You are on page 1of 35

'. .

Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 1 of 35

13743
UNITED STATES DISTRIO' COURT
EASTERN DISTRICT OF LOUISIANA
)
B & B ADVISORY SERVICES, L.L.c. )
) Civil Action No. 02-2695
)
Plaintiff, )
)
v. ) SECTION A" II

) JUDGE ZAINEY
BOMBARDIER AEROSPACE CORPORA- )
TION, BOMBARDIER BUSINESS JET SO- )
LUTIONS, INC., and )
JET SOLUTIONS, L.L.c. ) MAG. (3)
) MAGISTRATE KNOWLES
Defendants. )
------------~~------------)
/l'JEA1D
.MOTION IN OPPOSITION TO PLAINTIFF'S
MOTION FOR PARTIAL SUMMARY JUDGMENT

NOW INTO COURT, through undersigned counsel, come Bombardier Aero-

space Corp., Bombardier Business Jet Solutions, Inc., and Jet Solutions, Inc. ("Flexjet"),

through undersigned counsel, and submits this Opposition to the Motion for Partial

Summary Judgment filed by B&B Advisory Services, L.L.c. ("B&B"). Flexjet submits

there are material facts in dispute, and B&B is not entitled to judgment as a matter of

law. B&B has attempted to twist the language of the Non-Refundable Deposit Agree-

ment ("Deposit Agreement") to fit its argument that it is entitled to specific perform-
, . Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 2 of 35

ance. However the Deposit Agreement does not guarantee "substantially similar"

contracts, as B&B alleges, but contracts "in substantially similar form", and the obliga-

tion to execute contracts was joint between Flexjet and B&B.

B&B clearly states that it is the terms, not the form, of the contracts that it alleges

is not substantially similar. (See Memorandum in Support of Motion for Partial Sum-

mary Judgment, p. 8 in which B&B alleges that "Flexjet produced a set of agreements

with tenns substantially different" from the Learjet 31A Agreements. (emphasis

added»

It was B&B that rebuffed Flexjet's good faith effort to execute final documents for the

sale of the Learjet 45. The fact that B&B has misread the contract, and now attempts to

twist the clear words and meaning of the contract from "in substantially similar form"

to "substantially similar" terms is no fault of Flexjet. For these reasons B&B is not en-

titled to specific performance.

Summary Iudgment Standard

Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judg-

ment is proper "if the pleadings, depositions, answers to interrogatories, and admis-

sions to file, together with the affidavits, if any, show that there is no genuine issue as

to any material fact, and that the moving party is entitled to judgment as a matter of

law." F .R.CP. 56(c). Therefore, in ruling on a motion for summary judgment, the

court's objective is to decide whether there are any genuine factual issues that can only

-2-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 3 of 35

be resolved by a finder of fact because they may reasonably be resolved in favor of ei-

ther party. See Anderson v. Liberty Lobby, Inc. 477 U.S. 242 (1986).

The party seeking summary judgment always bears the initial burden of proof of

informing the court of the basis of its motion and identifying the evidence which dem-

onstrates the absence of a genuine issue of material fact as to the essential elements of

the nonmoving party's claim. See Celotex Corp., v. Catrett, 477 U.S. 317, 323 (1986).

Should the moving party fail to satisfy this burden, the motion for summary judgment

must be denied. See Stults v. Conoeo Inc., 76 F.3d 651, 655 (5th Cir. 1996).

The nonmoving party has the burden of offering specific facts showing a genu-

ine issue for trial. Id. In deciding whether an evidentiary conflict exists to preclude

summary judgment, the trial court must view the record in the light most favorable to

the party opposing the motion, including those inferences to be drawn from the un-

derlying facts contained in affidavits and depositions. See Gross v. Southern Rwy. Co.,

414 F.2d 292, 296 (5th Cir. 1969). In any event trial courts should award summary

judgment with caution, being careful to resolve doubts and construe the evidence in

favor of the nonmoving party. PYCA Indus. Inc. v .. Harrison Cty. Waste Water Manage-

ment Dist., 177 F.3d 351, 360 (5th Cir. 1999).

Law & Argument

Louisiana Contract Interpretation - Plain language and meaning

On May 13, 2002, B&B filed suit against Flexjet in Civil District Court for the

Parish of Orleans, State of Louisiana. On or about September 3, 2002, Flexjet removed

-3-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 4 of 35

this case to federal court under diversity jurisdiction. The law to be applied by federal

courts in any diversity case is the law of the forum state. Erie R.R. v. Tompkins, 304 U.S.

64 (1938).

Under Louisiana law, a contract is read for its plain meaning. In re Liljeberg En-

ter., 304 F.3d 410, 439 (5th Cir. 2002), quoting Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v.

Circle Inc., 915 F.2d 986, 989 (5 th Cir. 1990)(per curiam); La. c.c. art 2047. Therefore a

contract will only need interpretation by the court where the contract is ambiguous. A

contract is not ambiguous unless the words are susceptible of more than one reasonable

meaning, or the intent of the parties is unclear. Id. at 439-40. "When the words of the

contract are clear and explicit and lead to no absurd consequences, no further interpre-

ta tion may be made in search of the parties' intent," and the parties' are not allowed "to

create an ambiguity where none exists and does not authorize the courts to create new

contractual obligatons where the language of the written contract clearly expresses the

intent of the parties." Id. at 440, quoting Omnitech Int'l, Inc. v. Clorox Co., 11 F.3d 1316,

1326 (5th Cir. 1994); La. c.c. art 2046.

On or about January 17, 2000 Flexjet and B&B entered into a Non-Refundable

Deposit Agreement ("Deposit Agreement") by which B&B agreed to purchase a Learjet

45 aircraft. See Non-Refundable Deposit Agreement "Exhibit 1" at paragraph 1. B&B

bases it's entire motion for partial summary judgment requesting specific performance

upon the following language of the Deposit Agreement "Pursuant to the purchase and

sale of the Lear 45 Share, Buyer and Seller shall execute a Purchase Agreement, Man-

-4-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 5 of 35

agement Agreement, Joint Ownership Agreement, and Master Interchange Agreement

in substantially similar fonn as the like-titled agreements executed by Buyer and Seller

for the. purchase of the existing share as described in Exhibit A." See Exhibit "1" at

paragraph 3 (emphasis added).

The contract clearly states that the Learjet 45 contracts will be "in substantially

similar form" as that of the Learjet 31A contracts. Where the contracts is clear, courts

are bound to enforce the contracts as written. Grezafji v. Smith, 641 So.2d 210, 213 (La.

App. 1 Cir. 1994). B&B is now attempting to mislead this court and create an ambiguity

where none exists in order to have this court alter the terms of the contract, changing it

from contracts "in substantially similar form" to "substantially similar" contracts.

Contracts "in substantially similar farm"

Under Louisiana law, the meaning of words in a contract will be given their

plain meaning. La. c.c. art. 2047. Form is defined as "the outer shape or structure of

something as distinguished from its substance or matter." Blacks Law Dictionary 662

(7th ed. 1999). Both the 1997 and 2000 contracts consisted of a Purchase Agreement,

Addendum to Purchase agreement, Management Agreement, Addendum to Purchase

agreement, Master Interchange Agreement, Joint Ownership Agreement, and Sideletter

Agreement. See Andrew Thacker's Unsworn Declaration under Penalty of Perjury, Ex-

hibit "3" .

The contract does not guarantee that the substance or content of the new con-

tracts will be "substantially similar" but that they will be "in substantially similar

-5-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 6 of 35

form." In fact, B&B states that the provisions "look similar". See B&B's Memorandum

in Support of Motion for Partial Summary Judgment at p. 9. B&B never points to any

changes in form, but changes in language. However, even those provisions which B&B

alleges contain differences in language, show, upon examination, that the differences

are not substantial.

• B&B alleges that the transfer fee in the Learjet 45 Purchase and Management

Agreements was not in the Learjet 31A Agreements. A transfer fee is meant only for

when the customer, while owning its current share, wants to transfer that share to

an affiliate or to another customer-owned business. The transfer fee allows Flexjet

to recoup the costs of de-registration and re-registration of the aircraft due to a cus-

tomer initiated action. If B&B does not transfer its interest it will not incur a transfer

fee.

• B&B alleges that the Learjet 31A Agreements provided for an aircraft with not more

than 100 hours, while the Learjet 45 Agreements provided for an aircraft with not

more than 400 hours. However, both agreements are in the same form, and deal

with the exact same subject, in the exact same area of the contracts. The only differ-

ence is the number of hours guaranteed.

• While the Learjet 31A agreements provide for annual escalation, and the Learjet 45A

agreements call only for "escalation", both contracts are referring to the escalation of

the exact same fees. The reason for the change is that costs of maintaining and fu-

eling aircraft in today's market is more expensive than it was in 1997, and the fact

-6-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 7 of 35

that the Learjet 45 consumes more fuel because it is a larger, faster aircraft. See Ex-

hibit "3."

• While the Learjet 45 Sideletter agreement does not spell out Flexjet's responsibilities

for maintaining the aircraft in exactly the same manner as that in the Learjet 31A

Sideletter Agreement, such specification is unnecessary. The Learjet 45 Manage-

ment Agreement does state, in section 3(a), that the Manager is responsible for

maintenance, service, and repair of the aircraft. See Management Agreement Exhibit

1/4". Therefore the lack of the language specified by B&B is meaningless because the

meaning of the terms, is that Flexjet, and not B&B, is responsible for the mainte-

nance and repair of the aircraft the same as the Learjet 31A. In addition, the Deposit

Agreement does not state that the'Sideletter Agreement will be in substantially

similar form. The Deposit Agreement only refers to the Purchase, Management,

Joint Ownership, and Master Interchange Agreements. Therefore any change in

content or form to the Sideletter agreement is irrelevant to the Deposit Agreement.

• The fact that one agreement guarantees no "squawks" and the other no "material

squawks" is not a substantial change, the addition of one adjective, in a non-critical

clause, that would not justify a need for specific performance.

B&B also makes much ado about nothing regarding the provisions of the con-

tracts dealing with the possible future act of B&B should it increase it's ownership in-

terest in the plane from 12.5% to 25%. B&B did not raise this issue during the contract

negotiation phase and has never expressed an interest to Flexjet, prior to filing its mo-

-7-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 8 of 35

tion for partial summary judgment that it ever intended to purchase a greater interest

See e-mail correspondence between Carolyn Kirkman and Leopold Sher from July 4,

2001 - July 24, 2001, Exhibit "5."

The same argument can be said for the provisions B&B cites in pgs. 11-15 of its

Memorandum. The first issue, regarding the availability of the aircraft and "peak

days" is the only issue listed which was raised by B&B and addressed by Flexjet during

the contract negotiation process. See Exhibit "5." B&B argues that the language is dif-

ferent from that in the Learjet 31A contracts, but does not state how, if at all, such

changes affect it If these changes, such as that outlining the procedure when flying

outside the Prime Service area and Multiple Use inside a Metropolitan area, do not af-

fect B&B, then such changes are not substantial as they do not substantially change

B&B's rights or use from the Learjet 31A to the Learjet 45.

B&B has not shown that the form of the contracts are not "in substantially simi-

lar form." In addition, B&B has pointed out some language that is different, but has

failed to prove how those changes or differences affect them. Therefore, there at least

remain questions of fact, and B&B is not entitled to partial summary judgment as a

matter of law.

