Common use of SEC Investigation Clause in Contracts

SEC Investigation. The staff of the SEC is in the process of conducting a formal investigation involving Parent. The Formal Order of Investigation indicates that the staff is investigating certain registration statements filed by Parent in 2002 and 2003 by which shares of Parent Common Stock were issued to consultants. The staff also appears to be investigating whether officers, directors and others made misrepresentations in certain of Parent's press releases regarding planned mergers and acquisitions that were never consummated. The investigation is ongoing. The staff has not indicated whether it will or will not recommend that the Commission file an enforcement action against Parent, it officers or directors, or others. If the SEC brings an action against Parent based on the registration statements it could result in a civil injunctive order or administrative cease and desist order being entered against Parent in addition to the imposition of a significant civil penalty. If the Commission brings an action based on alleged material misrepresentations, it could result in civil injunctions and civil penalties being assessed against Parent or persons formerly or currently affiliated with it that are alleged to have been involved in the misrepresentations.