FILED
DALLAS COUNTY
11/25/2019 4:18 PM
FELICIA PITRE
DISTRICT CLERK

Angie Avina

DC-19-18831
CAUSE NO. _____________
FIRST NATIONAL CAPITAL, LLC,
Plaintiff,
v.
BLUESTONE RESOURCES, INC.
Defendant.

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IN THE DISTRICT COURT OF

DALLAS COUNTY, TEXAS

____ JUDICIAL DISTRICT

PLAINTIFF’S ORIGINAL PETITION AND APPLICATION
FOR CONFIRMATION OF ARBITRATION AWARD
TO THE HONORABLE COURT:
Plaintiff First National Capital, LLC (“FNC”) respectfully files its Plaintiff’s Original
Petition and Application for Confirmation of Arbitration Award. Through this Application, FNC
seeks confirmation of an arbitration award recently issued in favor of FNC and against Defendant
Bluestone Resources, Inc. (“Bluestone”). In support whereof, FNC would show the Court as
follows.
DISCOVERY CONTROL PLAN
1.

FNC does not believe that any discovery is necessary in aid of this Application. In

the unlikely event that any discovery does become necessary, the Court should enter an appropriate
Level 3 discovery control plan under pursuant to Texas Rule of Civil Procedure 190.4.
PARTIES, JURISDICTION, AND VENUE
2.

Plaintiff is First National Capital, LLC.

3.

Defendant is Bluestone Resources, Inc. Bluestone is a West Virginia corporation

with its chief executive office located at 302 S. Jefferson St., Roanoke, Virginia 24011. Bluestone
PLAINTIFF’S ORIGINAL PETITION

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 does not maintain a registered agent for service of process in Texas. Accordingly, the Texas
Secretary of State serves as Bluestone’s agent for service of process pursuant to Texas Civil
Practice & Remedies Code § 17.044(a)(1) & (b). The Secretary of State’s address for service of
process via certified mail is: Service of Process, Secretary of State, P.O. Box 12097, Austin, Texas
78711-2079.
4.

FNC and Bluestone contractually agreed and consented to jurisdiction and venue

in Harris County, Texas for any judicial proceeding seeking judgment on an arbitration award.
However, pursuant to Texas Rule of Civil Procedure 11, counsel for FNC and Bluestone have
agreed to waive that previous agreement and to conduct this proceeding in Dallas County instead
of Harris County. See Exhibit 1 (Rule 11 agreement).
5.

The Court has subject matter jurisdiction over this case pursuant to Texas Civil

Practice & Remedies Code §§ 171.081 and 171.082(a) because this suit seeks to render judgment
on an arbitration award.
FACTS
6.

FNC and Bluestone are parties to Master Equipment Lease Agreement No. 21592,

dated as of June 8, 2018 (the “Master Lease”). A true and correct copy of the Master Lease is
attached hereto as Exhibit 2.
7.

The Master Lease provides the basic contractual framework for any equipment

lease that the parties may choose to enter into, with additional terms of each equipment lease to be
contained in an accompanying Equipment Schedule.

Together, the Master Lease and an

Equipment Schedule form a “Lease.”
8.

Section 26(c) of the Master Lease contains a mandatory arbitration clause, which

provides for arbitration of all disputes, claims, or controversies arising out of or relating to any
PLAINTIFF’S ORIGINAL PETITION

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 Lease. Such arbitration is to be administered by JAMS in Dallas, Texas and heard by a single
arbitrator.
9.

FNC is the Lessor under the Master Lease, and Bluestone is the Lessee. The general

purpose of the agreement was to enable First National to purchase certain “Equipment” identified
on an accompanying Equipment Schedule and lease it to Bluestone for use in Bluestone’s mining
operations.
10.

As set forth in the original version of Equipment Schedule No. 01, also dated as of

June 8, 2018, the parties initially contemplated a 48-month Lease involving $2.5 million of
Equipment, with monthly rent payments by Bluestone in the amount of $55,352.50.
11.

But before that proposed transaction went into effect, Bluestone decided that it

wanted to pursue a much cheaper leasing option than contemplated by the original version of the
Schedule. Instead of $2.5 million in “New/Used Various CAT Equipment,” Bluestone proposed
to lease a remanufactured Caterpillar D11 bulldozer from FNC, with a purchase cost of
$1,387,500. However, FNC was not willing to proceed with financing until, among other matters,
Bluestone provided a copy of its 2017 audit report to FNC.
12.

Because the remanufactured bulldozer needed to be purchased quickly, the parties

agreed to amend the Lease in a signed writing referred to as the “Funding Agreement.” Pursuant
to the Funding Agreement, if all conditions were met prior to the “Funding Expiration Date” of
August 30, 2018, the Lease would operate on the terms provided by the June 8, 2018 equipment
schedule. As amended, that equipment schedule provided for a 60-month term and monthly rent
payments of $26,157.15. But the Funding Agreement also provided that if all conditions were not
met before August 30, 2018, the Lease would instead be governed by a new equipment schedule
dated as of July 27, 2018. That new equipment schedule provided for a 36-month term and
PLAINTIFF’S ORIGINAL PETITION

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 monthly rent payments of $39,074.78. With the Funding Agreement in place, FNC proceeded to
pay the purchase price for the remanufactured bulldozer, and Bluestone took possession of it as
the Lessee as of July 27, 2018.
13.

However, the conditions contained in the Funding Agreement were not met when

the “Funding Expiration Date” arrived. Specifically, Bluestone had failed to provide a copy of its
2017 audit report to FNC, and FNC had not secured permanent financing for the remanufactured
bulldozer. Because those express conditions had not been met, the July 27, 2018 equipment
schedule governs the parties’ lease agreement. As a result, the Lease became one that provided
for a term of 36 months and monthly payments of $39,074.78.
14.

A dispute arose between the parties soon after FNC began to invoice Bluestone

under the 36-month version of the Lease. Before long, Bluestone ceased making all rent payments
to FNC, even as it continued to possess and operate the bulldozer.
15.

On February 19, 2019, FNC sent Bluestone a default letter, demanding either

immediate payment of the $121,556.00 in past due payments owed under the Lease or to pay
$2,716,240.94 as the “Stipulated Loss Value” liquidated damages under section 18(b)(v) of the
Master Lease. Bluestone failed to comply with either demand.
16.

On March 21, 2019, Bluestone initiated arbitration with JAMS, seeking a

declaration that it was in compliance with the Lease. See Exhibit 3. Bluestone answered and
counterclaimed for breach of contract and conversion. See Exhibit 4. The arbitration proceeded
to final hearing on October 14, 2019 before the Honorable Mark Whittington (ret.).
17.

On November 13, 2019, the arbitrator issued his Final Award in the case, ruling

that “Respondent, First National Capital, LLC shall recover from Claimant Bluestone Resources,

PLAINTIFF’S ORIGINAL PETITION

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 Inc. the sum of $2,716,240.94 for breach of the lease agreement, plus attorney’s fees of $63,002.59
and costs of $13,045.55.” See Exhibit 5.
APPLICATION FOR CONFIRMATION OF AWARD AND ENTRY OF JUDGMENT
18.

Pursuant to section 171.087 of the Texas Civil Practice & Remedies Code, unless

grounds are offered to vacate, modify, or correct an arbitration award, “the court, on application
of a party, shall confirm the award.” Furthermore, after confirming the arbitration award, “the
court shall enter a judgment or decree conforming to the order.” Tex. Civ. Prac. & Rem. Code
§ 171.092(a). Accordingly, FNC asks the Court to confirm the arbitrator’s Final Award and enter
judgment upon it.
19.

As part of the judgment requested herein, FNC further requests that the Court grant

FNC recovery for its costs incurred in connection with this application and of the proceedings
subsequent to the application. See Tex. Civ. Prac. & Rem. Code § 171.092(b)(1).
20.

As an additional part of the judgment requested herein, FNC further requests that,

pursuant to section 38.001(8) of the Texas Civil Practice & Remedies Code, the Court grant it
recovery of its reasonable and necessary attorney fees incurred in this proceeding.
21.

Finally, pursuant to Chapter 304 of the Texas Finance Code, FNC requests that the

Court grant it post-judgment interest on all money damages awarded in the judgment at the
prescribed statutory rate.
PRAYER
FNC respectfully requests that the Court confirm the arbitrator’s Final Award and enter
judgment conforming to the award. Furthermore, FNC requests that the Court grant it recovery
for its costs and for its reasonable and necessary attorney fees incurred in this proceeding. Finally,
FNC requests that the Court award post-judgment interest at the statutory rate.
PLAINTIFF’S ORIGINAL PETITION

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 DATED: November 25, 2019
Respectfully submitted,
/s/ Richard A. Smith
Richard Smith, P.C.
Palmer & Manuel, PLLC
Texas Bar No. 24027990
richard@rsmithpc.com
8350 N. Central Expressway, Suite 1111
Dallas, Texas 75206
(214) 242-6484 – telephone
(214) 265-1950 – facsimile
ATTORNEY FOR RESPONDENT
FIRST NATIONAL CAPITAL, LLC

PLAINTIFF’S ORIGINAL PETITION

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 Exhibit 1
Richard Smith
From:
Sent:
To:
Subject:

James Stafford <James.Stafford@solidcounsel.com>
Friday, November 22, 2019 1:23 PM
Richard Smith; Priya Jesani
Re: Bluestone Resources v, First National Capital, Ref. No. 1310024305

Agreed.
James Stafford, III   Attorney   Scheef & Stone, L.L.P.   214.706.4245<tel:214.706.4245>
On Nov 22, 2019, at 11:12 AM, Richard Smith <richard@rsmithpc.com> wrote:
James:
As we discussed last week, First National Capital would like to reach agreement with Bluestone Resources to conduct the
confirmation proceeding on the recently issued final arbitration award in Dallas County. Section 26(e) of the parties’
Master Equipment Lease Agreement would require that confirmation proceeding to be brought in Harris County. On
behalf of Bluestone, and for purposes of Texas Rule of Civil Procedure 11, would Bluestone agree to waive the Harris
County venue and jurisdiction requirement of section 26(e) and instead agree to venue and jurisdiction for the
confirmation proceeding in Dallas County? Much appreciated for the courtesy, and hopefully this will keep costs down
for both sides.