Sped6c Performance

B&B is also not entitled to specific performance because B&B failed to perform

all of its obligations under the contract When there exists a bilateral promise of sale, in

which one party promises to sell and the other promises to buy a thing at a later time,

-8-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 9 of 35

such an agreement gives either party the right to demand specific performance. La.

e.e. art. 2623. However the party seeking specific performance is required to prove

that it has properly performed its part of the contract, or absent performance, "prove

that they are and were ready to comply with whatever obligations are devolved upon

them to perform." GrezaJfi v. Smith, 641 So.2d 210, 213 (La. App. 1st Cir. 1994); see also

Deleon v. WSIS Inc., 728 So.2d 1046, (La. App. 2d Cir. 1999).

B&B again has failed to look at all of the language in paragraph 3 of the Deposit

agreement which obligates both parties to execute the documents. The Deposit Agree-

ment, states, in pertinent part that; "Pursuant to the purchase and sale of the Lear 45

Share, Buyer and Seller shall execute ... Agreement(s) in substantially similar form."

See Exhibit "1", at paragraph 3 (emphasis added). Thus, the obligation to execute new

contracts is reciprocal, with B&B having equal responsibility to execute contracts in

"substantially similar form."

The execution of the contracts was not the only obligation under the Deposit

Agreement which B&B failed to fulfill. B&B had an obligation to accept the aircraft

within 10 days of actual delivery pursuant to the terms of the Deposit Agreement.

Paragraph 2 of the Deposit Agreements states that Flexjet, as the seller of the aircraft, is

obligated to deliver the Learjet 45 within 150 to 180 days of March 15, 2001. See Exhibit

"1" at paragraph 2 and Exhibit A to the Non-Refundable Deposit Agreement, Exhibit

"2". Had Flexjet failed to deliver the aircraft timely, then B&B was entitled to termi-

nate the agreement and B&B's "sole recourse against [Flexjet] shall be [Flexjet's] obli-

- 9-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 10 of 35

gation to promptly refund to [B&B]" the deposit amount. See Exhibit "1" at paragraph

2. The Deposit Agreement also provides B&B's obligation, as the buyer, to pay the bal-

ance of the purchase price within 10 days of the actual delivery date of the aircraft.

Flexjet's recourse, should B&B fail to pay the purchase price within 10 days of delivery

is to retain the deposit amount as liqUidated damages. See id. These are the only dam-

ages allowed the parties should either party fail to timely deliver or accept the aircraft.

Flexjet first attempted to execute contracts for the purchase of the Learjet 45 on

December 5, 2000, when it sent the first set of draft document to B&B ~or its approval.

See Exhibit "3". Flexjet sent a second set of documents to B&B on June 1, 2001, incor-

porating some of B&B's requested revisions. See Exhibit "3". Then on June 25, 2001

Flexjet sent the first delivery notice to B&B that the aircraft would be available for de-

livery on June 29, 2001. See Exhibit "3". This date was within 150 days of the March 15,

2001, anticipated delivery date stated in the Deposit Agreement. B&B however failed

to accept the aircraft, and so was in breach of the Deposit Agreement entitling Flexjet to

retain the $100,000 deposit. See Exhibit "3". Flexjet however, continued to attempt to

negotiate with B&B, negotiating and further revising the documents in an attempt to

reach an agreement. See Exhibit "3". On November 1, 2001, Flexjet again notified B&B

of the delivery of the aircraft, which was still to be delivered within 180 days of the an-

ticipated delivery date. See Exhibit "3". Again B&B failed to take delivery, and was

therefore again in breach of the Deposit Agreement. See Exhibit "3".

- 10-
------ ---~~--~-~~
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 11 of 35

B&B therefore did not perform it's part of the contract, and did not comply with

the obligation under the Deposit Agreement to execute agreements in a timely manner

in order to take delivery of the aircraft with 10 days of actual delivery. B&B is there-

fore "not entitled to specific performance as a matter of law.

Conclusion

Based on the foregoing, Flexjet respectfully submits there are issues of material

fact and law in dispute and B&B's motion for partial summary judgment should be de-

nied.

Respectfully submitted,

I\JI7I:t4~. CARROLL (3898), T.A.


R HARD A. FRASER, III (5831)
ICHAELA E. NOBLE (28173)
GELPI SULLIVAN CARROLL
400 Poydras St., Ste. 2525
New Orleans, LA 70130
Telephone: 504-524-9714
Attorneys for Defendants Bombardier
Aerospace Corporation, Bombardier Business
Jet Solutions, Inc. And Jet Solutions, L.L.c.

CERTIFICATE OF SERVICE

I hereby certify that a copy of the above and foregoing pleading has been

Mail, this 0=,


served upon all counsel of record, postage prepaid and properly addressed, by U.S.

day of April, 2003.

- 11 -
..
~ ..
'
Case 2:02-cv-02695-JCZ Document 53 (
Filed 04/29/03 Page
'" - . 12 of 35

. .:. .:',:
BOMBARDIER
NON-REFUNDABLE DEPOSIT AGREEMENT AEROSPACE

TillS NON-REFUNDABLE DEPOSIT AGREEMENT ("Agreement") is made this FHt day of


aatl"ctr~ , JooD, between Bombardier Business Jet Solutions Inc., 14651 Dallas Pkwy., Suite
600, DaI as, TX ;75240 ("Seller")
and • • B & B Advisory Services, L.L.C•.
having principal offices at 1209 Orange Street, Wilmington, DE 19801
telephone (504) 455-7600 facsimile . . (504) 455-7605 ("Buyer')

1. This Agreement will confirm Buyer's intent to existing share as described in Exhibit A ("Existing
purchase an undivided property interest in a Learjet 45 Share").
("Lear 45 Share") for the Purchase Price as set forth in
4. Buyer shall pay to Seller the non-refundable amounts
Exlubit A. Seller shall sell and deliver the Lear 45 Share
towards the Purchase Price as set forth in the Payment
to Buyer, and Buyer shall purchase and take delivery of
Schedule in Exlubit A. On the Actual Delivery Date,
the Lear 45 Share from Seller under the terms contained
Buyer shall pay to Seller an amount equal to .the
herein.
Purcb.3se Price, less the total payments made by Buyer to
2. Seller anticipates that the Lear 45 Share will be ready Seller pursuant to this Agreement and less any !tide-in
for delivery on the anticipated delivery date set forth in allowance granted by Seller. tp.
Exhibit A ("Anticipated Delivery Date"): In the even~ of-'_ .... __ 5.__The Monthly Management Fee for the.Lear.45 Share. _ .._ .... _
a delay caused by government ·regulation ·or authonty, d th L 45 Sh M A t , h II
. . . trik b' f un er e ear are anagement greemen s a
war, CivIl commotion, s e a r la or disputes, acts . 0 b e e amount se a m Exhib'It A sub'~ect to escaIation
th t fi rth' .
God or other causes beyond Seller's control or Without 'd d' Arti I 4{) f th Exis' Sh '
S eIIer's r;~auIt or negI'Igence (liE bl DI") th
an xcusa e e ay, e
as provl e m
M
ce
t A t til th A
a a e ting
I D li
are s
D t
"
Antictpa e t d D li D t hall b d i d
e very a e s e e aye accor g y.din 1 anagemen greemen un e ctua e very a e.
In the event the Lear 45 Share win not be available for 6. The Variable Rate for the Lear 45 Share, under the
delivery within 150 days before or after the Anticipated Lear 45 Share Management Agreement, shall be the
Delivery Date for reasons other than Excusable Delay; or amount set forth in Exhibit A subject to escalation as
in the event that the Lear 45 Share will not be made provided in Article 4(a) of the Existing Share's
available for delivery within 1~O days before or after the Management Agreement until the Actual Delivery Date.
Anticipated Delivery Date for any reason including an
Excusable Delay, Buyer may terminate this Agreement
and Buyer's sole recourse against Seller shall be Seller's
obligation to promptly refund to Buyer those amounts BUYER:
previously paid to Seller. In the event that Buyer does
not accept delivery of the Lear 45 Share on the delivery BY:
date offered by Seller or does not pay the balance of the
Purchase Price within 10 days of the actual delivery date
of the Lear 45 Share ("Actual Delivery Date"), Seller TITLE:
may terminate this Agreement and retain any amounts
paid to Seller pursuant to this Agree~nt as liquidated SELLER:
damages and not as a penalty. . f
3. Pursuant to the purchase and sale of the Lear 45 BY:
Share, Buyer and· Seller· shall execute a Purchase
Agreement, Managenient Agreeri:te~t, Ioint ,Ownership
Agreement,· and Master' Inte~haIige A,greement .in TITLE:
substantially siniiIar· form as ib.~·'like..#tled agi-eements
execUted ·by Buyer and S.eiier:··f~tthe·· purchase of the

LASIS99IDEP/1 EXHIBIT

1
. ~-..
Case 2:02-cv-02695-JCZ Document 53
e. t.
Filed 04/29/03 Page 13 of 35

Exhibit A to FlexJet Non-Refundable Deposit Agreement

Interest: 12.5%
Anticipated Delivery Date: March 15,2001
Purchase Price: $1,140,000.00
Payment Schedule:
(i) effective date of this Agreement: $100,000.00
• • (ii) Actual Delivery Date: balance of Purchase Price less previous payments
less any trade-in allowance

Monthly Management Fee: $9,254.00


(subject to escalation)
Variable Rate: $1.498.00 per Owner Operation Hour (subject to escalation)
Non Fuel Component: $946.00 per Owner Operation Hour (subject to escalation)
Fuel Component: $552.00 per Owner Operation Hour (subject to escalation)

Existing Share: Date of Purchase: March 5, 1997


Interest: 12.5%
Aircraft: Learjet 31A
Tail Number: N115FX

Buyer: B & B Advisory

Address: 1209 Orange Street


Wilmington, DE 19801
Phone: (504) 455-7600
Fax: (504) 455-7605

EXHIBIT
L4SI599JDEP

d
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 14 of 35
04/29/2003 lfi:32 F~~
APR-29-2003 15:51

13743
UNITED SIATES DISTRICT COURT
EASTERN DJSTRICf OP LOUISIANA
)
B & B ADV1SQRY SER'lICES, L.L.C. )
) Civil Action No. 02-2695
)
Flaintiff, )
)
v. ) SECTION'" An
) JUDGE ZAlNEY
BOMBARDlBR ABROSl:·ACE CORPORA- )
TION, BOMBARDIER BUSINESS JET SO- )
LUTIONS, INC., and )
JET SOLUTIONS, L.L.C. ) MAG. (3)
) MAGISTRATE KNOWLES
Defendants. )

--------------------------)
UNSWORN STATEMENT UNDER PENALTY OF PERJURY

I, ANDREW THACKER, as in-house counsel of Flexjet (consisting of Bombardier

Aerospace Corp. and Bombal'di.@r Bush"'les$ Jet Solut:i.ons~ Inc.) am authori2:ed to make

this unsworn statement under penalty of ~tjury on behalf of Flexjet.

In 1997, B&B pUl'(:hased a 12.5 % interest in a. Learjet 31A.

In January 2000, B&B and FIexjet began contract negotiations for the purchase of

a LearJet 45 upon the ext."CUtion of B&B's 1997 contracts.

EXHIBIT

3
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 15 of 35
04/29/2003 15:32 p~~ IaI 00:\
APR-29-2003 15:51 P.03/05

The Learjet 31A is ClIte of the most popular Bombardier aircraft. The Learjet 31A

seats up to seven passengers with an average long mnge cruise speed of 455 miles per

hour. The Learjet: 45 holds up to nine passen~s and has a long range cruise speed of

495 miles per hour. In addition, the cabin length of the Learjet 4.."i is 2.67 feet longer than

that of the LeaIjet31A.

