License Agreement Between Indonesian Centre for Rice Research (ICRR) and Benih Citra Asia Ltd on Hipa 18 Hybrid Rice Variety, 2020

This license agreement is made and signed on Thursday, the Five of November, Two Thousand and Twenty (November 5, 2020) in Sukamandi,  between:   

Henceforth, will be referred to as the FIRST PARTY and the SECOND PARTY, and collectively as the PARTIES.

First of all the PARTIES would like to clarify the following circumstances:

1. The FIRST PARTY is the inventor of HIPA 18 HYBRID RICE VARIETY, through research activities at Indonesian Centre For Rice Research, Indonesian Agency for Agricultural Research and Development, therefore the IPR of this HIPA 18 HYBRID RICE VARIETY belongs to Indonesian Agency for Agricultural Research and Development, Ministry of Agriculture, through Trade Secret protection.
2. The SECOND PARTY is an industrial agricultural company and has the capacity in terms of human resources, management, funds, machineries and also facilities to produce HIPA 18 HYBRID RICE VARIETY.
3. This license agreement is carried out based on the will of the PARTIES to achieve technology transfer of innovation and dissemination of technology, creating mutually beneficial conditions, and balancing rights and obligations.

Based on the circumstances above, the PARTIES in the spirit of professionalism and good faith has agreed to create a trade secret license agreement for HIPA 18 HYBRID RICE VARIETY, with the following conditions:

Article 1

LEGAL BASIS

1. Law No. 29/2000 on Plant Variety Protection (State Gazette 2000 No. 241, Supplement to the State Gazette No. 4043);
2. Law No. 11/2019 on National System of Research, Development and Application of Science and Technology (State Gazette 2019 No. 148, Supplement to the State Gazette No. 6374);
3. Government Regulation No. 20/2005 on Intellectual Property and Technology Transfer Research and Development by Universities and Institutes for Research and Development (State Gazette 2005 No. 430);
4. Government Regulation No. 29/2009 on Procedures for Determining Tax Rates, Payment, and the Deposit of Unpaid Non-Tax State Income (State Gazette 2009 No. 58, Supplement to the State Gazette 4995);
5. Government Regulation No. 35/ 2016 on Types and Rates of Non-Tax State Revenue Applicable to the Ministry of Agriculture (State Gazette 2016 No. 171, Supplement to the State Gazette 5918);
6. Minister of Agriculture Ministerial Regulation No. 06/Permentan/OT.140/2/2012 on Agricultural Research and Development Cooperation Guidelines;
7. Minister of Agriculture Ministerial Regulation No. 99/Permentan/OT.140/10/2013 on Second Amendment over the Minister of Agriculture Ministerial Regulation number 06/Permentan/OT 140/2/2012 on Agricultural Research and Development Cooperation Guidelines;
8. Minister of Agriculture Ministerial Regulation No. 29/Permentan/OT.140/3/2013 on the Organization and Operation of Institute of Agricultural Technology Transfer;
9. Minister of Agriculture Ministerial Regulation No. 05/OT.140/I/2014 on Legal Document Drafting Guidelines for Cooperation Agreements within the Ministry of Agriculture.

Article 2

DEFINITION

In this Agreement, the following terms shall have the following meanings:

• Hipa 18 Hybrid Rice Variety is a variety generated from breeding activities that are assembled and owned by the FIRST PARTY, which has been released based on the Decree of the Minister of Agriculture Number 4998/Kpts/SR.120/12/2013 dated 2013, December 18th and an application for PVP (Plant Variety Protection) Rights has been submitted with number 00391/PPVT/S/2017 dated 2017, April 4th at the Center for Plant Variety Protection and Agricultural Licensing, Ministry of Agriculture.
• Source Seeds are the mature seeds for commercially producing F1 Hybrid Rice Varieties of Hipa Variety 18, consisting of male sterile strain (GMJ) or cytoplasmic genetic male sterile (CMS) IR79156A as female elder and fertility restorer strain or restorer IR53942 as male elder .
• Plant Variety Protection Rights, hereinafter abbreviated as PVP Rights, are special rights granted by the state to breeders and/or PVP rights holders to use their own varieties result from their own breeding or to give approval to other people or legal entities to use them for a certain period of time.
• License agreement is a license that given by a PVP Rights Holder to another person or legal entity to use all or part of a PVP right.
• Non-exclusive license agreement is the granting of license rights to more than one licensee and the licensee is not entitled to transfer this agreement for said technology.
• Transfer of Technology is the transfer of the ability to utilize and control the science and technology between institutions, agencies, or people, both within the country and from abroad to the country and vice versa.
• Cooperation is an agreement between the Indonesian Agency for Agricultural Research and Development as a technology producer and cooperation partners both from within and outside the country for marketing and/or product development.
• Cooperation Partners are the Central Government, Regional Governments, Business Entities, Universities, and Non-Governmental Organizations.
• Royalties are economic value compensation given to PVP rights holders in the framework of licensing.
• Sales price at distributor level is the selling price determined by the SECOND PARTY in accordance with the invoice.
• Audit is the process of collecting and evaluating evidence, measurable information about economic units carried out by an independent person to be able to determine and report the conformity of information with predetermined criteria.
• Verification is monitoring, checking documents, and inspection to determine the suitability of conditions that occur with the specified criteria.
• The Government Internal Supervisory Apparatus of the Ministry of Agriculture, hereinafter referred to as APIP, is an apparatus that carries out supervision through audits, reviews, evaluations, monitoring of the activities of the Ministry of Agriculture.
• Institute for Agricultural Technology Transfer, hereinafter referred to as Balai PATP, is a technical implementation unit in the field of research and development that is under and responsible to the Director General of the Indonesian Agency for Agricultural Research and Development which has the task of carrying out intellectual property management and technology transfer of agricultural research and development activities.

