Common use of Consequences of Xxxxxxx Xxxxxxx Clause in Contracts

Consequences of Xxxxxxx Xxxxxxx. 2.1 The consequences of xxxxxxx xxxxxxx are serious. They include civil suits for rescission or damages by private parties and SEC civil and criminal enforcement actions. 2.2 The SEC may also bring an action in federal court to impose a civil penalty against a person who "controlled" the violating person, if the "controlling person" knew or recklessly disregarded the fact that a controlled person (e.g., an employee of the Company) was likely to engage in xxxxxxx xxxxxxx and failed to take action to prevent the violation. The term "controlling person" in this context means the Company and any person with power to influence or control the direction or management, policies or activities of another person, and arguably includes directors and officers of the Company.