The aircraft fractional ownership industry has ~hanged between 1997 and 2000

and therefore the standard contract language has been slightly modified in order to

keep up with industry practices and Flexjet's growU, JOT the benefit of both Flexjet and

its own2rs. Despite some of these language differences, the form~ of the contracts are in

substantially the same form, that being a Purchase Agreement, Addendum to Pllrchas~

Agreement, Master Agreement, Addendum to Master Agreemel11:, Master Interclwnge

Agreement Joint OwneJship Agreement, and Sideletter Agreement were issued in both

1997 and 2000. In addition, each of these contracts has substantially si.ntilar subhead·

ings and subparts.

In January of 2000, B&B and Flex-jet entered into it Non.·Refundable Deposit

agreement with which B&:B promised to purchase ~ Lerujet 45. As part of that deposit

agreement, B&:B We!.S Tequired to place a $100,000.00 deposit towards the purchase of

the aircraft. The contract stated. that should Flexjet faU to delivet the aircraft within 180

days of the anticipated delivery date, B&5 would be entitled to terminate the agreement

and the $100,000.00 would be refunded.. In. the event B&B did not accept the Learjet 45

on the date offeredl Flexjet was allowed to terminate the agreement and r.etain the de-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 16 of 35
04/29/2003 lfi:32 F~~ IaI 004
FPR-29-201D 15:52 P.04/05

posit amount. nus was the only recourse granted either pa:rty undex the Non-

Refundable Deposit Agreement. Pu1'8wmt the Deposit Agreement, both Flexjet and

B&B had redprocal obligation to execute agreements in "substantially sUnilar form" for

the Learjet 45 f1B the like titled agreements executed for the Learjet 31 A.

Pursuant to this agreement, Flexjet had begun contract negotiations for a Leajet

45 with B&::B and sent the first draft set of documents for B&B's review and approval on

December 5, 2000. Flexjet and B&:B participated in various correspondence negotiations

and Flexjet :rent a second set of documents with modified terms as per MB's requests to

B&B on June 1, 2001. On June 25, 2001, Flex:jet gave notice to B&:B that the Learjet 45

was scheduled for delivery on June 29, 2OOt,t and that the documents in final form must

be Teceived upon delivery of the aircraft. On June 27, 2001. B&B refused delivery of the

aircraft and, therefore, was in breach of the Non-Refundable Deposit Agreement.

Flexjet,. however, continued to attempt to reach an agreement with B&:B and on Sep-

tember 19, 2001, sent a third set of draft documents to Bk8 with further revisions for

'8&B·s review. On November 11 20011 Flexjet gave the second noti~e to B~B that the au-

craft would be delivered on Novmnber 12, 20011 and that the agreem.ent must be final-

ized and executed by tlult date. Despite FIexjet'a continued efforts to reach an equitable

agreement for either. the purchase of the Leal'jet 45 or the re-purchase of S&B's current

share of a Learjet 31A., B&:B refused to agree to Flexjet's contract provJsions and filed

suit against Flexjet on May 13, 2002.

- 3·
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 17 of 35
04/29/2003 lfi:33 F~~
APR-29-2003 15:52

I can testify of my QWTI personal knowledge that the following documents aTe

authentic and the rep:resentatiOt1s and statements contained. therein are true and corr@ct:

Non-Refandable Deposit Agreement

Exhibit A to Non-Refundable Deposit Agreement

Draft of Management Agreement for Learjet 45

E-JIl.Qil cor.r.espondence between Carolyn Kirkman and Leopold Shex from July 4,

2001 - July 24, 2001.

I declare under penalty of perjury under the laws of the United States of America

that the foregoing is tJ:ue and correct. Executed on this ..216 of April, 2003.

ANDREW~mACI<BR

-4-

TOTFL P.05
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 18 of 35

• J
MANAGEMENT AGREEMENT DRAFT
BOMBARDIER
AEROSPACE

TIllS MANAGEMENT AGREEMENT ("Management Agreement") is made and entered into as of the day of
_ _ _ _ _ _ , 2001, by and between Bombardier Aerospace Corporation, a Delaware corporation having its
principal offices at 14651 Dallas Parkway, Suite 650, Dallas, Texas 75240 telephone (972) 720-2800
facsimile (972) 720-2474 ("Manager")
and B & B Advisory Services. L.L.C.
having principal offices at 401 Veterans Blvd.• Ste. 102. Metairie. LA 70005
telephone (504) 455-7600 facsimile '(504) 455-7605 ("Owner").

Preamble. Owner, having entered into a "Purchase Agreement" Purchase Agreement, then this Management Agreement shall
with Bombardier Business Jet Solutions Inc., "Seller", owns the thereupon apply to the substituted aircraft and Exhibit A shall be
percentage property interest set forth in Exhibit A (the "Interest") in deemed amended to refer instead to the substituted aircraft.
that certain aircraft described in Exhibit A attached hereto and made
3. Services Provided by Manager.
a part hereof (the "Aircraft"), and Owner together with such other
(a) Manager shall arrange for the Aircraft to be inspected,
parties who own the remaining undivided interests in the Aircraft (the
maintained, serviced, repaired, overhauled and tested by duly
"Additional Interest Owners") (the Owner and the Additional Interest
competent personnel, in accordance with approved maintenance and
Owners shall be collectively referred to as the "Joint Owners") are
preventive repair programs therefor, including the standards and
parties to a "Joint Ownership Agreement" and "Master Interchange
guidelines established by the Federal Aviation Administration (the
Agreement" entered into concurrently herewith and have agreed to
"FAA") and manufacturer's recommended maintenance, and shall
engage the services of Mahager to manage the Aircraft for the benefit
keep and maintain the Aircraft in good operating condition, ordinary
of the Joint Owners and at the direction of the Majority Owners (as
wear and tear excepted, and in such condition as may be necessary to
defined in Section 1) in accordance with the procedures set forth
maintain in good standing the airworthiness certification of the
herein. The parties hereto agree as follows:
Aircraft.
1. Provision of Management Services. Manager agrees to provide (b) Manager shall cause to be maintained on behalf of Owner
management services for the benefit of the Joint Owners and at the all records, logs and other materials required by the FAA to be
direction of the Majority Owners in accordance with the terms maintained in respect of the Aircraft. Any other manuals provided or
hereof. Owner shall identify to Manager a designated representative used by Manager in connection with the services provided hereunder
authorized to make decisions on behalf of Owner with respect to the will be and remain the exclusive property of Manager and, if
Aircraft, and Manager shall obtain from each of the Additional provided to Owner, shall be returned to Manager upon termination of
Interest Owners the identity of the designated representative this Management Agreement.
authorized to make decisions for such Additional Interest Owner with (c) Manager shall not pennit or allow the Aircraft to be
respect to the Aircraft to the extent not otherwise provided for herein. operated or located in any area excluded from coverage by any
Manager shall advise each such representative in writing or by insurance required by the terms of this Management Agreement.
telephone (to be confirmed in writing) as soon as practicable of _ (d) Manager shall provide professionally trained and qualified
issues for which a decision is required and the date or time by which pilots who shall b~ familiar with and licensed to operate the Aircraft,
such decision must be provided to Manager. Manager shall act in recurrent pilot training, pilot medical examinations and unifonns,
accordance with the decision of Joint Owners holding a majority of hangar space, general s~orage space, tie-down as required, normal (as
the percentage ownership interests in the Aircraft held by the Joint available) in-flight catering as described in Exhibit A, flight planning
Owners (the "Majority Owners"); provided, however, if no such and weather services, communications, Aeronautical Radio, Inc. (or
decision is made by Majority Owners on or before the date or time its equivalent) and a computerized maintenance program.
specified by the Manager in its notice, then the Manager shall act in (e) Manager shall make on behalf of Owner all necessary
accordance with the decision of the party identified in Exhibit A as take-off, flight and landing arrangements, and, at Owner's request and
decision maker for the year during which the decision deadline expense, shall coordinate ground transportation.
specified by the Manager occurs; provided, further, if such decision (f) Manager shall, at its expense, arrange for and obtain (i)
maker shall fail to decide by the deadline specified by the Manager, all-risk aircraft hull insurance with respect to the Aircraft, against any
then the right and obligation to make the final decision shall be loss, theft or damage to the Aircraft (including any engines or parts
vested in the party identified in Exhibit A as decision maker for the while removed from the Aircraft), for an amount not less than the fair
following year. market value of the Aircraft as reasonably detennined by Manager,
naming Manager, Owner, and the Additional Interest Owners as loss
2. Term. This Management Agreement shall commence on the
payees and as insureds with losses payable as provided by Section 6
Closing Date (as defined in Section 1.3 of the Purchase Agreement)
as their respective interests may appear; and (ii) liability insurance for
and, subject to the provisions of Section 6(c), shall automatically
bodily injury and property damage for the Aircraft in an amount not
terminate on the date Owner no longer owns an Interest unless
less than $200,000,000 combined single limit liability coverage, and
assigned to and assumed by a transferee in accordance with the
Owner, Manager, Additional Interest Owners, and such other parties
Governing Documents (as defined in the Preamble of the Purchase
as may be mutually agreed shall be insured. The insurance required
Agreement). In the event that an interest in another aircraft is
hereunder shall be maintained by Manager in full force and effect
substituted for Owner's Interest pursuant to Section 5{c) of the
throughout the term hereof. All such insurance shall contain a breach
I LJl~2~1
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 19 of 35

