Document:

Exhibit 4.3

 

Execution Version

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 13, 2018, is entered into by and among Fly Leasing Limited, a Bermuda exempted company (including its successors, the “Company”), and each of the shareholders of the Company that is listed in the signature pages hereof (each, an “Investor” and, collectively the “Investors,” which term shall include individuals who purchase New Shares pursuant to the Summit Securities Purchase Agreement (each as defined below)).

 

RECITALS

 

WHEREAS, on December 28, 2012 (the “Original Execution Date”), the Company and certain Investors (the “Original Investors”) entered into that certain Registration Rights Agreement (the “Original Registration  Rights Agreement”), pursuant to which the Company granted such Investors certain registration rights with respect to certain American Depositary Shares (the “Original Shares”), each representing one Common Share, par value $0.001, of the Company (“Common Shares”);

 

WHEREAS, the Company desires to sell, and certain of the Investors (the “New Investors”) desire to purchase, severally and not jointly, a total of 1,333,334 Common Shares in the form of American Depositary Shares, on the terms and subject to the conditions contained in (i) the Securities Purchase Agreement, dated as of July 11, 2018 (the “Onex Securities Purchase Agreement”), by and among the Company, Meridian Aviation Partners Limited and certain other persons named therein, and (ii) the Securities Purchase Agreement, dated as of July 11, 2018 (the “Summit Securities Purchase Agreement” and, collectively with the Onex Securities Purchase Agreement, the “Securities Purchase Agreements”), by and among the Company and Summit Aviation Holdings LLC (“Summit”);

 

WHEREAS, upon the closing of the transactions contemplated by the Securities Purchase Agreements, the Investors identified or designated will subscribe for Common Shares in the form of American Depositary Shares (the “New Shares” and, collectively with the Original Shares, the “Shares”) at a price per New Share as set forth in the each of the Securities Purchase Agreements;

 

WHEREAS, pursuant to Section 4.9 of the Original Registration Rights Agreement, the provisions, covenants and conditions set forth therein may be amended or modified upon the written consent of the Company and the Original Investors (together with their permitted transferees) of a majority-in-interest of the “Registrable Shares” (as such term was defined in the Original Registration Rights Agreement) at the time in question;

 

WHEREAS, the Company and all of the Original Investors (together with their permitted transferees) desire to amend and restate the Original Registration Rights Agreement in order to provide such Investors and the New Investors certain registration rights with respect to certain securities of the Company, as set forth in this Agreement;

 

WHEREAS, the Company has agreed to provide the Investors with the registration rights specified in this Agreement with respect to the Shares held by them or any of their permitted transferees, on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

1.1  Definitions.  The following terms shall have the meanings set forth in this Section 1.1:

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.

 

“Excluded Registration” means a registration under the Securities Act of (i) securities registered on Form S‐8 or any similar successor form, and (ii) securities registered to effect the acquisition of, or combination with, another Person.

 

“Holder” means (i) each Investor and (ii) any direct or indirect transferee of any Investor who shall become a party to this Agreement in accordance with Section 2.7 and has agreed in writing to be bound by the terms of this Agreement.

 

“Onex Investors” means the Investors named on the signature pages hereto under the heading “Onex”.

 

“Person” or “person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof.

 

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

“Registrable Shares” means the Shares owned by Holders, together with any securities owned by Holders issued with respect to such Shares by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, amalgamation or other reorganization; provided, however, that Shares that, pursuant to Section 3.1, no longer have registration rights hereunder shall not be considered Registrable Shares.

 

“SEC” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations promulgated by the SEC thereunder.

 

“Summit Investor” means Summit and any Investor named on the signature pages hereto under the heading “Summit,” as well as any individual who purchases New Shares pursuant to the Summit Securities Purchase Agreement.

 

1.2  Other Terms.  For purposes of this Agreement, the following terms have the meanings set forth in the section or agreement indicated.

 

	
Term

	 	
Section

	
Adverse Effect

	 	
Section 2.1.4

	
Advice

	 	
Section 2.3

	
Agreement

	 	
Introductory Paragraph

	
Common Shares

	 	
Recitals

	
Company

	 	
Introductory Paragraph

	
Demand Notice

	 	
Section 2.1.1(b)

	
Demand Registration

	 	
Section 2.1.1(b)

	
Filing Date

	 	
Section 2.1.1(a)

	
Inspectors

	 	
Section 2.2(xii)

	
FINRA

	 	
Section 2.2(xiv)

	
Investors

	 	
Introductory Paragraph

	
New Investors

	 	
Recitals

	
New Shares

	 	
Recitals

	
Onex Securities Purchase Agreement

	 	
Recitals

 

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	Term	 	Section
	
Original Execution Date

	 	
Recitals

	
Original Investors

	 	
Recitals

	
Original Registration Rights Agreement 

	 	
Recitals

	
Original Shares

	 	
Recitals

	
Records

	 	
Section 2.2(xii)

	
Securities Purchase Agreement

	 	
Recitals

	
Seller Affiliates

	 	
Section 2.5.1

	
Shares

	 	
Recitals

	
Shelf Registrable Shares

	 	
Section 2.1.3

	
Shelf Registration Statement

	 	
Section 2.1.1(a)

	
Shelf Underwriting

	 	
Section 2.1.3

	
Shelf Underwriting Notice

	 	
Section 2.1.3

	
Shelf Underwriting Request

	 	
Section 2.1.3

	
Summit

	 	
Recitals

	
Summit Securities Purchase Agreement

	 	
Recitals

	
Suspension Notice

	 	
Section 2.3

1.3  Rules of Construction.  Unless the context otherwise requires

 

(1)          a term has the meaning assigned to it;

 

(2)          “or” is not exclusive;

 

(3)          words in the singular include the plural, and words in the plural include the singular;

 

(4)          provisions apply to successive events and transactions; and

 

(5)          “herein,” “hereof and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

 

ARTICLE 2

 

REGISTRATION RIGHTS

 

2.1  Registration Statement.

 

2.1.1  Company to File Registration Statement.

 

(a)          As soon as practicable following, and in no event later than 10 days after, the 180th day after the issuance of New Shares pursuant to the Onex Securities Purchase Agreement (the “Filing Date”), the Company shall withdraw its registration statement on Form F-3 (Registration Number 333-187305) and shall file a registration statement under Rule 415 of the Securities Act (or a successor rule) (a “Shelf Registration Statement”) for a public offering of all (but not less than all) of the Registrable Shares.  If, at any time that there are outstanding Registrable Shares, any Shelf Registration Statement covering such Registrable Shares should cease to be effective for any reason, then, subject to Section 2.1.1(b), the Company shall file another Shelf Registration Statement for a public offering of all (but not less than all) of the Registrable Shares. The Company shall use reasonable best efforts to cause each Shelf Registration Statement referred to in this Section 2.1.1(a) to be declared effective by the SEC as promptly as practicable after such filing and to maintain the effectiveness of such Shelf Registration Statement.

 

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(b)          If the Company is unable to file, cause to be effective or maintain the effectiveness of a Shelf Registration Statement as required under Section 2.1.1(a), each Holder shall have the right by delivering a written notice to the Company (a “Demand Notice”) to require the Company to register under the Securities Act the number of Registrable Shares held by such Holder and requested by such Demand Notice to be so registered (a “Demand Registration”).  A Demand Notice shall also specify the expected method or methods of disposition of the applicable Registrable Shares.  Following receipt of a Demand Notice, the Company shall use its reasonable best efforts to file, as promptly as reasonably practicable, but not later than 60 days after receipt by the Company of such Demand Notice, a registration statement relating to the offer and sale of the Registrable Shares requested to be included therein by the Holders in accordance with the methods of distribution set forth in such Demand Notice and shall use its reasonable best efforts to cause such registration statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof.