Richard Smith, P.C.
8350 N. Central Expressway
Suite 1111
Dallas, Texas 75206
(214) 242-6484

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 ...

Exhibit 2
21592

.,~NATIONAL
APJTAL

Master Equipment Lease Agreement

A TRUSTED FINANCIAL RESOURCE

THIS M~lER EQUIPMENT LEASE AGREEMENT No. 21592 dated as of June 8, 2018 ("Master Lease") Is made by and between First
National Capital, LLC having an address at 1029 Highway 6 North, Suite 650-283, Houston, TX 77079 ('Lessor"), and Bluestone Resources Inc. and
Affiliates wth its chief executive offices located at 302 S. Jefferson Street, Roanoke, VA 24011 C'Lessee').
1.
Lease. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, Equipment, subject to and upon the terms set forth herein and in any
Equipment Schedule executed In connectlon herewth (each, a "Schedule"). Each Schedule shall constitute a separate and enforceable lease Incorporating all
the terms of this Master Lease (each Schedule, together Vvith this Master Lease as it relates to such Schedule, Is referred to herein as a "Lease'1. If any term of a
Schedule conflicts or is Inconsistent wth any term of this Master Lease, the terms of such Schedule shall govern.
2.
Definitions. Unless the context otherwse requires, as used in the Lease, the following terms shall have the respective meanings Indicated below and
shall be equally applicable to both the singular and the plural forms thereof:
"Bluestone Resources Inc. and Affillates• means: Bluestone Resources Inc., Bluestone Industries, Inc., Bluestone Mineral, Inc. (flea Mechel Bluestone, Inc.),
Bluestone Equipment Management, Inc., Gilbert Mine, Inc., Dynamic Energy, Inc., Bluestone Coal Corporation, Bluestone 011 Company, Double-Bonus
Coal Company, Energy Plus, Inc., James River Construction Co., Keystone Services Industries, Inc., National Resources, Inc., Landgraff Realty Company,
Inc., Second Sterling Corp., JCJ Coal Group, LLC, James C Justice Companies, LLC, Bluestone Coal Sales Corp., Justice Energy Company, Inc., Justice
High Wall Mining, Inc., M & P Services, Inc., Nufac mining Company, Inc., Pay Car Mining, Inc., Frontier Coal Co., Mine Support Services, Inc.
"Equipment" means each item of property designated on a Schedule that will be leased by Lessee pursuant to the Lease, together with all replacement parts,
additions and accessories Incorporated therein or affixed thereto. Where rights to receive license fees for Software and charges for Services supplied or to be
supplied lo Lessee are included In the amount financed by Lessor under the Lease, references to leasing, purchases, 01M1ership and administration of
"Equipment" under the Lease shall be broadly interpreted to include such Financed Fees.
"Fair Markel Rental Value" or "Fair Market Sale Value" means the value of Equipment for lease or sale, in place and In continued use, v.tiich would be obtained in
an arm's length transaction betv.een an informed and willing retail lessor or seller (under no compulsion to lease or sell) and an Informed and \'.1lling retail lessee
or buyer (under no compulsion to lease or purchase), assuming that Equipment is In the condition specified by Sections 10 and 11 hereof, as determined by the
parties or, if the parties cannot agree, by an American Society of Appraisers certified appraiser selecied by Lessor and paid for by Lessee.
"Financed Fees" means the Software license, usage, or other fees and the charges for Services, if any, specified on a Schedule.
"Guarantor" means any guarantor of Lessee's obligations hereunder.
"Initial Term Commencement Date• shall mean the first day of the calendar quarter (January, April, July or October) follo\'.1ng Rent Commencement Date.
"Initial Tenn Expiration Dale" shall have the meaning specified In the applicable Schedule.
"Lease Documents" means this Master Lease, a Schedule and all other documents relating to or provided In connection with a Lease, prepared by Lessor, and
now or hereafter executed In connectlon herewith or therewith, as the same may be modified, amended, extended or replaced.
"License Agreement" means the software license agreement(s) betv.een Lessee and Licensor relating to Software.
•~
means the Suppfler(s) of Software, solely in its (their) capacity as licensor of such Software.
"Purchase Agreement" means any purchase agreement or other contract betv.een a Supplier and Lessee for the acquisition of Equipment to be leased or
financed under a Lease.
"Rent" means the periodic payments due for the leasing of Equipment as set forth on the related Schedule and, where the context hereof requires, all such
additional amounts as may, from time to lime, be payable under a Lease. The term "Rent'' shall include interim rent, if any, as desaibed in Section 5 hereof.
"Rent Commencement Date" means, with respect to Equipment, the date on v.tiich (a) Lessor receives an executed Certificate of Acceptance for Equipment from
Lessee or (b) Lessor disburses funds for the purchase of Equipment, as determined by Lessor in its sole discretion.
"Rent Payment Date" shall have the meaning specified in the applicable Schedule.
" ~ " means all training, Installation, transportation, handling, maintenance, custom programming, integration, technical consulting and support services
relating lo Equipment and specified on a Schedule.
"Software" means the software and all related documentation, corrections, updates and revisions used in connection with Equipment financed under a Schedule.
"Stipulated Loss Value" shall have the meaning specified in the applicable Schedule.
" ~ ' means the manufacturer or the vendor of the Equipment
"Term" means the Initial Tenn or any Renewal Tenn, each as defined In Section 6 hereof, and any Extended Lease Tenn or Interim Term, as defined In the
applicable Schedule.
3.
Ordering Equipment Lessee hereby assigns to Lessor all of Lessee's rights, but none of its obligations, under any Purchase Agreement related to a
Lease. Lessor may (a) a~pl such assignment from Lessee of Lessee's rights, but none of Lessee's obligations, under any such Purchase Agreement and/or (b)
issue a purchase order for the Equipment to the Supplier. Lessee shall arrange for delivery of Equipment. If Equipment Is subject to an existing Purchase
Agreement betv.een Lessee and the Supplier, and Equipment has been delivered to Lessee as of the date of the Schedule applicable thereto, Lessee warrants
that it has advised Lessor of the delivery dale(s) of such Equipment. Lessee hereby authorizes Lessor to complete each Schedule with the serial numbers and
other Identification data of Equipment associated therewith as such data Is received by Lessor.
4.
Delivery and Acceptance. Upon derivery to and acceptance by Lessee of any Equipment, Lessee shall execute and deliver to Lessor a Certificate of
Acceptance in form acceptable to Lessor C'Certificate of Acceptance"). LESSOR SHALL HAVE NO OBLIGATION TO ADVANCE ANY FUNDS HEREUNDER
UNLESS AND UNTIL LESSOR RECEIVES ACER11FICA1E OF ACCEPTANCE FOR SUCH EQUIPMENT EXECUlED BY LESSEE.
5.
Rent; Delinquent Payments. (a) Lessee shall pay Rent commencing on the Rent Commencement Date. The Initial Term shall commence on the
Initial Term Commencement Date and continue on the same day of each payment period thereafter for the balance of the Tenn. If the Rent Commencement
Date does not fall on the first day of a calendar quarter, then the first rental payment shall be calculated by multiplying the number of days beginning on the Rent
Commencement Date through the last day of the calendar quarter by a daily rental equal to one-thirtieth of the Rent. Rent shall be due v.tlether or not Lessee has
received any notice that it Is due, and all Rent shall be paid to Lessor al its address set forth on the Schedule, or as otherwse directed by Lessor In Y<Titing.
(b) If Lessee fails to pay any Rent or other sums under the Lease on or before the dale v.tlen the same becomes due. Lessee shall pay to Lessor Qn
addition to and not In lieu of other rights of Lessor) a late charge equal to the lesser of five percent of such delinquent amount or the maximum permitted by law.
Such late charge shall be payable by Lessee upon demand by Lessor and shall be deemed Rent hereunder. Lessee acknov.4edges and agrees that the late
charge Q) does not constitute interest, Qi) is an estimate of the costs Lessor v.ill Incur as a result of the late payment and Qii) Is reasonable In amount.
6.
Tenn; Survival. With respect to any Equipment, unless otherwse specified on a Schedule, the Initial term of the Lease (the "Initial Term") shall
commence on the Initial Term Commencement Date and, unless earlier terminated as provided herein, shall expire on the Initial Term Expiration Date. Any
renewal term of the Lease (Individually, a "Renewal Term'1 shall commence immediately upon the expiration of the Initial Term or any prior Renewal Term, as the
case may be, and, unless earlier terminated as provided herein, shall expire on the last day of the period for v.tlich the final payment of Rent Is due. All obligations
of Lessee hereunder shall survive the expiration, cancellation or other termination of the Term of each Lease.
7.
Location; Inspection; Labels. Equipment shall be delivered to the location specified in the Schedule and shall not be removed therefrom without
Lessor's prior written consent. Lessor shall have the right to enter upon the premises v.tiere the Equipment Is localed and Inspect the Equipment at any

