory, the Company will determine the “Parenting” policy.

Deal Registration

The deal registration benefit within the Partner Program is designed to reward Partners for new opportunities which they register, develop and close (or work in conjunction with the Company to develop and close). In situations where the initial, qualified lead comes from the Company, the opportunity will not be eligible for deal registration.

Resellers are expected to comply with the Company’s terms and conditions for deal registration. If a Partner is not compliant with the deal registration terms and conditions, the additive deal registration margin will be withheld and not due to the Partner.

The core requirements for deal registration approval are:

• Reseller must be enrolled in the Partner Program.
• The deal registration web form must be filled out completely in the Partner Portal.
• The opportunity registered must be approved by the Company’s territory Account Manager and the Company’s Sales Operations team as a qualifying opportunity (must have budget, authorized approval, project, timeline). The Company will notify the Partner of its decision within 3 – 5 business days.
• A registered End User company must represent new business, and the opportunity must be one hundred percent (100%) Partner generated. “New” means a new site opportunity that has never been sold or a passive or inactive account that purchases Products as new. Add-on sale as part of a new project within an account must be registered as a separate deal registration.  Opportunities with End User’s Affiliates (i.e. fully owned subsidiary companies) qualify for deal registration.
• The opportunity must be quoted to the End User by the Partner and Partner must assist in closing the sale or the deal registration will be revoked. The Company providing assistance is encouraged but the Partner must be an ACTIVE participant.
• The opportunity must include Products and must meet published minimum threshold requirements. The Company may decline any deal registration below its minimum threshold requirements. Support (or any derivative), Professional Services (also known as consulting services) and any training revenue totals do not apply nor count towards the minimum opportunity value required.
• Multi-phase projects can be registered as one deal registration. With a multi-phase project, the entire project (with phases) must be outlined and submitted on the registration.
• Approved deal registrations expire after 180 days and then must be re-registered (status updates will be required at a minimum every 30 days).
• Resellers may request one extension per registered opportunity with a standard extension being 90 days. At its sole discretion, the Company may extend the approval period or the number of extensions if justification exists.
• Resellers may not combine opportunities and/or accounts for any purpose when applying for deal registration.
• The opportunity must be closed in order for the Partner to be eligible for the deal registration rebate.
• The first Partner to submit an opportunity that meets all of the deal registration criteria specified above, as determined by the Company in its sole discretion, will receive an approved deal registration for that opportunity. Another Partner cannot register and be approved for the same opportunity unless the original Partner does not close the deal within 180 days and the Company does not to extend the registration for the original Partner.
• At its sole discretion, the Company may rescind an approved deal registration if any information provided by the Partner is inaccurate or fraudulent.
• Special bid pricing / specialized discounting will, at the Company’s sole discretion, void a deal registration.
• Opportunities that are known or discovered to have been put out to public bid / tender / quote are not eligible for deal registration unless the deal registration was validated / approved prior to the issue of the bid / tender / quote.

Processing Orders

All Product orders from approved Partners must include a completed order form submitted by the Partner to the Company and a signed End User Agreement unless one is already on file with the Company. The order form must include complete information on the End User customer who will receive the Product, including the End User’s legal company name, address/location where the Product will be implemented, and contact information. Orders without a fully executed End User Agreement will not be processed.

Accounting & Financial Management

Where deemed appropriate and feasible by the Company, the Company will implement an escalation process in an effort to avoid balances remaining outstanding beyond 60 days past due. The following guidelines are intended to assist the parties in managing this process:

1. Initial contact will be made on any Partner account with invoices outstanding 15 days after the original invoice due date, unless special terms have been given, to define a plan to resolve and cure the past due amounts.
2. Outstanding accounts receivable (A/R) that are 60 days past the original invoice due date will result in the Partner being placed on a prepaid status for any new orders unless special circumstances exist for any invoices or accounts identified by the Company.
3. Outstanding A/R balances that are 60 days past the original invoice due date may result in the Partner being denied authorization for or access to the Partner Portal, to support services, Support or new product updates, and/or to new leads, as appropriate based upon the amount outstanding. The Company has sole discretion as to the measures adopted. The Company reserves the right to waive any suspension of Partner’s privileges under the Reseller Agreement in the event that the Partner and the Company enter into a written agreement signed by the parties detailing a plan for how the past due accounts will be cured, together with monthly adherence to that plan to pay down the balance due. If an account is placed on a payment plan, Partner will lose, indefinitely, the right to receive any earned Partner Program benefits including margin or other forms of compensation under the Reseller Agreement, and any compensation earned may be used, at the Company’s sole discretion, to offset any amounts that Partner owes the Company.
4. The Partner must be within 30 days of current A/R status for all account balances to participate in any new product controlled release program. This requirement may be waived with a written payment plan, signed by the parties, to resolve and cure the outstanding A/R.

