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CAUSE NO. ID-COS RE
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CHEYENNE SPECIAL, INC.
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DALLAS COUNTY, TEXAS, ox
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JUDICIAL DISTRICT
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CHARTER SERVICES, INC., ROBERT A.
MARKS, AND GERALDINE B. MARKS,
Defendants.
PLAINTIFF’S ORIGINAL PETITION
TO THE HONORABLE COURT:
COMES NOW, Cheyenne Special, Inc., Plaintiff (“Plaintiff or “Cheyenne”,
complaining of Charter Services, Inc. ( “Defendant” or “Charter”), Robert A. Marks (“Robert
Marks” or “Defendant”) and Geraldine B. Marks (“Geraldine Marks” or “Defendant’’)
(collectively “Defendants”), and states as follows:
DISCOVERY CONTROL PLAN
1. Discovery is intended to be conducted in this case under Level 2. See Tex. R.
Civ. P. 190.3.
II.
PARTIES
2. Plaintiff. Plaintiff Cheyenne Special, Inc. (hereinafter “Cheyenne” or “Plaintiff’)
is a Corporation duly formed and existing under the laws of the State of Texas.
3. Defendant Charter Services. Defendant Charter Services, Inc. (“Charter” or
“Defendant”) is a corporation duly formed and existing under the laws of the State of Alabama’
Charter may be served with process by serving Plaintiffs Original Petition on Robert A. Marks,
eS
Registered Agent for Charter, at 1800 Ridge Court, Mobile, Alabama 36609. Plaintiff requests
PLAINTIFF'S ORIGINAL PETITION - Page 1
1402263.1that the Court issue citation for Defendant Charter, but Plaintiff will arrange for service on
Defendant via a private process server. lot
4. Defendant Robert A. Marks. Defendant Robert A. Marks is an individual
eS
residing in the State of Alabama. Defendant Robert Marks may be served with process by
serving Plaintiffs Original Petition on Robert A. Marks at 1800 Ridge Court, Mobile, Alabama
36609. Plaintiff requests that the Court issue citation for Defendant Robert A. Marks, but
__——om
Plaintiff will arrange for service on Defendant via a private process server.
5. Defendant Geraldine B. Marks. Defendant Geraldine B. Marks is an individual
—
residing in the State of Alabama. Defendant Geraldine Marks may be served with process by
serving Plaintiffs Original Petition on Geraldine B. Marks at 1800 Ridge Coun, Mobile,
Alabama 36609. Plaintiff requests that the Court issue citation for Defendant Geraldine B.
ee
Marks, but Plaintiff will arrange for service on Defendant via a private process server.
IIL.
JURISDICTION AND VENUE
6. The amount in controversy is within the jurisdictional limits of this Court.
7. Venue is proper in Dallas County, Texas, because all or part of Plaintiff's claims
arose in Dallas County, Texas. In addition, venue is proper in Dallas County, Texas as the
designated venue set forth in the Lease Agreement at issue in this suit.
Iv.
BACKGROUND FACTS
8. The foregoing paragraphs are incorporated by reference for all purposes.
9. On or about March 21, 2007, Plaintiff entered into an ‘Aircraft Dry Lease
Agreement” (hereinafter the “Lease™) with Defendant Charter, whercin Plaintiff agreed to Lease
to Charter a particular Cessna 550 aircraft, as further described in the Lease as a “1998 Cessna
PLAINTIFF'S ORIGINAL PETITION - Page 2
4402263.)550, Serial Number 550-0858, Registration Number NIOOWT” (hereinafter the “Cessna” or
“Aircraft’). In the Lease, among other obligations, Defendant Charter agreed to pay to Plaintiff
a specified rental amount of $35,000.00 USD per month for a specified term of forty cight (48)
months, commencing on March 28, 2007 and ending on March 30, 201 1!
10. Over the course of the term of the Lease, Defendant became delinquent in its
rental payments to Plaintiff, and on December 8, 2009, Plaintiff and Defendant entered into an
“Amendment to Aircraft Dry Lease Agreement” (“Lease Amendment”), wherein Defendant
acknowledged that it was delinquent in rental payments to Plaintiff under the Lease in the
amount of $157,500.00. Pursuant to the Amendment, Plaintiff agreed to accept from Defendant
an inimediate payment of one-half (1/2) of the past due amount, $78,750.00, and to defer the
remaining balance on the past due amount of $78,570.00 for nine (9) months and thereafter to
amortize this amount equally over the remaining term of the Lease.
Il. In addition, the Amendment provided that Plaintiff would additionally defer
$16,000 a month for a nine (9) month period beginning in December 2009 on Defendant’s
regular monthly rental payments (subject to the additional provisions of the Lease Amendment
tegarding monthly aircraft usage), which deferred regular rents would also be amortized over the
course of the remaining term of the Lease starting in October 2010.
12. Defendants Robert Marks and Geraldine Marks each personally yuaraniced all
amounts deferred under the Lease Amendment. See Exhibit A to Exhibit J, at p. 2, 45, p. 3. The
total amount of rents deferred under the Lease is $222,750.00. See Exhibit A to Exhibit I (“Lease
Amendment’), at p. 1, 4] 1-2 ($78,750.00 deferred for nine months plus $16,000 per month
deferred for nine months ($144,000.00) equals $222,750.00). Accordingly, Defendants Robert
‘The commencement date of the Lease was set as of the date of that Defendant executed an “Aircraft Dry Lease
Acceptance Certificate”, which was executed by Defendant on March 28, 2007.
PLAINTIFE’S ORIGINAL PETITION - Page 3
1402263.1Marks and Geraldine Marks are personally liable to Plaintiff for the $222,750.00 in deferred
rents pursuant to the Lease Amendment.
13. Although Defendant Charter made the initial down-payment due under the Lease
Amendment and the monthly amounts due under the Lease Amendment for January, February
and March 2010, neither Defendant Charter nor Defendants Robert and Geraldine Marks have
made any payments to Plaintiff for any amounts due under the Lease and/or Lease Amendment
since that time.
14. Pursuant to Article X of the Lease, Plaintiff has elected to accelerate all rents due
under the Lease and has declared the entire amount of rents due under the Lease, including all
amounts duc for the entire remaining term of the Lease, to be immediately due and payable to
Plaintiff. See Exhibit A to Exhibit 1 (‘Lease Agreement”), at Article X, p. 9,41. Accordingly,
all amounts set forth above are now immediately due and payable from Defendants as specified
herein.
15. Pursuant to the terms of the Lease and Lease Amendment, Defendants are in
default of their respective obligations under the Lease and Lease Amendment for failing to
tender to Plaintiff when due each of the required monthly installments set forth in the Lease,
including all regular monthly rental payments, all deferred rents, all future rents and other
charges duc under the Lease (including reserve payments for engine maintenance on the Cessna
aircraft as set forth in paragraph 3 of Article Il of the Lease). The total amount due from
Defendant Charter, including all accrued and unpaid rents and accelerated future rents through
the remaining term, but specifically excluding any amounts owed by Defendant to Plaintiff for
unpaid property taxes, maintenance expenses and inspection charges attributable to the
Aircraft, is $580,470.00. See Exhibit B to Exhibit ]. Exhibit | is the Affidavit of Windle Turley,
PLAINTIFF'S ORIGINAL PETITION - Page 4
1402263.President of Cheyenne, attesting to the amounts due under the Lease and including copies of the
Lease Agreement, Lease Amendment (and related Lease documents) and an accounting of the
amounts owed under the Lease by Defendants. Exhibit 1 and the exhibits attached thereto are
attached hereto and are incorporated herein by reference as if set out in full herein.
16. The total amount of rents deferred under the Lease, for which Defendants Robert
Marks and Geraldine Marks are personally liable to Plaintiff, is $222,750.00. See Exhibit A to
Exhibit | (“Lease Amendment’), at p. 1, G9 1-2.
17. On May 17, 2010, the law firm of Cowles & Thompson, P.C. (“Cowles &
Thompson”), on behalf of Plaintiff, sent a demand letter to Defendant Charter demanding
payment of the above-stated amount due under the Lease Agreement. Despite demand on
Defendant Charter for payment of the above specified amounts, Defendant Charter has failed and
refused to pay such amount to Plaintiff.
Vv.
COUNT 1—SWORN ACCOUNT
18. The foregoing paragraphs are incorporated by reference for all purposes.
19. Marked as Exhibit B to Exhibit 1 and attached hereto is a verified account
representing a liquidated money demand for the unpaid rents due under the Lease to date, as well
as a liquidated money demand for future accelerated rentals due under the Lease. In
consideration of the various privileges, services, and products provided, on which a systematic
record has been kept, Defendants promised and became bound and liable to pay Plaintiff the
rental and other amounts charged under the Lease and Lease Amendment for these privileges,
services, and products, said sum, exclusive of unpaid property taxes, maintenance charges and
inspection charges attributable to the Aircraft. The amount owed by Defendant Charter under
the Lease (exclusive of unpaid taxes and maintenance charges) is $580,470.00 as of the date of
PLAINTIFF'S ORIGINAL PETITION - Page $
1402263.1this Petition as further shown on the attached Exhibit B to Exhibit 1. The total amount of rents
deferred under the Lease, for which Defendants Robert Marks and Geraldine Marks are
personally liable to Plaintiff, is $222,750.00.
20. — The $580,470.00 set forth in paragraph 19 above as to Defendant Charter, and the
$222,750.00 as to Defendants Robert and Geraldine Marks, are just and truce amounts due and
owing the Plaintiff by Defendants, respectively, for the unpaid and/or deferred rents due under
the Lease to date, as well as the future accelerated rentals due under the Lease. The $580,470.00
as to Defendant Charter, and the $222,750.00 as to Defendants Robert and Geraldine Marks, are
amounts due and unpaid to Plaintiff, and all just and lawful offsets, payments, and credits have
been allowed.
21. Despite demand on Defendant Charter for payment to Plaintiff, Defendant has
refused and failed to pay the account, to Plaintiffs damage, exclusive of unpaid property taxes,
maintenance charges and inspection charges attributable to the Aircraft, in the sum of
$580,470.00, plus interest as alleged below.
22. On May 17, 2010, Plaintiff, by and through its attomey of record, presented
Defendant with a demand for the amounts owing as indicated in Exhibit B to Exhibit 1. More
than thirty (30) days have passed since demand was made, but Defendant has failed and refused
to make payment to Plaintiff. As a direct result of Defendant Charter’s failure and refusal to
tender payment to Plaintiff, Plaintiff was compelled to employ an attorney to represent Plaintiff
in this litigation. Accordingly, pursuant to Civ. PRAC. & REM. CODE § 38.001(7) and pursuant to
Article X of the Lease, Plaintiff seeks to recover its reasonable attomeys’ fees and costs incurred
in prosecution of this claim.
PLAINTIFF'S ORIGINAL PETITION - Page 6
1402263.123. — Accordingly, Plaintiff hereby sues and seeks recovery from Defendant Charter in
the amount of $580,470.00, plus all lawful interest, fecs and other charges due under the Lease.
In addition, Plaintiff hereby sues and seeks recovery from Defendants Robert and Geraldine
Marks in the amount of $222,750.00, plus all lawful interest, fees and other charges due under
the Lease and/or Lease Amendment.