FNC
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 21592
reasonable lime. At Lessor's request, Lessee shall (a) affix pem,anent labels In a prominent place on Equipment stating Lessor's interest In the Equipment, (b)
keep such labels in good repair and condition and (c) provide Lessor wth en Inventory listing of all labeled Equipment wthln thirty days of such request.
8.
Non-Cancelable Lease. THE LEASE IS A NET LEASE. LESSEE'S OBLIGATION TO PAY RENT AND PERFORM ITS OBLIGATIONS
HEREUNDER ARE ABSOLUTE, IRREVOCABLE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY RIGHT OF SET OFF,
COUNTERCLAIM, DEDUCTION, DEFENSE OR OTHER RIGHT LESSEE MAY HAVE AGAINST THE SUPPLIER, LESSOR OR ANY OTHER PARTY
PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL PRECLUDE LESSEE FROM ASSERTING ANY SUCH CLAIMS IN A SEPARATE CAUSE OF
ACTION. LESSEE UNDERSTANDS AND AGREES THAT NEITHER THE SUPPLIER NOR ANY SALES REPRESENTATIVE OR OTHER AGENT OF THE
SUPPLIER IS AN AGENT OF LESSOR OR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THE LEASE, AND NO SUCH
WAIVER OR ALTERATION SHALL VARY THE TERMS OF THE LEASE. LESSOR IS NEITHER A SUPPLIER NOR A LICENSOR, AND LESSOR IS NOT
RESPONSIBLE FOR REPAIRS, SERVICE OR DEFECTS IN EQUIPMENT. LESSEE AGREES NOT TO ASSERT AGAINST LESSOR ANY CLAIMS OR
DEFENSES LESSEE MAY HAVE WITH RESPECT TO EQUIPMENT, AND UNDERSTANDS THAT IT MAY ASSERT SUCH CLAIMS AGAINST SUPPLIER
OR LICENSOR
9.
Use; Alterations. (a) Lessee shall use Equipment lawfully and only In the manner for v-Alich ii was designed and Intended and so as to subject ii only
to ordinary wear and tear. Lessee shall comply Wth all applicable laws. Lessee shall Immediately notify Lessor, In wiling, upon becoming aware of any existing or
threatened Investigation, dalm or action by any governmental authority that could adversely affect Equipment, Lessor or the Lease. Lessee, at Its 0'M1 expense,
shall make such alterations, additions or modifications (each, a "Required Alteration") to Equipment as may be required from time to time to meet the
requirements of applicable law or a governmental body. All such Required Alterations shall immediately, and wthout further act, be deemed lo constitute
"Equipment" and be fully subject to the Lease as if originally leased hereunder. Except es otherv.ise pem,itted herein, Lessee shall not make any alterations to
Equipment without Lessor's prior witten consent.
(b) Lessee, at Its own expense, may from time to time add or Install upgrades or attachments (each en ''Upgrade") to Equipment during the Term;
provided, that such Upgrades Q) are readily removable wthout causing material damage to Equipment, Qi) do not materially adversely affect the Fair Market
Value, the Fair Market Rental Value, residual value, productive capacity, utility or remaining useful life of Equipment and Qi!) do not cause Equipment to become
"limited use property" wthln the meaning of Revenue Procedure 2001-28, 2001-19 I.RB. 1156 (or such other successor tax provision), as of the date of
Installation of such Upgrade. Arry such Upgrades shall remain the property of Lessee. Upon the expiration or earlier cancellation of the Lease, Lessee may, at Its
option, remove any such Upgrades and, upon such removal, shall restore Equipment to the condition required hereunder.
(c) If any Equipment covered under any Lease becomes attached or affixed to, or used in connection wth, Equipment covered under another Lease
hereunder (a "Related Lease'1, Lessee agrees that, If Lessee elects to exercise a purchase or renewal option under any such Lease, or If Lessee elects to return
Equipment under any such Lease, then Lessor, In its sole discretion, may require that all Equipment leased under all Related Leases be similarly disposed of.
10.
Repairs and Maintenance. Lessee, at Lessee's cost and expense, shall (a) keep Equipment in good repair, good operating condition, appearance
and v.urking order In compliance v.ith the manufacturer's recommendations and Lessee's standard practices (but in no event less than Industry practices), (b)
take all actions necessary to ensure that the Equipment \'viii be eligible, at the expiration of the Initial Term and any Renewal Term, for a standard, full service
maintenance contract wth the manufacturer, (c) properly service all components of Equipment followng the manufacturer's witten operating and servicing
procedures, (d) enter Into and keep in full force and effect during the Term a maintenance agreement covering the Equipment v.ith the manufacturer, or a
manufacturer-approved maintenance organization, to maintain, service and repair such Equipment, as otherv.ise required herein (but an alternate source of
maintenance may be used by Lessee wth Lessor's prior written consent), (e) upon Lessor's request furnish Lessor v.ith an executed copy of any such
maintenance agreement, and (I) replace any part of the Equipment that becomes unfit or unavallable for use from any cause (v-Alether or not such replacement is
covered by a maintenance agreement) with a replacement part that, In Lessor's sole opinion, is of the same manufacture, value, remaining useful life and utility as
the replaced part Immediately preceding the replacement, assuming that such replaced part was In the condition required by this Lease. Replacement parts shall
be free and dear of all liens, constitute Equipment and be fully subject to this Lease as If originally leased hereunder.
11.
Return of Equipment Except as otherv.ise provided in a Schedule, upon the expiration or earlier termination or cancellation of each Lease, Lessee,
at its sole expense, shall de-Install, assemble, pack properly and in accordance IMlh the manufacturer's instructions (under the supervision of persons acceptable
to Lessor), including labeling of ell components and hardware, and return to Lessor all, but not less than all, Equipment by delivering the Equipment to and
unloading it at such location or wth such carrier as Lessor shall specify. Lessee agrees that (a) Equipmen~ v-Alen returned, shall be in the condiUon required by
the Lease, and (b) upon Lessor's request, Lessee \'viii obtain from the manufacturer (or other maintenance service provider previously approved by Lessor or
manufacturer) a certificate stating that such Equipment qualifies for full maintenance service at the standard rates and terms then In effect. If, in the opinion of
Lessor, any Equipment falls to meet the standards set forth above, Lessee agrees to pay, on demand, all costs and expenses Incurred in connection v.ith the
repairing and restoring of such Equipment so as to meet such standards. If Lessee falls to return any Equipment as required hereunder, then all of Lessee's
obligations under the Lease Qncluding, wthout limitation, Lessee's obligation to pay Rent for the Equipment at the rental then applicable under the Lease) shall
continue in full force and effed until such Equipment shall have been returned in the condition required under the Lease.
12.
Sublease and Assignment (a) LESSEE SHALL NOT, WITHOUT LESSOR'S PRIOR WRITTEN CONSENT, (I) SELL, ASSIGN, TRANSFER,
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THE LEASE, EQUIPMENT OR ANY INTEREST THEREIN, (II) RENT, SUBLET OR LEND
EQUIPMENT TO ANYONE OTHER THAN LESSEE OR LESSEE'S AFFILIATES OR (Ill) PERMIT EQUIPMENT TO BE USED BY ANYONE OTHER THAN
THEIR RESPECTIVE QUALIFIED EMPLOYEES. LESSEE ACKNOWLEDGES THAT IT REMAINS PRIMARILY LIABLE FOR ALL OBLIGATIONS
HEREUNDER NOTWITHSTANDING ANY USE BY AN AFFILIATE.
(b) Lessor, at any time with or wthout notice to Lessee, may sell, transfer, assign and/or grant a security Interest in all or any part of Lessor's interest in
each Lease or any Equipment (each, a "Lessor Transfer"). Arry purchaser, transferee, assignee or secured party of Lessor (each a "Lessor Assignee") shall have
and may exercise ail of Lessor's rights hereunder IMlh respect to the Items to v-Alich any such Lessor Transfer relates, and Lessee shall not assert against any
Lessor Assignee any claim that Lessee may have against Lessor provided, Lessee may assert any such claim in a separate action against Lessor. Upon witten
notice of a Lessor Transfer, Lessee shall promptly ackno\\Aedge in writing its obligations under the applicable Lease, shall comply v.ith the Y.rltten diredlons or
demands of any Lessor Assignee and shall make all payments due under the applicable Schedule as directed in wiling by the Lessor Assignee. Following such
Lessor Transfer, the term "Lessor" shall be deemed to include or refer to each Lessor Assignee. Lessee will provide reasonable assistance to Lessor to complete
any transaction contemplated by this subsection (b).
(c) Subject to the restrlctlon on assignment contained In subsection (a), the Lease Documents shall inure to the benefit of, and are binding upon, the
successors and assigns of the parties thereto Including, v.ithout limitation, each person v-Alo becomes bound thereto as a "new debtor" as set forth In the Uniform
Commercial Code f'UCC").
13.
Risk of Loss; Damage to Equipment (a) Lessee shall bear the entire risk of loss Qncludlng wthout limitation, theft, destruction, disappearance of or
damage to Equipment from any cause v-Alatsoever), v-Alether or not insured against, during the Term of each Lease and until Equipment is returned to Lessor in
accordance with Section 11 hereof. No such loss shall relieve Lessee of the obligation to pay Rent or of any other obligation under the related Lease.
(b) If any Equipment is lost, stolen or damaged beyond repair, or confiscated, seized or the use and/or title thereof requisitioned to someone other than
Lessee (any such event being a "Total Loss"), Lessee shall immediately notify Lessor of such event. On the next Rent Payment Date following the occurrence of
the Total Loss, at Lessor's option, Lessee shall either Q) replace Equipment wth equipment that, In Lessor's sole opinion, is of the same manufacture, value,
remaining useful life and utility as the replaced Equipment immediately preceding the replacement, assuming such replaced Equipment was in the condition
required by the Lease or Qi) pay to Lessor the sum of (A) all Rent due and owing under the Lease v.ith respect to such Equipment (at the lime of such payment)
plus (B) the Stipulated Loss Value for the Equipment as of that Rent Payment Date. If Lessor elects to allow replacement of Equipment as set forth In subsection
Q) above, Lessee shall cause the Supplier of such replacement equipment to deliver to Lessor a bill of sale for such equipment free and clear of all liens and

