Settlements

STARCOM INTERNATIONAL OPTICS CORPORATION [Agreed Stmt]

BCSECCOM #:
Document Type:
Agreed Stmt
Published Date:
1996-12-13
Effective Date:
1996-12-06
Details:


IN THE MATTER OF THE SECURITIES ACT
S.B.C. 1985, c. 83

AND

IN THE MATTER OF STARCOM INTERNATIONAL OPTICS CORPORATION,
STARCOM INVESTMENT INCORPORATED
AND STARCOM INVESTMENT FUNDING CORPORATION


Agreed Statement of Facts and Undertaking


The following agreement has been reached between Starcom International Optics Corporation (“SIOC”), Starcom Investment Incorporated (“SII”), Starcom Investment Funding Corporation (“SIFC”) and the Executive Director:

1. As the basis for the matters and undertakings referred to in paragraphs 2 and 3 of this agreement, SIOC, SII, and SIFC acknowledge the following facts to be correct:
      (a) SIOC was incorporated under the Company Act, R.S.B.C. 1979, c. 59 (the “Company Act”) on February 12, 1992, and is not a reporting issuer;

      (b) SII was incorporated under the Company Act on October 13, 1992, and is not a reporting issuer;

      (c) SIFC was incorporated under the Company Act on January 13, 1993, and is not a reporting issuer;

      (d) during the period from April 6, 1992 to August 9, 1993 , SIOC distributed approximately 15 million common shares to 129 purchasers resident primarily in British Columbia (the “SIOC Shareholders”) and received approximately $5.5 million in proceeds (the “Distribution”);
      (e) during the Distribution SIOC issued shares under an Offering Memorandum dated July 22, 1992 and amended October 30, 1992 and December 31, 1992 (the “Offering Memorandum”), purporting to rely on sections 76 (a) and (b) and 117 (a) and (b) of the Securities Regulation, B.C. Reg. 270/86 (the “Regulation”). In the process, SIOC issued shares to a total of 40 purchasers (the “Non-Exempt SIOC Shareholders”), 29 of whom entered into subscription agreements with SIOC for less than $25,000 and for which SIOC incurred selling expenses, and 11 of whom entered into subscription agreements with SIOC as members of the public, for whom exemptions under the Act were not available, contrary to sections 20 and 42 of the Securities Act, S.B.C. 1985, c. 83 (the “Act”);

      (f) during the Distribution, SIOC incorporated SII and SIFC to carry out distributions of SII and SIFC shares (the “SII Distribution” and the “SIFC Distribution” respectively), in respect of which SIOC represented to purchasers under the SII and SIFC Distribution (the “SII and SIFC Shareholders”) that all outstanding SII and SIFC shares ultimately would be converted to SIOC shares, and that all proceeds would be forwarded to SIOC;

      (g) the SII Distribution took place from October 19, 1992 to June 15, 1993, during which SII distributed approximately 2.6 million shares to 100 purchasers resident primarily in British Columbia and Ontario, and received approximately $875,000 in proceeds. The SII Distribution was done without an Offering Memorandum before November 30, 1992, during which time SII issued approximately 720,000 shares to approximately 26 purchasers and received approximately $180,000 in proceeds, contrary to sections 20 and 42 of the Act;

      (h) the SIFC Distribution took place from January 13, 1993 to September 16, 1993, during which SIFC distributed approximately 1.6 million shares without an Offering Memorandum, to 48 purchasers resident primarily in British Columbia and Ontario and received approximately $650,000 in proceeds, contrary to sections 20 and 42 of the Act;


      (i) SII and SIFC transferred the funds raised under the SII Distribution and the SIFC Distribution to SIOC, in return for which SIOC distributed shares in SIOC to SII and SIFC (the “Indirect SIOC Distribution”), equal in number to the SII and SIFC shares sold in the SII Distribution and the SIFC Distribution respectively, purporting to rely on sections 31(2)(5) and 55(2)(4) of the Act;

      (j) the Indirect SIOC Distribution was contrary to sections 20 and 42 of the Act, as neither SII nor SIFC acted as principal when purchasing SIOC shares;

      (k) during the Distribution, SIOC distributed, to a company operating in California and the United Kingdom under the name of Daylog Limited (“Daylog”), 987,220 shares (the “Daylog Shares”) of which Daylog acquired 49,920 shares on its own behalf. SIOC distributed the remainder of the Daylog shares to Daylog, which acquired them on behalf of 33 other investors (the “Non-Exempt Daylog Shareholders”) resident in California and the United Kingdom, in purported reliance on sections 31(2)(5) and 55(2)(4) of the Act (the “Daylog Distribution”); and

      (l) the Daylog Distribution was contrary to sections 20 and 42 of the Act as Daylog did not act as principal in the Daylog Distribution.

2. SIOC has, at the request of staff of the British Columbia Securities Commission in connection with this agreement:
      (a) obtained, on December 21, 1995, an order from the Supreme Court of British Columbia stipulating that the share register of SIOC be rectified, pursuant to which SIOC removed the names of SII and SIFC from the register and entered the names of individual SII and SIFC shareholders, each of whom was allocated SIOC shares equal in number to their holdings of SII and SIFC shares;
      (b) mailed, on December 29, 1995, an Offering Memorandum (the “OM”) to all the SII, SIFC and Non-exempt SIOC Shareholders, and to 11 of the Non-Exempt Daylog Shareholders, which OM contained an offer to rescind the subscription agreements under which the shareholders purchased their SII, SIFC and SIOC shares (the “Rescission Offer”), which offer expired on January 22, 1996. On January 23, 1996, SIOC mailed the OM and Rescission Offer to the 22 remaining Non-Exempt Daylog Shareholders, with a covering letter stipulating a Rescission Offer expiry date of February 15, 1996. The Rescission Offer was taken up by 10 shareholders who held 256,880 shares and who received total proceeds of $83,670; and

      (c) paid to the British Columbia Securities Commission the sum of $15,000.
3. SIOC, SII and SIFC undertake to ensure that all future distributions of securities are in compliance with the provisions of the Act and Regulation.

4. SIOC, SII AND SIFC waive any right they may have, under the Act or otherwise, to a hearing, hearing and review, judicial review or appeal related to, in connection with or incidental to this agreement.

DATED at Vancouver, British Columbia, on December 6, 1996.




STARCOM INTERNATIONAL OPTICS CORPORATION
____________________________________________
Authorized Signatory
Brent Connors_______________________________
Print Name

DATED at Vancouver, British Columbia, on December 6, 1996



STARCOM INVESTMENT INCORPORATED
__________________________________________
Authorized Signatory
Paul B. Marley______________________________
Print Name

DATED at Vancouver, British Columbia, on December 6, 1996


STARCOM INVESTMENT FUNDING CORPORATION
___________________________________________
Authorized Signatory
Peter D. Jones_______________________________
Print Name

DATED at Vancouver, British Columbia, on December 6, 1996.





Paul C. Bourque
A/Executive Director

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