Augdome Corporation Ltd. v. Gray et al.

THAT the Company do sell all of its mining claims and all of its other assets of whatever nature and kind to Augdome Exploration Limited, and subject to the assumption of the liabilities by Augdome Exploration Limited, for the consideration of one fully paid and non‑assessable share, with no fractions, of the capital stock of Augdome Exploration Limited, for every five fully paid

[Page 359] and non-assessable issued shares of the capital stock of New Augarita Porcupine Mines Limited (No Personal Liability), provided that any certificates when issued, representing any shares now held in escrow, shall be delivered to the Guaranty Trust Company, 70 Richmond Street West, Toronto, Ontario, to be held in escrow by it, subject to release prorata to the parties entitled thereto, only upon the written consents of the Ontario Securities Commission and a majority of the Directors of Augdome Exploration Limited.

THAT a Special General Meeting of the Shareholders of the Company be called and held at a time and place to be fixed by the Directors of the Company, as soon as may be convenient, for the purpose of considering and if deemed advisable, to approve, ratify and confirm the sale of the Company’s mining claims and other assets of whatever nature and kind pursuant to the terms of this By-Law.

PASSED BY THE DIRECTORS of the Company this 13th day of June, 1957.

A resolution was passed at a general meeting of the shareholders of New Augarita Porcupine Mines Limited on July 4, 1957. That resolution I quote:

The Chairman then requested that a resolution be passed approving, ratifying and confirming the said By-Law No. 65.

UPON MOTION of acceptance by Mr. Magee, seconded by Mr. Hergott, and carried unanimously,

IT WAS RESOLVED that By-Law No. 65 enacted by the Directors on the 13th day of June, 1957, be and the same is hereby ratified, approved and confirmed.

On July 5, 1957, the directors of Augdome Exploration Limited now, by supplementary Letters Patent known as the appellant Augdome Corporation Limited, met at a meeting the minutes of which were produced in this litiga-

[Page 360] tion. Those matters will be discussed in detail thereafter. Sufficient to quote here the resolution passed at the said directors meeting:

UPON MOTION regularly made, seconded and unanimously carried, IT WAS RESOLVED THAT the Company do purchase from New Augarita Porcupine Mines Limited (No Personal Liability) the assets of the said New Augarita Porcupine Mines Limited (N.P.L.) as set out in the draft agreeement between New Augarita Porcupine Mines Limited (No Personal Liability) and Augdome Exploration Limited dated the 5th day of July, 1957, on the terms and conditions as therein set forth, and that the President and Secretary of the Company be, and they are hereby authorized, instructed and empowered to execute the said Agreement on behalf of the Company and to affix thereunto its Corporate Seal.

A copy of the said draft agreement dated July 5th, 1957, was directed to be annexed to the Minutes of the Meeting.

At that meeting of the directors of Augdome Exploration Limited it was determined that a shereholders meeting should be held on July 19, 1957, for the purpose of confirming the said agreement dated July 5, 1957:

providing for the purchase of assets of New Augarita Porcupine Mines Limited consisting of certain mining claims…

Notice of that meeting of shareholders was sent out as verified by the secretary of Augdome Exploration Limited and the business cited in the Minutes of Meeting was to ratify and confirm an agreement of July 5, 1957:

providing for the purchase of all the assets of New Augarita Porcupine Mines Limited (No personal Liability) consisting of certain mining claims…

Such a meeting of shareholders of Augdome Exploration Limited was held on July 19, 1957. The minutes recite that the Chairman stated that the purpose of the meeting was approving and confirming an agreement dated July 5, 1957, between the Company and New Augarita Porcupine Mines Limited “regarding the purchase of

[Page 361] assets of the latter company”. The chairman read to the meeting the agreement dated July 5, 1957, and also read Schedule B, being By-Law No. 65 of New Augarita Porcupine Mines Limited and Schedule C, being the resolution passed at the general meeting of July 4, 1957, which I have recited above. The resolution was simply that the purchase of mining claims from New Augarita Porcupine Mines Limited, as set forth in the agreement of July 5, 1957, be approved. That agreement between New Augarita Porcupine Mines Limited and Augdome Exploration Limited was executed on July 5, 1957. Despite the regrettable length of that document, I find it necessary to quote it in full:

THIS AGREEMENT made and entered into this 5th day of July, One thousand nine hundred and fifty seven,

BETWEEN:

NEW AUGARITA PORCUPINE MINES LIMITED (no personal liability) a Company duly incorporated under The Ontario Companies Act, hereinafter called the “Vendor”

OF THE FIRST PART

and

AUGDOME EXPLORATION LIMITED a Company duly incorporated under Part IV of The Corporations Act 1953 of Ontario, and having its Head Office at the City of Toronto in the Province of Ontario, hereinafter called the “Purchaser”

OF THE SECOND PART

WHEREAS the Vendor owns or controls those certain mining claims situated in the Township of Tisdale in the county of Cochrane in the Province of Ontario, more particularly set out as follows:

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1860—SE¼-S½-Lot 1-Con 1

1861—SW¼-S½-Lot 1-Con 1

1862—NE¼-S½-Lot 1-Con 1

1863—NW¼-S½-Lot 1-Con 1

1864—SE¼-N½-Lot 1-Con 1

1865—SW¼-N½-Lot 1-Con 1

1866—NE¼-N½-Lot 1-Con 1

1867—NW¼-N½-Lot 1-Con 1

1868—SE¼-S½-Lot 1-Con 2

1909—SW¼-S½-Lot 2-Con 1

1910—NE¼-S½-Lot 2-Con 1

1911—NW¼-S½-Lot 2-Con 1

1912—N½-Lot 2-Con 1

1958—NE¼-S½-Lot 3-Con 1

AND WHEREAS the Vendor was duly incorporated and organized under the Ontario Companies Act, with capitalization of $4,000,000 divided into 4,000,000 shares of the par value of $1.00 each;

AND WHEREAS the Purchaser has been duly incorporated under Part IV of the Corporations Act 1953 of Ontario, with a capilization of $4,000,000 divided into 4,000,000 shares of a par value of $1.00 each, and has the right to sell its shares at a discount;

AND WHEREAS a By-Law was enacted at a meeting of the Directors of the Vendor Company held on the day of June, 1957, as a By-Law no. , and which by-law was subsequently approved and confirmed at a Special General Meeting of the Shareholders of the Vendor Company held on the 4th day of July, 1957, authorizing the sale of the assets of the Vendor Company, consisting of the mining claims as hereinabove enumerated on the terms and conditions hereinafter set forth;

AND WHEREAS the Purchaser has agreed to assume and pay all the outstanding liabilities of the Vendor Company;

AND WHEREAS it is agreed between the Vendor and the Purchaser that the maximum number of shares to be issued and alloted to the shareholders is not to exceed in amount 800,000 shares;

AND WHEREAS the Vendor has agreed to sell and the Purchaser has agreed to purchase the assets, more particularly described as follows:

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1860—SE¼-S½-Lot 1-Con 1

1861—SW¼-S½-Lot 1-Con 1

1862—NE¼-S½-Lot 1-Con 1

1863—NW¼-S½-Lot 1-Con 1

1864—SE¼-N½-Lot 1-Con 1

1865—SW¼-N½-Lot 1-Con 1

1866—NE¼-N½-Lot 1-Con 1

1867—NW¼-N½-Lot 1-Con 1

1868—SE¼-S½-Lot 1-Con 2

1909—SW¼-S½-Lot 2-Con 1

1910—NE¼-S½-Lot 2-Con 1

1911—NW¼-S½-Lot 2-Con 1

1912—N½-Lot 2-Con 1

1958—NE¼-S½-Lot 3-Con 1

WITNESSETH that in consideration of the premises that the mutual covenants and agreements hereinafter contained, it is agreed by and between the parties hereto as follows:—

1. The Vendor does hereby sell and the Purchaser does hereby purchase the assets more particularly described as follows consisting of the mining claims located in the township of Tisdale in the District of Cochrane in the Province of Ontario, in consideration of the allotment and issuance to the Shareholders of the Vendor Company, of one (1) fully paid and nonassessable share of capital stock of the Purchaser Company, with no fractions, for every five (5) issued fully paid and non-assessable share of the capital stock of the Vendor, provided that the maximum number of shares of the Purchaser Company to be issued therefor shall not exceed 800,000; PROVIDED further that the certificates representing shares to be issued for shares now held in escrow by the Premier Trust Company, 19 Richmond Street West, Toronto, Ontario, are to be held by it in escrow subject to release pro rata to the parties entitled thereto, only upon the written consents of the Ontario Securities Commission and a majority of the Directors of the Purchaser Company, and subject also to transfer, hypothecation, assignment or other alienation only on the written consent of the Ontario Securities Commission.

2. The Purchaser convenants and agrees to assume the cost and expenses, including all legal fees in connection with the sale and transfer of the assets of the Vendor to the Purchasr under the terms of this agreement.

The Purchaser further convenants and agrees to assume all the outstanding liabilities of the Vendor Company, at the date of the transfer of the mining claims to the Purchaser, under the terms of this agreement.

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The Vendor Company hereby represents and warrants that the said mining claims as set out hereinabove are all in good standing under the mining laws of the Province of Ontario applicable thereto, and that it has the right to deal therewith under the terms of the agreement, and will deliver a proper transfer of the same to the Vendor Company.

This transaction is to be completed as soon as possible, and a proper transfer of the mining claims as set out hereinabove to the agreement delivered to the Purchaser for registration and the shares of the Purchaser alloted to the shareholders of the Vendor Company.

This agreement shall enure to the benefit of and be binding upon the parties hereto and their successors and assigns respectively.