24, Plaintiff further shows that it is entitled to and hereby seeks to recover from all
Defendants pre-judgment interest at the maximum lawful rate from the thirticth G0") day after
each unpaid item of the account became due and payable, and Plaintiff further secks to recover
post-judgment interest as allowed by law.
VI.
COUNT 2 — BREACH OF CONTRACT
25. — The foregoing paragraphs are incorporated by reference for all purposes.
26. Plaintiff and Defendant had an agreement whereby Plaintiff would deliver and
Icase the Cessna to Defendant and in retum, Defendant would pay Plaintiff a specified rental
amount for the use and lease of the Cessna Aircraft, as well as any related charges set out in the
Lease, through the entire term of the Lease. The Lease Agreement constitutes a legally binding
contract between Plaintiff and Defendant.
27. In addition, Plaintiff and Defendants Robert Marks and Geraldine Marks agreed
that such Defendants were personally guarantecing all deferred rents due under the Lease as set
forth in the Lease Amendment. The Lease Amendment constitutes a legally binding contract
between Plaintiff and Defendants Robert and Geraldine Marks.
28. Pursuant to the terms of the Lease Agreement, Plaintiff performed its obligations
under the Lease and delivered the Cessna to Defendant Charter as agrced under the Lease in
March 2007. Pursuant to the terms of the Lease and Leasc Amendment, Defendants were
PLAINTIFF'S ORIGINAL PETITION - Page 7
1402263.1obligated to pay Plaintiff for all rental charges and other charges due to Plaintiff under the Lease
and Lease Amendment, and Defendant Charter was obligated to reimburse Plaintiff for any
amounts expended by Plaintiff on behalf of Defendant Charter pursuant to the Lease.
29. To date, Defendants have not remitted to Plaintiff any payment for the rental
charges, deferred rents, and related charges incurred by Defendants under the Lease and Lease
Amendment from April 2010 forward. Accordingly, Defendants have cach failed to perform
their respective obligations under the Lease.
30. Defendants’ failure to pay the outstanding balance due to Plaintiff under the terms
of the Lease and Lease Amendment constitutes a breach of contract, and Plaintiff has been
damaged as a result. In total, Plaintiffis owed an amount currently due from Defendant Charter
of $580,470.00 for all unpaid rents due under the Lease to date, as well as the future accelerated
rentals due under the Lease, plus all lawful interest, fees and other charges due under the Lease
for which it has not been paid. In addition, Plaintiff is owed an amount currently due from
Defendants Robert Marks and Geraldine Marks of $222,750.00 for all unpaid and accelerated
deferred rents due under the Lease Amendment, plus all lawful interest, fees and other charges
due under the Lease Amendment for which Plaintiff has not been paid.
31. In addition, pursuant to Article XIV of the Lease, Defendant Charter was required
to pay all applicable taxes attributable to Defendant’s use or operation of the Cessna Aircraft.
See Exhibit A to Exhibit 1, at p. 11, Article XIV. Despite Defendant’s obligation to pay such
taxes, Defendant faited to pay the taxes attributable to Defendant's use or operation of the
Cessna Aircraft, which amounts total $86,492.00 for the years 2008-2010. Accordingly,
Defendant is also indebted to and Plaintiff has been damaged in an amount of $86,492.00 for
PLAINTIFF'S ORIGINAL PETITION - Page 8
14022631payment of unpaid taxes by Defendant attributable to Defendant's use or operation of the Cessna
Aircraft.
32. Further, pursuant to paragraph 2 of Article III of the Lease, Defendant Charter
was obligated to retum the Cessna Aircraft to Plaintiff in at least as good condition as when
delivered to Defendant, ordinary wear and tear excepted, and Defendant was equally obligated to
conduct or otherwise pay for any applicable “Phase 1-4 inspections completed by a Cessna
Citation Service Center” and to return the Cessna “with no less than 50% life remaining on the
tires, brakes, and starter generators”. See Exhibit A to Exhibit 1, at p. 3, Y 2 (’Retum
Conditions”). Following Defendant's breach of its obligations under the Lease, Plaintiff
obtained possession of the Aircraft from Defendant; however, Plaintiff has been required to
complete the above cited inspections and perform other maintenance on the Aircraft to bring
such Aircraft up to the condition which it should have been in upon Plaintiff's repossession of
the Aircraft from Defendant.
33. The amounts attributable to the above cited inspections and related maintenance
which are being conducted by Plaintiff have yet to be quantified. Accordingly, Plaintiff hereby
sues and seeks recovery from Defendant Charter for any and all of these specified charges and
expenses owed by Defendant to Plaintiff pursuant to the Lease, and Plaintiff will supplement its
Petition upon receipt of the exact amounts expended by Plaintiff to perform Defendant's
obligations under the Lease.
34. For Defendants’ respective breaches of contract, Plaintiff seeks to recover
$580,470.00 in unpaid rents and accelerated future rents due and owing by Defendant Charter to
Plaintiff pursuant to the Lease, $222,750.00 of which is duc and owing by Defendants Robert
Marks and Geraldine Marks, plus the unpaid taxes attributable to Defendant Charter’s use or
PLAINTIFF'S ORIGINAL PETITION - Page 9
1402263.1operation of the Cessna Aircraft in the amount of $86,492.00, plus all charges and expenses
related to the inspections and other maintenance performed on the Aircraft on behalf of
Defendant Charter by Plaintiff, plus all interest, both before and after judgment as allowed by
law, fees, and other charges set forth hercin which are the responsibility of Defendants under the
Lease and Lease Amendment.
35. In addition, pursuant to Civ. PRac. & REM. CODE § 38.001(8) and pursuant to
Article X of the Lease, Plaintiff secks to recover the reasonable attorneys’ fees and costs incurred
in prosecuting this claim against all Defendants. On May 17, 2008, Plaintiff, by and through its
attomey of record, presented a claim to Defendant Charter, demanding payment for the unpaid
rents and accelerated future rents described above. More than thirty (30) days have passed since
that demand was made, but Defendant has failed and refused to make payment to Plaintiff. Asa
direct result of Defendant’s failure and refusal to tender payment to Plaintiff, Plaintiff was
compelled to employ an attorney to represent it in this litigation. Accordingly, Plaintiff seeks to
recover its reasonable attomeys’ fees and costs incurred in prosecution of this claim.
VU.
CONCLUSION AND PRAYER
WHEREFORE, PREMISES CONSIDERED, Plaintiff Cheyenne Special, Inc. requests
that Defendant Charter Services, Inc., Defendant Robert A. Marks, and Defendant Geraldine B.
Marks be cited to appear and answer and that, upon final hearing, Plaintiff have judgment against
Defendants in the amount determined by the trier of fact, plus all other charges and fees which
may accrue under the Lease for which Defendants are obligated to pay, plus interest before and
afler judgment as provided by law, and for Plaintiff's reasonable attorneys’ fees and costs of suit.
Plaintiff further seeks all other relief to which it is justly entitled.
PLAINTIFF'S GRIGINAL PETITION - Page 10
1402263.)Respectfully submitted,
COWLES & THOMPSON, P.C,
By:
: to
JIM E- COWLES
Texas Bar No. 0493 f000
SCOTT R. MEYER
Texas Bar No. 24051046
901 Main Street, Suite 3900
Dallas, TX 75202
(214) 672-2000
(214) 672-2020 (Fax)
ATTORNEYS FOR PLAINTIFF
CHEYENNE SPECIAL, INC.
PLAINTIFF'S ORIGINAL PETITION - Page UD
1402263.1CAUSE NO.
CHEYENNE SPECIAL, INC. § IN THE DISTRICT COURT
Plaindff, §
§
v § DALLAS COUNTY, TEXAS
§
CHARTER SERVICES, INC.,ROBERT A. §
MARKS, AND GERALDINE B. MARKS, §
Defendants. § JUDICIAL DISTRICT
§
AFFIDA WINDLE Y¥
STATE OF TEXAS §
COUNTY OF DALLAS ;
Before me, the undersigned authority, this day personally appeared Windle Turley,
known to me to be the person whose name is subscribed to the following instrument and who,
after being duly swom, stated as follows:
Ll. My name is Windle Turley. ] am over the age of twenty-one years and am not in
any way incapacitated from making this affidavit. The facts stated herein are within my personal
knowledge and are true and correct.
2. 1 am the President of Cheyenne Special, Inc., Plaintiff in the above referenced
matter (“Cheyenne” or “Plaintiff’} and Lessor under that certain ‘Aircraft Dry Lease
Agreement” (the Lease") at issue in the above-referenced lawsuit dated on or about March 2!,
2007 between Cheyenne and Charter Services, Inc., Defendant in the above referenced matter
(“Charter” or “Defendant”), covering the lease of that certain 1998 Cessna 550 Aircraft, Serial
No. 550-0858, Registration No. N1OOWT (the “Aircraft”).
3. As the President for Cheyenne, I am responsible for maintaining all records
related to the Lease, including but not limited to the subsequent Lease Amendment dated
December 8, 2009 wherein Defendants Robert A. Marks and Geraldine B. Marks personally
AFFIDAVIT OF WINDLE TURLEY - Page!
1492909.1
PLAINTIFF'S
EXHIBIT
NO. 4guaranteod the deferred rents set forth therein, as well as all records pertaining to the amounts
owed by Defendants to Plaintiff pursuant to the Lease and Lease Amendment, and I have
personal knowledge of all such records maintained by Cheyenne pursuant to the Lease and Lease
Amendment. As President of Cheyenne, I also have personal knowledge of all rents, fees,
expenses and other charges incurred by Defendants that are due and owing to Plaintiff pursuant
to the Lease Agreement and Lease Amendment.
4. Attached hereto as Exhibits “A” and “B" are records from the business records of
Cheyenne. Attached hereto as “Exhibit A” is a true and correct copy of the Lease at issue in this
suit between Plaintiff and Defendant and the subsequent “Amendment to Aircraft Lease
Agreement” related to the Lease. Attached hereto as “Exhibit B” is a true and correct copy of
the “Summary of Amount owed by Charter Services, Inc.” pursuant to the terms of the Lease.
Exhibits A and B are incorporated herein by reference as if set out in full.
5. As of the date of this Petition, excluding any amounts owed by Defendant Charter
for unpaid property taxes, maintenance expenses and inspection charges attributable to the
Aircraft, all of which Defendant Charter is obligated to pay pursuant to the Lease, I have
personal knowledge that Defendant Charter is justly indebted to Plaintiff in the amount of
$580,470.00. See Exhibit B. This $580,470.00 is a just and true amount due and owing to the
Plaintiff by Defendant Charter Services, Inc. for unpaid rents and future accelerated rentals due
under the Lease to date. This amount is due and unpaid, and all just and lawful offsets,
payments, and credits have been allowed.
6. In addition, as of the date of this Petition, 1 have personal knowledge that
Defendants Robert A. Marks and Geraldine B. Marks are justly indebted to Plaintiff in the
amount of $222,750.00, representing the amount of deferred rents guaranteed by Defendants
Robert and Geraldine Marks pursuant to the Lease Amendment. This $222,750.00 is a just and
AFFIDAVIT OF WINDLE TURLEY - Page 2
1402900.5true amount due and owing to the Plaintiff by Defendants Robert A. Marks and Geraldine B.
