SETTLEMENT AGREEMENT
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This Agreement (this "Agreement") is dated ________ day of September, 2002,
by and between PLM WORLDWIDE LEASING CORP. ("PLM")and VARIG S.A. (VICAO AEREA
RIO-GRANDENSE) ("Varig").
W I T N E S S E T H
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WHEREAS, PLM as owner and lessor, and Varig, as lessee, entered into an
aircraft lease agreement (GF-VII) dated September 10, 1996 covering one Boeing
Model 737-200 Aircraft 21007/PP-VML equipped with a Xxxxx and Xxxxxxx Model
JT8D-17A Engine. PLM and Varig subsequently entered into a written Amendment of
this Lease on or about September 30, 1999; and
WHEREAS, PLM as owner and lessor, and Varig, as lessee, entered into an aircraft
lease agreement (IF-I) dated September 10, 1996 covering four Boeing Model
737-200 Aircraft 21005/PP-VMJ, 21000/PP-VME, 21017/PP-CJT, 21012/PP-CJN equipped
with a Xxxxx and Whitney Model JT8D-17A Engines. PLM and Varig subsequently
entered into a written Amendment of this Lease on or about September 30, 1999;
and
WHEREAS, PLM as owner and lessor, and Varig, as lessee, entered into an aircraft
lease agreement (GF-V) dated September 10, 1996 covering three Boeing Model
737-200 Aircraft 21003/PP-VMH, 21008/PP-VMM, 21009/PP-VMN equipped with a Xxxxx
and Xxxxxxx Model JT8D-17A Engine. PLM and Varig subsequently entered into a
written Amendment of this Lease on or about September 30, 1999. The three
Aircraft Leases and the Amendments thereto are referred to collectively herein
as the "Leases" or the "Aircraft Leases;" and
WHEREAS, PLM sued Varig to recover past due sums under the above-described
Leases, Case No. 02-06116 CA 21 in the Circuit Court of the 11th Judicial
Circuit, in and for Miami-Dade County, Florida (the "Lawsuit");
WHEREAS, PLM and Varig wish to resolve all the claims relating to the
afore-described Leases, the parties agree to the following terms:
1. LEASE TERM FOR THE AIRCRAFT.
A. The terms for the Leases for the following four aircraft shall
extend through and include March 31, 2003: 21000/PP-VME, 21009/PP-VMN,
21012/PP-CJN, 21003/PP-VMH. The monthly rental for the lease of each of these
Aircraft shall be $30,000.00 per Aircraft, commencing with the first payment due
on October 1, 2002 with the final payment coming due on March 1, 2003. These
Aircraft shall be re-delivered to PLM on April 1, 2003 in the condition
described in paragraph 2 below.
B. The terms of the Leases for the following Aircraft shall
terminate on October 31, 2002: 21003/PP-VMH, 21008/PP-VMM, 21009/PP-VMN. After
October 31, 2002, Varig shall store and continue to insure these Aircraft until
the earlier of either (i) March 31, 2003, or (ii) PLM requests Varig to return
the Aircraft upon thirty (30) days written notice by PLM to Varig. These
aircraft shall be returned to PLM in the condition set forth in paragraph 2
below.
2. RETURN CONDITIONS OF THE AIRCRAFT. All Aircraft will be redelivered by
Varig to PLM in the same return condition required under the Leases with the
following exceptions:
A. Airframe. Aircraft 21000/PP-VME, 21017/PP-CJT,
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21009/PP-VMN, 21007/PP-VML and 21008/PP-VMM will be re-delivered by Varig to PLM
fresh from C-check. Aircraft 21005/PP-VMJ and 21003/PP-VMH will be redelivered
by Varig to PLM fresh from D-check. The Aircraft shall be painted white and
shall not have open or deferred items. The Aircraft shall be returned to PLM
with only reasonable wear and tear from normal usage. It is agreed that Varig
will not be required to update the Aircraft to the latest FAR requirement by the
Aviation Authority since October 31, 2002.
B. Engine SV. Engines shall comply with Return Conditions on
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average. No engine shall have less than 2500 cycles to the next scheduled
removal in which case Varig shall compensate PLM for this shortfall by paying
$71.00 per hour.
C. Engine LLP. Engines shall comply with Return Conditions on
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average. No engine shall have an average of less than 9100 cycles remaining
life. Should this shortfall occur, Varig will compensate PLM on a cost per cycle
basis. This will be based on a pro-ration of the LLP manufacturer list price,
current cost divided by allowable life would equal the costs per cycle.
D. Aging. Varig shall perform the Service Bulletin ("SB")
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tasks, which can be performed on a best effort basis during upcoming checks on
all the Aircraft. During the checks on 21005/PP-VMJ and 21003/PP-VMH the Aging
work will be terminated on a best effort basis. This may leave an adjustment in
favor of PLM, which shall be calculated as per the man-hours listed in Schedule
"A" hereto multiplied by a man-hour rate of $45.00. Varig shall provide the
required parts/kits for specific SBs, or compensation equaling the current list
price from the manufacturer.
E. Airworthiness Directives. Airworthiness Directives ("ADs")
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shall be cleared for a period terminating three months after the redelivery date
by Varig to PLM, except that ADs issued on a date after this agreement that has
a termination or due date that falls into the three months after the redelivery
date will be for the account of lessor.