 

(c)          No Holder may participate in any registration statement pursuant to Section 2.1.1(a) or (b) unless such Holder completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents and delivers all legal opinions reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (i) such Holder’s ownership of his or its Registrable Shares to be transferred free and clear of all liens, claims, and encumbrances, (ii) such Holder’s power and authority to effect such transfer, and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; provided, further, however, that the obligation of such Holder to indemnify pursuant to any such underwriting arrangements shall be several, not joint and several, among such Holders selling Registrable Shares, and the liability of each such Holder will be in proportion thereto, and provided, further, that such liability will be limited to the net amount received by such Holder from the sale of his or its Registrable Shares pursuant to such registration.

 

2.1.2  Deferral of Filing.  The Company may defer the filing (but not the preparation) of a registration statement required by Section 2.1 until a date not later than ninety (90) days after the Filing Date if at the time of the Filing Date and for two weeks thereafter, the Company is engaged in confidential negotiations or other confidential business activities, disclosure of which would be required in such registration statement (but would not be required if such registration statement were not filed), and the Board of Directors of the Company or a committee of the Board of Directors of the Company determines in good faith that such disclosure would be materially detrimental to the Company and its shareholders.  A deferral of the filing of a registration statement pursuant to this Section 2.1.2 shall be lifted, and the registration statement shall be filed forthwith, if the negotiations or other activities are disclosed or terminated.  In order to defer the filing of a registration statement pursuant to this Section 2.1.2, the Company shall promptly (but in any event within ten (10) days), upon determining to seek such deferral, deliver to each Investor a certificate signed by an executive officer of the Company stating that the Company is deferring such filing pursuant to this Section 2.1.2 and a general statement of the reason for such deferral and an approximation of the anticipated delay (subject to the execution of a confidentiality agreement if required by law or contract).

 

2.1.3.  Shelf Takedowns.  In the event that the Company files a Shelf Registration Statement pursuant to Section 2.1.1 and such registration statement becomes effective, the Holders shall have the right at any time or from time to time to elect to sell their Registrable Shares in any manner described under “Plan of Distribution” in such registration statement, including pursuant to an underwritten offering of Registrable Shares available for sale pursuant to such registration statement (“Shelf Registrable Shares”).  A Holder shall make such election with respect to an underwritten offering by delivering to the Company a written request (a “Shelf Underwriting Request”) for such underwritten offering to the Company specifying the number of Shelf Registrable Shares that the Holder(s) desire(s) to sell pursuant to such underwritten offering (the “Shelf Underwriting”); provided that the Shelf Underwriting Request shall provide for the sale of no less than $10 million of Registrable Shares.  As promptly as practicable, but no later than two (2) Business Days after receipt of a Shelf Underwriting Request, the Company shall give written notice (the “Shelf Underwriting Notice”) of such Shelf Underwriting Request to all other Holders.  The Company shall include in such Shelf Underwriting (x) the Registrable Shares of the Holder(s) making such Shelf Underwriting Request and (y) the Shelf Registrable Shares of any other Holder of Shelf Registrable Shares which shall have made a written request to the Company for inclusion in such Shelf Underwriting (which request shall specify the maximum number of Shelf Registrable Shares intended to be disposed of by such Holder) within five (5) days after the receipt of the Shelf Underwriting Notice.  The Company shall, as expeditiously as possible (and in any event within 20 days after the receipt of a Shelf Underwriting Request) use its reasonable best efforts to facilitate such Shelf Underwriting.  Notwithstanding the foregoing, if a Holder wishes to engage in an underwritten block trade off of a Shelf Registration Statement, then notwithstanding the foregoing time periods, the Holder only needs to notify the Company of the block trade Shelf Underwriting on the day such offering is to commence and the Company shall notify other Holders on the same day and other Holders must elect whether or not to participate on the day such offering is to commence, and the Company shall as expeditiously as possible use its reasonable best efforts to facilitate such Shelf Underwriting, provided that the Holder requesting such underwritten block trade shall use reasonable best efforts to work with the Company and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus supplement and other offering documentation related to the underwritten block trade.  The Company shall, at the request of any Holder of Registrable Shares registered on such Shelf Registration Statement, file any prospectus supplement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by any Holder of Registrable Shares registered on such Shelf Registration Statement to effect such Shelf Underwriting.  Once a Shelf Registration Statement has been declared effective, the Holders of Registrable Shares may request, and the Company shall facilitate, an unlimited number of Shelf Underwritings with respect to such Shelf Registration Statement.  In connection with any Shelf Underwriting, the Company shall follow the applicable procedures set forth in Section 2.3.

 

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2.1.4  Cutbacks.  No securities to be sold for the account of the Company, or any other Person that is not a Holder, shall be included in a Shelf Underwriting or Demand Registration, as applicable, unless the managing underwriter or underwriters shall advise the Holders in writing that the inclusion of such securities will not adversely affect the price, timing or distribution of the offering or otherwise adversely affect its success (an “Adverse Effect”).  Furthermore, if the managing underwriter or underwriters shall advise the Holders that, even after exclusion of all securities of other Persons pursuant to the immediately preceding sentence, the amount of Registrable Shares requested  to be included in such Shelf Underwriting or Demand Registration, as applicable, by Holders is sufficiently large to cause an Adverse Effect, the Registrable Shares to be offered by such requesting Holders in the Shelf Underwriting or Demand Registration, as the case may be, shall be reduced pro rata such that each such Holder shall be permitted to include a number of Registrable Shares in the offering equal to (x) the maximum number of Registrable Shares that may be offered in such offering without causing an Adverse Effect multiplied by (y) a fraction, the numerator of which is the number of Registrable Shares proposed by such Holder to be included in the offering and the denominator of which is the total number of Registrable Shares proposed by all Holders to be included in such offering.

 

2.1.5  Selection of Underwriters.  The Holders of a majority of the Registrable Securities being offered in connection with a Shelf Underwriting or Demand Registration, as applicable, shall select the underwriters for the offering.

 

2.2  Registration Procedures.  The Company will use its reasonable best efforts to effect the registration and the sale of Registrable Shares in accordance with the intended method of disposition thereof as promptly as is practicable, and pursuant thereto the Company will as promptly as practicable:

 

(i)           prepare and file with the SEC, pursuant to Section 2.1.1(a) or (b), as applicable, a registration statement on any appropriate form under the Securities Act with respect to such Registrable Shares (provided that a registration pursuant to Section 2.1.1(a) shall be effected pursuant to a Shelf Registration Statement), provided that as far in advance as practicable before filing such registration statement or any amendment thereto, the Company will furnish to the Investors copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits), and any Investor shall have the opportunity to object to any information contained therein and the Company will make corrections reasonably requested by such Investor with respect to such information prior to filing any such registration statement or amendment;

 

(ii)          prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares subject thereto;

 

(iii)         furnish to each seller of Registrable Shares and the underwriters of the securities being registered such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), any documents incorporated by reference therein and such other documents as such seller or underwriters may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such seller or the sale of such securities by such underwriters (it being understood that, subject to Section 2.4 and the requirements of the Securities Act and applicable state securities laws, the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller and the underwriters in connection with the offering and sale of the Registrable Shares covered by the registration statement of which such prospectus, amendment or supplement is a part);

 

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(iv)         use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the managing underwriter reasonably requests (or, in the event the registration statement does not relate to an underwritten offering, as the holders of a majority of such Registrable Shares may reasonably request); and do any and all other acts and things which may be reasonably necessary or advisable to enable each seller to consummate the disposition of the Registrable Shares owned by such seller in such jurisdictions (provided, however, that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction);

 

(v)          promptly notify each Investor and confirm such notice in writing (A) when a prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (B) of the issuance by any state securities or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Shares under state securities or “blue sky” laws or the initiation of any proceedings for that purpose, and (C) of the happening of any event which makes any statement made in a registration statement or related prospectus untrue or which requires the making of any changes in such registration statement, prospectus or documents so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, as promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable Shares, such prospectus will not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(vi)         make reasonably available members of management of the Company, as selected by the Holders of a majority of the Registrable Shares included in such registration, for assistance in the selling effort relating to the Registrable Shares covered by such registration, including, but not limited to, the participation of such members of the Company’s management in road show presentations;

 

(vii)        otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, including the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and make generally available to the Company’s security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Company’s first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 20-F and 6-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

 