FNC
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encumbrances, and such replacement equipment shall become Equipment subject to the applicable Lease. Upon Lessor's receipt of the bill of sale or the
amounts specified in subsection Qi) above, Lessee shall be entitled to Lessor's Interest in the replaced Equipment, in its then condition and location, "as is" and
"v.here is," wthout any warranties, express or Implied.
14.
Insurance. (a) Lessee shall, at all limes during the Term of each Lease and at Lessee's O'Ml cost and expense, maintain Q) insurance against all risks
of physical loss or damage to Equipment for the greater of the full replacement value or the Stipulated Loss Value thereof, and Qi) commercial general liability
insurance Qnduding blanket contractual liability coverage and products liability coverage) for personal and bodily injury and property damage per occurrence as
stated in each Schedule.
(b) All insurance policies required hereunder shall include terms, and be with insurance carriers, reasonably satisfactory to Lessor. Without limiting the
generality of the foregoing, each policy shall indude the following terms: Q) all physical damage insurance shall name Lessor and its assigns as lender loss payee,
(IQ all liability insurance shall name Lessor and its assigns as additional insureds, Qii) the policy shall not be canceled or altered without at least thirty days
advance notice to Lessor and its assigns and Qv) coverage shall not be invalidated against Lessor or its assigns because of any violation of any condition or
warranty contained in any policy or application therefor by Lessee or by reason of any action or inaction of Lessee. On each anniversary of the Rent
Commencement Date during the term hereof, Lessee shall deliver to Lessor certificates or other proof of insurance satisfactory to Lessor evidencing the
coverage required by this section.
15.
Taxes. Lessee shall pay when due and shall indemnify and hold harmless Lessor (on an after-tax basis) from and against any and ail taxes, fees,
withholdings, levies, imposts, duties, assessments and charges of every kind and nature whatsoever Qncluding any related penalties and interest) imposed upon
or against Lessor, any Lessor Assignee, Lessee or any Equipment by any governmental authority in connection wth, arising out of or otherv.ise related to
Equipment, the Lease Documents or the Rent and receipts or earnings arising therefrom and excepting only all Federal, state and local taxes on or measured by
Lessor's net Income. Whenever each Lease expires, terminates or is canceled as to any Equipment, Lessee, upon written request by Lessor, shall advance to
Lessor the amount estimated by Lessor to be the taxes on said Equipment that are not yet payable, but for which Lessee is responsible. Al Lessee's request,
Lessor shaft provide Lessee wlh Lessor's method of computation of any such estimated taxes.
16.
Lessor's Right to Perfonn for Lessee. If Lessee fails to perform any of its obligations contained herein, Lessor may (but shall not be obligated to)
itself perform such obligations, and the amount of the reasonable costs and expenses of Lessor incurred in connection with such performance, together wth
interest on such amount at the lesser of eighteen percent per annum or the maximum permitted by !aw, shall be payable by Lessee to Lessor upon demand. No
such performance by Lessor shall be deemed a waiver of any rights or remedies of Lessor or be deemed to cure the default of Lessee hereunder.
17.
Personal Property; Liens. Lessee represents and warrants that the Equipment is, and shall at all times remain, fully removable personal property
notwithstanding any affixation or attachment to real property or improvements. Lessee shall at all times keep Equipment free and dear from all liens and
encumbrances of any kind or nature other than those created by, through or under Lessor. If, in violation of the foregoing covenant, any prohibited lien or
encumbrance shall attach to Equipment, Lessee shall (a) give Lessor immediate written notice thereof and (b) promptly, at Lessee's sole cost and expense, take
such action as may be necessary to discharge such lien.
18.
Default; Remedies. (a) As used herein, the term "Defaulr' means any of the foilov.ing events: (Q Lessee fails to pay any Rent or other amount due
under a Lease within ten days after the same shall have become due; QO Lessee or any Guarantor becomes insolvent or makes an assignment for the benefit of
its creditors; Qii) a receiver, trustee, conservator or liquidator of Lessee or any Guarantor of all or a substantial part of Lessee's or such Guarantor's assets is
appointed v.ith or without the application or consent of Lessee or such Guarantor, respectively; Qv) a petition is filed by or against Lessee or any Guarantor under
any bankruptcy, insolvency or similar law; (v) Lessee or any Guarantor violates or fails to perform any provision or covenant of either this Lease or any other
loan, lease or credit agreement (including but not limited to all credit facilities or agreements provided by any financial institution) or any acquisition or
purchase agreement IMth Lessor or any other party; (vi) any warranty or representation made by Lessee herein proves to have been false or misleading when
made; (vii) there is a material adverse change in Lessee's or any Guarantor's financial condition since the related Rent Commencement Date; (viii) Lessee or
any Guarantor merges or consolidates wth any other corporation or entity, or sells, leases or disposes of all or substantially all of Its assets or there Is any
change in the controlling O'Mlership of Lessee or any Guarantor; in each case, IMthout the prior written consent of Lessor; Qx) Lessee or any Guarantor, if an
individual, dies or, if not an individual, is dissolved; or (x) any filing by Lessee of a termination statement for any financing statement filed by Lessor while any
obligations are owed by Lessee under a Lease. A Default with respect to any Lease shall, at Lessor's option, constitute a Default for all Leases and any other
agreements between Lessor and Lessee.
(b) Upon the occurrence of a Default, Lessor may do one or more of the fol101Mng as Lessor In its sole discretion shall elect: Q) proceed by appropriate
court action to enforce performance by Lessee of the related Lease or to recover damages, including Incidental and consequential damages, for the breach
thereof; Qi) cause Lessee, at Its expense, promptly to assemble Equipment and return the same to Lessor at such place as Lessor may designate In writing; (ilQ
by notice in writing to Lessee, cancel or terminate the related Lease, 1Mthout prejudice to any other remedies hereunder; Qv) enter upon the premises of Lessee or
other premises where any Equipment may be located and, wthout notice to Lessee and 1Mth or wthout legal process, take possession of and remove all or any
such Equipment without liabllity to Lessee by reason of such entry or taking possession, and wthout such action constituting a cancellation or termination of the
Lease unless Lessor notifies Lessee in writing to such effect; (v) by written notice to Lessee specifying a payment date (the "Remedy Date'), demand that Lessee
pay to Lessor, and Lessee shall pay to Lessor, on the Remedy Date, as liquidated damages for loss of a bargain and not as a penalty, a sum equal to (A) any
unpaid Rent due prior to the Remedy Date (together IMlh interest on such amount at the lesser of eighteen percent per annum or the maximun permitted by law
from the Remedy Date to the date of actual payment), plus (B) the Stipulated Loss Value; (vi) sell Equipment at public or private sale or hold, keep idle or lease to
others any Equipment; and {vii) exercise any other right or remedy available to Lessor under applicable law. In addition, Lessee shall be liable for all reasonable
costs, expenses, and legal fees incurred in enforcing Lessor's rights under the Lease, before or in connection wth litigation or arbitration and for any deficiency in
the disposition of the Equipment. Lessor's recovery hereunder shall in no event exceed the maximum recovery permitted by law.
{c) If a Default occurs, Lessee hereby agrees that ten days' prior notice to Lessee of any public sale or of the time after which a private sale may be
negotiated shall be conclusively deemed reasonable notice. None of Lessor's rights or remedies hereunder are Intended to be exclusive, but each shall be
cumulative and In addition to any other right or remedy referred to hereunder or otherwise available to Lessor at law or In equity, and no express or implied waiver
by Lessor of any Default shall constitute a waiver of any other Default or a waiver of any of Lessor's rights.
{d) With respect to any exercise by Lessor of its right to recover and/or dispose of any Equipment or any other collateral securing Lessee's obligations
under any Lease, Lessee acknov.4edges and agrees that Lessor may dispose of Equipment on an "AS-IS, WHERE-IS" basis, in compliance with applicable law
and wth such preparation (if any) as Lessor determines to be commercially reasonable. Lessee shall remain liable for any deficiency In the disposition of the
Equipment, and any purchase by Lessor of the Equipment may be through a credit to some or all of Lessee's obligations under any Lease.
19.
Notices. Ali notices and other communications hereunder shall be in writing and shall be transmitted by hand, overnight courier or certified mall {return
receipt requested), US postage prepaid. Such notices and other communications shall be addressed to the respective party at the address set forth above or at
such other address as any party may, from time to lime, designate by notice duly given in accordance with this section. Such notices and other communications
shall be effective upon the eartier of receipt or three days after mailing if mailed in accordance with the terms of this section.
20.
Indemnity. Lessee shall indemnify and hold harmless Lessor and each Lessor Assignee, on an after tax basis, from and against any and an liabilities,
causes of action, claims, suits, penalties, damages, losses, costs or expenses (including attorneys' fees), obllgatlons, liabilities, demands and judgments
{collectively, a "Liability') arising out of or in any way related to: {a) Lessee's failure to perform any covenant under the Lease Documents, {b) the untruth of any
representation or warranty made by Lessee under the Lease Documents. {c) the order, manufacture, purchase, ov.11ership, selection, acceptance, rejection,
possession, rental, sublease, operation, use, maintenance, control, loss, damage, destruction, removal, storage, surrender, sale, condition, delivery, return or
other disposition of or any other matter relating to any Equipment or (d) injury to persons, property or the environment including any Liability based on strict llabillty
in tort, negligence, breach of warranties or Lessee's failure to comply fully wth applicable law or regulatory requirements; provided, that the foregoing indemnity