F. Time Controlled Components. Varig will return time controlled
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components in compliance with lease return provisions.
G. Varig Mods. In each case Varig offers to leave GPS (with
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STC) in Aircraft at the cost of $60,000.00 and STC for 37,000 feet operation at
the cost of $20,000.00 and such amounts shall be offset against the next due
payment from Varig.
H. Paint. PLM is to compensate Varig for painted liveries at
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the rate of $25,000.00 per Aircraft (except for complex or full liveries) and
such amount shall be offset against the next due payment from Varig.
3. PAYMENT.
A. In lieu of the monthly rental payments set forth in the Leases
and in addition to the monthly payment amounts set forth in Paragraph 1 above,
Varig shall pay to PLM $9,079,500.00, payable together with five percent (5%)
interest, with an initial payment of $223,358.75, followed by twenty-three (23)
equal monthly installments of $406,358.75. Varig's initial payment of
$223,358.75 shall be due upon the signature of this Agreement by both parties.
B. Varig shall also pay to MILPI, LLC ("MILPI") $183,000.00 as
compensation for the time spent by MILPI's executive officers in connection with
the negotiation and execution of this Agreement. This payment shall be due upon
the signature of this Agreement by both parties.
C. PLM shall off-set any funds it has garnished in the lawsuit
against Varig's last payment due. Varig agrees to cooperate with PLM and to
sign any necessary papers to facilitate PLM's obtaining any garnished monies.
D. Varig shall pay PLM $___________, representing PLM's legal fees
and expenses incurred due to Varig's default under the Leases.
4. ADDITIONAL VARIG OBLIGATIONS. Varig shall make available to PLM or
PLM's agents seven (7) first class round-trip tickets from New York, London or
Miami to Brazil.
5. DEFAULT. In the event that Varig fails to timely make any of the
settlement payments set forth above or any other payments set forth in the
Leases:
A. PLM shall immediately be entitled to file a lawsuit in any
court in any state in the United States or in any court in Brazil without prior
notice to Varig (PLM may also re-open the existing Lawsuit in order to obtain a
final judgment). The parties agree that PLM shall be entitled to the immediate
entry of a final judgment, in the form attached hereto as Exhibit "A" (the
"Final Judgment"), in the amount of $10,879,899.92, representing all past due
and future sums due under the Leases, less any payments that Varig has made
after the signing of this Agreement, plus any additional legal fees and expenses
incurred by PLM as a result of Varig's default under this Agreement or under the
Leases. PLM shall be entitled to this relief by filing a Motion for Entry of
Final Judgment along with an Affidavit of Counsel, in the form attached hereto
as Exhibit "B" (the "Affidavit"), setting forth Varig's default. Varig waives
any and all defenses it may have with the exception of payment (i.e. that it is
has paid the amounts alleged to be unpaid).
B. PLM shall immediately be entitled to apply the Security
Deposits to the outstanding balance owed by Varig to PLM under this Agreement
and/or under the Leases.
C. The applicable interest rate on any balance owed by Varig to
PLM under this Agreement or under the Leases shall be 18% per annum for the
period following Varig's default.
6. RETURN OF SECURITY DEPOSITS. Upon Varig's timely completion of all
of its obligations under this Agreement and under the Leases, PLM shall return
the Security Deposits to Varig.
7. DOMESTICATION OF FINAL JUDGMENT. In the event that PLM seeks to
domesticate a final judgment, including the Final Judgment, entered in its favor
in a different state or country, Varig consents to and hereby waives any
objection, to the domestication of such a judgment in any state in the United
States or in any other country, including, without limitation, Brazil.
8. DISMISSAL OF LAWSUIT AND RETENTION OF JURISDICTION. The parties agree and
stipulate that upon Varig's payment of the first monthly installment due
hereunder and PLM's receipt of all of the garnished monies garnished to date,
the parties shall file a Joint Stipulation for Dismissal of this Lawsuit. The
parties agree that the Court shall retain jurisdiction to enforce the terms of
this Agreement. The parties explicitly agree that in the event that Varig
defaults in the timely payment of any sums due hereunder, PLM may re-open this
Lawsuit to enforce whatever remedies it may have.
9. RELEASES. Upon Varig's fulfillment of all of its duties and obligations
set forth herein as well as those set forth in the Leases, the parties shall
exchange reciprocal releases, in a form attached hereto as Exhibit "C."
10. FLORIDA LAW. Notwithstanding any contrary provisions contained within
the Leases, this Agreement shall be governed by and construed in accordance with
laws of the State of Florida and may be enforced in any court in the United
States or in Brazil.
11. EFFECTIVENESS OF THE LEASES. Except as modified in this Agreement, the
Leases described above shall remain in full force and effect. In the event of a
conflict between any term of the Leases and this Agreement, the term in this
Agreement shall be controlling.
WE HEREBY AGREE to each of the foregoing terms.
PLM WORLDWIDE LEASING CORP. VARIG, S.A. (VIACAO AEREA RIO-GRANDENSE)
ALSO KNOWN AS VARIG BRAZILIAN AIRLINES, A BRAZILIAN CORPORATION
By:_______________________________ By:_________________________________
Its:_______________________________ Its:_______________________________
Date:_____________________________ Date:______________________________