(viii)       if requested by the managing underwriter or any seller promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or any seller reasonably requests to be included therein, including, without limitation, with respect to the Registrable Shares being sold by such seller, the purchase price being paid therefor by the underwriters and with respect to any other terms of the underwritten offering of the Registrable Shares to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment;

 

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(ix)         cooperate with the sellers and the managing underwriter to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law) representing securities sold under any registration statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or such sellers may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such registration statement a supply of such certificates;

 

(x)           promptly make available for inspection by any seller, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained by any such seller or underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this subparagraph (x) if (A) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (B) if either (1) the Company has requested and been granted from the SEC confidential treatment of such information contained in any filing with the SEC or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing, unless prior to furnishing any such information with respect to clause (B) such Holder of Registrable Shares requesting such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions; and provided, further, that each Holder of Registrable Shares agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;

 

(xi)          furnish to each seller and underwriter a signed counterpart of (A) an opinion or opinions of counsel to the Company, and (B) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the sellers or managing underwriter reasonably requests;

 

(xii)         use its reasonable best efforts to cause the Registrable Shares included in any registration statement to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed;

 

(xiii)        provide a transfer agent and registrar for all Registrable Shares registered hereunder;

 

(xiv)       cooperate with each seller and each underwriter participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”);

 

(xv)        during the period when the prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;

 

(xvi)       notify each seller of Registrable Shares promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information;

 

(xvii)      enter into such agreements (including underwriting agreements in the managing underwriter’s customary form) as are customary in connection with an underwritten registration; and

 

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(xviii)     advise each seller of such Registrable Shares, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

 

2.3  Suspension of Dispositions.  Each Holder agrees by acquisition of any Registrable Shares that, upon receipt of any notice (a “Suspension Notice”) from the Company of the happening of any event of the kind described in Section 2.2(v)(C) such Holder will forthwith discontinue disposition of Registrable Shares until such Holder’s receipt of the copies of the supplemented or amended prospectus, or until it is advised in writing (the “Advice”) by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus, and, if so directed by the Company, such Holder will deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Shares current at the time of receipt of such notice.  The Company shall use its reasonable best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable.

 

2.4  Registration Expenses.  All fees and expenses incident to any registration statement including, without limitation, the Company’s performance of or compliance with this Article 2, all registration and filing fees, all fees and expenses associated with filings required to be made with FINRA, as may be required by the rules and regulations of FINRA, fees and expenses of compliance with securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the Registrable Shares), rating agency fees, printing expenses (including expenses of printing certificates for the Registrable Shares in a form eligible for deposit with the Depository Trust Company and of printing prospectuses if the printing of prospectuses is requested by a Holder of Registrable Shares), messenger and delivery expenses, the fees and expenses incurred in connection with any listing or quotation of the Registrable Shares, fees and expenses of counsel for the Company and its independent certified public accountants (including the expenses of any special audit or “cold comfort” letters required by or incident to such performance), the fees and expenses of any special experts retained by the Company in connection with such registration, and the fees and expenses of other persons retained by the Company, will be borne by the Company (unless paid by a security holder that is not a Holder for whose account the registration is being effected) whether or not any registration statement becomes effective; provided, however, that any underwriting discounts, commissions, or fees attributable to the sale of the Registrable Shares will be borne by the Holders pro rata on the basis of the number of shares so registered and the fees and expenses of any counsel, accountants, or other persons retained or employed by any Holder will be borne by such Holder.

 

2.5  Indemnification.

 

2.5.1  The Company agrees to indemnify and reimburse, to the fullest extent permitted by law, each seller of Registrable Shares, and each of its employees, advisors, agents, representatives, partners, officers, and directors and each Person who controls such seller (within the meaning of the Securities Act or the Exchange Act) and any agent or investment advisor thereof (collectively, the “Seller Affiliates”) (A) against any and all losses, claims, damages, liabilities, and expenses, joint or several (including, without limitation, attorneys’ fees and disbursements except as limited by Section 2.5.3) based upon, arising out of, related to or resulting from any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus, preliminary prospectus, issuer free writing prospectus (as such term is defined in Rule 433 of the Securities Act) or any amendment thereof or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (B) against any and all loss, liability, claim, damage, and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, and (C) against any and all costs and expenses (including reasonable fees and disbursements of counsel) as may be reasonably incurred in investigating, preparing, or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon, arising out of, related to or resulting from any such untrue statement or omission or alleged untrue statement or omission, or such violation of the Securities Act or Exchange Act, to the extent that any such expense or cost is not paid under subparagraph (A) or (B) above; except insofar as any such statements are made in reliance upon and in strict conformity with information furnished in writing to the Company by such seller or any Seller Affiliate for use therein or arise from such seller’s or any Seller Affiliate’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such seller or Seller Affiliate with a sufficient number of copies of the same.  The reimbursements required by this Section 2.5.1 will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred.

 

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2.5.2  In connection with any registration statement in which a seller of Registrable Shares is participating, each such seller will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the fullest extent permitted by law, each such seller will indemnify the Company and each of its employees, advisors, agents, representatives, partners, officers and directors and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) and any agent or investment advisor thereof against any and all losses, claims, damages, liabilities, and expenses (including, without limitation, reasonable attorneys’ fees and disbursements except as limited by Section 2.5.3) resulting from any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus, or any preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is contained in any information or affidavit so furnished in writing by such seller or any of its Seller Affiliates specifically for inclusion in the registration statement; provided that the obligation to indemnify will be several, not joint and several, among such sellers of Registrable Shares, and the liability of each such seller of Registrable Shares will be in proportion to, and will be limited to, the net amount received by such seller from the sale of Registrable Shares pursuant to such registration statement; provided, however, that such seller of Registrable Shares shall not be liable in any such case to the extent that prior to the filing of any such registration statement or prospectus or amendment thereof or supplement thereto, such seller has furnished in writing to the Company information expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto which corrected or made not misleading information previously furnished to the Company.

 

2.5.3  Any Person entitled to indemnification hereunder will (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give such notice shall not limit the rights of such Person) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (X) the indemnifying party has agreed to pay such fees or expenses, or (Y) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person.  If such defense is not assumed by the indemnifying party as permitted hereunder, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld).  If such defense is assumed by the indemnifying party pursuant to the provisions hereof, such indemnifying party shall not settle or otherwise compromise the applicable claim unless (1) such settlement or compromise contains a full and unconditional release of the indemnified party or (2) the indemnified party otherwise consents in writing.  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party, a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the reasonable fees and disbursements of such additional counsel or counsels.

 

2.5.4  Each party hereto agrees that, if for any reason the indemnification provisions contemplated by Section 2.5.1 or Section 2.5.2 are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities, or expenses (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, liabilities, or expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the actions which resulted in the losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.5.4 were determined by pro rata allocation (even if the Holders or any underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 2.5.4.  The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities, or expenses (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or, except as provided in Section 2.5.3, defending any such action or claim.  Notwithstanding the provisions of this Section 2.5.4, no Holder shall be required to contribute an amount greater than the dollar amount by which the net proceeds received by such Holder with respect to the sale of any Registrable Shares exceeds the amount of damages which such Holder has otherwise been required to pay by reason of any and all untrue or alleged untrue statements of material fact or omissions or alleged omissions of material fact made in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto related to such sale of Registrable Shares.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations in this Section 2.5.4 to contribute shall be several in proportion to the amount of Registrable Shares registered by them and not joint.

 

9

If indemnification is available under this Section 2.5, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 2.5.1 and Section 2.5.2 without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 2.5.4 subject, in the case of the Holders, to the limited dollar amounts set forth in Section 2.5.2.

 

2.5.5  The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and will survive the transfer of securities.

 

2.6  Transfer of Registration Rights.  The rights of each Holder under this Agreement may be assigned to any direct or indirect transferee of a Holder who agrees in writing to be subject to and bound by all the terms and conditions of this Agreement.