Marks for unpaid deferred (and now accelerated) rentals due under the Lease and Lease
Amendment to date. This amount is due and unpaid, and all just and lawful offsets, payments,
and credits have been allowed.
7. The records attached hereto as Exhibits A and B are records kept by Plaintiff in
the regular course of business, and it was the regular course of business for an employee or
representative of Plaintiff, with knowledge of the ect, event, or transaction recorded to make the
record or to transmit information thereof to be included in such record; and the record was made
at or near the time of the act, event or transaction recorded or reasonably soon thereafter.
8. These records attached hereto as Exhibits A and B are the originals or exact
duplicates of the originals.
FURTHER AFFIANT SAITH NOT.
I Y¥
SUBSCRIBED AND SWORN TO before me this 4 toy of Hass , 2010
to evidence which witness my hand and seal below.
suttlilltiniyy,
Wn 0. TREY,
AFFIDAVIT OF WINDLE TURLEY - Page 3
1402900.1DRY LEASE AGREE)
This Aircraft Dry Lease Agreement (Lease) is made and entered into as of the ___ day of
March, 2007 between CHEYENNE SPECIAL, INC. a Texas Corporation with offices at 6440 N.
Central Expressway, Suite 1000, Dallas, Texas 75206 (Lessor), and CHARTER SERVICES, INC.,
an Alabama corporation, having their principal office at 8400 Airport Boulevard, Bldg. 31, Mobile,
Alabama 36608 (Lessee). Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
without a crewmember of any kind, the following described Aircraft and engine(s):
Make and Model: Cessna 550
Year Manufactured: 1998
Serial Number: 550-0858
Registration Number: N100WT
Make and Model of Engines: Pratt & Whitney PW530A
Engine Serial Numbers: PCE-DA0126, PCE-DA0125
Together with the manufacturer's specified equipment and the equipment described on Exhibit A
attached hereto and made a part hereof by reference, all of which shall hereinafter be referred to as
the "Aircraft".
Article
Term. The term of this Lease shall commence upon the date of execution of the Aircraft
Dry Lease Acceptance Certificate (Acceptance Certificate), substantially in the form attached
hereto as Exhibit B (Commencement Date), and shall continue for a Period of forty-eight (48)
months thereafter. An extension to this Lease may be requested in writing to Lessor no later than
thirty (30) days prior to the termination date.
Article TT,
Rents and Special Conditions. Upon execution of this Agreement, the parties do hereby
agree that:
1. Rent. For said term, excluding any extension options, Lessee shall pay Lessor as
rent for the Aircraft the sum indicated in Exhibit C per month in immediately
available U.S. funds. The monthly payments shall be paid in advance for each
monthly rental period of this Lease, with the first and last rental payment due on the
Commencement Date and each subsequent payment becoming due and payable on
the same day of each month thereafter (Rent Payment Date). Should Lessee fail to
make such payment within ten (10) days of its due date, Lesser shall pay a late
charge equal to ten percent (10%) of such payment. :
2. Security Deposit: In addition to all other payments to be made pursuant to this
Agreement, Lessee shall deposit with Insured Aircraft Title Services, Inc. (Attn:
Brenda Cobb) (Escrow Agent) before the beginning of the inspections described in
Article THI (1) a security deposit in the sum indicated on Exhibit C (Security
PLAINTIFF'S
Ov.lean EXHIBITOv.lean
Deposit) which becomes non-refundable upon execution of this Lease and shall be
forwarded from Escrow Agent to Lessor upon Escrow Agent's receipt of the
executed Acceptance Certificate. The Security Deposit shall be retained by Lessor
during the entire term of this Agreement. Provided Lessee satisfactorily performs
all its obligations under this Agreement, and upon return of the Aircraft to Lessor in
accordance with the provisions of Article TI herein, Lessor shall retum to Lessee
the Security Deposit within ten (10) days of such return in immediately available
U.S. funds. Under no circumstances shall the Security Deposit be credited by
Lessee towards payment of rent.
Reserves: Lessor shall enroll the engines on Cessna’s Power Advantage Pius
Program and Lessee shall pay Lessor the current hourly reserve rate monthly in
arrears adjusted annually per the Program. Lessee shall enroll the Aircraft on
Cessna’s ProParts Program and during the lease term pay Cessna the Proparts rates
as required under such program. The Proparts enrollment fee shall be at Lessee’s
expense; any unused funds upon termination of the program shall be refunded to
Lessee; and upon termination of the Program any amounts owing shall be paid by
Lessee. Lessor and Lessee agree to settle any Power or Proparts hourly differences
upon termination of the Lease.
Article TM
Delivery Conditions. Lessor shall deliver the Aircraft in Dallas, Texas or other
mutually agreeable location (1) "as is where is" in airworthy condition meeting
FAR Part 91 requirements; (2) with all systems in normal working order; (3) in
compliance with the manufacturer's recommended maintenance program and all
applicable Airworthiness Directives, Recommended and Mandatory Service
Bulletins with due dates on or before lease commencement; (4) with fresh Phase
14 and Phase 52 inspections completed at a Citation Service Center; (5) SBS50-
34-10R1 Honeywell Primus 1000 Mod PH3 and SLS50-23-31R1 Airshow
Software Improvement complied with; (6) and no less than 50% wear remaining
on the tires and brakes. The parties agree to rectify the 50% tire and brake wear
requirements by an appropriate dollar value adjustment from Lessor to Lessee for
the amount of wear remaining below 50%. Lessee may at its expense request a
review of the Flight Manual and Log Books to assure that all required Part 91
documents are contained therein; perform a window inspection, a fuel tank leak
inspection; perform corrosion inspections under the refreshment center, both AC
evaporators and under the toilet; Phase MD (Emergency Exit Door Frame
Inspection), Phase 20 (Air Data Computer), Phase 21 (Transponders) inspections;
and check all avionics and telephone for Proper operation. Any discrepancies
noted during these inspections which exceed the Cessna Citation Maintenance
Manual criteria shall be forwarded in writing to Lessor (Discrepancy List).
Lessor shall have the option within two (2) business days of receipt of the
Discrepancy List described in this Article IIL (1) to either (a) correct all
discrepancies at Lessor’s expense; or (b) provide written notice of termination of
this Lease. If Lessor elects to correct all discrepancies at Lessor’s expense, it
shall notify Lessee in writing of its willingness to do so and, upon completion of
2.the corrections of the discrepancies, Lessee shall execute and forward to Escrow
Agent the Acceptance Certificate. If Lessee fails to execute and forward the
Acceptance Certificate to Escrow Agent within two (2) days of Lessor’s
completion of the correction of the discrepancies, Escrow Agent shall forward the
Security Deposit to Lessor and the Lease shall be terminated. If Lessee forwards
the Acceptance Certificate to Escrow Agent, Escrow Agent shall forward the
Security Deposit to Lessor and such Security Deposit shail be retained by Lessor
pursuant to the provisions of Article II (2). If Lessor exercises its option to
terminate this Lease then all Security Deposits and rental payments (if any) shall
be immediately refunded to Lessee; Lessor shall Pay Lessee the costs of all
inspections made at the direction of Lessee as described in this Article III (1); and
neither Lessor nor Lessee shall have any further rights or obligations thereafter
except the termination payments to be made by Lessor as described above.
2. Return Conditions: Upon expiration or earlier termination of the Lease, Lessee
shall return the Aircraft to Lessor at Dallas, Texas (1) in at least as good condition
as when delivered to Lessee, ordinary wear and tear excepted; (2) in airworthy
condition, free of all operational and mechanical discrepancies, limitations and
restrictions; (3) in compliance with the manufacturer's recommended maintenance
program and with all applicable Airworthiness Directives, Recommended and
Mandatory Service Bulletins with due dates on or before lease termination; (4) fresh
Phase 1-4 inspections completed by a Cessna Citation Service Center and with no
more than mid-time hours/calendar days having elapsed since performance of the
last Phase 5 inspection required by such program; (5) with no less than 50% life
remaining on the tires, brakes and starter generators; and (6) in such condition as
further described in the Lease. The parties agree to rectify the mid-time Phase 5
inspection, the 50% tire, brakes and starter generator wear requirements by an
appropriate dollar value adjustment from Lessee to Lessor for the amount of wear
temaining below 50%. Lessor may perform at its expense a post lease inspection,
including a review of the Flight Manual and Log Books to assure that all required
Part 91 documents are contained therein; a window inspection, a fuel tank leak
inspection, corrosion inspections under the refreshment center, both AC
€vaporators and under the toilet; Phase MD (Emergency Exit Door Frame .
Inspection), Phase 20 (Air Data Computer), Phase 21 (Transponders) inspections;
and check all avionics and telephone for proper operation. An engine power check
will be performed, and if recommended by the Citation Service Center, a test flight
will be performed to verify compliance with the return condition and configuration.
Any discrepancies noted during these inspections which exceed the Cessna
Citation Maintenance Manual criteria shall be forwarded to Lessee and shall be
corrected at Lessee’s expense.
Article IV
Base of the Aireraft. Lessor and Lessee agree that the Aircraft shall remain on U.S.
registration and be permanently based at the Mobile Regional Airport (KMOB). Lessee shall not
make any change in such permanent base without notifying Lessor in writing of such change and
receiving Lessor's prior written consent thereto.
<3
Ov, leanArticle V
Condition of Aircraft. The execution of the Acceptance Certificate by Lessee in the time
and manner herein provided acknowledges by Lessee that said Aircraft is fit for use and is in good,
safe and serviceable condition and conforms to the Delivery Conditions set forth in Article IIL.
Lessee agrees that upon termination of this Lease, it will retum the Aircraft to Lessor in the same
and in as good a condition as when received by Lessee, normal wear excepted and pursuant to the
Return Conditions set forth in Article ITI. All Risk of Loss shall be upon Lessee from the date of
execution of the Acceptance Certificate by and to Lessor until the date of satisfaction of all Retum
Conditions as described in Article II (2).
cle VI
Title and Use.
1 Title to the Aircraft shall remain with Lessor and the Aircraft shall remain under
USS. Registry. Lessor warrants that it is the absolute owner of the Aircraft and that
it has full right and obtained any consents (if necessary) to lease the Aircraft to
Lessee.
2. Lessee shall have the complete use of the Aircraft, restricted, however, to the
ordinary lawful and reasonable purposes of Lessee's business and pleasure. Lessee
will not use, operate, maintain or store the Aircraft in violation of this Agreement.
The Aircraft shall not be used or operated in violation of Aircraft insurance or of
any laws or any rules, regulations or orders of any government or governmental
body or officials having jurisdiction over the Aircraft, or in violation of any
airworthiness certificate, license or registration. Nothing herein shall authorize
Lessee or any other person to operate the Aircraft or to incur any liability or
obligation on behalf of Lessor.
Article VII
Maintenance and Operation. Lessee will be in operational control of the Aircraft at all
times hereunder and shall be responsible for its operation, possession, use, and maintenance.
Lessee shall keep the Aircraft and all systems fully functional and airworthy. All inspections,
repairs, modifications, FAA Airworthiness Directives Service Bulletins and overhaul work to be
made or accomplished (other than engine overhauls and hot section inspections) shal! be performed
by Lessee at Lessee's expense by persons licensed to perform such work and shall be in accordance
Advantage engine program and upon return of the Aircraft pursuant to the terms of this Agreement
shall deliver such records to Lessor. Should such work be other than minor in nature, Lessor shall
have the right to approve the repair agency prior to commencement of such work. In addition,
Lessee will be responsible for maintaining the aircraft on the Cescom computerized records
tracking program in accordance with the manufacturers recommended maintenance program.