0010
PageFNC
10 of
27

 21592
shall not extend to any Liability to the extent resulting solely from the gross negligence or willful misconduct of Lessor.
21.
Fees and Expenses. Lessee shall pay all reasonable costs and expenses of Lessor, including, wthout limitation, attorneys' and other professional
fees, returned check or non-sufficient funds charges, processing fees, the fees of any collection agencies and appraisers, an annual $2,500 Lease Maintenance
Fee (per Schedule) which will be billed quarter1y in arrears after the Initial Term Commencement Date, and all other costs and expenses related to any sale
or re-lease of Equipment Qncluding storage costs) incurred by Lessor in enforcing any of the terms, conditions or provisions hereof or in protecting Lessor's
rights hereunder.
22.
Financial and Other Data. During the Term hereof, Lessee shall furnish Lessor (a) as soon as available, and in any event within one hundred tv.enty
days after the last day of each fiscal year, financial statements of Lessee and each Guarantor and (b) from lime to lime as Lessor may reasonably request other
financial reports, information or data Qncluding federal and state Income tax returns) and quarter1y or Interim financial statements of Lessee and each Guarantor.
All annual financial statements shall be audited (or if audited Information is not available, compiled or reviewed) by an independent certified public accountant.
23.
Representations and Warranties of Lessee. Lessee represents and warrants that (a) the address stated above is the chief place of business and
chief executive office of Lessee, Lessee's full and accurate legal name is as stated above and the information describing Lessee set forth under Lessee's
signature below is accurate in all respects; (b) Lessee is either Q) an indMdual and the sole proprietor of its business v.ttich Is located at the address set forth
above and doing business only under the names disclosed herein, or QQ a limited liability company or co,poration duly organized and validly existing In good
standing under the Jaw.; of the state of its organization or Incorporation, or Qli) a general or limited partnership organized under the law.; of the state of its principal
place of business set forth In the Lease or the Lease Documents and the Individual general partner executing this Master Lease has the full authority to represent,
sign for and bind Lessee In all respects; (c) the execution, delivery and performance of this Master Lease and all related instruments and documents Q) have
been duly authorized by all necessary action on the part of Lessee, QI) do not require the approval of any stockholder, partner, manager, trustee, or holder of any
obligations of Lessee except such as have been duly obtained, and Qli) do not and wll not contravene any law, governmental rule, regulation or order now binding
on Lessee, or contravene the operating agreement, charter or by-law.; of Lessee, or constitute a default under, or result In the creation of any lien or
encumbrance upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by v.ttich it or Its property is
bound; (d) the Lease Documents when entered into wll constitute legal, valid and binding obligations of Lessee enforceable against Lessee In accordance wth
their terms; (e) there are no actions or proceedings to v.ttlch Lessee is a party, and there are no other threatened actions or proceedings of v.ttich Lessee has
knov.1edge, before any governmental authority which, either individually or In the aggregate, would adversely affect the financial condition of Lessee or the ability
of Lessee to perform its obligations hereunder; (f) Lessee Is not in default under any obligation for the payment of borrowed money, for the deferred purchase
price of property or for the payment of any rent under any lease agreement v.ttich, either individually or in the aggregate, would adversely affect the financial
condition of Lessee or the abinty of Lessee to perform its obligations hereunder and (g) the financial statements of Lessee (copies of v.ttlch have been furnished
to Lessor) have been prepared in accordance with generally accepted accounting principles consistently applied and fair1y present Lessee's financial condition
and the results of Its operations as of the date of and for the period covered by such statements, and since the date of such statements there has been no
material adverse change in such conditions or operations.
24.
Lessee's Walveni. TO THE EXTENT PERMITTED BY APPLICABLE LAW, LESSEE WAIVES (a) ANY AND ALL RIGHTS AND REMEDIES
CONFERRED UPON A LESSEE BY ARTICLE 2A OF THE UCC AND (b) ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR
OTHERWISE TO RECOVER INCIDENTAL OR CONSEQUENTIAL DAMAGES FROM LESSOR FOR ANY BREACH OF WARRANTY OR FOR ANY
OTHER REASON OR TO SET OFF OR DEDUCT ALL OR ANY PART OF ANY CLAIMED DAMAGES RESULTING FROM LESSOR'S DEFAULT, IF ANY,
UNDER THE RELATED LEASE.
25.
UCC FIiings. LESSEE HEREBY AUTHORIZES LESSOR OR AGENT OF LESSOR TO AUTHENTICATE AND/OR FILE ALL UCC FINANCING
STATEMENTS AND AMENDMENTS THAT IN LESSOR'S SOLE DISCRETION ARE DEEMED NECESSARY OR PROPER TO SECURE OR PROTECT
LESSOR'S INTEREST IN EQUIPMENT IN ALL APPLICABLE JURISDICTIONS. Lessee hereby ratifies. to the extent permitted by law, all that Lessor shall
lawfully and in good faith do or cause to be done by reason of and in compliance with this section. Lessee shall provide written notice to Lessor at least thirty
days prior to any contemplated change in Lessee's name, Jurisdiction of organization or chief executive office address.
26.
Miscellaneous; Governing Law. (a) Time is of the essence with respect to each Lease. Any fallure of Lessor to require strict performance by
Lessee or any waiver by Lessor of any provision of a Lease shall not be construed as a consent or waiver of any provision of such Lease. The Lease will
be binding upon Lessor only if executed by a duly authorized officer or representative of Lessor. An authorized signer of Lessee shall execute the Lease
Documents on Lessee's behalf. Any provision of a Lease that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or
unenforceabillty without invalidating the remaining provisions thereof. Captions are intended for convenience or reference only, and shall not be
construed to define, limit or describe the scope or intent of any provisions hereof. Lessee will promptly execute or otherwise authenticate and deliver to
Lessor such further documents, instruments, assurances and other records and take such further action as Lessor may reasonably request In order to
carry out the Intent and purpose of this agreement and each Lease and to establish and protect the rights and remedies created or Intended to be
created in favor of Lessor hereunder and thereunder.
(b) EACH LEASE IS BEING DELIVERED IN, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAWS WHICH WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER STATE.
(c) Any dispute, claim or controversy arising out of or relating to any Lease or the breach, termination, enforcement, interpretation or validity thereof,
including the detenninatlon of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration In Dallas, Texas before one
arbitrator. The arbitration shall be administered by JAMS pursuant to Its Comprehensive Arbitration Rules and Procedures and In accordance with the
Expedited Procedures in those Rules, including Rules 16.1 and 16.2 of those Rules as in effect on the date hereof. Judgment on the arbitration award
may be entered in any court specified in Section 26(e). This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from
any court specified in Section 26(e). The parties shall maintain the confidential nature of the arbitration proceeding and the award, Including the hearing,
except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court
application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or Judicial decision.
(d) NOTWITHSTANDING THE FOREGOING, LESSOR AND LESSEE HEREBY EACH WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO EQUIPMENT OR EACH LEASE OR ANY OTHER
LEASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION OR PROCEEDING TO WHICH
LESSOR OR LESSEE MAY BE PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, INCLUDING
WITHOUT LIMITATION ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY, OF THIS AGREEMENT OR THE OTHER LEASE DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER IS MADE KNOWINGLY, WILLINGLY AND VOLUNTARILY BY LESSOR AND LESSEE WHO EACH ACKNOWLEDGE
THAT NO REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO EACH LEASE AND THE LEASE DOCUMENTS.
(e) Without limiting the foregoing, if the provisions of Section 26(c) are not enforceable and, in any case seeking provisional remedies in aid of arbitration
or a judgment on an arbitration award, any judicial proceeding arising out of or relating to this Lease shall be brought in any state or federal court of
competent Jurisdiction in Harris County, Texas and each of the parties hereto (I) accepts the exclusive Jurisdiction of such courts and any related
appellate court and agrees to be bound by any judgment rendered by any such court in connection with any such proceeding and (ii) waives any
objection It may now or hereafter have as to the venue of any such proceeding brought In such court or that such court is an
The