 

2.7  Rule 144.  The Company will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, will, upon the request of the Holders, make publicly available other information) and will take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time or (ii) any similar rule or regulation hereafter adopted by the SEC.  Upon the reasonable request of any Holder, the Company will deliver to such parties a written statement as to whether it has complied with such requirements and will, at its expense, forthwith upon the request of any such Holder, deliver to such Holder a certificate, signed by the Company’s principal financial officer, stating (a) the Company’s name, address and telephone number (including area code), (b) the Company’s Internal Revenue Service identification number, (c) the Company’s SEC file number, (d) the number of shares of each class of capital stock outstanding as shown by the most recent report or statement published by the Company, and (e) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder.

 

2.8  Preservation of Rights.  The Company will not (i) grant any registration rights to third parties which are inconsistent with the rights granted hereunder or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the Holders in this Agreement.

 

10

ARTICLE 3

 

TERMINATION

 

3.1  Termination.  The Company’s obligation to maintain the effectiveness of any registration statement  hereunder shall cease to apply to any particular Registrable Shares when:  (a) a registration statement with respect to the sale of such Registrable Shares (or other securities) shall have become effective under the Securities Act and such Registrable Shares shall have been disposed of in accordance with such registration statement; (b) such Registrable Shares (or other securities) shall have been sold to the public pursuant to Rule 144 under the Securities Act (or any successor provision); or (c) such Registrable Shares (or other securities) shall have ceased to be outstanding.  The Company shall promptly upon the request of any Holder furnish to such Holder evidence of the number of Registrable Shares then outstanding.

 

ARTICLE 4

 

MISCELLANEOUS

 

4.1  Notices.  Any notice or other communication required or permitted to be provided hereunder shall be in writing and shall be delivered in person or by first class mail (registered or certified, return receipt requested), facsimile, or overnight air courier guaranteeing next day delivery, to such address as the recipient shall most recently have designated in writing or, if no such designation has been made, to the following address:

 

If to the Company:

 

Fly Leasing Limited

West Pier

Dun Laoghaire

County Dublin, Ireland

Facsimile:      +353 1 231 1901

Attention:       Chief Executive Officer

 

with a copy to:

 

Jones Day

250 Vesey Street

New York, New York 10281

Facsimile:      +1 (212) 755-7306

Attention:       Boris Dolgonos, Esq.

 

If to any Summit Investor:

 

Summit Aviation  Holdings LLC

50 California Street, 14th Floor

San Francisco, CA 94111

Facsimile: (415) 618-3337

Attention: General Counsel

and

Summit Aviation Management Co., Ltd.

c/o Maples Corporate Services Limited

PO Box 309, Ugland House

Grand Cayman KY1-1104

Cayman Islands

Facsimile: (345) 949-8080

 

11

Attention: Director

 

With a copy to:

 

Davis Polk & Wardwell LLP

1600 El Camino Real

Menlo Park, CA 94025

Facsimile: (650) 752-3601

Attention: Daniel G. Kelly, Jr.

 

If to the Onex Investors:

 

c/o Onex Partners Advisor LP

161 Bay Street

Toronto, ON M5J 2 S1

Attention: Tawfiq Popatia

With a copy to:

 

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York 10004

Facsimile: (212) 859-4000

Attention: Christopher Ewan and David Shaw

 

If to any other Holder, the address indicated for such Holder in the Company’s stock transfer records with copies, so long as Investor owns any Registrable Shares, to the Investors as provided above.

 

All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next business day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

 

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

 

4.2  Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Shares pursuant to the registration statement.

 

4.3  Authority.  Each of the parties hereto represents to the other that (i) it has the corporate power and authority to execute, deliver and perform this Agreement, (ii) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate action and no such further action is required, (iii) it has duly and validly executed and delivered this Agreement, and (iv) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

 

4.4  Governing Law; Jury Trial.  This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without regard to choice of laws or conflict of laws provisions thereof that would require the application of the laws of any other jurisdiction. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

12

4.5  Successors and Assigns.  Except as otherwise expressly provided herein, this Agreement shall be binding upon and benefit the Company, each Holder, and their respective successors and assigns.  In the event of any merger, consolidation, reorganization, business combination or similar transaction affecting the Company in which the Company is not the surviving entity, it shall be a condition to such merger, consolidation, reorganization, business combination or other transaction that the successor entity to the Company assume the Company’s obligations under this Agreement.

 

4.6  Severability.  If any provision of this Agreement shall be invalid, unenforceable, illegal or void in any jurisdiction, such invalidity, unenforceability, illegality or voidness shall not affect the validly or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.  In that case, the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining provisions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

4.7   Remedies.  In the event of a breach by the Company or by a Holder of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement.  The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.  In addition, the remedies provided herein are cumulative and not exclusive of any remedies provided by law.

 

4.8   Waivers.  The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party entitled to enforce such term, but such waiver shall be effective only if it is in a writing signed by the party against whom the existence of such waiver is asserted.  Unless otherwise expressly provided in this Agreement, no delay or omission on the part of any party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right or privilege under this Agreement operate as a waiver of any other right or privilege under this Agreement nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Agreement.  No failure by either party to take any action or assert any right or privilege hereunder shall be deemed to be a waiver of such right or privilege in the event of the continuation or repetition of the circumstances giving rise to such right unless expressly waived in writing by the party against whom the existence of such waiver is asserted.

 

4.9   Amendment.  This Agreement may not be amended or modified in any respect except by a written agreement signed by the Company and the Holders of a majority of the then outstanding Registrable Shares.

 

4.10 Entire Agreement. This Agreement supersedes all other prior oral or written agreements among the parties hereto and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, none of the parties hereto makes any representation, warranty, covenant or undertaking with respect to such matters. Unless expressly indicated otherwise in this Agreement, all references in this Agreement “to the date hereof” or “the date of this Agreement” shall refer to ____________, 2018 and shall not be deemed to refer to the Original Execution Date.

 

13

4.11  Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

4.12  Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Agreement.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

14

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

 

	 	
FLY LEASING LIMITED

	 	 	 
	 	
By:

	
/s/ Colm Barrington

	 	 	
Name: Colm Barrington

	 	 	
Title:   Chief Executive Officer

 

	 	
SUMMIT:

	 	 	 
	 	
SUMMIT AVIATION HOLDINGS LLC

	 	 	 
	 	
By:

	
/s/ Steven Zissis

	 	 	
Name: Steven Zissis

	 	 	
Title:   President

 

	 	
ONEX:

	 		 
	 	
ONEX CORPORATION

	 		
	 	
By:

	
/s/ Christopher A. Govan

	 	 	
Name:  Christopher A. Govan

	 	 	
Title:    Chief Financial Officer

	 	 	 
	 	
By:

	
/s/ David Copeland

	 	 	
Name:  David Copeland

	 	 	
Title:    Managing Director - Tax

	 	
ONEX PARTNERS III LP

	 	
By:  Onex Partners III GP LP, its General Partner

	 	
By:  Onex Partners Manager LP, its Agent

	 	
By:  Onex Partners Manager GP ULC, its General Partner

	 	 	 
	 	
By:

	
/s/ Joshua Hausman

	 	 	
Name:  Joshua Hausman

	 	 	
Title:    Managing Director

	 	 	 
	 	
By: 

	
/s/ Matthew Ross

	 	 	
Name:  Matthew Ross

	 	 	
Title:    Managing Director

 

	 	
ONEX PARTNERS III GP LP

	 	 	 
	 	
By:

	
/s/ Joshua Hausman

	 	 	
Name:  Joshua Hausman

	 	 	
Title:    Vice President

	 	 	 
	 	
By:

	
/s/ Matthew Ross

	 	 	
Name:  Matthew Ross

	 	 	
Title:    Vice President

 

	 	
ONEX US PRINCIPALS LP

	 	
By:

	Onex American Holdings GP LLC, its General Partner
	 	 	 
	 	
By:

	
/s/ Matthew Ross

	 	 	
Name:  Matthew Ross

	 	 	
Title:    Vice President

 

	 	
ONEX PARTNERS III PV LP

	 	
By:

	Onex Partners III GP LP, its General Partner
	 	
By:

	Onex Partners Manager LP, its Agent
	 	
By:

	Onex Partners Manager GP ULC, its General Partner
	 	 	 
	 	
By:

	
/s/ Joshua Hausman

	 	 	
Name:  Joshua Hausman

	 	 	
Title:    Managing Director

	 	 	
	 	
By:

	
/s/ Matthew Ross

	 	 	
Name:  Matthew Ross

	 	 	
Title:    Managing Director

	 	
ONEX PARTNERS III SELECT LP

	 	
By:

	Onex Partners III GP LP, its General Partner
	 	
By:

	Onex Partners Manager LP, its Agent
	 	
By:

	Onex Partners Manager GP ULC, its General Partner
	 		
	 	
By:

	
/s/ Joshua Hausman

	 	 	
Name:  Joshua Hausman

	 	 	
Title:    Managing Director

	 	 	
	 	
By:

	
/s/ Matthew Ross

	 	 	
Name:  Matthew Ross

	 	 	
Title:    Managing Director

 

	 	
MERIDIAN AVIATION PARTNERS LIMITED

	 	 	
	 	
By:

	
/s/ Jonathan Mueller

	 	 	
Name: Jonathan Mueller

	 	 	
Title:   Director

	 	
NEW PCO II INVESTMENTS LTD.

	 		
	 	
By:

	
/s/ Lori Shapiro

	 	 	
Name: Lori Shapiro

	 	 	
Title:   Vice President

	 	 	
	 	
By:

	
/s/ Michelle Iskander

	 	 	
Name: Michelle Iskander

	 	 	
Title:   SecretaryExhibit 4.4

Execution Version

 

FLY LEASING LIMITED

SUBSCRIPTION AGREEMENT

 

July 18, 2018

 

TABLE OF CONTENTS

 

	 	 	 	
Page

	 	 	 	
	
1.

	
Purchase and Sale of Shares

	
1

	 	
1.1

	
Issuance of Shares

	
2

	 	
1.2

	
FLY Share Closings

	2
	 	 	 	 
	
2.

	
Representations and Warranties of the Company

	
2

	 	
2.1

	
Organization, Good Standing and Qualification

	
2

	 	
2.2

	
Power and Authority

	
3

	 	
2.3

	
Authorization; Enforceable Agreement

	
3

	 	
2.4

	
Valid Issuance of Shares

	
3

	 	
2.5

	
Capitalization

	
3

	 	
2.6

	
Investment Company Act

	
4

	 	
2.7

	
No Default or Violation

	
4

	 	
2.8

	
Financial Statements

	
4

	 	
2.9

	
No Material Adverse Effect

	
5

	 	
2.10

	
Brokers

	
5

	 	
2.11

	
Reports

	
5

	 	
2.12

	
Listing of Shares

	
5

	 	 	 	 
	
3.

	
Representations and Warranties of the Investor and the Guarantor

	
5

	 	
3.1

	
Private Placement

	
5

	 	
3.2

	
Organization

	
7

	 	
3.3

	
Power and Authority

	
7

	 	
3.4

	
Authorization; Enforceability

	
7

	 	
3.5

	
No Default or Violation

	
7

	 	
3.6

	
Ownership of Common Shares

	
7

	 	
3.7

	
Brokers

	
8

	 	 	 	 
	
4.

	
Covenants

	
8

	 	
4.1

	
PFIC and Other Tax Information

	
8

	 	
4.2

	
Transfer Restrictions

	
8

	 	
4.3

	
Standstill

	
9

	 	
4.4

	
Voting Agreement

	
9

	 	
4.5

	
Non-Disparagement

	
10

	 	
4.6

	
Non-Compete

	
10

	 	
4.7

	
Guarantee

	
11

	 	
4.8

	
Communication with the Company

	
11

	 	
4.9

	
Listing

	
11

 

- i -

TABLE OF CONTENTS

(continued)

 

	 	 	
Page

	 	 	 
	
5.

	Miscellaneous	11
	 	
5.1

	
Governing Law; Jury Trial

	11
	 	
5.2

	
Enforcement of Agreement

	11
	 	
5.3

	
Assignment

	
12

	 	
5.4

	
Entire Agreement

	
12

	 	
5.5

	
Notices, Etc

	
12

	 	
5.6

	
Expenses

	
13

	 	
5.7

	
Variation

	
13

	 	
5.8

	
Waiver

	
14

	 	
5.9

	
Indulgence

	
14

	 	
5.10

	
Counterparts

	
14

	 	
5.11

	
Severability

	
14

	 	
5.12

	
Titles and Subtitles

	
14

 

- ii -

EXHIBITS

 

	Exhibit A	
Definitions

 

- iii -

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Agreement”) is made as of the 18th day of July 2018, by and among Fly Leasing Limited, a Bermuda exempted company (the “Company”), AirAsia Group Berhad, a company incorporated and existing under the laws of Malaysia (the “Investor”) and AirAsia Berhad, a company incorporated and existing under the laws of Malaysia (the “Guarantor,” and together with the Investor, collectively, the “Investor Parties” and each an “Investor Party”).  Certain capitalized terms used but not otherwise defined in this Agreement have the respective meanings set forth in Exhibit A hereto.

W I T N E S S E T H:

WHEREAS, the Investor, the Guarantor, the Company and Fly Aladdin Holdings Limited have entered into a Sale and Purchase Agreement (the “SPA”), dated as of February 28, 2018, pursuant to which the Investor has agreed to sell 100% of the share capital of Red Aircraft Holdings 3 Co., Ltd. and Red Aircraft Holdings 4 Co., Ltd. to the Company and certain of its affiliates;

WHEREAS, the Company has agreed to issue to the Investor up to 3,333,333 American Depositary Shares (each, an “ADS” and collectively, “ADSs”) representing the Company’s common shares, par value $0.001 per share (“Common Shares”) in connection with the transactions contemplated by the SPA, on the terms and subject to the conditions contained herein;

WHEREAS, in connection with such issuance, the Company is willing to make certain representations and warranties and to agree to observe certain covenants set forth herein for the benefit of the Investor, and the Investor will rely on such representations, warranties and covenants;

WHEREAS, in connection with such issuance, each Investor Party is willing to make certain representations and warranties set forth herein for the benefit of the Company, and the Company will rely on such representations and warranties;

WHEREAS, in connection with such issuance, the Company and the Investor Parties desire to enter into this Agreement to set forth certain rights and obligations of the Company and the Investor Parties with respect to the Shares and certain governance matters; and

WHEREAS, in connection with such issuance, the Company and the Investor Parties are entering into a registration rights agreement with respect to the Shares on even date herewith (the “Registration Rights Agreement”).

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.            Purchase and Sale of Shares.

 

1.1          Issuance of Shares. Subject to the terms of this Agreement and the Transaction Documents, and following and subject to (i) the occurrence of the Initial Transfer Date and (ii) the delivery of an aggregate total of Three Hundred Fifty Million Dollars (US$350,000,000) of Adjusted Initial Transfer Amount and Adjusted Deferred Transfer Amount has been finally paid in cash by the Purchaser to or at the direction of the Vendor or (in the case of Adjusted Deferred Transfer Amount) released from escrow to the Vendor, the Company shall issue and sell, and the Investor shall purchase, 3,333,333 ADSs, at a purchase price of $15.00 per ADS; provided, however, that the payment required to be made by the Investor under this Section 1.1 in consideration for the ADSs shall be made on a net basis and offset against the payments required to be made by the Purchaser under the SPA of an equivalent amount of cash in consideration for the relevant Assets on such Transfer Date(s), with no net cash payment being required by either party hereunder or thereunder in satisfaction of their respective obligations.  The ADSs will be issued pursuant to and in accordance with that certain Amended and Restated Deposit Agreement dated as of October 2, 2007 (as so amended and supplemented, the “Deposit Agreement”) by and among the Company, the Depositary and all holders and beneficial owners of ADSs issued thereunder.  The ADSs to be issued by the Company to the Investor pursuant to this Agreement are collectively referred to herein as the “Shares”.