of warranty endorsement in favor of Manager, Owner and Additional gallon than the Base Fuel Price (set forth in Exhibit A, excluding any
Interest Owners. IN ALL CASES, OWNER AGREES TIlAT TIlE fuel tax for which Manager is exempt).
PROCEEDS OF SUCH INSURANCE TO WHICH IT IS (b) Owner shall be and remain responsible for any and all
ENTITLED SHALL BE DEEMED TO BE ACCEPTED AS federal, state, local and foreign taxes, charges, imposts, duties and
OWNER'S SOLE RECOURSE AGAINST MANAGER FOR ANY excise taxes, and other similar assessments, including associated
LOSS OR DAMAGE TO TIlE OWNER OR TIlE AIRCRAFT interest and penalties (except net income or any other similar taxes
EXCEPT TO TIlE EXTENT CAUSED BY OR DUE TO THE imposed upon the net income of Manager) relating to the ownership,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF TIlE operation, maintenance or use of the Aircraft, charges for Owner's
MANAGER. use of flight phones on board the Aircraft, and all special landing
(g) Manager shall provide assistance to and consult with permits and fees, head taxes, departure taxes, immigration, customs,
Owner on matters regarding the Aircraft including but not limited to: handling fees, overflight, navigation, and air space fees and similar
(i) FAA and manufacturer's correspondence and directives; charges including associated interest and penalties.
(ii) Administration and enforcement of warranty claims; (c) Owner hereby agrees that Manager shall have the right,
(iii) Administration and enforcement of insurance matters; during such periods of time that the Aircraft is not actually being
(iv) Parts replacement, services and maintenance utilized by Owner or by an Additional Interest Owner or under the
arrangements; and Master Interchange Agreement, to utilize the Aircraft for recurrent
(v) Preparation and filing of FAA and Federal flight training for Manager pilots and for demonstration flIghts, and
Communications Commission mandatory reports or registrations. Manager shall be entitled to retain for its own account any
(h) Manager shall provide all administrative services reimbursement actually received by Manager in such use of the
necessary to enable Owner to participate in the Interchange Program Aircraft.
contemplated by the Master Interchange Agreement. (d) Upon execution of this Agreement, Owner will advance to
(i) Manager shall file such documents as are necessary and Manager a sum equal to one month's estimated Variable Rate charge
appropriate for filing and perfecting the encumbrances created by the (i.e., Variable Rate multiplied by Allocated Hours (as defined in
Governing Documents and to ensure the terms thereof are binding at Section 5(a» per year divided by 12) to be used by Manager to defer
all times upon all Owners of all Interests in the Aircraft. the cost of maintenance, fuel and miscellaneous expenses incurred by
(j) Manager shall cause to be maintained on behalf of Owner Manager and as a result of invoicing Variable Rate charges in arrears.
all records, logs, and other materials required by the FAA to be Such amount shall be returned to Owner at the expiration of thIS
maintained in respect of the Aircraft. Owner may, upon reasonable Agreement after payment by Owner of all sums due to Manager.
notice to Manager and at Owner's expense, inspect and copy such (e) Owner shall pay its proportionate share (based upon
records, logs and other materials at such times during Manager's Owner's Interest in the Aircraft) of the costs of complying with any
business hours as it shall not interfere with the performance by airworthiness directives, manufacturer's alert/mandatory servIce
Manager of its business. Any other manuals provided or used by bulletins, new FAA Part 91 requirements or manufacturer's
Manager in connection with the services provided hereunder will be recommended service bulletins applicable to the Aircraft. Manager
and remain the exclusive property of Manager and, if provided to shall use all reasonable efforts to pursue any reimbursement from the
Owner, shall be returned to Manager upon termination of this manufacturer or other appropriate party for such costs.
Management Agreement. (f) Owner shall reimburse Manager for all costs and expenses
incurred by Manager resulting from extraordinary wear, tear or
4. Compensation and Reimbursement. damage caused by Owner and not covered by insurance carried
(a) As compensation for the services to be performed by pursuant to Section 3(f).
Manager hereunder, Owner hereby agrees to pay to Manager a (g) The services explicitly provided in ArtIcle 3 of this
Monthly Management Fee in the amount set forth in Exhibit A, Management Agreement will be at the sale expense of the Manager,
payable in advance on the first day of each month throughout the with the exception of those expenses specifically delineated as
term of this Management Agreement, and a Variable Rate charge in Owner's responsibility in Article 4.
the amount set forth 10 Exhibit A multiplied by the number of Owner
Operation Hours (as defined in Section 5 (d)) actually flown by 5. Availability and Operation of Aircraft.
Owner during the previous month, which Variable Rate charge shall (a) Owner and Manager hereby agree that Owner shall be
be payable within 30 days after date of the invoice therefor. In the entitled to the use of the Aircraft, and Manager agrees to make the
event the Monthly Management Fee, Variable Rate charge or other Aircraft available, for the number of Owner OperatIOn Hours (as
amounts due to Manager hereunder shall not be promptly paid when defined in Section 5 (d» each year set forth in Exhibit A (the
due, Owner shall pay interest from the date the fees were due at the "Allocated Hours") plus all unused Allocated Hours carried over
rate of 15 percent per annum (but not in excess of the maximum rate from previous years ("Available Hours"), subject to the notice and
permitted by law). The Monthly Management Fee and the component other requirements of Section 5 (b) and the limitatIOns of Section 5
of the Variable Rate which does not relate to fuel (the Non Fuel (c). Owner agrees and acknowledges that, due to its participation in
Component as set forth 10 Exhibit A) may, in Manager's sale the Master Interchange Agreement, Owner may be provided the use
discretion, each be adjusted on January I of each calendar year of another aircraft; provided, however, that Manager shall use
during the term hereof by an amount not to exceed the percentage reasonable efforts to obtain for Owner the Aircraft before providmg
change in the Consumer Price Index for all Urban consumers - U.S. Owner with any other aIrcraft available under the Master Interchange
cIty average, all items (1982-84 = 100) ("Consumer Price Index") Agreement; provided further, however, that Manager shall not be
during the immedIately preceding calendar year. In addition thereto liable in the event that the Aircraft or any aircraft under the Master
the Vanable Rate shall (i) increase by the amount set forth in Interchange Agreement is unavailable at any given time; and
ExhIbit A beginning on the first day of the thirtieth (30th) month prOVIded further, however, that in the event the Aircraft and all
from the date of this Management Agreement and continuing every aIrcraft under the Master Interchange Agreement are unavailable at
month thereafter, and (ii) may increase or decrease as a result of any gIven time, Manager will provide Owner with use of a SUItable
adjustments to the component of such charge that relates to fuel (the and comparable replacement aircraft ("Substitute Aircraft"), subject
Fuel Component as set forth 10 ExhibIt A) by the amount of the Fuel to the notice and other requirements of Section 5 (b) and other
Component Adjustment Factor (set forth in ExhIbIt A) for each $.01 applIcable proviSIOns of this Management Agreement. Any aircraft
per gallon that the U.S. Average Jet-A Fuel Price per gallon, as so provided by Manager shall be deemed an AIrcraft when used by
published in Business and Commercial AVIation, (excluding any fuel Owner for purposes of this Management Agreement and for purposes
tax for which Manager IS exempt), IS at least $.06 more or less per of determming Owner's use of its Allocated Hours. Except as
prOVIded for in the sentence to follow, any upgrades or downgrades,

I UIO-2000/MN2
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 20 of 35

which are provided for in Section 2 of the Master Interchange (c) In addition to the foregoing, in the event Owner shall
Agreement, shall be provided to Owner solely on an as available desire to use the Aircraft in any year in excess of the AvaIlable Hours
basis, which availability shall be determined by Manager at its own to which it is entitled for such year, Owner shall be permitted to use
discretion. Notwithstanding the precedmg, in the event the size of the Aircraft at the Variable Rate for up to an additional number of
the Interest is at least 12.5 percent, Owner shall be exempt from the hours in such year (the "Excess Hours"), other than during the final
"as available" restriction for a Learjet 31 A, Learjet 60, or Canadair year of this Management Agreement, set forth in Exhibit A, and such
Challenger upgrade or a downgrade request for 2 calendar days per Excess Hours shall be charged against Owner's Allocated Hours for
contract year, provided that Owner provide Manager with 48 hours the following year during the term hereof, thereby reducing
prior notice, that all of the exempted flight segments on such day are accordingly the Allocated Hours to which Owner is entitled to use
contiguous (as defined in this Section 5(g)), and that such the Aircraft in such subsequent year. Similarly, in the event Owner
exemptions may not be used on a Peak Day and may not be carried fails to use the Aircraft in any given year for the full Allocated Hours
forward to future contract years. Under the same tenns and to which it is entitled, then Owner shall be entitled to use the Aircraft
conditions, in the event the size of the Interest is greater than 12.5 in any subsequent year or years during the term hereof for the amount
percent, OW!1er shall be entitled to an additional upgrade/downgrade of such unused hour(s) in addition to Owner's Allocated Hours
exemption for one calendar day for each 6.25 percent component of attributable to such subsequent year or years. Notwithstanding
the Interest in excess of 12.5 percent (e.g., a 25 percent Interest anything to the contrary contained herein, Owner's total use of the
would entitle Owner to 2 additional exempt calendar days). All of Aircraft (i.e., Available Hours plus Excess Hours) in any year of this
the remaimng tenns and conditions of this Management Agreement Management Agreement shall, under no circumstances, exceed the
and the Master Interchange Agreement will apply to the exempted number of Total Available Hours in first year as set forth m Exhibit
upgrade/downgrade flight segments, including but not limited to the A. If at the expiration or earlier termination of this Management
sentence to follow and the 12.5 percent limit on the total number of Agreement Owner has exceeded the Allocated Hours to which It was
upgrade hours as set forth in the Master Interchange Agreement. For entitled prior to the expiration or termination of this Management
any upgrades and downgrades that are requested by Owner and Agreement (i.e., Allocated Hours per year divided by 12, multiplied
provided by Manager, as provided for in the Master Interchange by the number of months this Management Agreement was in effect),
Agreement, Owner shall be charged the then current Interchange then Owner shall pay to Manager the Pro Rata Charge as set forth in
Program variable rate applicable to new owners for the aircraft model Exhibit A with respect to each Excess Period of use. The number of
(or replacement model) utilized, and Owner's Allocated Hours shall Excess Periods shall be calculated as the total hours flown during the
be reduced according to a ratio ofthe Comparative Hourly Cost listed term of this Management Agreement, less the Allocated Hours to
in Exhibit A to the Master Interchange Agreement (which is subject which it was entitled prior to the termination of this Management
to change by Manager pursuant to such Exhibit A) divided by the Agreement as defined In the preceding sentence, the difference of the
Variable Rate to one. For example, If the Comparative Hourly Cost two then divided by Allocated Hours per year divided by 12. For the
for a particular model divided by the Variable Rate is 1.9 (making the purposes of this Management Agreement (excepting when "calendar"
applicable ratio 1.9: I), l!Ild Owner utilizes J4 Owner Operation precedes the word) "year" shall mean the period of time beginning on
Hours on a flight segment on such aircraft model (or replacement the date hereof and on the same date for each subsequent year during
model), then for such upgrade Owner's Allocated Hours would be the term hereof, and ending at 12:00 midnight on the day before the
reduced by 4.6 hours, and Owner would be charged the applicable same date of the year next following.
variable rate for 2.4 hours. If Owner, an affiliate of Owner, or a party (d) Manager and Owner agree that the use of the Aircraft
otherwise related to Owner also owns an interest in an Interchange shall be deemed to commence at the time Owner takes off on the
Aircraft managed under a separate Management Agreement, Owner Aircraft and shall terminate when the Aircraft lands at the destination
shall not be entitled to use the Aircraft on the same day that such airport. In addition, one tenth of an hour shall be added to each take-
party uses an aircraft provided by Manager; such use shall instead be off and each landing to compensate Manager for taxi time on take-off
on an as available basis. and landing. Each such hour of use of the Aircraft shall be defined
(b) The "Prime Service Area" shall be defined to mean an area herein as an "Owner OperatIOn Hour" which shall be measured and
hmited to the contiguous U.S. and any point within 200 nautical accounted for in one tenth of one hour increments. Notwithstandmg
rmles thereof. Owner agrees that it shall provide Manager with a the foregoing, Owner agrees that all flight segments shall be
flight schedule or any alterations being made to a previously measured in one tenth of one hour increments and shall be deemed to
scheduled flight, as far in advance as possible and in any case Owner be a minimum of I hour's duration; except that the foregoing I hour
shall give Manager the minimum number of hours telephonic notice minimum flight segment duration shall not apply to (1.) any flight
set forth in Exhibit A prior to the anticipated flight; provided, segment caused solely as a result of government regulation such as a
however, that such notice shall instead be minimum of 48 hours if the customs stop or a fuel stop necessitated by the airport of departure
proposed destination or departure pomt is outside the PrIme Service for a specific leg, in which event Owner shall be charged for actual
Area or Owner desires to schedule such flight on a "Peak Day". For Owner OperatIOn Hours plus $200, (ii.) any flight segment during a
tripS on Peak Days, the 48 hours notice must be provided prior to calendar day during which Owner's use of the Aircraft equals at least
12:0 I am of such Peak Day as opposed to 48 hours prior to the time 4 Owner Operation Hours, or (IiI.) three flight segments per year
of departure. Further, Manager shall be entitled to delay or dUrIng the term of this Management Agreement as specified by
accelerate requested departure times on Peak Days by up to 3 hours. Owner to Manager. On days which Owner has scheduled more than
Peak Days shall be as publIshed from time to time by Manager and one flight segment, the mimmum flight segment duration of one hour
shall not exceed 10 days in any calendar year. In addition, Owner referenced in the precedmg sentence will not apply to the reductIOn
agrees that It shall provide Manager with the following mformation of Allocated Hours for those segments that are due solely to stops,
for each proposed flight: during any trip for any flight segment taken by Owner solely for
(i) proposed departure pomt; picking up or dropping off passengers, provided, however, that these
(ii) destination; mtenm stops will not reqUire the Aircraft to be on the ground for
(iii) date and time of flight; more than one hour, and upon this occurrence, Owner wlll be billed
(iv) the number of anticipated passengers; for one hour for such flight segment, With only the Owner OperatIOn
(v) the nature and extent of luggage to be camed; Hours bemg deducted from Owner's Allocated Hours. In additIOn,
(VI) the date and time ofa return flight, Ifany; Owner acknowledges and agrees that on all flight segments
(vii) any other information concernmg the proposed flight origmatmg or terminating outside the Pnme Service Area, m addItIOn
that may be pertinent or is reasonably reqUired by Manager. to actual Owner OperatIOn Hours, Owner shaII be charged the
Variable Rate for all flight hours required to ferry the Aircraft to or