The Company reserves the right to suspend or terminate the Reseller Agreement, at its sole election, in the event that Partner has an outstanding balance for amounts owed to the Company in excess of 90 days past the original invoice due date, regardless of whether any of the foregoing steps are implemented. The parties agree that the Company will not terminate the Reseller Agreement due to any outstanding balances that are subject to a good faith dispute between the parties.

SUPPORT

Generally

Support is included during the first license subscription term for all new subscription license End User customers. While enrolled, this program provides eligible End Users with enhancements and corrections to Products in the form of updates, as more fully described in the End User Agreement and the Company’s Support policy.

Resellers are required to assist the Company with selling Support to End Users after the End Users’ initial term for Support and/or license subscription ends.

Resellers must contact the appropriate Company Channel Account Manager for an official Support quote and for any questions or issues regarding the Support program.

Billing & Collection

The Company will quote and invoice the Partner directly for the annual Support at the then current list price for the Support, less the Partner Program tier margin for renewals that the Partner is eligible for as described in this Partner Program.

If the Partner is not engaged, or is no longer enrolled in the Partner Program, then the Company will invoice Support directly to each End User on or before the Support renewal date.

Unpaid Support

In cases where the End User fails to pay the renewal invoice or where the Partner fails to pay to the Company the renewal invoice, the Company will no longer provide margin to the Partner for the account and may suspend or terminate the End User’s Support. In addition, the End User will not be able to install updates or upgrades to the Products past the expiration date of the Support period without renewing for a subsequent period.

Upon expiration of any End User’s Support, in order to reinstate the Support coverage, the End User and Partner must adhere to the Company’s then current reinstatement policy.

MARKETING POLICY

Marketing Offerings and Participation

It is our goal to market our Company, Products and our Partners in the marketplace with the highest of quality references and with timely and accurate business and marketing materials, promotions and events. We also expect our Partners to independently market the Products for maximum reach, demand and penetration in all applicable geographies. In order to achieve this goal, we produce, for our own and our Partners use, many original and licensed logos, images, art, media, materials, content, copyrights and trademarks (collectively, Company Materials) that display and communicate the brand and value proposition of the Products, professional services and Support in an accurate and appealing manner in the form of assets, advertisements, events and marketing campaigns.

Marketing support and joint participation with us is dependent upon the Partner remaining in good standing within the Partner Program. Some marketing program participation may be subject to fees and expenses as set forth from time to time by us in addition to any fees or expenses already described in this Marketing Policy.

Marketing Material

We will develop and make available Company Materials to support the sale of the Products. Reseller will also be issued materials with which to identify themselves as Partners in the Partner Program according to their tier status. Electronic materials will be supplied at no cost. Costs that may be passed on to the Partner for any requested printed Company Materials could include the professional printing costs, as well as, shipping costs.

Resellers must obtain written permission from the Company to copy, borrow, reproduce, distribute, link to, refer to or otherwise make public any Company materials that are not provided in accordance with this Marketing Policy. The Company’s permission may be provided or withheld in the Company’s sole discretion and is subject to revocation at any time by the Company with written notice.

Company Brand

Resellers must comply with the Company brand standards for all materials, including: existing Company Materials that will be leveraged by a Partner, Partner’s web site and web pages, co-branded materials that will be created, and any newly created materials as of the Effective Date of the Reseller Agreement. The Company will supply relevant guidelines and share best practices for implementation.

Company Web Site

All Partners in the Partner Program will be eligible to be listed on the Company web site under the directory listing.  Established top-tier Partners are eligible for additional listing information that will include the Partner’s logo and company description with a direct link back to the Partner’s web site.