Article 3

GOALS AND OBJECTIVES

• This License Agreement is intended as an effort to disseminate technology to support agricultural development and improve public welfare.
• The objective of this License is to commercially transfer the technology for HIPA 18 HYBRID RICE VARIETY

Article 4

SCOPE

The scope of this License Agreement includes:

1. Determination of the licensed technology;
2. Determination of royalty; and
3. Technology transfer mechanism.

Article 5

LICENSING

• The Trade Secret License Agreement of HIPA 18 HYBRID RICE VARIETY as referred in Article 3 is Non-Exclusive, given by the FIRST PARTY to the SECOND PARTY to carry out production and marketing for domestic and/or overseas markets.
• The commercialization activities as mentioned in Article 3, includes:
  1. Production of HIPA 18 HYBRID RICE VARIETY;
  2. Promotion, Distribution dan Marketing of HIPA 18 HYBRID RICE VARIETY.

Article 6

RIGHTS AND OBLIGATIONS

• The FIRST PARTY has the following rights:
  1. Receiving royalty payments of 2,5% (two point five percent) from the selling price of HIPA 18 HYBRID RICE VARIETY at distributor level from the SECOND PARTY;
  2. Supervising the production activity and conduct random or periodic tests to guarantee the product quality;
  3. Receiving commercialization workplans from the SECOND PARTY no later than 3 (three) months after this agreement is signed;
  4. Receiving annual commercialization plans from the SECOND PARTY which covers the production, promotion, distribution and marketing of HIPA 18 HYBRID RICE VARIETY before the first month (January) of the following year;
  5. Receiving commercialization reports from the SECOND PARTY which details the amount of HIPA 18 HYBRID RICE VARIETY produced, distributed and sold annually (Januari to December);
  6. Utilizing the HIPA 18 HYBRID RICE VARIETY formula in research, development and dissemination activities.
• The SECOND PARTY has the following rights:

1. Carrying out the production, promotion, distribution and marketing activities of HIPA 18 HYBRID RICE VARIETY;
2. Receiving direct or indirect guidance and supervision from the FIRST PARTY for quality assurance of HIPA 18 HYBRID RICE VARIETY product; and
3. Obtaining and using data, information, recommendation and technology from this cooperation after getting written approval from the FIRST PARTY.
4. Obtaining other trademarks registered by Directorate General of Intellectual Property, Ministry of Law and Human Rights and communicating that to the FIRST PARTY.

• The FIRST PARTY has the following obligations:

1. Providing information and knowledge for the production of Ostri Pheromone;
2. Keeping the formula of HIPA 18 HYBRID RICE VARIETY secret from other non-contracted parties; and
3. Providing guidance and supervision in producing good quality HIPA 18 HYBRID RICE VARIETY to the SECOND PARTY, if requested and funded by the SECOND PARTY

• The SECOND PARTY has the following obligations:

1. Paying royalties to the FIRST PARTY at the rate of 2,5% (two point five percent) of the sale price of HIPA 18 HYBRID RICE VARIETY at the distributor level;
2. Carrying out production, promotion, distribution and sale of Ostri Pheromone;
3. Keeping the formula of HIPA 18 HYBRID RICE VARIETY secret from other non-contracted parties, unless authorized in writing by the FIRST PARTY;
4. Maintaining the quality of the product to meet quality standards set by the FIRST PARTY;
5. Submiting a commercialization plan no later than 3 (three) months after this License agreement is agreed and signed by the PARTIES, which contains:

• production plans;
• promotion plans;
• distribution plans;
• marketing plans; and
• estimation sale volume for a period of one year from the commencement of the commercialization plan;