I UIO-20001MAl3
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 21 of 35

from such origination or termination point outside the Prime Service each separate occurrence not to exceed the "late charge" amount set
Area, to or from, as the case may be, the nearest suitable international forth in Exhibit A ("Late Charge").
airport within the contiguous U.S. regardless of whether or not (f) The Aircraft may be used at any time during any day of the
Manager shall actually ferry the Aircraft to or from the contiguous week and shall be available at any airport suitable for landing in
U.S., but such ferry hours shall not be charged against Owner's accordance with the FAA Regulations under which the Aircraft is then
Allocated Hours. As an alternative to the Owner's paying the being operated and for which Manager can obtain a landing slot and
Variable Rate charge for such ferry flights to or from the contiguous provided the same does not violate the terms of applicable insurance
U.S., Owner shall be entitled to be billed as if Owner kept the coverage or any U.S. laws, regulations or applicable policies. In
Aircraft outside the Prime Service Area, provided that the entire trip addition, any operations outside the contiguous U.S. shall be subject
does not exceed 5 calendar days (including, if applicable, any day or to all applicable laws, regulations and policies.
portion thereof used for ferry flights). In order to elect this second (g) "Multiple Use" shall mean the flying of more than one
billing option for a trip, the first segment of the trip must originate flight segment on the same calendar day (such multiple segments
within the Prime Service Area and the last segment must terminate being referred to as "First Leg" and "Second Leg") in the event such
within the Prime Service Area, provided that contiguous flight segments are not contiguous. Contiguous segments shall include only
segments, as defined in Section 5(g), within the round trip may those occupied legs for which the time of departure for the Second Leg
originate and terminate outside the Prime Service Area In the event is subsequent to the time of arrival for First Leg, and for which the
Owner elects this second billing option, Owner shall be deemed to airport of departure for the Second Leg is the same as the airport of
have used the Aircraft for the greater of 3 Owner Operation Hours
arrival for the First Leg. If the size of the Interest is less than 25
per day or the actual number of Owner Operation Hours used per
percent of a Lerujet 60 or a Lerujet 31A or less than 50 percent of a
day, and Owner shall be surcharged $300 for each night the flight
crew remains outside the Prime Service Area For example, if Owner Canadair Challenger, Owner shall not be entitled the Multiple Use.
flies (i) from an airport inside the Prime Service Area ("Airport #1'') Instead, Multiple Use will be provided by Manager solely on an as
to an airport outside the Prime Service Area ("Airport #2") and available basis, which availability shall be determined by Manager at
returns from Airport #2 to Airport #1, and (ii) the flight from Airport its sole discretion. If the size of the Interest is at least 25 percent of a
# 1 to Airport #2 occurs on the first day of the round triE and the Lerujet 60 or a Lerujet 31A or at least 50 percent of a Canadair
flight back to Airport #1 from Airport #2 occurs on the 5 and last Challenger, Owner shall be entitled to the following kind of Multiple
day of the round trip, and (iii) the round trip utilizes 12 Owner Use during a calendar day: flying two segments which are not
Operation Hours, and (iv) Owner elects to be billed as if the Aircraft contiguous or flying two trips (or two sets of segments) which are not
was kept outside the Prime Service Area, then Owner will be deemed contiguous with one another but for which all segments within each
to have used 9 Owner Operation Hours (3 each for days 2, 3, and 4 trip are contiguous with one another. Regardless of the size of the
of the trip) in addition to the 12 actually utilized, for a total of 21 Interest, the Multiple Use of aircraft other than as provided for in the
Owner Operation Hours for the entire trip. Owner acknowledges preceding sentence will be provided by Manager solely on an as
that, eyen if Owner elects this second billing_option, Manager shall available basis, which availability shall be determined by Manager at
always have the right to provide different aircraft for different its sole discretion. Notwithstanding the foregoing, Multiple Use shall
segments of a trip as provided for in Section Sea). Manager shall not not be available to Owner on Peak Days or on any calendar day in
under any circumstances be obligated to provide more than one crew
which an aircraft is being provided to Owner for a flight segment that
for any of Owner's trips outside the Prime Service Area, but may do
originates or terminates outside of the Prime Service Area, or on any
so at its sole discretion in the event that Owner's flight schedule, in
Manager's opinion, requires Manager to provide more than one calendar day for which Owner exercises the exemption from the "as
crew. Regardless of whether Owner elects the first or second billing available" restriction for an upgrade or downgrade request under
option with respect to ferrying, if Manager provides more than one Section Sea) herein.
crew for any of Owner's trips that originate or terminate outside the (h) "Metropolitan Area" shall be defined to include any point
Prime Service Area, then for such trips Owner shall pay for all of the within a 15 statute mile radius of the center of the city as found in the
additional expenses incurred by Manager as a result of providing the current year's Rand McNally Road Atlas. In the event that Owner
additional flight crew, including but not limited to positioning, flies into one airport in a Metropolitan Area and flies out of another
repositioning (room and board), and travel expenses (business class airport in th~ same Metropolitan Area during the same calendar day,
for flight segments outside the Prime Service Area and coach class the two legs shall be deemed to be contiguous for purposes of Section
otherwise) for the additional crew, and travel and salary expenses S(g) above, but the repositioning of the aircraft from one such airport
incurred in order to return the original crew to the Prime Service to the other shall bl; included as Owner Operation Hours as defined in
Area Owner agrees that, in the event Manager elects not to provide Section Sed) of this Management Agreement and be charged to Owner.
more than one crew and, in Manager's opinion, more than one crew However, the minimum flight segment duration of one hour will not
is required, Owner shall be required to revise the flight segments to apply to the reduction of Allocated Hours for these Owner Operation
ensure that the crew will not exceed Manager's internal crew duty Hours for repositioning; provided however, Owner will be billed for
day policies and to allow for adequate crew rest.
one hour for these Owner Operation Hours, with only the Owner
(e) There shall be no charge to Owner in the event Owner is
Operation Hours being deducted from Owner's Allocated Hours.
late or cancels a scheduled flight, except that (i) the Aircraft shall be
permitted to leave in the event Owner is more than ninety minutes late (i) In the event Owner elects to (i.) fly into one airport in a
for the flight and has not notified Manager that Owner will be late Metropolitan Area ("Airport #1") and, (ii.) on the same calendar day,
provided however, if less than ninety minutes after the scheduled fly out of another airport ("Airport #2") which is outside the same
departure time the Owner reschedules the departure to a time less than Metropolitan Area but is within 50 statute miles of Airport #1, and
4 hours after the originally scheduled departure, then the Aircraft must (iii.) Manager can reasonably accomplish both flight segments by
remain positioned until the rescheduled departure time; (ii) if Manager utilizing the same aircraft and crew, the two legs shall be deemed to be
has pre-positioned an aircraft specifically for such canceled flight, contiguous for purposes of Section 5(g) above, but the repositioning
Manager may charge Owner for all crew and aircraft repositioning leg from Airport #1 to Airport #2 shall be included as Owner
expenses (not to exceed 2 hours times the Variable Rate) unless Operation Hours as defined in Section Sed) of this Management
Owner has given Manager 4 hours prior notice of such cancellation on Agreement and be charged to Owner as if it were a live leg: the
flights completely within the "Prime Service Area" or 24 hours prior minimum flight segment duration of one hour shall apply to the
notice of such cancellation for all other flights and; (iii) in the event reduction of Owner's Allocated Hours and to the application of the
Owner is more than four hours late, Manager may charge a fee for Variable Rate charge.