i~~er&tJfll

Page 11 of 27

 21592
foregoing shall not prevent any action In any other court to enforce a judgment or to acquire or reacquire possession of any Equipment.
27.
Quiet Enjoyment So long as no Default has occurred and Is continuing, Lessee shall peaceably hold and quieUy enjoy Equipment y,ithout
interruption by Lessor or any person or entity claiming through Lessor.
28.
Entire Agreement Each Lease, together \\nth all other Lease Documents, constitutes the entire understanding or agreement betv.een Lessor and
Lessee \\nth respect to the leasing of Equipment covered thereby, and there Is no understanding or agreement. oral or witten, v.hlch is not set forth herein or
therein. No Lease may be amended except by a wiUng signed by Lessor and Lessee. Delivery of an executed Lease Document by facsimile or any other reliable
means shall be deemed as effective for all purposes as delivery of a manually executed copy. Lessee shall provide to Lessor the manually executed original of
any Lease Document delivered by facslmlle \\nthin five days.
29.
More than One Lessee. If more than one person or entity executes the Lease Documents as "Lessee," the obligations of "Lessee" shall be deemed
joint and several and all references to "Lessee" shall apply both Individually and joinUy.
30.
Disclaimer of Warranties. LESSOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, TITLE TO, DESIGN, OPERATION, CONDITION, OR QUALITY OF THE MATERIAL OR WORKMANSHIP IN, EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT
DISCOVERABLE), LACK OF INFRINGEMENT ON ANY PATENT, TRADEMARK OR COPYRIGHT, AND LESSOR HEREBY DISCLAIMS ALL SUCH
WARRANTIES; IT BEING UNDERSTOOD THAT THE EQUIPMENT IS LEASED TO LESSEE "AS IS, WHERE IS." LESSEE HAS MADE THE SELECTION
OF THE EQUIPMENT FROM THE SUPPLIER BASED ON ITS OWN JUDGMENT AND EXPRESSLY DISCLAIMS ANY RELIANCE ON ANY STATEMENTS
OR REPRESENTATIONS MADE BY LESSOR. IN NO EVENT SHALL LESSOR BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES. LESSOR HEREBY ASSIGNS TO LESSEE FOR THE TERM OF EACH LEASE WITHOUT RECOURSE AND FOR SO LONG AS LESSEE IS
NOT IN DEFAULT UNDER ANY LEASE, ANY WARRANTY PROVIDED BY THE SUPPLIER.
31.
Execution in Counterparts. The Master Lease and all other Lease Documents may be executed In several counterparts and by different parties
hereto or thereto on separate counterparts, each of v.hlch v.hen so executed or otherwise authenticated and delivered shall be an original, but all such
counterparts shall together consist of one and the same Instrument; except, to the extent that any Lease Documents constitute chattel paper under the UCC, no
security Interest therein may be created other than through the transfer or possession of the original counterpart, v.hich shall be identified by Lessor.
32.
Software. To the extent that any Schedule relates to Software:
(a) Lessee acknoWedges that (I) all Software Is furnished to Lessee under one or more separate license agreements ("License Agreement(s)"
governing Lessee's rights thereto, (10 the Lease does not convey any explicit or implicit license for the use of Software or other intellectual property relating to
Equipment, and (110 Lessor does not hold tiUe to any Software and Lessee Is or shall be the licensee of such Software direcUy from the Licensor.
(b) Lessee shall not amend, modify or otherwise alter, any term or condition of any License Agreement, Including, y,ithout limitation, any such term or
condition related to 0) payment of any amounts due thereunder, (ii) any llabiliUes or obligaUons of Lessee as licensee, 0ii) the payment of late fees on past due
amounts, or 0v) the payment of applicable taxes; provided, however, that this provision shall not apply to those terms or conditions relating solely to amounts
oy,ing to Licensor v.hich have not been financed under the Lease.
(c) Lessee and Lessor each further agrees that any operation system software supplied \\nlh the Equipment is not Included \\nlhin the above definition
of "Software" and shall be returned \\nth the Equipment at the end of the Term, in accordance y,ith Section 11 of this Master Lease.
(d) Lessee agrees to hold Lessor harmless and indemnify and reimburse Lessor for any loss or cost associated with any violation of the License
Agreement(s) by Lessee, including but not limited to unauthorized use, disclosure, transfer of software and patent or copyright infringement. If Lessee is found to
be using any portion of the Software after the termination of the Lease (as defined In the Equipment Schedule) or after an occurrence of Default or if Supplier
terminates a license or Lessee's right to use the Software for an alleged breach of all or any portion of the License Agreement(s), Lessee agrees that all liquidated
damages be payable immediately by Lessee to Lessor In an amount decided In Lessor's full discretion, but not to be less than three (3) times the amount paid by
Lessor for the Software.

IN WITNESS WHEREOF, Lessor and Lessee have executed this Master Lease as of the day and year first above witten.

Lessor:

Lessee:

FIRST NATIONAL CAPITAL, LLC
By: _ _ _ _ _ _ _ _ _ _ _ _ _ __
Name: _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
TIUe: _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

TIiie: President

0012
PageFNC
12 of
27

 Exhibit 3

8

7920 Belt Line Road, Suite 670
Dallas, Texas 75254
Phone (972) 677-7570
Facsimile (469) 283-1787
cquillin@silblawfirm.com

SILBERMAN
LAVV FIRM, PLLC
March 22, 2019
First National Capital, LLC
27051Towne Centre Dr., Suite 260
Foothill Ranch, California 92610

Via Certified Mail Return Receipt Requested and First Class Mail

RE:

Bluestone Resources Inc. and Affiliates - Demand for Arbitration

To whom it may concern,
Please be advised that Silberman Law Firm has been retained by Bluestone Resources, Inc.
and affiliates ("Bluestone") in connection with a contract dispute under the Master Equipment
Lease Agreement ("Master Lease") executed by Bluestone and First National Capital, LLC ("First
National") on June 8, 2018 and the accompanying Equipment Schedule No. 1.
Blues tone is in receipt of your letter dated February 19, 2019 in which you allege that
Bluestone is in default under the Master Lease in the amount of $121,556.00. Bluestone disputes the
allegations contained in that letter and denies that it is liable for any default under the agreement.
Pursuant to Article 26( c) of the Master Lease, Bluestone is hereby initiating arbitration.
Enclosed with this letter is the JAMS Demand for Arbitration Form which our firm will be
submitting to JAMS within the week. The submission to JAMS will be accompanied by copies of
the Master Equipment Lease Agreement and Equipment Schedule No. 1 as well as copies of this
letter and your February 19, 2019 letter to Bluestone. We recommend that you consult the JAMS
Comprehensive Arbitration Rules & Procedures regarding your right to respond to Bluestone's
Demand for Arbitration. We anticipate that the next contact you receive in this matter will be from a
JAMS representative to coordinate the commencement of arbitration.
Respectfully,
Silberman Law Firm, PLLC

Isl Chris Quillin
Chris Quillin, For the Firm

Enclosures

Page 13 of 27

 Demand for Arbitration Form
Instructions for Submittal of Arbitration to JAMS

INSTRUCTIONS
Please submit this form to your local JAMS Resolution Center. Once the below items
are received, a JAMS professional will contact all parties to commence and coordinate
the arbitration process, including the appointment of an arbitrator and scheduling a
hearing date.

\. 1-800-352-JAMS

~ www.jamsadr.com

If you wish to proceed with an arb itration by executing and serving a Demand for Arbitration on the appropriate
party, please submit the following items to JAMS with the requested number of copies:
A. Demand for Arbitration (2 copies)
B. Proof of service of the Demand on the appropriate party (2 copies)
C. Entire contract containing the arbitration clause (2 copies)
• To the extent there ctre any court orders or stipulations relevant to this arbitration demand, e.g. an order compelling arbitration, please also include two copies .
D. Administrative Fees
• For two-party matters, the Fil ing Fee is .$1,500. For matters involving three or more parties, the filing fee. is
$2.000. The entire Filing Fee must be paid in full to expedite the commencement of the proceedings . Thereafter .
a Case Manag ement Fee of 12% will he assessed against all Professional Fees, including time spent for
hearings, pre- and post-hearing reading and research and award preparation. JA MS also charges a $1,500
fil in g fee for counterclaims . For matters involving consumers, the consumer is oniy required to pay $250 . See
JAMS Policy on Consum.er Arbitrations Pursuant to Pre -Dispute Clo.uses . For matters ba sed on a clause or
agreement that is required as a condition of employment, the employee is only requi red to pay $400. See JAMS
Policy on Employment Arbitrations. Minimum Standards of Fairness .

•

A refund of $600 will be issued if the matter is withdrawn within five days of filing . After five days , the filing
fee is non-refundable.
Once completed, please submit to your local JAMS Resolution Center.
Resolution Center locations can be found on the JAMS website at: http:1/wwwiamsadrcom/locations/.

JAMS Demand for Arbitration Form

Page 1 of 7

Page 14 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS
Add more responden ts on page 6.

TO RESPON DENT
(PARTY ON WHOM
.....
. .DEMAND
.
.. FOR ARBITRATION IS MADE )

,.....

··-

,

... ······•·

·•·

•·

.

RESPONDENT

First National Capital, LLC

ADDRESS

27051 Towne Centre Dr. Suite 260

CITY

Foothill Ranch

PHONE

949-707-2070

NAME

FAX

949-707-2073

STATE

CA

EMAIL

info@firstncc.com

ZIP

92610

RESPONDENT'S REPRESENTATIVE OR ATTORNEY (IF KNO WN)
REPR ESENTATI VE/ATTO RH EY

·-

I
-

'

s,.

_ _ _ , _ __ , ,

--

----,,

_...,.....

.........

-'
~

·•

FIRM/
COMPANY

ADDRESS

STATE

CITY

PHONE

FAX

ZIP

EMAIL
................... ··········-

... ----~---------

Add more claimants on page 7.

