United States District Court, D. Utah, Central Division
TOMBSTONE EXPLORATION CORP., Plaintiff and Counterclaim Defendant,
v.
EUROGAS, INC., Defendant, Counterclaim Plaintiff and Third-Party Plaintiff, RIATA MINERALS INC., WOLFGANG RAUBALL, and JACK BAUSKA, Defendants,
v.
ALAN M. BROWN, Third-Party Defendant.
MEMORANDUM DECISION AND ORDER CONSTRUING
AGREEMENTS
DAVID
NUFFER, UNITED STATES DISTRICT JUDGE.
This
Memorandum Decision and Order construes and interprets four
key documents which are the foundation of many claims in the
case, dealing with the material terms. The Memorandum
Decision and Order was provided in draft before trial to
assist the parties in presentation of proof. Following the
findings of fact entered March 21, 2018, it was again
provided as a basis for the eventual decision. After the
conclusions of law were announced March 22, 2018, this order
is entered.
FACTS
AND DOCUMENTS
.........................................................................................................
2
DISCUSSION
.................................................................................................................................
3
The
Agreement
............................................................................................................................
3
The
First Amendment
.................................................................................................................
5
The
Second Amendment
.............................................................................................................
5
The
Extension Agreement
...........................................................................................................
7
No Need
to Consider Extrinsic Evidence
...................................................................................
9
Summary
of Parties' Obligations Under the Agreements
......................................................... 10
FACTS
AND DOCUMENTS
The
parties have stipulated to the existence, execution and
authenticity of four significant documents and to some
pertinent facts.[1]
1. On
December 13, 2013, EuroGas, Inc., (“Eurogas”);
Eurogas AG, and Tombstone Exploration Company
(“Tombstone”) entered into a Stock-for-Stock
Exchange Agreement (“Agreement”). A true and
correct copy of the Agreement is Joint Exhibit 3.
2. On
January 13, 2014, the parties entered into a First Amendment
to the Agreement (the “First Amendment”). A true
and correct copy of the First Amendment is Joint Exhibit 4.
The First Amendment re-affirmed the original Agreement but
added that EuroGas granted to Tombstone an amount equal to
20% of any award obtained by EuroGas or EuroGas AG, an
indirect subsidiary, relating to EuroGas's lawsuit
against the Slovak Republic in Paris, France.
3. On
May 13, 2014, EuroGas and Tombstone entered into a Second
Amendment to the Exchange Agreement (the “Second
Amendment”). A true and correct copy of the Second
Amendment is Joint Exhibit 8.
4. On
May 20, 2014, pursuant to the Second Amendment, EuroGas's
Utah counsel wired $100, 000 to Tombstone and received a
certificate representing 69 million shares of Tombstone stock
from Tombstone's transfer agent. The certificate
representing the 69 million shares was agreed by the parties
to be issued in the name of ZB Capital AG, a EuroGas
subsidiary.
5. In
August 2014, Tombstone filed a lawsuit in the federal
district court of Utah against EuroGas and others. The
Complaint was denominated as Tombstone v. EuroGas, et al.,
No. 2:14-cv-00606-PMW. A true and correct copy of the
Complaint is Joint Exhibit 18.
6. On
November 19, 2014, EuroGas and Tombstone (along with EuroGas
AG and ZB Capital AG) entered into an Extention Agreement
[sic] (the “Extension Agreement”). The Extension
Agreement re-affirmed the original Agreement, as amended, but
added new provisions. A true and correct copy of the
Extension Agreement is Joint Exhibit 20.
7.
Tombstone voluntarily dismissed No. 2:14-cv-00606 without
prejudice on November 25, 2014.
DISCUSSION
The
Agreement
The
Agreement effective December 10, 2013, calls for exchange of
stock and payment of money. In the exchange of stock,
Tombstone was to deliver 348 million shares of its stock to
Eurogas while Tombstone was to receive 240 million shares of
Eurogas AG, an indirect subsidiary of Eurogas. The 240
million Eurogas AG shares were recited as 26% of the Eurogas
AG issued and outstanding shares. The parties have stated,
though the documents do not state, that the 348 million
shares of Tombstone stock were to give Eurogas control of
Tombstone. Eurogas was to have “the right to appoint
two Members” to the Tombstone Board and Tombstone was
to have the rights to appoint two members to the board of
Eurogas AG.
Closing
under the Agreement was to occur December 10, 2013. Eurogas
was to pay for exploration work by Tombstone, with
“$500, 000 on closing; $500, 000 on or before April 30,
2014, and $4, 000, 000 on or before September 30,
2014.” The Agreement contains many covenants and
conditions.
The
Agreement refers to the Eurogas AG shares of common stock as
the “Shares.” Seller is willing to exchange 240
million shares (the “Shares”) of [Eurogas AG]
common stock (the “Shares”) representing
approximately 26% of [Eurogas AG]'s total issued and
outstanding shares of Common Stock for common stock of
[Tombstone].
The
Agreement also contains a merger clause:
14. Miscellaneous.
d. Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related
[sic] in any way to the subject matter hereof.
and a
clause regarding amendments:
j. Amendments and Waivers. No. amendment of any
provision of this Agreement shall be valid unless the same
shall be in writing and signed by [Tombstone] and [Eurogas]
or their respective representatives. No. waiver by any Party
of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or ...