I LJI0-2000~AJ4
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 22 of 35

"(j) For purposes of this section, "Measured Period" shall be of Joint Ownership Agreement and (iii) in the case of Owner, a Lien,
the contract year of the Management Agreement, provIded that in the if any, as permitted pursuant to Section 3 of the Joint Ownership
event Owner has prevIOusly executed one or more management Agreement.
agreements with Manager for the same model of aircraft ("Previous 8. Force Majeure. Manager shall have no liability for delay or
Agreements"), then the Measured Period shall instead be the contract failure to furnish the services contemplated by this Management
year of the Previous Agreement with the earliest effective date. Agreement when such delay or failure is caused by Force Majeure as
Notwithstanding the eventual termination of the Previous Agreements, defined below. Owner and Manager agree that when, in the
the Measured Period shall not change throughout the course of the reasonable view of Owner, Manager or the pilots of the Aircraft,
Management Agreement. In the event that Manager provides a safety may be compromised, Owner, Manager or the pilots may
Substitute Aircraft to Owner for Owner Operation Hours consisting of terminate a flight, refuse to commence a flight, or take other action
more than 5 percent of Owner's Measured Hours over the course of any necessitated by such safety considerations WIthout liability for loss,
of the first 4 complete or partial Measured Periods ("Excess Substitute injury, damage or delay. In the event Manager is more than 60
Hours") over the course of this Management Agreement, the Excess minutes late in furnishing the Aircraft at any time due to any reason
Substitute Hours shall be replenished to Owner's Allocated Hours as set other than Force Majeure or for safety considerations as set forth in
forth below. "Measured Hours" for a given Measured Period shall be the this Section 8, Owner shall be granted additional flight time at no
greater of (i) Owner's cumulative pro rata Allocated Hours to which additional cost in the month of Owner's choice during the term hereof
Owner was entitled during the Measured Period, considering the equal to the length of the delay, up to a maximum of 2 hours per
occurrence. The foregoing shall be Owner's sole remedy for delay or
Management Agreement and all Previous· Agreements, or (ii) the
failure to furnish the Aircraft by Manager. For purposes of this
cumulative Owner Operation Hours used during the Measured Period, Management Agreement, "Force Majeure" shall mean an act of God,
considering the Management Agreement and all Previous Agreements. strike or lockout or other labor dispute, act of the public enemy, war
Manager shall notify Owner of any Excess Substitute Hours within 90 (declared or undeclared), blockade, revolution, civil commotion,
days after the end of each of the first 4 Measured Periods. Such Excess lightning, fire, storm, flood, earthquake, explosion, governmental
Substitute Hours shall be added back to Owner's Allocated Hours under restraint, embargo, sudden or unexpected aircraft mechanical failure,
the Management Agreement, provided that in the event any Previous inability to obtain or delay in obtaining equipment or transport,
Agreements are still in effect at the time of replenishing, the Excess inability to obtain or delay in obtaining governmental approvals,
Substitute Hours shall instead be added back to Owner's Allocated permits, licenses or allocations and any other cause whether of the
Hours under the Previous Agreement with the earliest effective date. The kind specifically enumerated above or otherwise, provided that in
Variable Rate charges and other charges related to the Excess Substitute order for any of the foregoing to constitute "Force Majeure", it must
Hours shall remain unchanged. The replemshing of the Excess not be reasonably within the control of the Manager.
Substitute Hours shall not change the maximum Total Available Hours 9. Events of Default by Owner. The occurrence and continuation of
(as set forth in the Section 5(c) of this Management Agreement), that can any of the following shall constitute an "Event of Default" by Owner
be used in any given year under the Management Agreement or the under this Management Agreement;
Previous Agreements. No hours shall be replenished under this section (a) The failure of Owner to pay when due any amount
for the Management Agreement or any Previous Agreement which is not required to be paid by Owner hereunder; provided, however, the
in effect for at least 6 months during any Measured Period." Owner may cure such Event of Default by paying such amount to the
Manager within 10 days after the date such payment is due
6. Loss or Damage to the Aircraft. hereunder;
(a) In the event of any damage to or loss, theft or destruction (b) Any lien, claim, charge or encumbrance, other than a Lien
of the AIrcraft by any cause whatsoever ("Loss or Damage") not permitted pursuant to Section 3 of the Joint Ownership Agreement,
involving a total loss, all aIrcraft hull insurance proceeds in respect shall attach to the Aircraft or the Interest as a result of Owner's acts.
thereof shall be paId to Manager in trust for the repair and restoration or failure to act;
of the Aircraft to good repair, condition and working order. (c) The breach by Owner of any other provision of thIS
(b) In the event of Loss or Damage to the Aircraft under Management Agreement, any other agreement with Manager, which
subparagraph (a) above, Manager shall use reasonable efforts to breach shall continue for 10 days after written notice to Owner by
arrange for Owner an alternate aircraft in accordance with the tenns Manager, or such other party to the relevant agreement;
of SectlOn Sea) hereof while the Aircraft is being repaired as may be (d) Owner shall:
necessary as provided under the Master Interchange Agreement. (i) admit in writing its inability to pay, or fail to pay, debts
(c) In the event of a totai loss of the AIrcraft as determined by generally as they oecome due;
the insurer or insurers that have issued the all-risk hull insurance with (ii) file a petition in bankruptcy or a petition under any
respect to the Aircraft ("Total Loss"), unless Seller exercises its insolvency act or file an answer admittmg or faihng to deny the
option to replace the Aircraft in accordance with Section 5(b) of the material allegation of such petition;
Purchase Agreement, Owner shall be entitled to receive its portion of (iii) make an assignment for the benefit of its creditors;
the aircraft hull insurance proceeds m accordance with Section 3(f), (iv) consent to the appointment of, or possession by, a
and in whIch event this Management Agreement will terminate. In custodian for itself or for the whole or substantially all of its
the event such replacement option IS exercised, Owner shall be property;
entitled to fly and enjoy all the benefits of this Management (v) upon a petition in bankruptcy filed against It, be
Agreement dunng the period from loss to replacement without adjudicated, or have an order for relief granted as, a bankrupt; or
interruption. Owner and Manager agree to execute all documents (vi) file a petition or answer seeking reorganization or
necessary to accomphsh the foregoing. arrangement or other aid or relief under any bankruptcy or insolvency
laws or any other law for the relief of debtors or file an answer
admitting, or failing to deny, the material allegatIOns of a petltion
7. No Liens, Claims, Charges or Encumbrances. Manager and filed agamst it for any such relief;
Owner agree that, throughout the term of this Management (e) A court of competent jurisdictlOn shall enter an order,
Agreement, neither party shall cause or penmt, through its own acts judgment or decree appointing, without the consent of Owner, a
or failure to act, any hens, claims, charges or encumbrances custodian for Owner or the whole or substantIally all of its property,
attributable to It to attach to the AIrcraft or the Interest, other than (i) or approving a petitIOn filed against it seeking reorgamzation or
mechanics' liens to be dIscharged in the ordmary course of business,
(il) the rights of any AdditIOnal Interest Owner pursuant to the terms

UIO-2000/MN5
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 23 of 35

arrangement of Owner under any bankruptcy or insolvency laws or 13. Limitation of Liability. MANAGER SHALL, IN NO EVENT,
any other law for the relief of debtors, and such order, judgment or BE LIABLE TO OWNER FOR ANY INDIRECf, SPECIAL OR
decree shall not be vacated or set aside or stayed within 60 days from CONSEQUENTIAL DAMAGES AND/OR PUNITIVE DAMAGES
the date of entry thereof; or OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES
(f) Under the provision of any law for the relief of debtors, OR FOR ANY REASON INCLUDING ANY DELAY OR
any court of competent jurisdiction or custodian shall assume custody FAILURE TO FURNISH THE AIRCRAFT OR CAUSED OR
or control of Owner or of the whole or any substantial part of its OCCASIONED BY THE PERFORMANCE OR NON
property without the consent of Owner, and such custody or control PERFORMANCE OF ANY MANAGEMENT SERVICES
shall not be terminated or stayed within 60 days from the date of COVERED BY THIS AGREEMENT.
assumption of such custody or control.
14. Third Party Beneficiaries. Owner acknowledges that, in
consideration of the mutual covenants set forth in this Management
10. Remedies for Event(s) of Default by Owner. In addition to any
Agreement together with the Master Interchange Agreement and the
other remedies provided for herein or otherwise available to Manager
Joint Ownership Agreement, all other Additional Interest Owners of
at law or in equity, upon the occurrence of an Event of Default by
the Aircraft are third party beneficiaries of this Management
Owner, Owner shall no longer be entitled to management services, its
Agreement.
use of the Aircraft or any other aircraft hereunder or under the Master
Interchange Agreement for the Allocated Hours for one month for 15. Independent Contractor. The relationship of Manager to
each 30 day period (or part thereof) that Owner is in default until Owner hereunder is that of an independent contractor. In no event
such default is cured; provided, however, in -the case ofthe Events of shall this Management Agreement be construed as creating a joint
Default specified in paragraphs (a), (b) or (c) of Section 9, Manager venture, partnership or other form of association or cooperative
shall first declare Owner in default; provided, further, that the failure arrangement between the parties.
of Manager to declare Owner in default shall not prevent such event
16. Assignments.
from becoming or continuing to be an Event of Default hereunder.
(a) This Management Agreement shall not be assigned by
Any such reduction of the Allocated Hours shall be in addition to and
Owner except in cases as may be allowed by the Purchase Agreement
not in lieu of Manager's right to bring an action or claim against
without the prior written consent of Manager. Notwithstanding the
Owner for all sums which may be due and owing hereunder and to
foregoing, provided that owning or managing the Interest is not
pursue all other remedies available to it at law or in equity. Upon the
Buyer's sole material purpose for existence, this Management
occurrence of an Event of Default, the original Seller of the Aircraft
Agreement may, upon 30 days prior written notice to Manager, be
or its designee shall have the right, but not the obligation, to
assigned in its entirety and only in its entirety by Owner to any entity
repurchase Owner's Interest at a 20 percent discount from the fair
to which Owner transfers all or substantially all of its assets and
market value (determined in accordance with Section 4 of the
business pursuant to a merger, acquisition, or other such
Purchase Agreement) as liquidated damages and not as a penalty.
reorganization or to any affiliate of Owner provided that (i) the
11. Events of Default by Manager. . The occurrence and Interest is transferred to the same person in accordance with the
continuation of any of the following shall constitute an Event of Purchase Agreement and other Governing Documents are assigned to
Default by Manager under this Management Agreement; such person and, in Manager's opinion in any such case, such transfer
(a) The failure by Manager to maintain in full force and effect is acceptable in terms of such transferee's creditworthiness,
during the term of this Management Agreement the insurance geographic location or flight patterns and any other factors Manager
required by Section 3(f) hereof reasonably determines to be applicable, (ii) such transferee is a
(b) In the event that Manager is more than 60 minutes late in citizen of the United States (as defined in 49 U.S.C. Section 40102, as
furnishing the Aircraft to the Owner on five or more separate amended) or otherwise eligible to register aircraft with the FAA
occasions during any calendar year within the term hereof under pursuant to Part 47 of the Federal Aviation Regulations, and (iii)
circumstances which entitle the Owner to free additional flight time such transferee shall execute all other documents relating to the
pursuant to Section 8 hereof Aircraft necessary to reflect such transferee's ownership, the
(c) The breach by Manager of any other material provision of management of the Aircraft by Manager and the transferee's
this Management Agreement or any other agreement with Owner participation in the Interchange Program. The assignment shall not be
which breach shall continue for 30 days after written notice to effective until and unless the assignee has acquired Owner's Interest
Manager by Owner (given according to Section 20 hereof) to correct and executed such documents as Manager, as manager of the
such breach and which notice must describe the breach complained Aircraft, shall deem necessary to evidence assignee's assumption of
of; provided that if such breach complained of in the notice cannot be Owner's obligations with respect to the Aircraft. Buyer shall pay to
cured within 30 days and Manager is diligently attempting to cure Seller the Transfer Fee listed in Exhibit A to pay for administrative
that breach, such breach shall not be deemed a default of Manager costs necessary to facilitate such transfer. Any such assignment shall
unless such material breach shall not be cured at the end of 60 days not operate to relieve Owner or Manager of any liabilities accrued
from the giving of the said notice or within such other delay as prior to such assignment.
Owner and Manager may agree. (b) This Management Agreement may be assigned by
Manager, without consent of Owner, to any affiliate of Manager.
12. Remedies for Event(s) of Default by Manager. In addition to
(c) This Management Agreement shall be binding upon and
any other remedies provided for herein or otherwise available to
shall inure to the benefit of the parties hereto, their representatives,
Owner at law or in equity, upon the occurrence of an Event of
successors and permitted assigns.
Default by Manager; Owner may cancel this Management Agreement
and remarket the Aircraft pursuant to the terms of Section (4) of the 17. Entire Agreement. This Management Agreement constitutes the
Purchase Agreement. In the event that Owner exercises the option to entire understanding among the parties and there are no
cancel this Management Agreement pursuant to an Event of Default representations, warranties, conditions, covenants or agreements
by Manager, Manager shall pay to Owner an amount equal to the other than as set forth expressly herein or in the other Governing
brokerage fee incurred by Owner pursuant to the terms of Section (4) Documents.
of the Purchase Agreement; provided however, that Manager shall be
entitled to deduct therefrom any and all amounts then due to Manager 18. Amendments. This Management Agreement may not be altered,
by Owner hereunder. changed or amended except by an instrument in writing signed by all
parties hereto.