1.2          FLY Share Closing  The issuance of the Shares and other transactions contemplated hereby (the “FLY Share Closing”) shall take place at the offices of Milbank, Tweed, Hadley & McCloy LLP on the date of issuance under Section 1.1, or at such other place as the Company and the Investor may mutually agree.  At the FLY Share Closing, the Company shall (i) transfer and deliver the Shares to the Investor, free and clear of all Encumbrances (other than as set forth in Sections 4.2 and 4.4), (ii) take all such actions reasonably necessary under the Deposit Agreement to cause the issuance of the Shares, (iii) deliver to the Investor a certificate or certificates representing the Shares being issued to the Investor at the FLY Share Closing and (iv) cause its counsel to furnish to the Investor a written private placement opinion, subject to reasonable or customary assumptions, qualifications and conditions as may be reasonably acceptable to Investor and such counsel.

2.            Representations and Warranties of the Company  The Company hereby represents and warrants to the Investor that, except as disclosed or incorporated by reference in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2016 or its other reports and forms filed with or furnished to the Securities and Exchange Commission (the “Commission”) under the Securities Act or the Securities Exchange Act of 1934 (the “Exchange Act”) after December 31, 2016 and before the date of this Agreement (all such reports collectively, the “SEC Reports”):

2.1          Organization, Good Standing and Qualification  Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all corporate or other organizational power and authority to own its properties and conduct its business as presently conducted. Each of the Company and its Subsidiaries is duly qualified to do business and in good standing in each and every jurisdiction where its business requires such qualification, except where failure to qualify would not have, and would not reasonably be expected to have, a Material Adverse Effect.  True, complete and accurate copies of the Company’s Certificate of Incorporation, Memorandum of Association and Amended and Restated Bye-Laws, each as amended and in effect as of the date hereof, have been made available to the Investor (collectively, the “Organizational Documents”).

 

- 2 -

2.2          Power and Authority  The Company has full right, power, authority and capacity to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby and has taken all necessary action to authorize the execution, delivery and performance hereof.

2.3          Authorization; Enforceable Agreement

(a)          All organizational action on the part of the Company, its officers, directors, and shareholders necessary for the authorization, execution, and delivery of this Agreement and the Registration Rights Agreement, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance and delivery of the Shares being issued hereunder has been taken, and this Agreement and the Registration Rights Agreement, when executed and delivered, assuming due authorization, execution and delivery by the Investor, constitute a valid and legally binding obligation of the Company, enforceable in accordance with its terms, subject to: (i) laws limiting the availability of specific performance, injunctive relief, and other equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting creditors’ rights generally (the “Enforceability Exceptions”).  The issuance of the Shares is not subject to any preemptive rights, rights of first offer or similar rights.

 

(b)          No provision of the Organizational Documents would, directly or indirectly, restrict or impair the ability of the Investor to vote, or otherwise to exercise the rights of a shareholder with respect to, the Shares or any other shares of the Company that may be acquired or controlled by the Investor.

2.4          Valid Issuance of Shares  The Shares, when issued and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly authorized and issued, will be fully paid and nonassessable, will not be issued in violation of any preemptive or similar rights, and will be free and clear of all Encumbrances (including any restrictions on transfer), other than restrictions under applicable state and federal securities laws and this Agreement.

2.5          Capitalization  The authorized share capital of the Company consists of 499,999,900 Common Shares and 100 manager shares, par value of $0.001 per share (the “Manager Shares”), of which 27,983,352 Common Shares and 100 Manager Shares were issued and outstanding as of December 31, 2017.  All issued and outstanding Common Shares have been duly authorized and validly issued and are fully paid and nonassessable.  Other than as provided in this Agreement and the Company’s 2010 Omnibus Incentive Plan, there are no outstanding rights, options, warrants, preemptive rights, rights of first offer, or similar rights for the purchase or acquisition from the Company or any Subsidiary thereof of any securities of the Company or any Subsidiary thereof, nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights or rights of first offer.  There are no outstanding rights or obligations of the Company or any Subsidiary thereof to repurchase or redeem any of its securities.  The rights, preferences, privileges, and restrictions of the Common Shares are as stated in the Organizational Documents.  All outstanding securities of the Company and its Subsidiaries have been issued in compliance with state and federal securities laws.

 

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2.6          Investment Company Act  Neither the Company nor any of its Subsidiaries is an investment company within the meaning of the Investment Company Act of 1940, as amended, or, directly or indirectly, controlled by or acting on behalf of any Person which is an investment company, within the meaning of said Act.

2.7          No Default or Violation  The Company is not in breach, violation or default of any provision of the Organizational Documents, each as amended and in effect as of the FLY Share Closing.  The execution, delivery, and performance of and compliance with this Agreement and the issuance and delivery of the Shares will not (x) result in any default or violation of the Organizational Documents, (y) result in any default, breach or violation of any agreement relating to any material Indebtedness of the Company or any of its Subsidiaries or under any material mortgage, deed of trust, security agreement or lease to which any of them is a party, or in any default or violation of any judgment, order or decree of any Governmental Authority applicable to the Company or any of its Subsidiaries or the assets or properties of any of them, or (z) result in (1) a violation or breach of, or a conflict with, termination of, contravention with or default under (or give rise to any right of termination, cancellation, payment or acceleration under) any of the terms, conditions or provisions of, any material contract, agreement or arrangement to which any of the Company or its Subsidiaries is a party, or by which any of their respective properties or assets are or may be bound, or (2) the creation of any Encumbrance (other than Permitted Encumbrances) upon the properties or assets of the Company or any of its Subsidiaries, except in the case of clauses (y) and (z), as would not have, and would not reasonably be expected to have, a Material Adverse Effect.

2.8          Financial Statements

(a)          The financial statements of the Company and its Subsidiaries on a consolidated basis for each of the periods included or incorporated by reference in the SEC Reports fairly present in all material respects, in accordance with Generally Accepted Accounting Principles, the financial condition, results of operations, cash flows and shareholders’ equity of the Company and its Subsidiaries on a consolidated basis as of the dates and for the periods indicated (subject, in the case of unaudited quarterly statements, to normal year-end adjustments).

(b)          The Company and its Subsidiaries do not have any liabilities or obligations (whether known or unknown, absolute or contingent, accrued or unaccrued, due or to become due, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of the Company and its Subsidiaries, on a consolidated basis, or any of them), other than liabilities or obligations reflected on, reserved against, or disclosed in the notes to, the Company’s consolidated balance sheet included in the Company’s interim report for the fiscal quarter ended September 30, 2017 and included in the Company’s Report on Form 6-K filed on November 9, 2017 (the “Latest Interim Report”), except such liabilities or obligations that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect.

 

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2.9          No Material Adverse Effect  Since September 30, 2017, no event or circumstance has occurred that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

2.10        Brokers  No agent, broker, Person, financial advisor or other intermediary that has been retained by or is authorized to act on behalf of the Company or any Subsidiary thereof is, or will be, entitled to any broker’s commission, finder’s fees or similar payment from any of them in connection with the transactions contemplated by this Agreement.

2.11        Reports

 

(a)          Since December 31, 2016, the Company has timely filed all documents required to be filed by it with the Commission pursuant to the Securities Act or the Exchange Act.

(b)          The SEC Reports, when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, in each case as in effect at such time, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make such statements, in the light of the circumstances in which they were made, not misleading.

(c)          The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the individuals responsible for the preparation of the Company’s filings with the Commission and other public disclosure documents, and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company’s board of directors (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date hereof, to the Knowledge of the Company, there is no reason that its outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.

2.12        Listing of Shares  The Shares have been approved for listing on the NYSE, subject to official notice of issuance.

3.            Representations and Warranties of the Investor and the Guarantor. Each of the Investor Parties hereby represents and warrants as follows:

3.1          Private Placement

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(a)          The Investor is (i) an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act; (ii) aware that the issuance of Shares to it is being made in reliance on a private placement exemption from registration under the Securities Act and that the Company is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and covenants of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Shares; and (iii) acquiring Shares for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in a manner that would violate the Securities Act.

