Securities Law & Instruments

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S-5, as amended

AND

IN THE MATTER OF

THE FARINI COMPANIES INC.

ANGELO PANZA AND CAMILLE AYOUB

 

SETTLEMENT AGREEMENT

BETWEEN STAFF OF THE ONTARIOSECURITIES COMMISSION,

ANGELO PANZA AND CAMILLE AYOUB

I. INTRODUCTION

1. Pursuant to section 5(1) of the "PracticeGuidelines - Settlement Procedures in Matters Before the OntarioSecurities Commission" of the Ontario Securities CommissionRules of Practice, Staff of the Ontario Securities Commission,Angelo Panza and Camille Ayoub propose to settle the mattersdescribed further below.

II STATEMENT OF FACTS

2. The Farini Companies Inc. ("Farini")is an Ontario corporation which manufactured and distributedpasta makers and food products.

3. Farini is a reporting issuer in Ontariowhose shares traded on the Canadian Dealers Network untilOctober, 2000.

4. Angelo Panza was, at all material times,the President, Chief Executive Officer and a Director of Farini.

5. Camille M. Ayoub was, at all material times,the Secretary of Farini and has been a Director of Farinisince May 20, 1997.

Failure to Meet Financial Statement FilingRequirements

6. During the period between May, 1996 andMay, 2002, Farini repeatedly failed to file both interim andaudited annual financial statements with the Commission withinthe time periods prescribed by sections 77 and 78 of the SecuritiesAct.

7. In particular, Farini failed on 11 occasionsto file its interim financial statements within the time periodprescribed by section 77 of the Securities Act.

8. Specifically, Farini failed to file:

(a) its first quarter interim financialstatements for the 1998, 1999, 2000, 2001 and 2002 fiscalyears;

(b) its second quarter interim financialstatements for the 1998, 2000, 2001 and 2002 fiscal years;and

(c) its third quarter interim financialstatements for the 1998, 1999 and 2000 and 2002 fiscal years

within the required time period.

9. In addition, Farini failed on 8 occasionsto file its annual comparative financial statements withinthe time period prescribed by section 78 of the SecuritiesAct.

10. Specifically, Farini failed to file itsannual comparative financial statements for the 1995, 1996,1997, 1998, 1999, 2000, 2001, and 2002 fiscal years withinthe required time period.

11. As a result of Farini's failure to fileits financial statements in a timely manner, the Commissionimposed four cease trade orders on its shares. The Commission'sorders to this effect were dated May 28, 1999, July 26, 2000,May 25, 2001 and May 24, 2002.

12. To date, Farini's latest failure to filehas not been rectified, and the Commission's cease trade orderdated May 24, 2002 remains in effect.

Conduct Contrary to the Public Interest

13. Panza and Ayoub authorized, permittedor acquiesced in Farini's contraventions of sections 77 and78 of the Securities Act and thereby acted in a mannercontrary to the public interest.

III POSITION OF PANZA AND AYOUB

14. Panza and Ayoub state that the reasonthat Farini's financial statements were not filed in a timelymanner was that the company did not have sufficient fundsto pay its auditors.

IV TERMS OF SETTLEMENT

15. Panza and Ayoub agree to the followingterms of settlement:

(a) Panza and Ayoub undertake to resigntheir positions as directors and officers of Farini, aswell as of any other issuer, by February 28, 2003; and

(b) Panza and Ayoub undertake not to assumea position or act as a director or officer of any issuerfor a period of two years following the date of the ExecutiveDirector's consent to this Settlement Agreement.

16. Panza and Ayoub agree that they will not,in any proceeding, refer to or rely upon this Settlement Agreement,the settlement negotiations or the process of obtaining theExecutive Director's consent to this Settlement Agreementas the basis for any attack on the Executive Director or theCommission's jurisdiction, alleged bias or appearance of bias,alleged unfairness or any other remedies or challenges thatmay otherwise be available.

V STAFF COMMITMENT

17. If this Settlement Agreement receivesthe consent of the Executive Director, Staff will not initiateany other proceeding under the Act against Panza and/or Ayoubin relation to the facts set out in Part II of this SettlementAgreement, subject to the provisions of paragraphs 18 and23 below.

18. If this Settlement Agreement receivesthe consent of the Executive Director, and at any subsequenttime Panza and/or Ayoub fail to honour the undertakings containedin paragraph 15 of this Settlement Agreement, Staff reservethe right to bring proceedings under Ontario securities lawagainst Panza and/or Ayoub based on the facts set out in PartII of the agreement, as well as the breach of the undertakings.

VI APPROVAL OF SETTLEMENT

19. If, for any reason whatsoever, the ExecutiveDirector does not consent to this Settlement Agreement:

(a) this Settlement Agreement and its terms,including all settlement negotiations between Staff andPanza and Ayoub leading up to the execution of this SettlementAgreement, shall be without prejudice to Staff and Panzaand Ayoub; and

(b) Staff and Panza and Ayoub shall be entitledto all available proceedings, remedies and challenges, includingproceeding to a hearing of these matters before the Commission,unaffected by this Settlement Agreement or the settlementnegotiations.

VII DISCLOSURE OF SETTLEMENT AGREEMENT

20. This Settlement Agreement and its termswill be treated as confidential by Staff and Panza and Ayoubuntil consented to by the Executive Director, and forever,if for any reason whatsoever this settlement is not consentedto by the Executive Director, except with the consent of Staffand Panza and Ayoub or as may be required by law.

21. Any obligation of confidentiality shallterminate upon receiving the Executive Director's consentto this settlement.

22. Staff and Panza and Ayoub agree that ifthe Executive Director does consent to this Settlement Agreement,they will not make any public statements inconsistent withthis Settlement Agreement.

23. If Panza and/or Ayoub fail to honour theagreement contained in paragraph 22 of this Settlement Agreement,Staff reserve the right to bring proceedings under Ontariosecurities law against Panza and/or Ayoub based on the factsset out in Part II of the agreement, as well as the breachof the agreement.

24. If the Executive Director does consentto this Settlement Agreement, a copy of the Settlement Agreementshall be published in the Ontario Securities Commission Bulletinand posted on the Commission's website.

VIII EXECUTION OF SETTLEMENT AGREEMENT

25. This Settlement Agreement may be signedin one or more counterparts which together shall constitutea binding agreement.

26. A facsimile copy of any signature shallbe effective as an original signature.

February 16, 2003.

"Angelo Panza"
Angelo Panza

February 25, 2003.

"Camille Ayoub"
Camille M. Ayoub

February 27, 2003.

"Michael Watson"
Staff of the Ontario Securities Commission
Per: Michael Watson

I hereby consent to the settlement of this matteron the terms contained in this Settlement Agreement.

February 28, 2003.

"Charles Macfarlane"
Ontario Securities Commission
Per: Charles Macfarlane