I LJI0-2000~AJ6
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 24 of 35

19. Governing Documents. Governing Documents shall be defined the intention of the parties underlying the invalid, illegal or
as this Management Agreement, the Purchase Agreement, the Joint unenforceable provision.
Ownership Agreement, the Master Interchange Agreement and any
other documents that the Buyer and SeIler under the Purchase
Agreement or the Owner and Manager under this Management
Agreement may agree upon, sign and designate as a Governing
Document or such other document that Joint Owners may sign and so
designate if approved by Manager and SeIler as defined in this MANAGER Bombardier Aerospace Corporation
Management Agreement and the Purchase Agreement.
By:
20. Governing Law. This Management Agreement shaIl be
interpreted and governed by the laws of the State of Texas applicable
to contracts made and to be performed therein without giving effect
Title:
to the principles of conflict laws thereof.
21. Notices. Any notice to be given shall be deemed sufficiently
given if sent by registered or certified mail, commercial courier or OWNER B & B Advisory Services. L.L.c.
facsimile to the party to which said notice is to be given at its address
as shown on page I unless such address is changed by notice given to
the other party. Notices so sent shall be deemed to be received upon By:
the earlier of (i) 2 days foIlowing sending in the manner provided
above or (ii) actual receipt by the receiving party.
Title:
22. Counterparts. This Management Agreement may be executed in
one or more counterparts each of which shall be deemed an original,
all of which together shall constitute one and the same agreement.
23. Severability. In the event that anyone or more of the provisions
of this Management Agreement shall for any reason be held to be
invalid, illegal or unenforceable, the remaining provisions of this
Management Agreement shall be unimpaired and the invalid, illegal
or unenforceable provision shall be replaced by a mutually acceptable
provision, which, being valid, legal and enforceable, comes closest to

I UIO-20001MN7
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 25 of 35

Kirkman, Carolyn
From: Kirkman, Carolyn
Sent: Tuesday, July 24,200112:05 PM
To: 'Sher, Leopold'
Cc: 'dburrus@burrusgroup.com'; 'cschott@burrusgroup.com'; Bringe, Dean
Subject: RE: FlexJet

Hello Lee,

We have reviewed the comments and attached are our replies. What J did was copy the last email you sent into Word and
added our response beneath each of your comments. We look forward to hearing from you soon. Thank you!

Comments 2.doc

Best regards,
Carolyn

-Original Message-
From: Sher, Leopold [SMTP:LSher@SHERGARNER.coml
Sent: Friday, July 06,200110:38 AM
To: 'ckirkman@flexjelcom'
Cc: 'dburrus@burrusgroup.com'; 'cschott@burrusgroup.com'
Subject: RE: FlexJet

Hi Carolyn, hope all is well. Mr. Burrus and I have discussed the revised
Sideletter Agreement and we wish to reiterate all the items discussed in my
July 4, 2001, email, below, and note the fOllowing additional items:

1. The exemptions from the "as available" restriction to upgrades and


downgrades should not be limited to the 1st contract year. We accommodated
you in transferring our ownerShip, and in consideration of our
accommodation, you agreed to give us these upgrades. The exemptions(which
should be a total of 6 as we indicated in our previous email) should be
available at any time throughout the contract period.

2. We wish to reemphasize the importance of the rounding issue. Giving us


additional hours for your unilateral changing of the rounding calculations
in your favor is certainly appreciated but does not fully compensate us for
the past and future rounding calculations. We paid for time that should not
have been charged to us and we will do the same under the new contract we
are about to sign with you. This is just not right. As we discussed on ---
the phone, a more fair and appropriate solution would be to provide that we
would not pay the variable rate for the extra hours(i.e., the Special Core
Hours and the Additional Core Hours) you kindly gave us. This alsO".would
necessitate changing the method of application of hours you provided in
paragraph 2 of page 10 of the Sideletter so that the Additional Core Hours
would be listed as number "(2)" as opposed to number "(4)."

Thanks for your help and please let us hear from you.

All the best, Lee.

Leopold Z. Sher
Sher Gamer Cahill Richter Klein McAlister & Hilbert, L.L.C.·
Twenty-Eighth Floor
909 Poydras Street
New Orleans, Louisiana 70112 EXHIBIT
1
5
Tel: 504-299-2101
Fax: 504-299-2301
'.
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 26 of 35

The information contained in this electronic message may be attorney


privileged and confidential information intended only for the use of the
owner of the email address listed as the recipient of this message. If you
are not the intended recipient, or the employee or agent responsible for
delivering this message to the intended recipient, you are hereby notified
that any disclosure, dissemination, distribution, or copying of this
communication is strictly prohibited. If you have received this
transmission in error, please immediately notify us by telephone at
504-299-2100 and return the original message to us at Sher Gamer Cahill
Richter Klein McAlister & Hilbert, L.L.C., Twenty Eighth Floor, 909-Poydras
Street, New Orleans, LA 70112 via the United States Postal Service.

> -Original Message-


> From: Sher, Leopold
> Sent: Wednesday, July 04,20014:10 PM
> To: 'ckirkman@flexjet.com'
> Cc: 'dburrus@burrusgroup.com'; 'cschott@burrusgroup.com'
> Subject: FlexJet
>
> Carolyn, hope you had a nice 4th. Thank you for your quick turnaround of
> the revised Sideletter Agreement. Mr. Burrus has not had an opportunity
> to review your revisions yet, he and I have not spoken since you produced
> the revisions and I have not yet thoroughly reviewed the revisions and,
> accordingly, we reserve the right to make additional comments and
> suggestions._After a brief review, these are my preliminary observations
> to your revisea Sideletter Agreement:
>
> 1. On page 3 in the fourth to last line of the first paragraph, you refer
> to days that are "contiguous" to Peak Days. Technically, all days in the
> year are "contiguous" to Peak Days in one way or another. What do you
> mean and why is there this additional restriction?
>
> 2. In the next paragraph on the same page, you say that if we repurchase
> after 60 months, we get to keep carryover hours. Why does this right only
> exist if we keep the plane for 60 months? We are not keeping our plane
> now for 60 months. As a matter of fact, just a few months ago, you asked
> us to swap planes and we had not been in the program for 60 months. The
> carryover hours are our hours and we should be able to keep them if we
> continue to buy your planes, whether we keep the plane a full 60 months.
> It is for this same reason that carryover hours should not be limited to
> 10 percent of the Allocated Hours, as you have provided in this same--
> paragraph as a further limitation on carryover hours. We never agreed to.
> that and we should be able to keep all carryover hours.
> ~

> 3. In this same paragraph you refer to "and other fees" in the 4th to
> last line. We do not agree to these "other fees" and we have not seen
> this terminology used at any other time when referring to our paying the
> variable rate.
>
> 4. On page 4, second paragraph, you make certain statements regarding
> lawsuits, etc. We thought you were going to make additional statements
> similar to those made in the prior sideletter relating to proceedings with
> taxing authorities, manufacturers and statements dealing with the subject
> of depreciation and the fact that the regulatory authorities have
> recognized fractional ownership. Also, when we first got into the
> program, we were advised for tax purposes by representatives of FlexJet to
> operate our interest through a Delaware entity and take possession and
> ownership of the plane in Delaware. Could you please have the Sideletter
2
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 27 of 35
:>reflect that the place we are now taking possession and ownership does not
> give rise to a tax problem and that we no longer have to operate through a
> Delaware entity?
>
> 5. As Mr. Burrus advised during our telephone conference last Friday, one
> of the most important, if not the most important issue remaining open is
> the rounding problem. In order to try to compensate us for the rounding
> problem, on pages 9 and 10 you provide for 5 "Special Core Hours" and 25
> "Additional Core Hours." Thank you for those hours. We thought, however,
> as a compromise and to fairly compensate us for the rounding issue, we
> would not have to pay the variable rate for these core hours.
>
> 6. In the third paragraph on page 10, you address what happens when the
> plane is not equipped with a life raft and the flight is from New Orleans
> to Palm Beach. The solution you propose is what we discussed on the phone
> but we were not supposed to limit its application to trips between these 2
> cities. Anytime you fly us without a life raft and the flight path is
> adjusted as a result, appropriate adjustments should be made so that the
> additional flight time should not be deducted and we should not be billed
> for the extra time.
>
> 7. In the last paragraph on page 10, you provide for the exemption from
> the "as available" restriction to upgrades or downgrades on 4 occasions.
> I thought we were receiving a total of 6 exemptions, the 2 that everyone
> receives under 5(a) of the Management Agreement and 4 in addition to those
>2.
>
> Please let me hear from you on these issues and I will get back to you as
> soon as I speak to Mr. Burrus and finish reviewing your fine work.
>
>
> Thanks very much for your help and best regards. Lee
>
>
>
>
> Leopold Z. Sher
> Sher Gamer Cahill Richter Klein McAlister & Hilbert, L.L.C.
> Twenty-Eighth Floor
> 909 Poydras Street
> New Orleans, Louisiana 70112
>
> Tel: 504-299-2101
> Fax: 504-299-2301
>
> The information contained in this electronic message may be attorney
> privileged and confidential information intended only for the use of the~
> owner of the email address listed as the recipient of this message. If
> you are not the intended recipient, or the employee or agent responsible
> for delivering this message to the intended recipient, you are hereby
> notified that any disclosure, dissemination, distribution, or copying of
> this communication is strictly prohibited. If you have received this
> transmission in error, please immediately notify us by telephone ,at
> 504-299-2100 and return the original message to us at Sher Gamer Cahill
> Richter Klein McAlister & Hilbert, L.L.C., Twenty Eighth Floor, 909
> Poydras Street, New Orleans, LA 70112 via the United States Postal
> Service.
>
>
>

3
Case 2:02-cv-02695-JCZ Document 53
e-
Filed 04/29/03 Page 28 of 35

-Original Message--
From: Sher, Leopold [SMTP:LSher@SHERGARNER.com]
Sent: Friday, July 06, 2001 10:38 AM
To: 'cl<irkman@flexjel.com'
Cc: 'dburrus@burruS9roup.com'; 'cscholt@burrusgroup.com'
Subject: RE: AexJet

Hi Carolyn, hope all is well. Mr. Burrus and I have discussed the revised
Sideletter Agreement and we wish to reiterate all the items discussed in my
July 4, 2001, email, below, and note the following additional items:
-
1. The exemptions from the "as available n restriction to upgrades and
downgrades should not be limited to the 1st contract year. We accommodated
you in transferring our ownership, and in consideration of our
accommodation, )(ClU agreed to give us these upgrades. The exemptions(which
should be a total of 6 as we indicated in our previous email) should be
available at any time throughout the contract period.

2. We wish to reemphasize the importance of the rounding issue. Giving us


additional hours for your unilateral changing of the rounding calculations
in your favor is certainly appreciated but does not fully compensate us for
the past and future rounding calculations. We paid for time that should not
have been charged to us and we will do the same under the new contract we
are about to sign with you. This is just not right. As we discussed on
the phone, a more fair and appropriate solution would be to provide that we
would not pay the variable rate for the extra hours(Le., the Special Core
Hours and the Additional Core Hours) you kindly gave us. This also would
necessitate changing_ the method of application of hours you provided in
paragraph 2 of page 10 of the Sideletter so that the Additional Core Hours
would be listed as number "(2)" as opposed to number "(4)."

Thanks for your help and please let us hear from you.

All the best, Lee.