FR OM CLAIMANT
CLAIMANT
NAME

Bluestone Resources, Inc. and Affiliates

ADDRESS

302 S. Jefferson St.

!......................

- ---======== ====-=-=.. .=. . ==::::::::::::::-:::::== = ~

CITY

Roanoke

PHONE

540-520-7720

VA

ZIP

24011

STATE

TX

ZIP

75254

EMAIL

cquillin@silblawfirm.com

STATE

EMAIL

FAX

CLAIMANT'S REPRESENTATIVE OR ATTORNEY (IF KNOWN )
REPREsENTA11vE1moRm

FIRM/
COMPANY

Chris Quillin

Silberman Law Firm

ADDRESS

7920 Belt Line Rd. Suite 670

CITY

Dallas

PHONE

972-677-7570

JAMS Demand for Arbitration Form

FAx

469-283-1787

Page 2 of 7

Page 15 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS
MEDIATION IN ADVANCE OF THE ARBITRATION

□

If mediation in advance of th e arbitration is desired, please check here and a JAMS Case Manager will assist the
pa1ties in coordinating a mediation session.

NATURE OF DISPUTE/ CLAIMS & RELIEF SOUGHT BY CLAIMANT
CLAIMANT HEREBY DEMANDS THAT YOU SUBMIT THE FOLLOWING DISPUTE TO FINAL AND BINDING ARBITRATION .
A MORE DETAILED STATEMENT OF CLAIMS MAY BE ATTACHED IF NEEDED.

On June 8, 2018, Claimant entered a 48 month lease agreement with Respondent whereby
Claimant leased certain industrial equipment. The contract was later amended to a 60 month term. :
On February 19, 2019, Respondent served Claimant with a letter asserting that Claimant was in
default under the Lease for delinquent payments as well as failure to sign and return certain
documentation. Respondent made demand for the amount of the alleged default or for liquidated
damages. Claimant denies that it is liable for any default under the Lease and seeks a declaration : !
that Claimant is in compliance with the Lease. The value listed below is the amount by which
Respondent alleged that Claimant was in default in rent.
The "Master Equipment Lease Agreement" including the JAMS pre-suit arbitration clause is
enclosed along with the amended Equipment Schedule extending the contract's term and a copy
of the February 19, 2019 letter received by Claimant from Respondent.

I - - - --·- - -· -

I

I
JAMS Demand for Arbitration Form

AMOUNT IN CONTROVERSY (US DO LLARS)

$121,556.00
Page 3 of 7

Page 16 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS

ARBITRATION AGREEMENT
This demand is made pursuant to the arbitration agreement which the parties m ade as follows . Please cite location of arbitration provision and attach two copies of entire agreement.
ARBITRATION PROVISION LOCATION

'' Master Equipment Lease Agreement - Article 26 (c)

RESPONSE
The respo nd ent m ay fi le a response and counter-claim to the above -stated cla im according to the applicable
arbitration rules. Send the original response and counter-claim to the claimant at the address stated above w ith
two copies to JAMS .

REQUEST FOR HEARING
REauEmo LocmoN

'

.., . ..

_.,

•. _..,._.•--

~-

~

Dallas, Texas
-~,...-- - -

- _- - - - -- - --

ELECTION FOR EXPED ITED PROCEDURES

-

- - -- - - - - - - - - - -- - - - -- - -

(IF COMPREHENSIVE RULE S APPLY)

See: Comprehensive Rule 16.1

1121

By checking the box to the left, Claimant requests that the Expedited Procedures described in JAMS Comprehensive Rules 16.1 and 16.2 be applied in this matter. Respondent shall in dica te not later than seven (7) days
from the date this Demand is served whether it agrees to the Expedited Procedures.

SUBMISSION INFORMATION
SIGNATURE

Isl Chris Quillin

JAMS Demand for Arbitration Form

om

March 21, 2019

Page 4 of 7

Page 17 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS
Completion of this section is required for all consumer or employment claims .

CONSUMER AN D EMPLOYMENT ARBITRATION
Please indicate if this is a CONSUMER ARBITRATION. For purposes of this designation, and whether this ca se will be administered in California or elsewhere, JAMS is guided by California Rules of Court Ethics Standa rds for Neutral Arbitrators,
Standard 2(d) and (e), as defined below, and the JAMS Consumer and Employment Minimum Standards of Procedural Fairness :

0

YES, th is is a CONS UMER ARBITRATION.

El

NO , t his is not a CON SUMER ARBITRATION.

"Consumer arbi t ration " m e ans an arbitration conducted under a pre-di spute arbitration provision co n tained in a cont ract th at
meets the criteria listed in paragraphs (1) through (3) below. "Consumer arbitration " excludes arb itration proceedin gs conducted under or aris ing ou t of p ublic or private sector la bor-relations laws, regu l ations . charter provisions, ordinances , statutes , or
agreements .
1.
2.
3.

Th e contract is with a consumer party, as defined in these sta n da rds;
The contract was drafted by or on behalf of th e non-consumer party; and
Th e consumer party was requ ired to accept the arbitration p rovis ion in the con tract.

"Consumer pa rty" is a party to an arb itra t ion agreement who, in the con text of tha t arbi tration agreement , is any of t h e fo llowing:
1.

2.

3.
4.

An individ u al who seeks or acquires , including by lease, any goods or services primari ly for personal, fam ily, or
h ou seh old purposes includi n g, but not limited to, fin ancial services, insurance, and oth er goods and services as
defined in section 1761 of the Civil Code;
An individu al who is an enroll ee, a subscriber, or insured in a health-ca re service plan within the meaning of section 1345 of the Health and Safety Cod e or hea lth-care in sura n ce plan within the meani n g of sec tion 106 of the
Insuran ce Cod e;
An ind ividual with a medical m alpractice claim that is subject to the arbitration agreement ; or
An employee or an applicant for emp loym ent in a disp ute arising out of or relating to the employee 's em ployme n t
or the appli cant's p rospec tive employmen t that is subject to the arb itration agreement .

In addi ti on , JAMS is guided by its Cons u mer Minimum Standards and Employmen t Minimum Standa rds when dete rmining
whethe r a ma tter is a consumer mat ter.
If Respondent disagrees with the assertion of Claimant re'garding whether this IS or IS NOT a CONSUMER ARBITRATION, Respondent should communicate this objection in writing to the JAMS Case Manager and Claimant within seven (7) calendar
days of service of the Demand for Arbitration.

EMPLOYMENT MATTERS

If this is an EMPLOYMENT matter, Claimant must complete the following information :

Private arbi tration compa nies a re required to collec t and pub lish certa in informa tion at least quarterly. and make it available
to the pu blic in a computer-search able forma t . In em ploym ent cases, th is includes the amount of th e employee's an nual wage .
The employee 's n ame will not appear in the d atabase , but th e employer's n ame will be pub lis h ed. Please check the app licab le
box below :

D

Less than $100,000

D

$100,000 to $250,000

D

More than $250,000

D

Decline to State

WAIVER OF ARBITRATION FEES

In certain states (e.g. California), the law provides that consumers (as defined above) with a gross monthly income of less
than 300% of the federal poverty guidelines are entitled to a waiver of the arbitration fees . In those cases, the respondent
must pay 100% of t he fees . Consumers must subm it a declaratio n under oath stating the consumer's monthly income and th e
n umber of persons living in his or he r house hold . Please contact JAMS at 1-800-35 2-5267 for fu r the r in forma t ion. Note : thi s
req uirem ent is not applicable in a ll states.

JAMS Demand for Arbitration Form

Page 5 of 7

Page 18 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS
RESPON DENT
RESPONDENT
NAME

#? (Y~RTYON 'N.~9. ~ PE~~ND FOR ARBITRATION I~ ~A~~)
n/a

ADDRESS

STATE

CITY

PHONE

FAX

ZIP

EMAIL

RESPONDENT'S REPRESENTATIVE OR ATTORNEY (IF KNOWN)
REPRESENTATIVE/ATTORNEY

FIRM/
COMPANY

ADDRESS

CITY

STATE

PHONE

FAX

ZIP

EMAIL

RES PONDE NT #3 (PARTY ON WHOM DEMAND FOR ARBITRATION
IS MADE)
- - - -- - - - - - - RESPONDENT

.. - . N
: ME_

n/a

-------------------=-=--------·cc---------=----------------==-=·------------------------------------------

ADDRESS

CITY

PHONE

STATE

FAX

ZIP

EMAIL

RESPONDENT'S REPRESENTATIVE OR ATTORNEY (IF KNOWN)

1·

REP RES ENTAT IVE/ATTORNEY

FIRM/
COMPANY

ADDRESS

STATE

PHONE

JAMS Dem and for Arbitra tion Form

FAX

ZIP

EMAIL

Page 6 of 7

Page 19 of 27

 Demand for Arbitration Form

(continued)

Instructions for Submittal of Arbitration to JAMS
CLAIMANT #2
CLAIMANT
NAME

n/a

STATE

CITY

PHONE

FAX

EMAIL

ZIP

,=====,... , , ,.,.,_,_,.,.,.-,.-,. -,.,.,.-,., -.,.-,. -.--, - - - - -- -

CLAI MANT' S REPRESENTATIVE OR ATTORNEY (IF KNOWN)

- - -- - ---- - -- - -- - - - -

REPRESENTATIVE/AHO RN EY

FIRM/
COMPANY

ADDRESS

CI TY

STATE

PHONE

FAX

ZIP

EMAIL

CLAIMANT #3
CLAIMANT
NAME

n/a

ADDRESS

CITY

PHONE

STATE

FAX

ZIP

EMAIL

CLAIMANT'S REPRE SENTATIVE OR ATTORNEY (IF KNOWN)
REP RESENTATI VE/ATTORNEY

FIRM/
COMPANY

ADDRESS

STATE

CITY

PHONE

JAMS Demand for Arbitration Form

FAX

ZIP

EMAIL

Page 7 of 7

Page 20 of 27

 Exhibit 4

JAMS ARBITRATION
BLUESTONE RESOURCES, INC.,
Claimant,
v.
FIRST NATIONAL CAPITAL, LLC,
Respondent.

