KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE

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comment on conflicting documents for vendor agreement
November 21, 2018
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comments on conflicting documents for vendor agreement from November 15, 2018 article
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Ken,
            Further thought on a Vendor Agreement—Many we’ve seen lately have a provision that states,            
        ‚Äč"This Agreement is Non Assignable without consent/approval from Vendor."
              When the alarm company decides to sell its company or even just the Contracts, if there is a Non Assignability clause, the potential buyer will not pay for that Contract without proper documented approval to transfer from the Vendor.  This creates a huge issue.  The selling company will not want to discuss this with the Vendor prior to closing the buy/sell transaction for fear that the Vendor will not allow the transfer and go out for rebid because the seller is selling.  This could be catastrophic for the seller.  A real conundrum.
            Ken’s suggestion of getting an attorney involved early on to negotiate this Contract with the Vendor is paramount.  The above is just one clause that can bite you somewhere down the road.  There are many others as we’ve seen all too often.  It may look great now because you’re getting the business.  Watch out for the future effects of your action.
Steve Rubin, Partner
Davis Mergers and Acquisitions Group
847 340 2555
srubin@graybeardsrus.com
www.graybeardsrus.com
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Ken,
            Great information on this site. I have followed you for a number of years and taken your suggestions and information seriously. It has saved me on a number of occasions.
            You will be the first and only person I go to when selling my alarm company.
Thank you for all the good advice.
Paul 
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Response
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            Right to assign the contract is usually a non-starter; the buyer won't want to assume the risk of buying the account when the transfer is not permitted.  Sellers on the other hand are loath to contact the subscriber to ask for permission to sell the company.  Avoid changing this provision in the Standard Form Agreements.  
            I want to clarify the term "vendor agreement".  In the alarm industry we refer to those businesses that provide support, products and services to the alarm dealers as Vendors; their agreements are called Vendor Agreement or sometimes Dealer Agreement.  But the "vendor" agreement that the article on November 15, 2018 referred to is an agreement provided by a subscriber, usually government, institutional or large company with the clout to demand its own form agreement be signed by any contractor looking for provide work for the subscriber.  
            When negotiating with these type of subscribers too many alarm companies are intimated and afraid to challenge the vendor agreement; never mind presenting the alarm company agreement.  It's a mistake.  While you may ultimately agree to the vendor agreement, making your contract with the devil, you should at least make an effort to negotiate the terms and try and get your Standard Form signed.  Of course if you don't have a Standard Form Agreement to present you are already behind the 8 ball. 
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com