4.
Oy JeanLessor, shall have the right at any reasonable time(s) to inspect the Aircraft including one or more
flight tests, at Lessor’s expense, provided such inspection does not conflict with Lessee's
Prearranged flight schedule. Any and all records and logs for the purpose of ascertaining
compliance with this Article shall also be subject to inspection by Lessor. Lessee agrees to be
responsible for all maintenance expenses, scheduled and unscheduled, excluding overhauls or hot
section inspection of said Aircraft engines.
Lessee further agrees to bear all operating cost, crew salaries, and benefits; fuel and oil
changes; landing and custom's fees; hangar and storage charges; and any fines or penalties arising
from the operation or use of the Aircraft.
Lessee, at it's own expense, may from time to time and with prior written approval from
Lessor, modify the airframe or any engine as Lessee may deem desirable in the Proper conduct of
its business, if such modification does not diminish the value or utility of the airframe of such
engine, or impair the airworthiness thereof, below the value, utility and airworthiness thereof
immediately prior to such modifications (assuming such airframe or such engine was then in the
condition and airworthiness required to be maintained by the terms of this Lease). Further, in the
event the paint condition deteriorates to the point that both Lessee and Lessor agree the Aircraft
should be repainted, Lessor shall Pay for the cost of the Aircraft to be Tepainted in the same
design and colors at a facility approved by Lessor. In such case the lease term shall be extended
at no charge to Lessee for the period the Aircraft is out of service (not to exceed 21 days). Lessor
and Lessee agree to share the cost 50/50 to install a 406 MHz ELT on or prior to March 2009.
Title to all parts incorporated or installed in or attached to or added to such airframe or such
engine as the result of any modification shall, without further act, vest in Lessor.
Lessee agrees and warrants that the Aircraft at ail times during the term of the Agreement
will be operated under the provisions of FAR Parts 91 or 135 and by duly qualified pilot(s)
employed and paid, or contracted for by Lessee. The pilot(s) must have FAA license{s) in good
standing and must meet the requirements established and specified by the FAA and the insurance
policies required herein.
Lessee hereby represents that such pilots will maintain all such licenses, medical
certificates, qualifications, and meet ail “ experience" requirements and other provisions of the
FAA regulations or the insurance policies required herein for the flight involved and the
requirements of the Aircraft insurance policy throughout the term of this Lease.
Lessee shall not operate the Aircraft in excess of forty-five (45) flight hours per month
calculated on an annual basis. Usage exceeding this amount shall be charged at $150.00 per
flight hour and be payable on the month following each annual caiculation period. Lessee shall
not operate the Aircraft on unimproved runways or beyond the geographical limits of any
insurance policies required by this Lease.
5.
Ov.leanOv.ican
Insurance.
1,
nv
Article VIII
Lessee shall secure and maintain, at its own expense, in effect throughout the term
hereof insurance policies with an insurance carrier acceptable to Lessor, naming
Lessee as named insured and Lessor and any Secured Party to Lessor with tespect
to the Aircraft as may be designated by Lessor from time to time as additional
insured, covering said Aircraft as follows:
A.
All risk hull coverage, including Foreign Object Damage (FOD) and war
risk, both in flight and not in flight in the amount indicated on Exhibit C.
Such hull policy shall also include a Diminution in Value (DIV)
endorsement providing coverage for a diminution in aircraft value of ten
Percent (10%) or greater of the amount indicated on Exhibit C in addition to
any other hull insurance proceeds. In the event that any claims are
necessitated, Lessee agrees to pay the deductible amount as Provided for in
such policy. Such hull insurance shall name Lessor, Lessee and the Secured
Party (as defined in Article XVIP) as the loss payees as their interests may
appear.
Public liability insurance in the amount indicated on Exhibit C, combined
single limit bodily injury and Property damage including passengers,
naming Lessor, Secured Party and Windle Turley as additional insured
parties.
In the event of loss or damage to the Aircraft, Lessee shall immediately report such
loss or damage to Lessor, to the insurance companies underwriting such risk and to
any and all applicable governmental agencies (if required to do so), both federal and
state, and shall furnish such information and execute such documents as may be
required and necessary to collect the proceeds from the insurance policies. In this
event, the rights, liabilities and obligations of the parties hereto shall be as follows:
A.
In the event the Aircraft is declared a total loss, or disappears for any reason
including but not Limited to theft, or confiscation or seizure or detention by
any goverment, or embezzlement, secretion or conversion by anyone in
possession of the aircraft, or is damaged beyond repair, the proceeds of the
insurance policy or policies shall be payable to Lessor, in which event this
Agreement shall terminate and Lessee's obligation to pay further rent
hereunder shall end and the Security deposit retumed to Lessee, provided
however that the current lease payment due shall be pro-rated to the date of
the payment of such insurance proceeds,
In the event that the Aircraft is partially damaged, the insurance proceeds
shall be payable to Lessor with the proceeds utilized to effect repair of the
Aircraft and this Agreement shall remain in full force and effect. Lessee
shall, at its sole cost and expense, (less any insurance proceeds) fully repair
4Ov tean
the Aircraft in order that the Aircraft shall be placed in as good us or the
same condition as it was prior to the damage. Lessor shall have the right to
approve all repairs made by Lessee.
Lessor shall be entitled to benefits of any payments of any monies by third
parties or their insurance carrier for partial damage to or destruction of the
Aircraft. Any monies from third persons or their insurers for partial damaye
to the Aircraft shall be payable to Lessor and shall be used to effect the
repair of the Aircraft. In the event the Aircraft is totally destroyed by third
parties, Lessor shall be entitled to any monies received from said third
parties or their insurers for the destruction of the Aircraft. Nothing herein
shall be construed to effect or in any way jeopardize any right of
subrogation of the Aircraft insurer to the extent of any payment made by the
Aircraft insurer under the Aircraft insurance required herein against said
third parties or their insurers,
In the event the Aircraft should be declared a total loss, or disappear tor any
reason including but not limited to theft, or confiscation. seizure, or
detention by any government or embezzlement, secretion, or conversion by
anyone in possession of the Aircraft, or totally destroyed or irreparably
damaged or permanently rendered unfit for use from any cause whatsoever,
and there exists no valid and collectible insurance under any insurance
policy, Lessee shall pay to Lessor, within forty five (45) days from the date
of notice by Lessor to Lessee, an amount indicated on Exhibit C as damages
for the loss or destruction of the Aircraft, in addition to any other damages
or remedies available hereunder or at law or in equity.
Notwithstanding any language elsewhere herein contained, Lessor and
Lessee each waives any claims either may have or ever acquire against the
other relating to the loss of, or damage to, the Aircraft to the extent that such
loss or damage is insured pursuant to the terms of the insurance policies
required to be maintained hereunder, regardless of whether such loss or
damage is due to the negligence of either party hereto. The carrier with
respect to both Lessor and Lessee shall endorse all insurance maintained
hereunder to reflect waiver of subrogation.
All policies providing insurance required by this section must contain the following
Provisions:
A.
Forbidding Lessee without first Providing thirty (30) days advance written
Notice to Lessor, to cancel such insurance or to make any change restricting
or reducing the coverage and providing that, without such advdnce written
notice, no mortgage, pledge, hypothecation, sale, assignment or transfer of
Lessee's interests in such insurance shall be recognized;
Providing that if the insurers cancel such insurance for any reason
whatsoever; such insurers shall promptly notify Lessor of such cancellation,
-7-and further providing that such cancellation, shall not be effective as to
Lessor for thirty (30) days after Lessors receipt of such notice;
Cc. (Intentionally Omitted)
D. Providing that in the case of damage or destruction of the Aircraft, the
insurers may not effect settlement of any claim thereunder without first
obtaining Lessor’s prior written consent.
E. Subject to the approval of Lessee's insuring company, a provision providing
that no act or omission of Lessee shall affect the obligation of the insurer to
pay the full amount of any loss to Lessor, or Lessee, as the case may be,
pursuant to Article VIII (2) (b) above.
F. All policies of insurance shall provide that Lessor and its' Secured Party will
be named on a Breach of Warranty Endorsement for physical damage as
their interests may appear.
Lessee shall provide Lessor with copies of all certificates of insurance respecting the
Aircraft subject to this Lease as soon as the same can be obtained from Lessee's carriers, but in no
case later than Commencement Date. Lessee shall further provide Lessor a certified copy of the
policy of insurance on the Aircraft as soon as it is available from the insurance carrier. Should the
Aircraft be damaged, there shall be no reduction or postponement of the lease payments due
hereunder during any repair period.
Uv lean
Article IX.
The following events shall constitute events of default hereunder:
Lessee shall fail to make any payment of rent or Article II (3) Reserves payment
when due and such failure shall continue unremedied for a period of ten (10) days
after written notice thereof is given by Lessor to Lessee; or
Lessee shall fail to perform or observe any other covenant, condition or agreement
to be performed or observed by it hereunder, and such failure shall continue without
temedy for a period of ten (10) days after written notice thereof is given to Lessee
by Lessor; or
Any representation or warranty made by Lessee herein or in any documents or
certificate furnished Lessor in connection herewith shall have been false in any
material respect when made or furnished; or
Lessee ceases doing business as a going concem, a petition is filed by or against
Lessee under the bankruptcy act of any amendment thereto, and is acquiesced in or
is not dismissed within thirty (30) days or results in an adjudication in bankruptcy,
or a temporary or permanent receiver is appointed for Lessee or any of its property,
Lessee commits any act of bankruptcy, makes an assignment for the benefit of itscreditors, or offers and composition or extension of any of its indebtedness,
dissolves or becomes insolvent.
If Lessee shall fail to procure or maintain the insurance coverage prescribed herein;
or
Tf an order, judgment or decree of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or, in any insolvency,
Teadjustment of debt, marshaling of assets or liabilities or similar proceedings of or
relating to Lessee or relating to all of or any substantial part of its property, or the
winding up or liquidation of its affairs, shall have been entered against Lessee, and
such decree or order shall have remained in force undischarged or unstayed for a
Period of thirty (30) days from the date of entry thereof.
cle
Remedies: Upon the occurrence of any event of default and at any time thereafter so long
as the same shall be continuing, Lessor may, at its option, declare this Agreement to be in default
and at any time thereafter, so long as Lessee shall not have remedied all outstanding defaults, have
and exercise all remedies provided at law in equity, including, without limitation, the following:
Uv.tean,
Declare the entire amount of rent hereunder immediately due and payable and
accelerate the terms of this Lease and declare the full amount of rental payments for
the remaining term hereof immediately due and payable and to sue for and receive
all such payments and other amounts then due or thereafter accruing under this
Lease, including reasonable attomey's fees; and
Recover from Lessee an amount equal to the aggregate of all sums payable and to
become due during the term of this Agreement and the unexpired term of this
Agreement; and
Cause Lessee, at Lessee's expense, to return the Aircraft to Lessor at a point in the
United States designated by Lessor. If Lessor shall so repossess the Aircraft and
shall further exercise the temedy provided in section (1) and/or {2) of this Article,
Lessor shall have the duty to use its best and reasonable efforts to (a) lease said
Aircraft for such period, and to such persons as Lessor shail elect and apply the
Proceeds of any such renting, after deducting all costs and expenses {including
teasonable attomeys' fees) incurred in connection with the recovery, Tepair, storage
and renting of the Aircraft, in Mitigation against the rent due and payable or
recovered from Lessee (Lessee shall be credited or reimbursed in accordance with
this provision in an amount up to that-payable to Lessor or recovered by Lessor
under section (1) and/or (2) of this Article); or
9.Possession and Lessor may, if permitted by law, use any of Lessee's licenses in
respect to the Aircraft.
