Common use of ACQUISITION AND CONSIDERATION Clause in Contracts

ACQUISITION AND CONSIDERATION. At the Effective Date (as defined in Section 1.3), the Acquiring Company shall acquire from the holders of the Target Common Stock shares of the Target Common Stock in exchange for shares of Series A Stock in a manner that constitutes a tax-free reorganization under the Code (the "Transaction") following the satisfaction or waiver, if permissible, of the conditions set forth in Articles 6 and 7. (a) There currently are 67,308,857 shares of Series A Stock outstanding. Immediately prior to the completion of the Transaction, the Acquiring Company will complete a 68:1 reverse stock split, resulting in approximately 989,836 shares of Series A Stock outstanding after the completion of the reverse stock split. (b) Subject to, and following the completion of the reverse stock split contemplated in Paragraph 1.1(a), the Acquiring Company will offer to issue shares of its Series A Stock to stockholders of the Target at an exchange ratio of .8034 shares of Acquiring Company for each share of the Target Common Stock owned by such stockholder (the "Per Share Consideration"), subject to adjustment as set forth in Section 3.7(a)(i), below. (c) Following the completion of this Transaction, the Acquiring Company will issue notes ("Acquiring Company Notes") to all of the holders of notes that previously had been issued by the Target ("Target Notes") and are in existence on the date of the Closing, as hereinafter defined. (d) As identified on Schedule 3.7C, certain outstanding Target Notes grant warrants to the noteholders ("Target Note Warrants"). Pursuant to the terms of the Target Note Warrants, the exercise price of the underlying warrant is dependent upon the offering price of a private investment in a public entity transaction ("PIPE"). Following the occurrence of the PIPE by the Acquiring Company and at the option of the noteholder, any Target Note Warrant may convert to an investment in the PIPE. The conversion rate is to be the same rate of the PIPE offering made by the Acquiring Company to accredited investors. Thus, upon electing to convert his or her Target Note Warrant to an investment in the PIPE, the noteholder will receive from the Acquiring Company warrants ("Acquiring Company Note Warrants") equal to the Target Note Warrants held by such noteholder with an exercise price equal to the PIPE offering price. The Acquiring Company Note Warrants will be exercisable for a period of one year after closing the PIPE transaction. (e) The Per Share Consideration payable to all holders of the Target Common Stock, the Target Notes, and the Target Note Warrants is collectively referred to as the "Total Consideration."