>
> Carolyn, hope you had a nice 4th. Thank you for your quick turnaround of
> the revised Sideletter Agreement. Mr. Burrus has not had an opportunity
> to review your revisions yet. he and I have not spoken since you produced
> the revisions and I have not yet thoroughly reviewed the revisions and,
> accordingly, we reserve the right to make additional comments and
> suggestions. After a brief review, these are my preliminary observations
> to your revised Sideletter Agreement: --
>
> 1. On page 3 in the fourth to last line of the first paragraph, you refer
> to days that are "contiguous" to Peak Days. Technically, all days in the
> year are "contiguous" to Peak Days in one way or another. What do you
> mean and why is there this additional restriction?
rm not sure how all days in the year would be considered contiguous to a Peak Day,
but in order to go forward, we will replace "(1) Peak Days or on days contiguous to
Peak Days" with "(1) Peak Days and the calendar days immediately preceding and
following Peak Days". The additional restriction has been placed only on the additional
4 days that are not in the current agreement. Peak Days and the days either side of
Peak Days are heavy usage days by a large percentage of our Owners. Managing the
number of aircraft used by each Owner on those days allows us to provide the
greatest coverage to the most Owners on those heavily flown days.
· . Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 29 of 35

> 2. In the next paragraph on the same page, you say that if we repurchase
> after 60 months, we get to keep carryover hours. Why does this right only
> exist if we keep the plane for 60 months? We are not keeping our plane
> now for 60 months. As a matter of fact, just a few months ago, you asked
> us to swap planes and we had not been in the program for 60 months. The
> carryover hours are our hours and we should be able to keep them if we
> continue to buy your planes, whether we keep the plane a full 60 months.
> It is for this same reason that carryover hours should not be limited to
> 10 percent of the Allocated Hours, as you have provided in this same
> paragraph as a further limitation on carryover hours. We never agreed to
> that and we should be able to keep all carryover hours.
The substitution of the aircraft is not relative to whether unused hours are carried over
from one interest to another. The carry over of hours from one interest to the next is a
concession and we think this is a fair offer. The program has always been that under-
flying can result in a loss of hours, depending on how many hours are not flown each
year.

> 3. In this same paragraph you refer to "and other fees" in the 4th to
> last line. We do not agree to these "other fees" and we have not seen
> this terminology used at any other time when referring to our paying the
};> variable rate.
The "other fees" are those incurred as a result of the flight taken on those hours for which t...
Owner is responsible, e.g., landing fees, etc. To make this more specific, after "and other "
fees", we can insert" as set forth in the Governing Documents and designated as the
responsibility of OwnerlBuyer." .

> 4. (a) On page 4, second paragraph, you make certain statements regarding
> lawsuits, etc. We thought you were going to make additional statements
> similar to those made in the prior sideletter relating to proceedings with
> taxing authorities, manufacturers and statements dealing with the subject
> of depreciation and the fact that the regulatory authorities have
> recognized fractional ownership. (b) Also, when we first got into the
> program, we were advised for tax purposes by representatives of FlexJet to
> operate our interest through a Delaware entity and take possession and
> ownership of the plane in Delaware. Could you please have the Sideletter
> reflect that the place we are now taking possession and ownership does not
> give rise to a tax problem and that we no longer have to operate through a
> Delaware entity?

rve split this question into 2 parts. ".


(a) From the discussion, Mr. Burrus gave no indication that anything further was needed
in this regard, therefore, this paragraph will not be changed from what is in the draft..
(b) It is the responsibility of the owner to seek the appropriate authority for advice on the
issues in question. F1exjet is not in the business of, nor in a position to give such
advice. Therefore, we will not provide such declarations in the Sideletter.

> 5. As Mr. Burrus advised during our telephone conference last Friday, one
> of the most important, if not the most important issue remaining open is
> the rounding problem. In order to try to compensate us for the rounding
> problem, on pages 9 and 10 you provide for 5 "Special Core Hours" and 25
> "Additional Core Hours." Thank you for those hours. We thought, however,
~ • f •

Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 30 of 35

> as a compromise and to fairly compensate us for the rounding issue, we


»- would not have to pay the variable rate for these core hours.
»-
and from the second email:

2. We wish to reemphasize the importance of the rounding issue. Giving us


additional hours for your unilateral changing of the rounding calculations
in your favor is certainly appreciated but does not fully compensate us for
the past and future rounding calculations. We paid for time that should not
have been charged to us and we will do the same under the new contract we
are about to sign with you. This is just not right. As we discussed on
the phone, a more fair and appropriate solution would be to provide that we
would not pay the variable rate for the extra hours(Le., the Special Core
Hours and the Additional Core Hours) you kindly gave us. This also would
necessitate changing the method of application of hours you provided in
paragraph 2 of page 10 of the Sideletter so that the Additional Core Hours
would be listed as number "(2)" as opposed to number "(4)."

This is the best we can offer on this issue.

>
> 6. In the third paragraph on page 10, you address what happens when the
> plane is not equipped with a life raft and the flight is from New Orleans
> to Palm Beach. The solution you propose is what we discussed on the phone
> but we were not supposed to limit its application to trips between these 2
> cities. Anytime you fly us-without a life raft and the flight path is
> adjusted as a result, appropriate adjustments should be made so that the
> additional flight time should not be deducted and we should not be billed
> for the extra time.
>
Since Mr. Burrus mentioned this particular segment, we believed this to be a primary
route for him and the one for which he has said Owner Services has worked with him on
in the past. We agreed to put it in writing and specified the 2 destination cities he
mentioned in our telephone conference. We believe this to be a fair offer as is.

> 7. In the last paragraph on page 10, you provide for the exemption from
> the "as available" restriction to upgrades or downgrades on 4 occasions.
> I thought we were receiving a total of 6 exemptions, the 2 that everyone
> receives under 5(a) of the Management Agreement and 4 in addition to those
>2.
> -.
and from the second email:

1. The exemptions from the "as available" restriction to upgrades and


downgrades should not be limited to the 1st contract year. We accommodated
you in transferring our ownership, and in consideration of our
accommodation, you agreed to give us these upgrades. The exemptions(which
should be a total of 6 as we indicated in our previous email) should be
available at any time throughout the contract period.

Please refer to the Amendment to the Sideletter Agreement for the Learjet 31A. It states
"a total of 4 calendar days", not a total of 6, nor does it say a total of 4 in addition to the
exemptions provided for in Section 5(a) of the Management Agreement. A total of 4 is
.., ., ,
Case 2:02-cv-02695-JCZ Document 53

Filed 04/29/03 Page 31 of 35

what was offered, understood (as of your email dated 4/16/01), agreed and accepted by an
authorized representative ofB & B. It was also accepted by B & B under the conditions
that the "exempted flight segments may not be carried forward to future contract years,"
and provided "that Owner maintains at least a 12.5% interest in Flexjet LeaIjet 31A
aircraft." Because:Mr. Burrus said he had not had a chance to utilize the 2 additional
upgrades, we have offered what we believe to be a fair compromise by allowing the 2
additional upgrades to be carried forward to the LeaIjet 45 interest and do not believe it to
be unreasonable by limiting it to the first contract ye~ only.

> Please let me hear from you on these issues and I will get back to you as
> soon as I speak ,to Mr. Burrus and finish reviewing_ your Jine work.
>
>
> Thanks very much for your help and best regards. Lee
>
>
>
>
" > Leopold Z. Sher
> Sher Gamer Cahill Richter Klein McAlister & Hilbert, L.L.C.
> Twenty-Eighth Floor
> 909 Poydras Street
> New Orleans, Louisiana 70112
> - - --
> Tel: 504-299-210t
> Fax: 504-299-2301
>
> The information contained in this electronic message may be attorney
> privileged and confidential information intended only for the use of the
> owner of the email address listed as the recipient of this message. If
> you are not the intended recipient, or the employee or agent responsible
> for delivering this message to the intended recipient, you are hereby
> notified that any disclosure, dissemination, distribution, or copying of
> this communication is strictly prohibited. If you have received this
> transmission in error, please immediately notify us by telephone at
> 504-299-2100 and return the original message to ~ at Sher Gamer Cahill
> Richter Klein McAlister & Hilbert, L.L.C., Twenty Eighth Floor, 909
> Poydras Street, New Orleans, LA 70112 via the United States Postal
> Service. --
>
>
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 32 of 35

13743

UNITED STATES DISTRICT COURT


EASTERN DISTRICT OF LOUISIANA
)
B & B ADVISORY SERVICES, L.L.C )
) Civil Action No. 02-2695
)
Plaintiff, )
)
v. ) SECTION" A"
) JUDGE ZAINEY
BOMBARDIER AEROSPACE CORPORA- )
TION, BOMBARDIER BUSINESS JET SO- )
LUTIONS, INC, and )
JET SOLUTIONS, L.L.C ) MAG. (3)
) MAGISTRATE KNOWLES
Defendants. )
-----------------------------)
RESPONSE TO PLAINTIFF'S STATEMENT OF
UNDISPUTED FACTS

NOW INTO COURT, through undersigned counsel, come Bombardier Aerospace

Corp., Bombardier Business Jet Solutions, Inc., Jet Solutions, Inc., and file the following

response to plaintiff's undisputed material facts, pursuant to Local Rule 56.2:

1. Admitted;

2. Admitted;

3. Admitted;

4. Admitted;

5. It is admitted that the language in the 1997 and 2000 agreements differ;
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 33 of 35

6. Denied. The Deposit Agreement states that the 1997 and 2000 Agreements

will be in "substantially similar form." The difference in some of the language between

the 1997 and 2000 agreements do not prevent the agreements from being in substan-

tially similar form.

7. Denied;

8. Admitted;

9. Admitted;

10. Admitted;

11. It is admitted that on March 31,2003 Flexjet answered B&B's second

amended complaint denying it had not already complied with the terms of the Deposit

Agreement.

12. Admitted;

13. Flexjet has only admitted that some of the language in the 1997 and 2000

agreements is different. However, the documents are in substantially similar form.

Flexjet also submits that the following are also uncontested facts:

1. The Deposit Agreement states that the contract agreements for the Lear 45

share will be in "substantially similar form" as the like titled agreements executed by

buyer and seller for the existing share.

2. The 1997 agreements for the Learjet 31A consist of a Purchase Agreement,

-2-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 34 of 35

Addendum to Purchase Agreement, Management Agreement, Addendum to Manage-

ment Agreement, Joint Ownership Agreement, Master Interchange Agreement, and

Sideletter Agreement.

3. The 2000 agreements for the Lear Jet 45 consist of a Purchase Agreement,

Addendum to Purchase Agreement, Management Agreement, Addendum to Manage-

ment Agreement, Joint Ownership Agreement, Master Interchange Agreement, and

Sideletter Agreement.

4. The 1997 contract agreements were for the purchase of a share in a Lear

Jet 31A aircraft.

5. The 2000 contract agreements were for the purchase of a share in a Lear

Jet 45 aircraft.

Respectfully submitted,

1-UV,"JLAJ K. CARROLL (3898), T.A.


RI HARD A. FRASER, III (5831)
CHAELA E. NOBLE (28173)
GELPI SULLIVAN CARROLL
400 Poydras St., Ste. 2525
New Orleans, LA 70130
Telephone: 504-524-9714
Attorneys for Defendants Bombardier
Aerospace Corporation, Bombardier Business
Jet Solutions, Inc. And Jet Solutions, L.L.c.

-3-
Case 2:02-cv-02695-JCZ Document 53 Filed 04/29/03 Page 35 of 35
" ..•

CERTIFICATE OF SERVICE

I hereby certify that a copy of the above and foregoing pleading has been

served upon all counsel of record, postage prepaid and properly addressed, by u.s. Mail,

this -4- day of April, 2003.

81854

-4-

You might also like