Article XI
Indemnification. Lessee hereby agrees to indemnify, save and hold harmless Lessor, its
officers, director
Preview
ve @ Aco e CAUSE NO. ID-COS RE IN THE DIST: CHEYENNE SPECIAL, INC. gh lainatt, > ‘ey, DALLAS COUNTY, TEXAS, ox 95.) JUDICIAL DISTRICT vv. CHARTER SERVICES, INC., ROBERT A. MARKS, AND GERALDINE B. MARKS, Defendants. PLAINTIFF’S ORIGINAL PETITION TO THE HONORABLE COURT: COMES NOW, Cheyenne Special, Inc., Plaintiff (“Plaintiff or “Cheyenne”, complaining of Charter Services, Inc. ( “Defendant” or “Charter”), Robert A. Marks (“Robert Marks” or “Defendant”) and Geraldine B. Marks (“Geraldine Marks” or “Defendant’’) (collectively “Defendants”), and states as follows: DISCOVERY CONTROL PLAN 1. Discovery is intended to be conducted in this case under Level 2. See Tex. R. Civ. P. 190.3. II. PARTIES 2. Plaintiff. Plaintiff Cheyenne Special, Inc. (hereinafter “Cheyenne” or “Plaintiff’) is a Corporation duly formed and existing under the laws of the State of Texas. 3. Defendant Charter Services. Defendant Charter Services, Inc. (“Charter” or “Defendant”) is a corporation duly formed and existing under the laws of the State of Alabama’ Charter may be served with process by serving Plaintiffs Original Petition on Robert A. Marks, eS Registered Agent for Charter, at 1800 Ridge Court, Mobile, Alabama 36609. Plaintiff requests PLAINTIFF'S ORIGINAL PETITION - Page 1 1402263.1that the Court issue citation for Defendant Charter, but Plaintiff will arrange for service on Defendant via a private process server. lot 4. Defendant Robert A. Marks. Defendant Robert A. Marks is an individual eS residing in the State of Alabama. Defendant Robert Marks may be served with process by serving Plaintiffs Original Petition on Robert A. Marks at 1800 Ridge Court, Mobile, Alabama 36609. Plaintiff requests that the Court issue citation for Defendant Robert A. Marks, but __——om Plaintiff will arrange for service on Defendant via a private process server. 5. Defendant Geraldine B. Marks. Defendant Geraldine B. Marks is an individual — residing in the State of Alabama. Defendant Geraldine Marks may be served with process by serving Plaintiffs Original Petition on Geraldine B. Marks at 1800 Ridge Coun, Mobile, Alabama 36609. Plaintiff requests that the Court issue citation for Defendant Geraldine B. ee Marks, but Plaintiff will arrange for service on Defendant via a private process server. IIL. JURISDICTION AND VENUE 6. The amount in controversy is within the jurisdictional limits of this Court. 7. Venue is proper in Dallas County, Texas, because all or part of Plaintiff's claims arose in Dallas County, Texas. In addition, venue is proper in Dallas County, Texas as the designated venue set forth in the Lease Agreement at issue in this suit. Iv. BACKGROUND FACTS 8. The foregoing paragraphs are incorporated by reference for all purposes. 9. On or about March 21, 2007, Plaintiff entered into an ‘Aircraft Dry Lease Agreement” (hereinafter the “Lease™) with Defendant Charter, whercin Plaintiff agreed to Lease to Charter a particular Cessna 550 aircraft, as further described in the Lease as a “1998 Cessna PLAINTIFF'S ORIGINAL PETITION - Page 2 4402263.)550, Serial Number 550-0858, Registration Number NIOOWT” (hereinafter the “Cessna” or “Aircraft’). In the Lease, among other obligations, Defendant Charter agreed to pay to Plaintiff a specified rental amount of $35,000.00 USD per month for a specified term of forty cight (48) months, commencing on March 28, 2007 and ending on March 30, 201 1! 10. Over the course of the term of the Lease, Defendant became delinquent in its rental payments to Plaintiff, and on December 8, 2009, Plaintiff and Defendant entered into an “Amendment to Aircraft Dry Lease Agreement” (“Lease Amendment”), wherein Defendant acknowledged that it was delinquent in rental payments to Plaintiff under the Lease in the amount of $157,500.00. Pursuant to the Amendment, Plaintiff agreed to accept from Defendant an inimediate payment of one-half (1/2) of the past due amount, $78,750.00, and to defer the remaining balance on the past due amount of $78,570.00 for nine (9) months and thereafter to amortize this amount equally over the remaining term of the Lease. Il. In addition, the Amendment provided that Plaintiff would additionally defer $16,000 a month for a nine (9) month period beginning in December 2009 on Defendant’s regular monthly rental payments (subject to the additional provisions of the Lease Amendment tegarding monthly aircraft usage), which deferred regular rents would also be amortized over the course of the remaining term of the Lease starting in October 2010. 12. Defendants Robert Marks and Geraldine Marks each personally yuaraniced all amounts deferred under the Lease Amendment. See Exhibit A to Exhibit J, at p. 2, 45, p. 3. The total amount of rents deferred under the Lease is $222,750.00. See Exhibit A to Exhibit I (“Lease Amendment’), at p. 1, 4] 1-2 ($78,750.00 deferred for nine months plus $16,000 per month deferred for nine months ($144,000.00) equals $222,750.00). Accordingly, Defendants Robert ‘The commencement date of the Lease was set as of the date of that Defendant executed an “Aircraft Dry Lease Acceptance Certificate”, which was executed by Defendant on March 28, 2007. PLAINTIFE’S ORIGINAL PETITION - Page 3 1402263.1Marks and Geraldine Marks are personally liable to Plaintiff for the $222,750.00 in deferred rents pursuant to the Lease Amendment. 13. Although Defendant Charter made the initial down-payment due under the Lease Amendment and the monthly amounts due under the Lease Amendment for January, February and March 2010, neither Defendant Charter nor Defendants Robert and Geraldine Marks have made any payments to Plaintiff for any amounts due under the Lease and/or Lease Amendment since that time. 14. Pursuant to Article X of the Lease, Plaintiff has elected to accelerate all rents due under the Lease and has declared the entire amount of rents due under the Lease, including all amounts duc for the entire remaining term of the Lease, to be immediately due and payable to Plaintiff. See Exhibit A to Exhibit 1 (‘Lease Agreement”), at Article X, p. 9,41. Accordingly, all amounts set forth above are now immediately due and payable from Defendants as specified herein. 15. Pursuant to the terms of the Lease and Lease Amendment, Defendants are in default of their respective obligations under the Lease and Lease Amendment for failing to tender to Plaintiff when due each of the required monthly installments set forth in the Lease, including all regular monthly rental payments, all deferred rents, all future rents and other charges duc under the Lease (including reserve payments for engine maintenance on the Cessna aircraft as set forth in paragraph 3 of Article Il of the Lease). The total amount due from Defendant Charter, including all accrued and unpaid rents and accelerated future rents through the remaining term, but specifically excluding any amounts owed by Defendant to Plaintiff for unpaid property taxes, maintenance expenses and inspection charges attributable to the Aircraft, is $580,470.00. See Exhibit B to Exhibit ]. Exhibit | is the Affidavit of Windle Turley, PLAINTIFF'S ORIGINAL PETITION - Page 4 1402263.President of Cheyenne, attesting to the amounts due under the Lease and including copies of the Lease Agreement, Lease Amendment (and related Lease documents) and an accounting of the amounts owed under the Lease by Defendants. Exhibit 1 and the exhibits attached thereto are attached hereto and are incorporated herein by reference as if set out in full herein. 16. The total amount of rents deferred under the Lease, for which Defendants Robert Marks and Geraldine Marks are personally liable to Plaintiff, is $222,750.00. See Exhibit A to Exhibit | (“Lease Amendment’), at p. 1, G9 1-2. 17. On May 17, 2010, the law firm of Cowles & Thompson, P.C. (“Cowles & Thompson”), on behalf of Plaintiff, sent a demand letter to Defendant Charter demanding payment of the above-stated amount due under the Lease Agreement. Despite demand on Defendant Charter for payment of the above specified amounts, Defendant Charter has failed and refused to pay such amount to Plaintiff. Vv. COUNT 1—SWORN ACCOUNT 18. The foregoing paragraphs are incorporated by reference for all purposes. 19. Marked as Exhibit B to Exhibit 1 and attached hereto is a verified account representing a liquidated money demand for the unpaid rents due under the Lease to date, as well as a liquidated money demand for future accelerated rentals due under the Lease. In consideration of the various privileges, services, and products provided, on which a systematic record has been kept, Defendants promised and became bound and liable to pay Plaintiff the rental and other amounts charged under the Lease and Lease Amendment for these privileges, services, and products, said sum, exclusive of unpaid property taxes, maintenance charges and inspection charges attributable to the Aircraft. The amount owed by Defendant Charter under the Lease (exclusive of unpaid taxes and maintenance charges) is $580,470.00 as of the date of PLAINTIFF'S ORIGINAL PETITION - Page $ 1402263.1this Petition as further shown on the attached Exhibit B to Exhibit 1. The total amount of rents deferred under the Lease, for which Defendants Robert Marks and Geraldine Marks are personally liable to Plaintiff, is $222,750.00. 20. — The $580,470.00 set forth in paragraph 19 above as to Defendant Charter, and the $222,750.00 as to Defendants Robert and Geraldine Marks, are just and truce amounts due and owing the Plaintiff by Defendants, respectively, for the unpaid and/or deferred rents due under the Lease to date, as well as the future accelerated rentals due under the Lease. The $580,470.00 as to Defendant Charter, and the $222,750.00 as to Defendants Robert and Geraldine Marks, are amounts due and unpaid to Plaintiff, and all just and lawful offsets, payments, and credits have been allowed. 21. Despite demand on Defendant Charter for payment to Plaintiff, Defendant has refused and failed to pay the account, to Plaintiffs damage, exclusive of unpaid property taxes, maintenance charges and inspection charges attributable to the Aircraft, in the sum of $580,470.00, plus interest as alleged below. 22. On May 17, 2010, Plaintiff, by and through its attomey of record, presented Defendant with a demand for the amounts owing as indicated in Exhibit B to Exhibit 1. More than thirty (30) days have passed since demand was made, but Defendant has failed and refused to make payment to Plaintiff. As a direct result of Defendant Charter’s failure and refusal to tender payment to Plaintiff, Plaintiff was compelled to employ an attorney to represent Plaintiff in this litigation. Accordingly, pursuant to Civ. PRAC. & REM. CODE § 38.001(7) and pursuant to Article X of the Lease, Plaintiff seeks to recover its reasonable attomeys’ fees and costs incurred in prosecution of this claim. PLAINTIFF'S ORIGINAL PETITION - Page 6 1402263.123. — Accordingly, Plaintiff hereby sues and seeks recovery from Defendant Charter in the amount of $580,470.00, plus all lawful interest, fecs and other charges due under the Lease. In addition, Plaintiff hereby sues and seeks recovery from Defendants Robert and Geraldine Marks in the amount of $222,750.00, plus all lawful interest, fees and other charges due under the Lease and/or Lease Amendment. 24, Plaintiff further shows that it is entitled to and hereby seeks to recover from all Defendants pre-judgment interest at the maximum lawful rate from the thirticth G0") day after each unpaid item of the account became due and payable, and Plaintiff further secks to recover post-judgment interest as allowed by law. VI. COUNT 2 — BREACH OF CONTRACT 25. — The foregoing paragraphs are incorporated by reference for all purposes. 26. Plaintiff and Defendant had an agreement whereby Plaintiff would deliver and Icase the Cessna to Defendant and in retum, Defendant would pay Plaintiff a specified rental amount for the use and lease of the Cessna Aircraft, as well as any related charges set out in the Lease, through the entire term of the Lease. The Lease Agreement constitutes a legally binding contract between Plaintiff and Defendant. 