Joint Venture Term Sheet

Below is a legal-ready Joint Venture (JV) Term Sheet suitable for Saudi commodity trading arms or family officesinvesting in Agarwood + Supercritical CO₂ Extraction (SFE) with Crown Extraction Solutions Inc. (CESI).
It is structured to be handed directly to counsel for conversion into SHA, JVA, and SPAs.

JOINT VENTURE TERM SHEET

Agarwood & Supercritical CO₂ Extraction Platform
(Saudi Partner × Crown Extraction Solutions Inc.)

1. Parties

  • Saudi Partner:
    A Saudi-based commodity trading arm / affiliated investment vehicle
  • Local Partner / Operator:
    Crown Extraction Solutions Inc. (CESI)
  • JV Entity:
    Special Purpose Company (“JVCo”)

2. Purpose of JV

To develop, own, and operate a vertically integrated agarwood processing platform, including:

  • Access to managed agarwood plantations
  • Supercritical CO₂ extraction (SFE) facilities
  • Production of halal-compliant agarwood extracts, oils, and derivatives
  • Long-term offtake supply for Saudi and GCC markets

3. Jurisdiction & Structure

  • Operating JVCo: Philippines
  • Equipment / IP HoldCo: Offshore (e.g., Singapore / DIFC / Cayman – to be agreed)
  • Governing Law:
    • JV Agreements: English law
    • Local operating matters: Philippine law

4. Equity Ownership

PartyEquity %
Saudi Partner49–60%
CESI40–51%

Exact split to be finalized at Financial Close.

5. Capital Contributions

Saudi Partner

  • Cash equity contribution
  • Funding of SFE equipment and installation
  • Optional: offtake prepayments / advance purchase facilities

CESI

  • Operational platform and permits
  • Plantation access and supply arrangements
  • Technical know-how (SFE operations, QA/QC)
  • Local management and workforce

6. Governance

  • Board: Equal representation
  • Chairman: Saudi Partner nominee
  • Reserved Matters (Supermajority):
    • Change of business scope
    • Capex above agreed threshold
    • Related-party transactions
    • New debt issuance
    • Sale of material assets
    • Change in offtake terms

7. Offtake Rights (Core Commercial Term)

  • Priority Offtake: 60–80% of total JV production
  • Offtake Agreement: Long-term take-or-pay
  • Pricing Mechanism: Formula-based
    • Cost base + agreed margin (floor)
    • Upside participation tied to grade / market benchmarks
  • Currency: USD or SAR-pegged USD
  • Delivery: FOB Philippines or CIF KSA (as agreed)

8. Returns & Distributions

  • Target Equity IRR:
    • Base Case: 14–18% (USD)
    • Hybrid / Expansion: 18–22%+
  • Dividends: Quarterly or semi-annual, subject to cash flow and reserves
  • Priority: Operating costs → debt → offtake obligations → dividends

9. Asset Security & Protections

  • First-ranking lien over SFE equipment
  • Title retention on extracted products until paid
  • Offshore ownership of critical equipment/IP
  • Escrow of offtake proceeds
  • Step-in rights for Saudi Partner upon default
  • Comprehensive insurance (equipment, business interruption)

10. Halal, ESG & Compliance

  • Supercritical CO₂ extraction (solvent-free)
  • Halal certification maintained at all times
  • No wild-harvested agarwood
  • Compliance with CITES, DENR, and export regulations
  • Annual ESG and compliance reporting

11. Exclusivity

  • Saudi Partner granted exclusive offtake rights for KSA & GCC
  • JVCo restricted from selling competing grades into GCC without consent

12. Expansion Rights

  • Right of first refusal on:
    • Additional SFE capacity
    • New botanical extraction lines
    • Downstream fragrance or blending JVs
  • Expansion funded pro rata or via separate SPVs

13. Exit & Buyout

  • Lock-up: 3–5 years
  • Exit Options:
    • Saudi Partner call option
    • CESI put option (at agreed multiple)
    • Third-party sale (subject to ROFR)
  • Valuation: EBITDA multiple or DCF (to be agreed)

14. Confidentiality & Non-Compete

  • Mutual confidentiality obligations
  • CESI non-compete in agarwood SFE supplying GCC outside JV

15. Conditions Precedent

  • Legal, technical, and commercial due diligence
  • Finalization of offtake agreement
  • Halal certification confirmation
  • Board and regulatory approvals
  • Financial close documentation

16. Non-Binding Nature

This Term Sheet is non-binding, except for:

  • Confidentiality
  • Exclusivity
  • Governing law
  • Costs

One-Line Legal Thesis

This JV converts agarwood into a controlled, halal-compliant, asset-backed supply chain with contracted offtake—delivering durable USD/SAR-linked returns for Saudi capital.

Next (I strongly recommend)

I can now:

  1. Convert this into a Shareholders’ Agreement outline
  2. Draft the Offtake Agreement (take-or-pay)
  3. Create a Shariah compliance memo
  4. Localize for a named Saudi trading group
  5. Prepare a board approval slide (1 page)

Tell me which to finalize and I’ll proceed immediately.