(b)          The Investor understands and agrees that the Shares are being issued in a transaction not involving any public offering within the meaning of the Securities Act, that such Shares have not been registered under the Securities Act and that the Shares may be offered, resold, pledged or otherwise transferred only (i) in a transaction not involving a public offering, (ii) pursuant to an exemption from registration under the Securities Act, (iii) pursuant to an effective registration statement under the Securities Act, or (iv) to the Company or one of its Subsidiaries, in each of cases (i) through (iv) in accordance with any applicable securities laws of any State of the United States.

(c)          The Investor (i) has such sufficient knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the Shares, and (ii) has the ability to bear the economic risks of its prospective investment.

(d)          The Investor acknowledges that (i) it has conducted its own investigation of the Company and the terms of the Shares, (ii) it has had access to the Company’s public filings with the Commission and to such financial and other information as it deems necessary to make its decision to invest in the Shares, and (iii) has been offered the opportunity to conduct such review and analysis of the business, assets, condition, operations and prospects of the Company and its Subsidiaries and to ask questions of the Company and receive answers thereto, each as it deemed necessary in connection with the decision to invest in the Shares. The Investor further acknowledges that it has had such opportunity to consult with its own counsel, financial and tax advisors and other professional advisers as it believes is sufficient for purposes of the investment in the Shares. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon, or any of the other express terms and conditions of this Agreement.

(e)          Except for the representations and warranties contained in Section 2 of this Agreement, the Investor acknowledges that neither the Company nor any Person on behalf of the Company makes, and the Investor has not relied upon, any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or with respect to any other information provided to the Investor in connection with the transactions contemplated by this Agreement.

(f)           The Investor understands that upon the original issuance of the Shares, and until such time as the same is no longer required under applicable requirements of the Securities Act or applicable state securities laws, any certificates or other instruments representing the Shares, and all certificates or other instruments issued in exchange therefor or in substitution thereof, shall bear customary legends referencing such restrictions on transferability, and that the Company will make a notation on its records and give instructions to any registrar or transfer agent of the Shares in order to implement the restrictions on transfer set forth and described herein.

 

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(g)          The Investor understands that no U.S. or foreign government or regulatory authority or agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the issuance of the Shares.

3.2          Organization  Each of the Investor Parties has been duly organized and is validly existing as a corporation, partnership or other entity under the laws of its jurisdiction of organization.

3.3          Power and Authority  Each of the Investor Parties has full right, power, authority and capacity to enter into this Agreement and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby and has taken all necessary action to authorize the execution, delivery and performance hereof.

3.4          Authorization; Enforceability  The execution, delivery and performance of this Agreement and the Registration Rights Agreement has been duly authorized by all necessary action on the part of each Investor Party, and this Agreement and the Registration Rights Agreement have been duly executed and delivered by each Investor Party and, assuming due authorization, execution and delivery of this Agreement and the Registration Rights Agreement by the Company, this Agreement and the Registration Rights Agreement constitute a valid and binding obligation of each Investor Party, enforceable against it in accordance with its terms, except to the extent that the enforcement thereof may be limited by the Enforceability Exceptions.

3.5          No Default or Violation  The execution, delivery, and performance of and compliance with this Agreement, the Registration Rights Agreement and the issuance of the Shares will not (x) result in any default or violation of the organizational documents of any Investor Party, (y) result in any default or violation of any agreement relating to its material Indebtedness or under any material mortgage, deed of trust, security agreement or lease to which it is a party or in any default or violation of any judgment, order or decree of any Governmental Authority applicable to it or its assets or properties, or (z) result in (1) a violation or breach of, or a conflict with, termination of, contravention of or default under (or give rise to any right of termination, cancellation, payment or acceleration under) any of the terms, conditions or provisions of, any material contract, agreement or arrangement to which it is a party, or by which any of its properties or assets may be bound, or (2) the creation of any lien or other encumbrance upon the its properties or assets, except in the case of clauses (y) and (z), as would not have, and would not reasonably be expected to have, a material adverse effect on its ability to consummate the transactions contemplated hereby.

3.6          Ownership of Common Shares  As of the date hereof, neither the Investor Parties nor any of their respective Affiliates Beneficially Owns any Common Shares.  Neither the Investor Parties nor any of their respective Affiliates holds any rights to acquire or vote any Common Shares, except pursuant to this Agreement.

 

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3.7          Brokers  Except for BNP Paribas, Credit Suisse Group and RHB Bank Berhad, no agent, broker, Person, financial advisor or other intermediary that has been retained by or is authorized to act on behalf of the Investor Parties is, or will be, entitled to any broker’s commission, finder’s fees or similar payment from the Investor Parties in connection with the transactions contemplated by this Agreement.

4.            Covenants  The parties hereby covenant and agree, for the benefit of the other parties hereto and their respective assigns, as follows:

4.1          PFIC and Other Tax Information  For as long as any Shares remain outstanding, the Company shall provide the Investor with such Information as the Investor may require or reasonably request to make and maintain an election to treat the Company as a “qualified electing fund” within the meaning of Section 1295 of the Code.  In addition, the Company shall provide to the Investor such other information as the Investor may reasonably request to comply with its U.S. federal, state, local, and/or non-U.S. tax filing obligations with respect to its investment in the Company.

4.2          Transfer Restrictions

(a)          During the Lock-Up Period, the Investor shall not, and shall cause its Affiliates not to, directly or indirectly, Transfer any Company Securities to any other Person without the prior written consent of the Board. Notwithstanding the foregoing, during the Lock-Up Period, the Investor and its Affiliates may Transfer such Company Securities: (i) to any Affiliate that is controlled by (x) an Investor Party or (y) any transferee following any transfer permitted by clause (iii), provided that such Affiliate agrees in writing to be bound by the terms and conditions of this Agreement and such Affiliate shall not be a Competitor or an Affiliate of any such Competitor; (ii) pursuant to a bona fide third party tender offer, merger, consolidation or other similar transaction made to all holders of Company Securities, involving a Change of Control of the Company or other similar transaction, provided that the Investor or any such Affiliate shall not Transfer its securities in any such transaction that is not approved by the Board unless and until more than fifty percent (50%) of the outstanding Common Shares (including in the form of ADSs) of the Company, other than the Shares, have been tendered or (iii) in connection with any internal recapitalization, reorganization or reclassification of the Investor or any such Affiliate, provided that the transferee in any such transaction agrees in writing to be bound by the terms and conditions of this Agreement.

(b)          Any Transfer by an Investor Party or its Affiliates following the expiration of the Lock-Up Period shall be made (1) in accordance with Rule 144 under the Securities Act or otherwise in compliance with the Securities Act; provided that such Transfer shall not be to a (x) Competitor or an Affiliate of any such Competitor or (y) Person who, to the knowledge of the Investor Parties, is acquiring such Company Securities with the purpose or effect of changing or influencing the control of the Company; (2) to underwriters in connection with an underwritten public offering of Shares registered under the Securities Act pursuant to which the sale of such Shares will be sold in a manner to effect a Broad Distribution; (3) to the Company or any of its Subsidiaries pursuant to a written agreement with the Company; (4) to any Affiliate, provided that such Affiliate agrees in writing to be bound by the terms and conditions of this Agreement and such Affiliate shall not be a Competitor or an Affiliate of any such Competitor; (5) pursuant to a bona fide third party tender offer, merger, consolidation or other similar transaction made to all holders of Company Securities, involving a Change of Control or other similar transaction, provided that the Investor or any such Affiliate shall not Transfer its securities in any such transaction that is not approved by the Board unless and until more than fifty percent (50%) of the outstanding Common Shares (including in the form of ADSs) of the Company have been tendered; or (6) in connection with any internal recapitalization, reorganization or reclassification of the Investor or any such Affiliate, provided that the transferee in any such transaction agrees in writing to be bound by the terms and conditions of this Agreement.

