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