Dated: February 25, 2007
First Vice President &
Head of Cards
Rangs Bhaban (8th Floor)
113 -116, old Airport Road
Tejgaon, Dhaka – 1215
Re: Vetting of Master Agreement for Software Licensing and Outsourcing services between Bank 1 And Company 1.
We refer to your letter dated 10 February 2007 on the above subject.
We have perused the Draft copy of Master Agreement for Software Licensing and Outsourcing Services to be executed between Bank 1 (“the Bank”) and Company 1 (“BEPS”).
Our comments on the draft agreement are as follows:
|Clause /Paragraph||Our Comments|
|Particulars of BEPS||In the 2nd line of the particulars of BEPS, please delete the word “(BEPS)” because this definition is properly given later on in the paragraph.|
|Particulars of Bank 1||In the 1st line of the particulars of Bank 1, please delete the words “(the “Participating Bank”)” because this definition is properly given later on in the paragraph.|
|Recital (3)||In Recital (3), System Access GeneSys Sdn Bhd has been defined as “SAG”, but throughout the Agreement it has been referred to as “System Access”. As such, it is suggested that, in the 2nd line of Recital (3) the word “(“SAG”)” should be deleted and replaced with the word “(“System Access”)”.|
|Clause 1.17||In clause 1.17, reference is made to schedule 4. We have not been provided with a copy of this schedule 4. Please check whether this is a typographical error. If it is not an error and there is indeed such a schedule 4, then please check the contents of it carefully.|
|Clause 1.26(iv)||In Clause 1.26 (iv), please delete the word “for” and replace it with the word “or”.|
|Clause 2.8||In Clause 2.8, BEPS has been given the right to audit the Bank’s use of the Software on a monthly basis. If such audit reveals that the Bank has underpaid fees to BEPS, the Bank shall have to pay to BEPS such additional fees at the prices previously agreed upon. But this clause does not state what would happen if the audit reveals that the Bank has overpaid for the Services or if it is found that the Bank has paid for services which has not been provided yet. That is why we suggest that at the end of clause 2.8 the following sentence may be added:“Alternatively, if such audit reveals that the participating Bank has overpaid fees to BEPS or have paid for services which has not been provided by BEPS yet, BEPS shall promptly reimburse the Participating Bank such additional fees paid.”|
|Clause 2.9||Please note that, according to Clause 2.9, the licence extended to the Bank by BEPS under the Agreement is strictly on non-exclusive basis. That is, BEPS retains the right to same licence to other Banks. Please ensure that the Bank agrees with this term.|
|Clause 4.1 (c)||Under Clause 4.1 (c), the Bank is under an obligation to insure the ATM Machines for the entire duration of the Agreement. Please check whether the Bank is willing to discharge this obligation.|
|Clause 5.3||Please note that according to this clause, the fees specified in the Agreement does not include taxes, duties or other fees. All taxes duties or other fees, except taxes based on BEPS’s net income are to be billed to and paid by the Bank. Please check whether or not the Bank agrees to fulfil this obligation.|
|Clause 6.1.1||Please delete and replace clause 6.1.1 with the following:
“6.1.1 Either party that has a right of termination under this Clause may exercise that right forthwith, subject to sub-clauses 6.1.2 and 6.1.3, by giving the other party one hundred and twenty (120) days notice of termination in writing, effective upon expiry of such notice period.”
|Clause 6.2(b)||According to Clause 6.2(b) upon termination of the Agreement for any reason, if the Bank had made payments of any fees to BEPS, no such payments made by the Bank in relation to the software or in relation to the services shall be refunded under any circumstances whatsoever. This may have the effect that even if the Bank had paid for future services, BEPS will not return those fees after termination. Please check whether the Bank agrees with this clause.|
|Clause 7.3||In Clause 7.3(i) it is stated that BEPS does not warrant that the Software will meet the Bank’s requirement and in Clause 7 (iii) it is stated that BEPS does not warrant that the software will be uninterrupted or error-free. These clauses are against the interest of the Bank. As such, please review carefully whether the Bank wants to keep these clauses.Please note that in the bold paragraph in Clause 7.3 it is stated that, the warranties in clauses 7.1 – 7.2 are exclusive and in lieu or all other warranties. Please check whether the Bank wants to allow BEPS to give such limited warranties. If the Bank wants to impose more stringent warranties upon BEPS then the paragraph written in bold in clause 7.3 may be deleted and replaced with the following:
“THE WARRANTIES IN CLAUSES 7.1 – 7.2 ARE IN ADDITION TO ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NONINFRINGEMENT AND QUALITY OF SERVICE.”
|Clause 7.3 (c)||Please note that in Clause 7.3(c) there is a disclaimer that BEPS makes no other representation and warranties regarding any matterother than those specifically stated in the Agreement. Please check whether the Bank wants to allow BEPS to give such limited warranties. If the Bank wants to allow such limited warranties in relation to the Services provided by BEPS then this clause may be deleted and replaced with the following:“DISCLAIMER OF OTHER WARRANTIES IN RELATION TO SERVICES: EXCEPT AS SPECIFICALLY STATED IN THIS AGREEMENT, BEPS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICES PROVIDED BY BEPS, INCLUDING THE MERCHANTABILITY, SUITABILITY, ORIGINALITY, FITNESS FOR A PARTICULAR USE OR PURPOSE OR RESULTS TO BE DERIVED FROM THE SERVICES PROVIDED UNDER THIS AGREEMENT.”|
|Clause 7.4||Please note that under Clause 7.4 there is no provision for compensation being paid by BEPS for any loss or damages suffered by the Bank as a result of any breach of warranties by BEPS; the Bank is only entitled to a pro-rated rebate of any fees actually paid. Please ensure whether or not the Bank agrees to this clause.|
|Clause 8.1||In Clause 8.1 it is stated that, in no event shall BEPS or System Access be liable for any indirect, incidental, special or consequential damages even if BEPS or System access have been advised or the possibility of such damages. We are of the opinion that this clause is against the interest of the Bank. As such we suggest that in line 8 of clause 8.1 the words “EVEN IF” may be deleted and replaced with the words “EXCEPT WHEN”.|
|Clause 8.2||In Clause 8.2 it is again stated that the aggregate and cumulative liability of System Access and BEPS jointly for direct and proven damages shall in no event exceed the amount of fees actually paid by the Bank under the Agreement. Please check whether or not the Bank agrees to limit BEPS’s liability to the amount of fees paid.|
|Clause 9.1||At the end of Clause 9.1 please delete the ‘full stop’ and replace it with the words “in relation to the following conducts by the Participating Bank:”|
|Clause 11.1||In the 7th line of the 2nd paragraph of Clause 11.1, please replace “10.1” with “11.1”.|
|Clause 12.1.1||Please note that according to this Clause, the Bank shall need the prior written consent of BEPS before assigning their rights under this Agreement. But there is no similar restriction on BEPS regarding assignment. Please check the matter.|
|Clause 12.2||Please delete the words “excluding its conflict of law provisions” from Clause 12.2 as they serve no purpose.|
Apart from the above observations, the terms and conditions of the Agreement are otherwise in order.
If you have any further query, please do not hesitate to contact the undersigned.
The Lawyers & Jurists
M.L.Hotel Tower Ltd, 208, Shahid Syed Nazrul Islam Sarani,
Bijoy Nagar, Dhaka-1000.