Exchange Agreement and Exclusive Stock Purchase Agreement among Competitive Technologies, Inc., Betty Rios Valencia, and Agrofrut E.U.

Contract Categories: Business Finance › Exchange Agreements
Summary

Competitive Technologies, Inc. (CTT) is acquiring Agrofrut E.U. (Colombia) through a two-step process. First, CTT will purchase 5% of Agrofrut’s shares and obtain exclusive marketing rights to its nutraceutical products in exchange for $750,000. CTT will then have 180 days to complete due diligence and finalize the acquisition of the remaining 95% of Agrofrut’s shares by exchanging CTT shares with Betty Rios Valencia. After closing, Agrofrut will become a wholly-owned subsidiary of CTT, with CTT financing its operations and appointing its board members.

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EX-10.1 2 cttexhibit101.txt EXHIBIT 10.1 SUMMARY OF TERMS OF EXCHANGE AGREEMENT AND EXCLUSIVE STOCK PURCHASE AGREMENT AMONG COMPETITIVE TECHNOLOGIES, INC., BETTY RIOS VALENCIA AND AGROFRUT E.U. ------------- APRIL ___, 2007 Acquiring Entity: Competitive Technologies, Inc. (CTT) Acquired Entity: Agrofrut E.U. (Colombia) (Agrofrut) Party Exchanging Shares: Betty Rios Valencia (Exchange Party)
As a strategic investment, CTT (i) acquires from Agrofrut upon execution of this Term 1. Acquisition: Sheet, Stock Purchase Agreement and Exclusive Marketing Agreement (A) 5% of Agrofrut's Shares, and (B) rights to market exclusively the total output of Agrofrut nutraceutical products and output from which CTT would receive 40% of the revenue and Agrofrut would receive 60% of the revenue upon receipt by CTT; and (ii) at Closing exchanges CTT Shares with Exchange Party to acquire 100% of Agrofrut's remaining shares. 750,000 (U.S.) upon execution of the Term Sheet, Stock Purchase Agreement and Exclusive Marketing Agreement by CTT, 2. Funds Transfer by CTT to Agrofut: Exchange Party, and Agrofrut. In return for payment of $750,000 from CTT to 3. Purchase Price of 5% of Agrofrut shares; Agrofrut upon execution of this Term Sheet, Acquisition of Remaining 95% of Agrofrut Stock Purchase Agreement and Exclusive shares: Marketing Agreement, Agrofrut would issue CTT 5% of Agrofrut's Shares and Exchange Party would give CTT an exclusive 180-day period for Closing the Exchange to acquire 100% of Agrofrut Shares. Agrofrut shall use the $750,000 payment for corporate purposes, excluding distributions to 4. Use of Proceeds: Exchange Party. CTT/Agrofrut/Rios Term Sheet April ____, 2007 Page 2 of 5 5. Fees and Expense: Each party shall be responsible for the fees and expenses incurred by that party in connection with this transaction unless the other party shall agree in advance to a different arrangement. 6. CTT's Ownership of Agrofrut shares: 5% upon execution of this Term Sheet, Stock Purchase Agreement and Exclusive Marketing Agreement; 100% upon Closing. Agrofrut and Exchange Party shall be required to supplement due diligence completed to date 7. Completion of Due Diligence and and to provide any assistance or information Valuation: required for an independent appraisal/ valuation. CTT shall make an appraisal/ valuation of Agrofrut to confirm technological feasibility of and intellectual property rights in Agrofrut's plant and machinery for separation of micronutrients from organic wastes, Agrofrut's product mix and output, market assessment of the demand and prices of Agrofrut's product mix and output, and the impact of Agrofrut's increased nutraceutical output on market demand and prices. Upon approval of the independent appraisal/valuation by CTT's Board, the number of shares to be received in the Exchange shall be determined by application of Terms 8 and 9 below. The value of CTT Shares at Closing to acquire all of Exchange Party's Agrofrut Shares shall be 110% of the 180-day weighted average price of CTT shares, for the period 90 days before the date of this Term Sheet and the period 90 days beginning on the date of this Term Sheet, as determined by the closing price and trading volume shown on the Consolidated Tape of the American Stock Exchange for each trading day in the 180-day period ("CTT Share Value"). 