27. In addition, Plaintiff and Defendants Robert Marks and Geraldine Marks agreed that such Defendants were personally guarantecing all deferred rents due under the Lease as set forth in the Lease Amendment. The Lease Amendment constitutes a legally binding contract between Plaintiff and Defendants Robert and Geraldine Marks. 28. Pursuant to the terms of the Lease Agreement, Plaintiff performed its obligations under the Lease and delivered the Cessna to Defendant Charter as agrced under the Lease in March 2007. Pursuant to the terms of the Lease and Leasc Amendment, Defendants were PLAINTIFF'S ORIGINAL PETITION - Page 7 1402263.1obligated to pay Plaintiff for all rental charges and other charges due to Plaintiff under the Lease and Lease Amendment, and Defendant Charter was obligated to reimburse Plaintiff for any amounts expended by Plaintiff on behalf of Defendant Charter pursuant to the Lease. 29. To date, Defendants have not remitted to Plaintiff any payment for the rental charges, deferred rents, and related charges incurred by Defendants under the Lease and Lease Amendment from April 2010 forward. Accordingly, Defendants have cach failed to perform their respective obligations under the Lease. 30. Defendants’ failure to pay the outstanding balance due to Plaintiff under the terms of the Lease and Lease Amendment constitutes a breach of contract, and Plaintiff has been damaged as a result. In total, Plaintiffis owed an amount currently due from Defendant Charter of $580,470.00 for all unpaid rents due under the Lease to date, as well as the future accelerated rentals due under the Lease, plus all lawful interest, fees and other charges due under the Lease for which it has not been paid. In addition, Plaintiff is owed an amount currently due from Defendants Robert Marks and Geraldine Marks of $222,750.00 for all unpaid and accelerated deferred rents due under the Lease Amendment, plus all lawful interest, fees and other charges due under the Lease Amendment for which Plaintiff has not been paid. 31. In addition, pursuant to Article XIV of the Lease, Defendant Charter was required to pay all applicable taxes attributable to Defendant’s use or operation of the Cessna Aircraft. See Exhibit A to Exhibit 1, at p. 11, Article XIV. Despite Defendant’s obligation to pay such taxes, Defendant faited to pay the taxes attributable to Defendant's use or operation of the Cessna Aircraft, which amounts total $86,492.00 for the years 2008-2010. Accordingly, Defendant is also indebted to and Plaintiff has been damaged in an amount of $86,492.00 for PLAINTIFF'S ORIGINAL PETITION - Page 8 14022631payment of unpaid taxes by Defendant attributable to Defendant's use or operation of the Cessna Aircraft. 32. Further, pursuant to paragraph 2 of Article III of the Lease, Defendant Charter was obligated to retum the Cessna Aircraft to Plaintiff in at least as good condition as when delivered to Defendant, ordinary wear and tear excepted, and Defendant was equally obligated to conduct or otherwise pay for any applicable “Phase 1-4 inspections completed by a Cessna Citation Service Center” and to return the Cessna “with no less than 50% life remaining on the tires, brakes, and starter generators”. See Exhibit A to Exhibit 1, at p. 3, Y 2 (’Retum Conditions”). Following Defendant's breach of its obligations under the Lease, Plaintiff obtained possession of the Aircraft from Defendant; however, Plaintiff has been required to complete the above cited inspections and perform other maintenance on the Aircraft to bring such Aircraft up to the condition which it should have been in upon Plaintiff's repossession of the Aircraft from Defendant. 33. The amounts attributable to the above cited inspections and related maintenance which are being conducted by Plaintiff have yet to be quantified. Accordingly, Plaintiff hereby sues and seeks recovery from Defendant Charter for any and all of these specified charges and expenses owed by Defendant to Plaintiff pursuant to the Lease, and Plaintiff will supplement its Petition upon receipt of the exact amounts expended by Plaintiff to perform Defendant's obligations under the Lease. 34. For Defendants’ respective breaches of contract, Plaintiff seeks to recover $580,470.00 in unpaid rents and accelerated future rents due and owing by Defendant Charter to Plaintiff pursuant to the Lease, $222,750.00 of which is duc and owing by Defendants Robert Marks and Geraldine Marks, plus the unpaid taxes attributable to Defendant Charter’s use or PLAINTIFF'S ORIGINAL PETITION - Page 9 1402263.1operation of the Cessna Aircraft in the amount of $86,492.00, plus all charges and expenses related to the inspections and other maintenance performed on the Aircraft on behalf of Defendant Charter by Plaintiff, plus all interest, both before and after judgment as allowed by law, fees, and other charges set forth hercin which are the responsibility of Defendants under the Lease and Lease Amendment. 35. In addition, pursuant to Civ. PRac. & REM. CODE § 38.001(8) and pursuant to Article X of the Lease, Plaintiff secks to recover the reasonable attorneys’ fees and costs incurred in prosecuting this claim against all Defendants. On May 17, 2008, Plaintiff, by and through its attomey of record, presented a claim to Defendant Charter, demanding payment for the unpaid rents and accelerated future rents described above. More than thirty (30) days have passed since that demand was made, but Defendant has failed and refused to make payment to Plaintiff. Asa direct result of Defendant’s failure and refusal to tender payment to Plaintiff, Plaintiff was compelled to employ an attorney to represent it in this litigation. Accordingly, Plaintiff seeks to recover its reasonable attomeys’ fees and costs incurred in prosecution of this claim. VU. CONCLUSION AND PRAYER WHEREFORE, PREMISES CONSIDERED, Plaintiff Cheyenne Special, Inc. requests that Defendant Charter Services, Inc., Defendant Robert A. Marks, and Defendant Geraldine B. Marks be cited to appear and answer and that, upon final hearing, Plaintiff have judgment against Defendants in the amount determined by the trier of fact, plus all other charges and fees which may accrue under the Lease for which Defendants are obligated to pay, plus interest before and afler judgment as provided by law, and for Plaintiff's reasonable attorneys’ fees and costs of suit. Plaintiff further seeks all other relief to which it is justly entitled. PLAINTIFF'S GRIGINAL PETITION - Page 10 1402263.)Respectfully submitted, COWLES & THOMPSON, P.C, By: : to JIM E- COWLES Texas Bar No. 0493 f000 SCOTT R. MEYER Texas Bar No. 24051046 901 Main Street, Suite 3900 Dallas, TX 75202 (214) 672-2000 (214) 672-2020 (Fax) ATTORNEYS FOR PLAINTIFF CHEYENNE SPECIAL, INC. PLAINTIFF'S ORIGINAL PETITION - Page UD 1402263.1CAUSE NO. CHEYENNE SPECIAL, INC. § IN THE DISTRICT COURT Plaindff, § § v § DALLAS COUNTY, TEXAS § CHARTER SERVICES, INC.,ROBERT A. § MARKS, AND GERALDINE B. MARKS, § Defendants. § JUDICIAL DISTRICT § AFFIDA WINDLE Y¥ STATE OF TEXAS § COUNTY OF DALLAS ; Before me, the undersigned authority, this day personally appeared Windle Turley, known to me to be the person whose name is subscribed to the following instrument and who, after being duly swom, stated as follows: Ll. My name is Windle Turley. ] am over the age of twenty-one years and am not in any way incapacitated from making this affidavit. The facts stated herein are within my personal knowledge and are true and correct. 2. 1 am the President of Cheyenne Special, Inc., Plaintiff in the above referenced matter (“Cheyenne” or “Plaintiff’} and Lessor under that certain ‘Aircraft Dry Lease Agreement” (the Lease") at issue in the above-referenced lawsuit dated on or about March 2!, 2007 between Cheyenne and Charter Services, Inc., Defendant in the above referenced matter (“Charter” or “Defendant”), covering the lease of that certain 1998 Cessna 550 Aircraft, Serial No. 550-0858, Registration No. N1OOWT (the “Aircraft”). 3. As the President for Cheyenne, I am responsible for maintaining all records related to the Lease, including but not limited to the subsequent Lease Amendment dated December 8, 2009 wherein Defendants Robert A. Marks and Geraldine B. Marks personally AFFIDAVIT OF WINDLE TURLEY - Page! 1492909.1 PLAINTIFF'S EXHIBIT NO. 4guaranteod the deferred rents set forth therein, as well as all records pertaining to the amounts owed by Defendants to Plaintiff pursuant to the Lease and Lease Amendment, and I have personal knowledge of all such records maintained by Cheyenne pursuant to the Lease and Lease Amendment. As President of Cheyenne, I also have personal knowledge of all rents, fees, expenses and other charges incurred by Defendants that are due and owing to Plaintiff pursuant to the Lease Agreement and Lease Amendment. 4. Attached hereto as Exhibits “A” and “B" are records from the business records of Cheyenne. Attached hereto as “Exhibit A” is a true and correct copy of the Lease at issue in this suit between Plaintiff and Defendant and the subsequent “Amendment to Aircraft Lease Agreement” related to the Lease. Attached hereto as “Exhibit B” is a true and correct copy of the “Summary of Amount owed by Charter Services, Inc.” pursuant to the terms of the Lease. Exhibits A and B are incorporated herein by reference as if set out in full. 5. As of the date of this Petition, excluding any amounts owed by Defendant Charter for unpaid property taxes, maintenance expenses and inspection charges attributable to the Aircraft, all of which Defendant Charter is obligated to pay pursuant to the Lease, I have personal knowledge that Defendant Charter is justly indebted to Plaintiff in the amount of $580,470.00. See Exhibit B. This $580,470.00 is a just and true amount due and owing to the Plaintiff by Defendant Charter Services, Inc. for unpaid rents and future accelerated rentals due under the Lease to date. This amount is due and unpaid, and all just and lawful offsets, payments, and credits have been allowed. 6. In addition, as of the date of this Petition, 1 have personal knowledge that Defendants Robert A. Marks and Geraldine B. Marks are justly indebted to Plaintiff in the amount of $222,750.00, representing the amount of deferred rents guaranteed by Defendants Robert and Geraldine Marks pursuant to the Lease Amendment. This $222,750.00 is a just and AFFIDAVIT OF WINDLE TURLEY - Page 2 1402900.5true amount due and owing to the Plaintiff by Defendants Robert A. Marks and Geraldine B. Marks for unpaid deferred (and now accelerated) rentals due under the Lease and Lease Amendment to date. This amount is due and unpaid, and all just and lawful offsets, payments, and credits have been allowed. 7. The records attached hereto as Exhibits A and B are records kept by Plaintiff in the regular course of business, and it was the regular course of business for an employee or representative of Plaintiff, with knowledge of the ect, event, or transaction recorded to make the record or to transmit information thereof to be included in such record; and the record was made at or near the time of the act, event or transaction recorded or reasonably soon thereafter. 8. These records attached hereto as Exhibits A and B are the originals or exact duplicates of the originals. FURTHER AFFIANT SAITH NOT. I Y¥ SUBSCRIBED AND SWORN TO before me this 4 toy of Hass , 2010 to evidence which witness my hand and seal below. suttlilltiniyy, Wn 0. TREY, AFFIDAVIT OF WINDLE TURLEY - Page 3 1402900.1DRY LEASE AGREE) This Aircraft Dry Lease Agreement (Lease) is made and entered into as of the ___ day of March, 2007 between CHEYENNE SPECIAL, INC. a Texas Corporation with offices at 6440 N. Central Expressway, Suite 1000, Dallas, Texas 75206 (Lessor), and CHARTER SERVICES, INC., an Alabama corporation, having their principal office at 8400 Airport Boulevard, Bldg. 31, Mobile, Alabama 36608 (Lessee). Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, without a crewmember of any kind, the following described Aircraft and engine(s): Make and Model: Cessna 550 Year Manufactured: 1998 Serial Number: 550-0858 Registration Number: N100WT Make and Model of Engines: Pratt & Whitney PW530A Engine Serial Numbers: PCE-DA0126, PCE-DA0125 Together with the manufacturer's specified equipment and the equipment described on Exhibit A attached hereto and made a part hereof by reference, all of which shall hereinafter be referred to as the "Aircraft". Article Term. The term of this Lease shall commence upon the date of execution of the Aircraft Dry Lease Acceptance Certificate (Acceptance Certificate), substantially in the form attached hereto as Exhibit B (Commencement Date), and shall continue for a Period of forty-eight (48) months thereafter. An extension to this Lease may be requested in writing to Lessor no later than thirty (30) days prior to the termination date. Article TT, Rents and Special Conditions. Upon execution of this Agreement, the parties do hereby agree that: 1. Rent. For said term, excluding any extension options, Lessee shall pay Lessor as rent for the Aircraft the sum indicated in Exhibit C per month in immediately available U.S. funds. The monthly payments shall be paid in advance for each monthly rental period of this Lease, with the first and last rental payment due on the Commencement Date and each subsequent payment becoming due and payable on the same day of each month thereafter (Rent Payment Date). Should Lessee fail to make such payment within ten (10) days of its due date, Lesser shall pay a late charge equal to ten percent (10%) of such payment. : 2. Security Deposit: In addition to all other payments to be made pursuant to this Agreement, Lessee shall deposit with Insured Aircraft Title Services, Inc. (Attn: Brenda Cobb) (Escrow Agent) before the beginning of the inspections described in Article THI (1) a security deposit in the sum indicated on Exhibit C (Security PLAINTIFF'S Ov.lean EXHIBITOv.lean Deposit) which becomes non-refundable upon execution of this Lease and shall be forwarded from Escrow Agent to Lessor upon Escrow Agent's receipt of the executed Acceptance Certificate. The Security Deposit shall be retained by Lessor during the entire term of this Agreement. Provided Lessee satisfactorily performs all its obligations under this Agreement, and upon return of the Aircraft to Lessor in accordance with the provisions of Article TI herein, Lessor shall retum to Lessee the Security Deposit within ten (10) days of such return in immediately available U.S. funds. Under no circumstances shall the Security Deposit be credited by Lessee towards payment of rent. Reserves: Lessor shall enroll the engines on Cessna’s Power Advantage Pius Program and Lessee shall pay Lessor the current hourly reserve rate monthly in arrears adjusted annually per the Program. Lessee shall enroll the Aircraft on Cessna’s ProParts Program and during the lease term pay Cessna the Proparts rates as required under such program. The Proparts enrollment fee shall be at Lessee’s expense; any unused funds upon termination of the program shall be refunded to Lessee; and upon termination of the Program any amounts owing shall be paid by Lessee. Lessor and Lessee agree to settle any Power or Proparts hourly differences upon termination of the Lease. Article TM Delivery Conditions. Lessor shall deliver the Aircraft in Dallas, Texas or other mutually agreeable location (1) "as is where is" in airworthy condition meeting FAR Part 91 requirements; (2) with all systems in normal working order; (3) in compliance with the manufacturer's recommended maintenance program and all applicable Airworthiness Directives, Recommended and Mandatory Service Bulletins with due dates on or before lease commencement; (4) with fresh Phase 14 and Phase 52 inspections completed at a Citation Service Center; (5) SBS50- 34-10R1 Honeywell Primus 1000 Mod PH3 and SLS50-23-31R1 Airshow Software Improvement complied with; (6) and no less than 50% wear remaining on the tires and brakes. The parties agree to rectify the 50% tire and brake wear requirements by an appropriate dollar value adjustment from Lessor to Lessee for the amount of wear remaining below 50%. Lessee may at its expense request a review of the Flight Manual and Log Books to assure that all required Part 91 documents are contained therein; perform a window inspection, a fuel tank leak inspection; perform corrosion inspections under the refreshment center, both AC evaporators and under the toilet; Phase MD (Emergency Exit Door Frame Inspection), Phase 20 (Air Data Computer), Phase 21 (Transponders) inspections; and check all avionics and telephone for Proper operation. Any discrepancies noted during these inspections which exceed the Cessna Citation Maintenance Manual criteria shall be forwarded in writing to Lessor (Discrepancy List). Lessor shall have the option within two (2) business days of receipt of the Discrepancy List described in this Article IIL (1) to either (a) correct all discrepancies at Lessor’s expense; or (b) provide written notice of termination of this Lease. If Lessor elects to correct all discrepancies at Lessor’s expense, it shall notify Lessee in writing of its willingness to do so and, upon completion of 2.the corrections of the discrepancies, Lessee shall execute and forward to Escrow Agent the Acceptance Certificate. If Lessee fails to execute and forward the Acceptance Certificate to Escrow Agent within two (2) days of Lessor’s completion of the correction of the discrepancies, Escrow Agent shall forward the Security Deposit to Lessor and the Lease shall be terminated. If Lessee forwards the Acceptance Certificate to Escrow Agent, Escrow Agent shall forward the Security Deposit to Lessor and such Security Deposit shail be retained by Lessor pursuant to the provisions of Article II (2). If Lessor exercises its option to terminate this Lease then all Security Deposits and rental payments (if any) shall be immediately refunded to Lessee; Lessor shall Pay Lessee the costs of all inspections made at the direction of Lessee as described in this Article III (1); and neither Lessor nor Lessee shall have any further rights or obligations thereafter except the termination payments to be made by Lessor as described above. 2. Return Conditions: Upon expiration or earlier termination of the Lease, Lessee shall return the Aircraft to Lessor at Dallas, Texas (1) in at least as good condition as when delivered to Lessee, ordinary wear and tear excepted; (2) in airworthy condition, free of all operational and mechanical discrepancies, limitations and restrictions; (3) in compliance with the manufacturer's recommended maintenance program and with all applicable Airworthiness Directives, Recommended and Mandatory Service Bulletins with due dates on or before lease termination; (4) fresh Phase 1-4 inspections completed by a Cessna Citation Service Center and with no more than mid-time hours/calendar days having elapsed since performance of the last Phase 5 inspection required by such program; (5) with no less than 50% life remaining on the tires, brakes and starter generators; and (6) in such condition as further described in the Lease. The parties agree to rectify the mid-time Phase 5 inspection, the 50% tire, brakes and starter generator wear requirements by an appropriate dollar value adjustment from Lessee to Lessor for the amount of wear temaining below 50%. Lessor may perform at its expense a post lease inspection, including a review of the Flight Manual and Log Books to assure that all required Part 91 documents are contained therein; a window inspection, a fuel tank leak inspection, corrosion inspections under the refreshment center, both AC €vaporators and under the toilet; Phase MD (Emergency Exit Door Frame . Inspection), Phase 20 (Air Data Computer), Phase 21 (Transponders) inspections; and check all avionics and telephone for proper operation. An engine power check will be performed, and if recommended by the Citation Service Center, a test flight will be performed to verify compliance with the return condition and configuration. Any discrepancies noted during these inspections which exceed the Cessna Citation Maintenance Manual criteria shall be forwarded to Lessee and shall be corrected at Lessee’s expense. Article IV Base of the Aireraft. Lessor and Lessee agree that the Aircraft shall remain on U.S. registration and be permanently based at the Mobile Regional Airport (KMOB). Lessee shall not make any change in such permanent base without notifying Lessor in writing of such change and receiving Lessor's prior written consent thereto. <3 Ov, leanArticle V Condition of Aircraft. The execution of the Acceptance Certificate by Lessee in the time and manner herein provided acknowledges by Lessee that said Aircraft is fit for use and is in good, safe and serviceable condition and conforms to the Delivery Conditions set forth in Article IIL. Lessee agrees that upon termination of this Lease, it will retum the Aircraft to Lessor in the same and in as good a condition as when received by Lessee, normal wear excepted and pursuant to the Return Conditions set forth in Article ITI. All Risk of Loss shall be upon Lessee from the date of execution of the Acceptance Certificate by and to Lessor until the date of satisfaction of all Retum Conditions as described in Article II (2). cle VI Title and Use. 1 Title to the Aircraft shall remain with Lessor and the Aircraft shall remain under USS. Registry. Lessor warrants that it is the absolute owner of the Aircraft and that it has full right and obtained any consents (if necessary) to lease the Aircraft to Lessee. 2. Lessee shall have the complete use of the Aircraft, restricted, however, to the ordinary lawful and reasonable purposes of Lessee's business and pleasure. Lessee will not use, operate, maintain or store the Aircraft in violation of this Agreement. The Aircraft shall not be used or operated in violation of Aircraft insurance or of any laws or any rules, regulations or orders of any government or governmental body or officials having jurisdiction over the Aircraft, or in violation of any airworthiness certificate, license or registration. Nothing herein shall authorize Lessee or any other person to operate the Aircraft or to incur any liability or obligation on behalf of Lessor. Article VII Maintenance and Operation. Lessee will be in operational control of the Aircraft at all times hereunder and shall be responsible for its operation, possession, use, and maintenance. Lessee shall keep the Aircraft and all systems fully functional and airworthy. All inspections, repairs, modifications, FAA Airworthiness Directives Service Bulletins and overhaul work to be made or accomplished (other than engine overhauls and hot section inspections) shal! be performed by Lessee at Lessee's expense by persons licensed to perform such work and shall be in accordance Advantage engine program and upon return of the Aircraft pursuant to the terms of this Agreement shall deliver such records to Lessor. Should such work be other than minor in nature, Lessor shall have the right to approve the repair agency prior to commencement of such work. In addition, Lessee will be responsible for maintaining the aircraft on the Cescom computerized records tracking program in accordance with the manufacturers recommended maintenance program. 4. Oy JeanLessor, shall have the right at any reasonable time(s) to inspect the Aircraft including one or more flight tests, at Lessor’s expense, provided such inspection does not conflict with Lessee's Prearranged flight schedule. Any and all records and logs for the purpose of ascertaining compliance with this Article shall also be subject to inspection by Lessor. Lessee agrees to be responsible for all maintenance expenses, scheduled and unscheduled, excluding overhauls or hot section inspection of said Aircraft engines. Lessee further agrees to bear all operating cost, crew salaries, and benefits; fuel and oil changes; landing and custom's fees; hangar and storage charges; and any fines or penalties arising from the operation or use of the Aircraft. Lessee, at it's own expense, may from time to time and with prior written approval from Lessor, modify the airframe or any engine as Lessee may deem desirable in the Proper conduct of its business, if such modification does not diminish the value or utility of the airframe of such engine, or impair the airworthiness thereof, below the value, utility and airworthiness thereof immediately prior to such modifications (assuming such airframe or such engine was then in the condition and airworthiness required to be maintained by the terms of this Lease). Further, in the event the paint condition deteriorates to the point that both Lessee and Lessor agree the Aircraft should be repainted, Lessor shall Pay for the cost of the Aircraft to be Tepainted in the same design and colors at a facility approved by Lessor. In such case the lease term shall be extended at no charge to Lessee for the period the Aircraft is out of service (not to exceed 21 days). Lessor and Lessee agree to share the cost 50/50 to install a 406 MHz ELT on or prior to March 2009. Title to all parts incorporated or installed in or attached to or added to such airframe or such engine as the result of any modification shall, without further act, vest in Lessor. Lessee agrees and warrants that the Aircraft at ail times during the term of the Agreement will be operated under the provisions of FAR Parts 91 or 135 and by duly qualified pilot(s) employed and paid, or contracted for by Lessee. The pilot(s) must have FAA license{s) in good standing and must meet the requirements established and specified by the FAA and the insurance policies required herein. Lessee hereby represents that such pilots will maintain all such licenses, medical certificates, qualifications, and meet ail “ experience" requirements and other provisions of the FAA regulations or the insurance policies required herein for the flight involved and the requirements of the Aircraft insurance policy throughout the term of this Lease. Lessee shall not operate the Aircraft in excess of forty-five (45) flight hours per month calculated on an annual basis. Usage exceeding this amount shall be charged at $150.00 per flight hour and be payable on the month following each annual caiculation period. Lessee shall not operate the Aircraft on unimproved runways or beyond the geographical limits of any insurance policies required by this Lease. 