6. Assignment

6. Assignment

Almost every vendor agreement includes a strict prohibition on the licensee's right to assign the agreement, even in the event of a merger or acquisition. In the event of such an occurrence, the successor entity may have to spend hundreds of thousands, potentially millions, of dollars re-licensing software used by the acquired entity. These types of provisions are unfair to the licensee and may result in a windfall to the licensor.

The licensee should require the ability to assign its rights under the agreement to its affiliates and other entities which may become successors or affiliates due to reorganization, consolidation, divestiture and the like. Any concerns the vendor may have from an assignment can be addressed by the requirement that the assignee will accept all of licensee's obligations under the agreement. Similarly, the licensee should also obtain assurance that any vendor assignee will agree to be bound by all of the terms and conditions of the agreement, including, without limitation, maintenance and support obligations.

Example Revision:

19. Assignment. Except as provided below, neither this Agreement nor any interest in this Agreement may be assigned by either party Customer without the prior express of written approval of the other party, such approval shall not be unreasonably withheld or delayed Vendor. Vendor may assign, pledge, mortgage, sell to a third party, or otherwise dispose of all or any portion of this Agreement, provided that such action shall not relieve Vendor of its obligations to Customer under this Agreement or reduce Customer's rights hereunder. Notwithstanding the foregoing, either party may assign this Agreement to an affiliate or to a successor entity in the event of a merger, acquisition, or sale of all or substantially all of its assets. Any such successor entity shall agree in writing to be bound by the terms of this Agreement.

19. Assignment. ^[1] This Agreement shall not be assigned by either party without the prior written consent of the other except as follows:

    1. Vendor may assign this Agreement provided such assignment (i) is in writing, (ii) states that the assignee is accepting all obligations of Vendor under this Agreement and agrees to be bound by and discharge the Agreement's terms, conditions, and obligations as if it were the original party hereto, and (iii) Vendor, the assignee entity, or both agree in writing to support the Licensed Software throughout the Term.

    2. Customer may assign this Agreement to a parent or subsidiary corporation, a subsidiary of its parent corporation, or any corporation or entity in which Customer has an ownership interest, or in the event of an affiliation, merger, acquisition, sale or disposition of substantially all of its assets, consolidation, or other joint operating arrangement between Customer and a third party(ies), provided such assignment (i) is in writing and (ii) states that the assignee is accepting all obligations of Customer under this Agreement and agrees to be bound by and discharge each of the Agreement's terms, conditions, and obligations as if it were the original party hereto.

^[1]The following is an alternate, more fully fleshed-out version of the assignment provision.