8. CTT Share Value upon Option Exercise: The number of CTT Shares that Exchange 9. Determination of Exchange Ratio: Party would receive at Closing shall be determined by multiplying the independent valuation (subject to both appropriate discount factor based on Agrofrut's stage of business development and approval by CTT's Board of CTT/Agrofrut/Rios Term Sheet April ____, 2007 Page 3 of 5 9. Determination of Exchange Ratio (cont'd): Directors) by .95 and dividing the result by the CTT Share Value. Shares of Common Voting Stock of Agrofrut E.U. (Colombia) are sold to Competitive Technologies, Inc. (U.S) at the execution of this Term Sheet, Stock Purchase Agreement and Exclusive Marketing Agreement. All 10. Sale and Exchange: remaining Shares of Agrofrut E.U. are exchanged at Closing for Shares of Competitive Technologies, Inc. 11. Registration of Exchange Shares of CTT: Exchange Party would receive unregistered CTT Shares that are restricted under Rule 144 of the Securities and Exchange Commission. As agreed by the parties, all or part of Exchange Party's CTT shares may be registered if CTT at any time proposes to register additional common shares. 12. Support by Exchange Party Prior to Closing, the Exchange Party shall provide Agrofrut and CTT with all necessary strategic and logistical support for (1) plant operation using Agrofrut's proprietary technology to extract micronutrient and other nutraceutical commodities from organic wastes processed by Agrofrut, (2) storage, preparation for shipment and transportation of the Agrofrut products, and (3) compliance with all laws and regulations governing manufacture, packaging, labeling, storage, shipment and sale of nutritional products for human consumption. Further, the Exchange Party and Agrofrut shall use their best efforts to convert key consultants to employees and to obtain from them employment and noncompetition agreements. 13. Encumbrances: Prior to Closing, Agrofrut shall not encumber any asset and the Exchange Party shall not encumber shares of Agrofrut without the permission of CTT while this Term Sheet is in effect. CTT/Agrofrut/Rios Term Sheet April ____, 2007 Page 4 of 5 Prior to Closing, the following actions require the prior approval of CTT: (a) amending the articles of incorporation, by-laws or corporate charter of Agrofrut; (b) sale or exchange of assets valued at more than $10,000 (U.S.) or intellectual property or other rights of Agrofrut; (c) sale or exchange of any interest in Agrofrut to a new owner; (d) taking any action which would cause the dilution of CTT's or the Exchange Party's interest in Agrofrut; (e) extending the purposes for which Agrofrut is organized or operating; (f) entering into any agreement for the sharing of profits or for joint ventures with any person or entity engaging in any business or venture with Agrofrut; (g) acquiring or merging with any business or executing any agreement to operate any business; (h) engaging in any other means of equity financing; (i) lending of Agrofrut funds; (j) filing or consenting to filing a petition for or against Agrofrut under any federal or state bankruptcy, insolvency or reorganization act; (k) establishing a program to allow one or more key employees to be awarded options or appreciation rights by Agrofrut; (l) entering into any agreement to market or to sell CTT 14. Decisions Requiring CTT Approval products or output; and/or (m) making any following CTT Payment for Exclusive Option: assignment for the benefit of creditors. 15. Closing The Closing shall be no later than 180 days after execution of this Term Sheet, the Stock Purchase Agreement and the Exclusive Marketing Agreement. Agrofrut shall cooperate fully in due diligence and independent appraisal/valuation. Agrofrut becomes a wholly-owned subsidiary of CTT following Closing. 16. Post-Acquisition: After Closing, CTT would finance Agrofrut operations in amounts agreed by CTT's board, and/or by outsourcing payroll, administration, marketing and other operations to CTT if such CTT/Agrofrut/Rios Term Sheet April ____, 2007 Page 5 of 5 17. Financing of Agrofrut: outsourcing is economical. After Closing, Agrofrut would have five Board members who would be elected by CTT. 18. Agrofrut Board Composition after Closing: 19. Agrofrut President and Closing: After Closing, the President and Chief Executive Officer of Agrofrut would be selected by Agrofrut's Board of Directors.
This summary of terms, other than the Agrofrut and the Exclusive Marketing Agreement is non-binding and is subject to execution of definitive documents, provided, however, that the Stock Purchase Agreement and Exclusive Marketing Agreement shall be binding on the parties, and the parties shall proceed in good faith to endeavor to consummate the Exchange. COMPETITIVE TECHNOLOGIES, INC. By: _____________________________ Name: John B. Nano Title: President & CEO AGROFRUT, E.U. By: ______________________________ __________________________________ Name: Betty Rios Valencia Betty Rios Valencia, Individually Title: President & CEO