§
§
§
§
§
§
§
§
§

Reference No. 1310024305

RESPONDENT’S ANSWER AND COUNTERCLAIMS

TO THE HONORABLE ARITRATOR:
Pursuant to Rule 9(c) of the JAMS Comprehensive Arbitration Rules and Procedures,
Respondent First National Capital, LLC (“FNC”) respectfully submits Respondent’s Answer and
Counterclaims to the Statement of Claim submitted by Claimant Bluestone Resources, Inc.
(“Bluestone”).
RESPONSE TO STATEMENT OF CLAIM
Bluestone is not entitled to the declaration sought in its demand for arbitration, nor is it
entitled to any other relief it might eventually seek with respect to the parties’ lease agreement.
COUNTERCLAIM FOR BREACH OF LEASE AGREEMENT
FNC and Bluestone are parties to Master Equipment Lease Agreement No. 21592, dated
as of June 8, 2018 (the “Master Lease”), as amended. FNC is the Lessor under the Master Lease,
and Bluestone is the Lessee. The general purpose of the agreement was for First National to
purchase certain “Equipment” (as identified on the Master Lease’s Equipment Schedule No. 01)
and lease it to Bluestone for use in Bluestone’s mining operations. As set forth in the original

ANSWER AND COUNTERCLAIMS

Page 1

Page 21 of 27

 equipment schedule, the parties initially contemplated a 48-month lease involving $2.5 million of
Equipment, with monthly rent payments by Bluestone in the amount of $55,352.50.
But before that proposed transaction went into effect, Bluestone decided that it wanted to
pursue a much cheaper leasing option than contemplated by the original equipment schedule.
Instead of $2.5 million in “New/Used Various CAT Equipment,” Bluestone proposed to instead
lease a remanufactured Caterpillar D11 bulldozer, with a purchase cost of $1,387,500. However,
FNC was not willing to proceed with financing until Bluestone provided a copy of its 2017 audit
report to FNC.
Because the remanufactured bulldozer needed to be purchased quickly, the parties agreed
to amend the Master Lease in a signed writing referred to as the “Funding Agreement.” Pursuant
to the Funding Agreement, if all conditions were met prior to the “Funding Expiration Date” of
August 30, 2018, the lease would be governed by the terms provided by the June 8, 2018 equipment
schedule. As amended, that equipment schedule provided for a 60 month term and monthly rent
payments of $26,157.15. But the Funding Agreement also provided that if all conditions were not
met before August 30, 2018, the lease would instead be governed by a new equipment schedule
dated as of July 27, 2018. That new equipment schedule provided for a 36 month term and monthly
rent payments of $39,074.78. With the Funding Agreement in place, FNC proceeded to pay the
purchase price for the remanufactured bulldozer, and Bluestone took possession of it as the Lessee
as of July 27, 2018.
However, the conditions contained in the Funding Agreement were not met when the
August 30, 2018 “Funding Expiration Date” arrived. Specifically, Bluestone had failed to provide
a copy of its 2017 audit report to FNC, and FNC had not secured secure permanent financing for
the remanufactured bulldozer.
ANSWER AND COUNTERCLAIMS

Because those express conditions had not been met by the
Page 2

Page 22 of 27

 August 30, 2018 deadline, the July 27, 2018 equipment schedule governs the parties’ lease
agreement. As a result, the lease agreement provides for a term of 36 months and monthly
payments of $39,074.78.
Bluestone has breached its contractual obligations under the parties’ lease agreement,
including the Master Lease and the Funding Agreement. Initially, Bluestone failed to pay the full
amount of the monthly payments it owed to FNC. More recently, Bluestone has ceased making
any payments at all. Through the date of this counterclaim, Bluestone has failed and refused to
pay hundreds of thousands of dollars that it owes to FNC for the lease of the remanufactured
bulldozer.
COUNTERCLAIM FOR CONVERSION
FNC owns the remanufactured bulldozer that is the subject of the parties’ lease agreement.
FNC also has the right to immediate possession of the remanufactured bulldozer due to Bluestone’s
defaults under the lease agreement. Contrary to FNC’s property rights, Bluestone has wrongfully
exercised dominion and control over the remanufactured bulldozer, and FNC has thereby suffered
injury.
REMEDIES REQUESTED
FNC respectfully requests recovery for all unpaid rent owed by Bluestone under the parties’
lease agreement through the date of the arbitrator’s final award, including interest on those sums
at the contractually agreed upon interest rate of 18% per annum. FNC also asks the arbitrator to
rule that Bluestone’s breach is a repudiation of the parties’ contract, and on that basis to award
FNC recovery for the value of all future payments Bluestone is obligated to make to FNC under
the lease agreement. FNC further seeks an award of damages for loss of the remanufactured
bulldozer’s value or use. FNC also seeks recovery of its attorney fees pursuant to Chapter 38 of
ANSWER AND COUNTERCLAIMS

Page 3

Page 23 of 27

 the Texas Civil Practice & Remedies Code, as well as recovery of its costs, expenses, and legal
fees incurred in enforcing FNC’s rights under the lease pursuant to section 18(b) of the Master
Lease. Finally, FNC requests all further and additional relief to which it may show it is entitled
under the parties’ lease agreement and all applicable law.

DATED: May 2, 2019
Respectfully submitted,
/s/ Richard A. Smith
Richard Smith, P.C.
Palmer & Manuel, PLLC
Texas Bar No. 24027990
richard@rsmithpc.com
8350 N. Central Expressway, Suite 1111
Dallas, Texas 75206
(214) 242-6484 – telephone
(214) 265-1950 – facsimile
ATTORNEY FOR RESPONDENT
FIRST NATIONAL CAPITAL, LLC

CERTIFICATE OF SERVICE
I hereby certify that, on May 2, 2019, the foregoing document is being served on counsel
for Claimant via electronic mail.

/s/ Richard A. Smith
Richard Smith, P.C.

ANSWER AND COUNTERCLAIMS

Page 4

Page 24 of 27

 Exhibit 5
JAMS ARBITRATION

BLUESTONE RESOURCES, INC. and
AFFLIATES

§
§
§
§
§
§

Claimant,
v.

FIRST NATIONAL CAPITAL, LLC
Respondent

§

REFERENCE NO. 1310024305

§
§
§

FINAL AWARD
THE UNDERSIGNED ARBITRATOR, having been designated in accordance with the
arbitration agreement between the Parties and having examined the evidence, pleadings and law
does find, conclude and issue this Final Award as follows:
In this arbitration proceeding, Bluestone Resources, Inc. seeks a declaration of its rights
under an equipment lease agreement with First National Capital LLC. In its counterclaim, First
National Capital, LLC seeks an award for breach of the lease agreement by Bluestone Resources,
Inc including liquidated damages and attorney's fees.
The Parties appeared at the JAMS Dallas office on October 14, 2019 and presented
evidence and argument in support of their positions. To the extent this Final Award differs from
a party's position, that is a result of determinations as to applicable law, witness credibility,
pleading and burden of proof considerations and the weighing of evidence, both oral and
documentary. The Parties requested the entry of a short-form award rather than a reasoned opinion
setting forth legal analysis.

Conclusion
Respondent, First National Capital, LLC, shall recover from Claimant Bluestone
Resources, Inc., the sum of $2,716, 240.94 for breach of the lease agreement, plus attorney's fees
1

Page 25 of 27

 of $63, 002.59 and costs of$13,045.55
This Final Award resolves all issues submitted for decision in this arbitration proceeding.

Signed November 13, 2019

2

Page 26 of 27

 PROOF OF SERVICE BY EMAIL & U.S. MAIL
Re: Bluestone Resources, Inc. and Affiliates vs. First National Capital, LLC
Reference No. 1310024305
I, Asimina Dayne, not a party to the within action, hereby declare that on November 14, 2019, I
served the attached FINAL AWARD on the parties in the within action by Email and by depositing true copies
thereof enclosed in sealed envelopes with postage thereon fully prepaid, in the United States Mail, at Detroit,
MICHIGAN, addressed as follows:
Richard A. Smith Esq.
Richard Smith, PC
8350 N. Central Expwy
Suite 1111
Dallas, TX 75206
Phone:214-242-6484
richard@rsmithpc.com
Parties Represented:
First National Capital
Melissa Massingham
Steve Smith

James Stafford III Esq.
Scheef & Stone LLP
500N. Akard
Suite 2700
Dallas, TX 75201
Phone:214-706-4200
james.stafford@solidcounsel.com
Parties Represented:
Bluestone Resources, Inc. and Affiliates
Steve Ball

I declare under penalty of perjury the foregoing to be true and correct. Executed at Detroit,
MICHIGAN on November 14, 2019.

~

ADayne@jamsadr.com

p

Page 27 of 27