1. Submiting annual reports on production, promotion, distribution and sales no later than January of the following year;
2. Creating complete, accurate and detailed reports and records regarding the sale of HIPA 18 HYBRID RICE VARIETY, to be used as the basis for calculating royalties that must be paid by the SECOND PARTY according to this agreement, and the records must be kept for 2 (two) years after inspection or in accordance with existing laws;
3. Creating reports on commercialization of HIPA 18 HYBRID RICE VARIETY to the FIRST PARTY, which includes the amount of annual sales for each period, and the use of public accounting services is strongly encouraged;
4. Putting the "Agro Inovasi" logo proportionally on each package of HIPA 18 HYBRID RICE VARIETY product;
5. Registering the HIPA 18 HYBRID RICE VARIETY Trade Secret License Agreement to the Directorate General of Intellectual Property, Ministry of Law and Human Rights; and
6. Providing products for promotional purposes on a regular basis and/or according to the request of the FIRST PARTY.

Article 7

ROYALTY PAYMENTS

The obligation of the SECOND PARTY is to pay royalties as stated in Article 6 paragraph (4) in exchange for the use of the technology to the FIRST PARTY, with the following conditions:

• Royalty payment is 2,5% (two point five percent) from the sale price of HIPA 18 HYBRID RICE VARIETY at distributor level, multiplied by the sales volume for 1 (one) calendar year.
• Payment of royalties by the SECOND PARTY to the FIRST PARTY as stated in paragraph (1) shall be made no later than March 31 of the following year before the due date, through Bank Rakyat Indonesia Bogor Branch with Account Number 0012.01.001890.30.8 belonging to BPn 023 IATT as notified in writing by the FIRST PARTY.
• If the payment of royalties as stated in paragraph (2) is made after the due date, the SECOND PARTY shall be subjected to a fine of 2% (two percent) per month in accordance with the laws and regulations.

Article 8

VERIFICATION

• The SECOND PARTY allows the FIRST PARTY's inspector to coordinate with IATT to verify the total sales calculation for HIPA 18 HYBRID RICE VARIETY and the value of royalties to be paid.
• The verification activity as referred to in paragraph (1) by IATT shall be communicated to the SECOND PARTY at least 10 (ten) days before and implemented no more than 2 (two) times in one calendar year.
• Costs required for verification activities as referred to in paragraph (2) shall be borne by each party.

Article 9

SUPERVISION AND CONTROL

• THE PARTIES allow APIP to supervise and control the scope of this agreement.
• Supervision and control as referred to in paragraph (1) aims to monitor the technology transfer and royalties resulting from the technology transfer according to the provisions of confidentiality specified in relevant laws and regulations.
• Costs required for supervision and control activities as referred to in paragraph (1) shall be borne by the Inspectorate General of the Ministry of Agriculture.

Article 10

SETTLEMENT OF DISPUTES

• If there are disputes in the interpretation and / or implementation of this license agreement, the PARTIES agree to settle it by deliberation to reach a consensus, which will be mediated by IATT.
• In disputes where a consensus cannot be reached, the PARTIES agree to resolve it through Arbitration.
• Arbitration as referred to in paragraph (2) consists of 3 (three) Arbitrators, two Arbitrators are appointed by the PARTIES, who will then appoint the third Arbitrator to act as the Chairperson of the Arbitration Tribunal.
• In case both Arbitrators chosen by the PARTIES as referred to in paragraph (3) fail to appoint a third Arbitrator who will sit as the Chair of the Arbitration Tribunal within 30 (thirty) days, the PARTIES agree to defer to Head of Bogor District Court to appoint the third Arbitrator.
• The fees required for carrying out Arbitration are charged to the PARTIES.
• The Arbitration Council as referred to in paragraph (4) stipulates the procedures and implementation of dispute resolution and makes decisions based on the majority votes of the members, and the decision is absolute and binding for the PARTIES.
• Within the period of dispute resolution, the PARTIES by mutual agreement or the approval of the Arbitration Body can implement this license agreement as before, except for activities that are being disputed.

Pasal 11

FORCE MAJEURE CONDITIONS

• Force majeure is an incident that is beyond human control and cannot be avoided, so that an activity cannot be carried out or cannot be carried out properly.
• Force majeure as referred to in paragraph (1) includes earthquakes, floods, hurricanes, fires, rebellions, wars, sabotages and riots.
• A statement of force majeure as referred to in paragraph (2) can be made by the SECOND PARTY and communicated to the FIRST PARTY at no later than 7 (seven) days after the event of a force majeure, with an evidence of force majeure statement from the head of authorized agencies.
• Losses due to force majeure are the responsibility of each PARTY.
• Force majeure as referred to in paragraph (2), does not eliminate the rights and obligations that have been carried out before the occurrence of force majeure.
• Force majeure can stop the implementation of this agreement based on the consent of the PARTIES.