5. Ov.leanOv.ican Insurance. 1, nv Article VIII Lessee shall secure and maintain, at its own expense, in effect throughout the term hereof insurance policies with an insurance carrier acceptable to Lessor, naming Lessee as named insured and Lessor and any Secured Party to Lessor with tespect to the Aircraft as may be designated by Lessor from time to time as additional insured, covering said Aircraft as follows: A. All risk hull coverage, including Foreign Object Damage (FOD) and war risk, both in flight and not in flight in the amount indicated on Exhibit C. Such hull policy shall also include a Diminution in Value (DIV) endorsement providing coverage for a diminution in aircraft value of ten Percent (10%) or greater of the amount indicated on Exhibit C in addition to any other hull insurance proceeds. In the event that any claims are necessitated, Lessee agrees to pay the deductible amount as Provided for in such policy. Such hull insurance shall name Lessor, Lessee and the Secured Party (as defined in Article XVIP) as the loss payees as their interests may appear. Public liability insurance in the amount indicated on Exhibit C, combined single limit bodily injury and Property damage including passengers, naming Lessor, Secured Party and Windle Turley as additional insured parties. In the event of loss or damage to the Aircraft, Lessee shall immediately report such loss or damage to Lessor, to the insurance companies underwriting such risk and to any and all applicable governmental agencies (if required to do so), both federal and state, and shall furnish such information and execute such documents as may be required and necessary to collect the proceeds from the insurance policies. In this event, the rights, liabilities and obligations of the parties hereto shall be as follows: A. In the event the Aircraft is declared a total loss, or disappears for any reason including but not Limited to theft, or confiscation or seizure or detention by any goverment, or embezzlement, secretion or conversion by anyone in possession of the aircraft, or is damaged beyond repair, the proceeds of the insurance policy or policies shall be payable to Lessor, in which event this Agreement shall terminate and Lessee's obligation to pay further rent hereunder shall end and the Security deposit retumed to Lessee, provided however that the current lease payment due shall be pro-rated to the date of the payment of such insurance proceeds, In the event that the Aircraft is partially damaged, the insurance proceeds shall be payable to Lessor with the proceeds utilized to effect repair of the Aircraft and this Agreement shall remain in full force and effect. Lessee shall, at its sole cost and expense, (less any insurance proceeds) fully repair 4Ov tean the Aircraft in order that the Aircraft shall be placed in as good us or the same condition as it was prior to the damage. Lessor shall have the right to approve all repairs made by Lessee. Lessor shall be entitled to benefits of any payments of any monies by third parties or their insurance carrier for partial damage to or destruction of the Aircraft. Any monies from third persons or their insurers for partial damaye to the Aircraft shall be payable to Lessor and shall be used to effect the repair of the Aircraft. In the event the Aircraft is totally destroyed by third parties, Lessor shall be entitled to any monies received from said third parties or their insurers for the destruction of the Aircraft. Nothing herein shall be construed to effect or in any way jeopardize any right of subrogation of the Aircraft insurer to the extent of any payment made by the Aircraft insurer under the Aircraft insurance required herein against said third parties or their insurers, In the event the Aircraft should be declared a total loss, or disappear tor any reason including but not limited to theft, or confiscation. seizure, or detention by any government or embezzlement, secretion, or conversion by anyone in possession of the Aircraft, or totally destroyed or irreparably damaged or permanently rendered unfit for use from any cause whatsoever, and there exists no valid and collectible insurance under any insurance policy, Lessee shall pay to Lessor, within forty five (45) days from the date of notice by Lessor to Lessee, an amount indicated on Exhibit C as damages for the loss or destruction of the Aircraft, in addition to any other damages or remedies available hereunder or at law or in equity. Notwithstanding any language elsewhere herein contained, Lessor and Lessee each waives any claims either may have or ever acquire against the other relating to the loss of, or damage to, the Aircraft to the extent that such loss or damage is insured pursuant to the terms of the insurance policies required to be maintained hereunder, regardless of whether such loss or damage is due to the negligence of either party hereto. The carrier with respect to both Lessor and Lessee shall endorse all insurance maintained hereunder to reflect waiver of subrogation. All policies providing insurance required by this section must contain the following Provisions: A. Forbidding Lessee without first Providing thirty (30) days advance written Notice to Lessor, to cancel such insurance or to make any change restricting or reducing the coverage and providing that, without such advdnce written notice, no mortgage, pledge, hypothecation, sale, assignment or transfer of Lessee's interests in such insurance shall be recognized; Providing that if the insurers cancel such insurance for any reason whatsoever; such insurers shall promptly notify Lessor of such cancellation, -7-and further providing that such cancellation, shall not be effective as to Lessor for thirty (30) days after Lessors receipt of such notice; Cc. (Intentionally Omitted) D. Providing that in the case of damage or destruction of the Aircraft, the insurers may not effect settlement of any claim thereunder without first obtaining Lessor’s prior written consent. E. Subject to the approval of Lessee's insuring company, a provision providing that no act or omission of Lessee shall affect the obligation of the insurer to pay the full amount of any loss to Lessor, or Lessee, as the case may be, pursuant to Article VIII (2) (b) above. F. All policies of insurance shall provide that Lessor and its' Secured Party will be named on a Breach of Warranty Endorsement for physical damage as their interests may appear. Lessee shall provide Lessor with copies of all certificates of insurance respecting the Aircraft subject to this Lease as soon as the same can be obtained from Lessee's carriers, but in no case later than Commencement Date. Lessee shall further provide Lessor a certified copy of the policy of insurance on the Aircraft as soon as it is available from the insurance carrier. Should the Aircraft be damaged, there shall be no reduction or postponement of the lease payments due hereunder during any repair period. Uv lean Article IX. The following events shall constitute events of default hereunder: Lessee shall fail to make any payment of rent or Article II (3) Reserves payment when due and such failure shall continue unremedied for a period of ten (10) days after written notice thereof is given by Lessor to Lessee; or Lessee shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it hereunder, and such failure shall continue without temedy for a period of ten (10) days after written notice thereof is given to Lessee by Lessor; or Any representation or warranty made by Lessee herein or in any documents or certificate furnished Lessor in connection herewith shall have been false in any material respect when made or furnished; or Lessee ceases doing business as a going concem, a petition is filed by or against Lessee under the bankruptcy act of any amendment thereto, and is acquiesced in or is not dismissed within thirty (30) days or results in an adjudication in bankruptcy, or a temporary or permanent receiver is appointed for Lessee or any of its property, Lessee commits any act of bankruptcy, makes an assignment for the benefit of itscreditors, or offers and composition or extension of any of its indebtedness, dissolves or becomes insolvent. If Lessee shall fail to procure or maintain the insurance coverage prescribed herein; or Tf an order, judgment or decree of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or, in any insolvency, Teadjustment of debt, marshaling of assets or liabilities or similar proceedings of or relating to Lessee or relating to all of or any substantial part of its property, or the winding up or liquidation of its affairs, shall have been entered against Lessee, and such decree or order shall have remained in force undischarged or unstayed for a Period of thirty (30) days from the date of entry thereof. cle Remedies: Upon the occurrence of any event of default and at any time thereafter so long as the same shall be continuing, Lessor may, at its option, declare this Agreement to be in default and at any time thereafter, so long as Lessee shall not have remedied all outstanding defaults, have and exercise all remedies provided at law in equity, including, without limitation, the following: Uv.tean, Declare the entire amount of rent hereunder immediately due and payable and accelerate the terms of this Lease and declare the full amount of rental payments for the remaining term hereof immediately due and payable and to sue for and receive all such payments and other amounts then due or thereafter accruing under this Lease, including reasonable attomey's fees; and Recover from Lessee an amount equal to the aggregate of all sums payable and to become due during the term of this Agreement and the unexpired term of this Agreement; and Cause Lessee, at Lessee's expense, to return the Aircraft to Lessor at a point in the United States designated by Lessor. If Lessor shall so repossess the Aircraft and shall further exercise the temedy provided in section (1) and/or {2) of this Article, Lessor shall have the duty to use its best and reasonable efforts to (a) lease said Aircraft for such period, and to such persons as Lessor shail elect and apply the Proceeds of any such renting, after deducting all costs and expenses {including teasonable attomeys' fees) incurred in connection with the recovery, Tepair, storage and renting of the Aircraft, in Mitigation against the rent due and payable or recovered from Lessee (Lessee shall be credited or reimbursed in accordance with this provision in an amount up to that-payable to Lessor or recovered by Lessor under section (1) and/or (2) of this Article); or 9.Possession and Lessor may, if permitted by law, use any of Lessee's licenses in respect to the Aircraft. Article XI Indemnification. Lessee hereby agrees to indemnify, save and hold harmless Lessor, its officers, director