Article 12

CORRESPONDENCE

• Correspondence for the implementation of this agreement can be carried out in writing, telephone, facsimile and/or electronic mail listed below:
  • The FIRST PARTY :
  • - Institution : Indonesian Centre For Rice Research
    • Address : Jalan Raya 9, Sukamandi, Subang, Jawa Barat 41256
    • Phone         : 0260 - 520157
    • Fax           : 0260 - 521104
    • E-mail             : bbpadi@litbang.pertanian.go.id

           kerjasama.bbpadi@gmail.com

• The SECOND PARTY :
  • Company : Benih Citra Asia Ltd
  • Address : Jalan Akmaludin Nomor 26 Desa Wirowongso, Kecamatan Ajung, Kabupaten Jember, Jawa Timur 68175
  • Phone           : 0331 - 323216
  • Fax           : 0331 - 323603
  • E-mail            : benihcitraasia@bintangasia.asia
• Notification or communication is considered to have been carried out, if evidenced by:

1. Acknowledgement of receipt of written letters;
2. Record of delivery and receipt issued by the post office or other delivery services;
3. “OK” sign in fax machines;
4. “Message sent” status in e-mails.

(3)    Any changes as referred to in paragraph (1) must be communicated by the PARTIES.

Article 13

DISCONTINUATION OF AGREEMENT

• If in the implementation of this agreement, the FIRST PARTY or the SECOND PARTY feels aggrieved due to negligence and/or violation of the conditions stated in this agreement, then this agreement can be reviewed.
• The PARTIES can terminate this agreement at any time unilaterally, in the following cases:
  1. Violation of the provisions stated in this agreement, with no rectification within 60 (sixty) days after a written notification from the PARTIES;
  2. The SECOND PARTY is for any reason, except for force majeure as referred to in Article 11, not able to carry out the production and marketing of HIPA 18 HYBRID RICE VARIETY by a maximum period of 1 (one) year from the date of the signing of this agreement; or
  3. all or part of the essential activities causing this agreement being canceled, due to seizure or an action by law enforcement agencies that cannot be solved within 30 (thirty) calendar days from the date of the notification of legal action by law enforcement agencies.
• The PARTIES agree to terminate this agreement.

Article 14

CONSEQUENCES OF TERMINATION OF AGREEMENT

(1)    If the termination of the agreement as referred to in Article 13 is initiated by the FIRST PARTY, the SECOND PARTY is permitted to continue using all existing raw materials to produce the HIPA 18 HYBRID RICE VARIETY until production from those materials ends, henceforth the SECOND PARTY must stop its commercialization.

(2)    If termination of the agreement referred to in Article 13 is initiated by the SECOND PARTY, the SECOND PARTY must immediately submit all materials, documents and information without exception to the FIRST PARTY, and stop the production, promotion, distribution and sales of Ostri Pheromone.

Article 15

AMENDMENT

• Other matters that have not been regulated and/or clearly stated in this Agreement will be regulated later in addendums and/or amendments in the agreement and signed by the PARTIES.
• The amendments of Agreement as referred to in paragraph (1) shall become one entity which is an integral part of this Agreement.

Article 16

MISCELLANEOUS

• The PARTIES are prohibited from transferring this Agreement.
• The PARTIES are prepared to cover all costs relating to the implementation of their respective rights and obligations, in accordance with this agreement.
• This Agreement is based on the laws and regulations of the Republic of Indonesia.

Article 19

DURATION

• This agreement shall come into force after its signature by the PARTIES for a period of 5 (five) years, from the fifthday, November, two thousand and twenty (5-11-2020) to the eleventh day, November, year two thousand and twenty five (11-11-2025).
• The period referred to in paragraph (1) can be extended based on the agreement of the PARTIES.
• The extension of the period as referred to in paragraph (2) shall be preceded by submitting a written application from the SECOND PARTY to the Director General of the Indonesian Agency for Agricultural Research and Development with a copy to the FIRST PARTY and the Head of Institute for Agricultural Technology Transfer at the latest than 2 (two) months before this agreement ends.
• In the event that this agreement ends and is no longer extended, the rights and obligations which have not been resolved by the PARTIES must be settled first as a result of the implementation of this agreement.

Thus this agreement was made and signed by the PARTIES in 2 (two) copies with appropriate stamp duties and institutional stamps, where each copy has the same legal force, and several copies without stamps were also created for various purposes.

        SLAMET SULISTIYONO        Dr. Ir. PRIATNA SASMITA, M.Si

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