 

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4.3          Standstill. During the Voting Period, except as specifically approved by the Board (so long as such approval was not obtained by the Investor in violation of this Agreement) and except as otherwise provided in this Section 4.3, neither the Investor Parties nor any of their respective Affiliates shall, directly or indirectly, (i) by purchase or otherwise, Beneficially Own, acquire, agree to acquire or offer to acquire any Company Securities or direct or indirect rights or options to acquire Company Securities (including any voting trust certificates representing such securities) (or any hedging or derivative transactions that may have a similar effect to the foregoing) other than the Shares acquired pursuant to this Agreement, (ii) except as permitted in Section 4.2, enter, or propose to enter into, solicit or support any merger, amalgamation or business combination or similar transaction involving the Company or any of its Subsidiaries, or purchase, acquire, propose to purchase or acquire or solicit or support the purchase or acquisition of any portion of the business or assets of the Company or any of its Subsidiaries, (iii) initiate any shareholder proposal without the approval of the Board or make, or in any way participate in, any “solicitation” of proxies” (as such terms are used in the proxy rules promulgated by the Commission under the Exchange Act) to vote, or seek to advise or influence any Person with respect to the voting of, any Company Securities or request or take any action to obtain any list of shareholders of the Company for such purposes with respect to any matter (or, as to such matters, solicit any Person in a manner that would require the filing of a proxy statement under Regulation 14A of the Exchange Act), (iv) form, join or in any way participate in a Group (other than a Group consisting solely of the Investor Parties) formed for the purpose of acquiring, holding, voting or disposing of or taking any other action with respect to Company Securities that would be required under Section 13(d) of the Exchange Act to file a Statement on Schedule 13D with respect to such Company Securities, (v) deposit any Company Securities in a voting trust or enter into any voting agreement or arrangement with respect thereto (other than this Agreement), (vi) seek representation on the Board, the removal of any directors from the Board or a change in size or composition of the Board, (vii) make any request to amend or waive any provision of this Section 4.3, (viii) disclose any intent, purpose, plan, arrangement or proposal inconsistent with the foregoing (including any such intent, purpose, plan, arrangement or proposal that is conditioned on or would require the waiver, amendment, nullification or invalidation of any of the foregoing) or take any action that would require public disclosure of any such intent, purpose, plan, arrangement or proposal, (ix) take any action challenging the validity or enforceability of this Section 4.3 or (x) except as permitted in Section 4.2, assist, advise, encourage or negotiate with any Person with respect to, or seek to do, any of the foregoing.

4.4          Voting Agreement

 

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(a)          During the Voting Period, the Investor shall cause all of the Company Securities then Beneficially Owned by it and its Affiliates to be voted (i) in favor of any action, proposal or matter to be voted on by the shareholders of the Company (including through action by written consent), including any the election of those persons nominated and recommended to serve as directors of the Board or any applicable committee thereof, that is recommended by the Board, and (ii) against any action, proposal or matter to be voted on by the shareholders of the Company (including through action by written consent), including any Third Party Offer, that is not recommended by the Board.

 

(b)          During the Voting Period, with respect to any matter that the Investor and/or its Affiliates are required to vote on in accordance with Section 4.4(a), the Investor shall cause all of the Company Securities then Beneficially Owned by it and its Affiliates to be voted by completing the proxy forms distributed by the Company and not by any other means.  The Investor shall deliver the completed proxy form to the Company no later than five (5) Business Days prior to the date of such general meeting of the Company’s shareholders.  With respect to the matters specified in Section 4.4(a), the Investor hereby appoints the Company and any designees of the Company, and each of them individually, as its proxies and attorneys-in-fact, with full power of substitution and resubstitution, to vote such Company Securities (or act by written consent) in accordance with Section 4.4(a) (the “Proxy”); provided, however, that the Proxy granted pursuant to this Section 4.4(b) may only be exercised if and when the Investor fails to comply with its covenants in this Section 4.4.  The Proxy is given by the Investor and its applicable Affiliates severally to secure the performance of the duties of the Investor under this Section 4.4.  The Investor shall take such further action or execute or cause to execute such other instruments as may be reasonably necessary to effectuate the intent of the Proxy.  The Proxy will be irrevocable during the term of this Section 4.4, will be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and revokes any and all prior proxies granted by the Investor.  The power of attorney granted by the Investor and included in the Proxy is a durable power of attorney and will survive the dissolution or bankruptcy of the Investor.

4.5          Non-Disparagement  The Investor Parties shall not, and shall instruct their Affiliates not to, take any action through any medium or in any forum, to directly or indirectly disparage the Company or any of its directors, officers or Affiliates. This provision includes, without limitation, email, any electronic media, and any postings to the Internet. Notwithstanding the foregoing, it shall not be a breach of this Section 4.5 for the Investor Parties and their Affiliates to comply with the lawful orders or processes of any court, including the obligation to testify truthfully in any legal proceeding.

4.6          Non-Compete  During the Lock-Up Period, each of the Investor Parties and its Affiliates shall not (i) engage in the business of the leasing of commercial aircraft or aircraft engines to third parties which are not Affiliate Airlines, but not including any leases entered into before the date of execution of the SPA, any wet leases or charters of aircraft, or any leasing which is for tax or other regulatory purposes (the “Business”), including, directly or indirectly, in its own capacity or through one or more Persons, whether as owner, consultant, equityholder, director, manager or officer, or (ii) make an investment that represents more than 5% of the outstanding shares of any class of a company (including owning more than 5% of the outstanding shares of any class of a company with shares that are listed on the NYSE, Nasdaq or other securities exchange) engaged in such Business.

 

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4.7          Guarantee  The Guarantor, solely in its capacity as a “Guarantor,” hereby absolutely, unconditionally and irrevocably guarantees, as principal obligor, and not merely as surety, to the Company and its successors and permitted assigns, the prompt performance by the Investor of its obligations under this Agreement (collectively, the “Obligations”).  The foregoing Obligations of the Guarantor constitute a continuing guaranty of performance and not of collection.  However, and notwithstanding anything herein to the contrary, the Obligations of the Guarantor are subject to any defenses, counterclaims, offsets, limitations and conditions that would otherwise be available to the Investor with respect to such Obligations.  The guarantee set forth in this Section 4.7 shall terminate automatically upon the expiration of the Voting Period.

4.8          Communication with the Company  The parties agree that, without the prior written consent of the Company, all communications from the Investor Parties regarding matters relating to the Company or this Agreement, including  , requests for information, requests for access to personnel or discussions or questions regarding this Agreement, the Company or its operations, shall be submitted only to the Company pursuant to Section 5.5.

4.9          Listing.    The Company will use its best efforts to effect and maintain the listing of its ADSs (including the Shares) on the NYSE.

5.            Miscellaneous

5.1          Governing Law; Jury Trial  This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without regard to choice of laws or conflict of laws provisions thereof that would require the application of the laws of any other jurisdiction. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

5.2          Enforcement of Agreement.    The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached.  It is accordingly agreed that each party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in accordance with Section 5.1.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies (whether provided by Law or otherwise). Additionally, each party hereto irrevocably waives (a) any defenses based on adequacy of any other remedy, whether at Law or in equity, that might be asserted as a bar to the remedy of specific performance of any of the terms or provisions hereof or injunctive relief in any action brought therefor and (b) any requirement under Law to post a bond, undertaking or other security as a prerequisite to obtaining equitable relief.

 

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5.3          Assignment.  Unless the parties specifically agree in writing, no party nor its Affiliates shall assign, transfer, charge or otherwise deal with all or any of its rights under this Agreement nor grant, declare, create or dispose of any right or interest in it.  Any purported assignment in contravention of this Section 5.3 shall be void.

5.4          Entire Agreement  This Agreement, the Registration Rights Agreement and the other Transaction Documents, contain the whole agreement and legal relationship between the parties relating to their respective subject matter at the date hereof to the exclusion of any terms implied by Law which may be excluded by contract and supersede any previous written or oral agreement between the parties in relation to the matters dealt with in the Transaction Documents, and set out the complete legal relationship of the parties in relation to matters dealt with in this Agreement (except for the Confidentiality Undertaking, which remains in full force and effect).

5.5          Notices, Etc

 

(a)          Any notice or other communication in connection with this Agreement shall be in writing in English (a “Notice”) and shall be sufficiently given or served if delivered or sent:

In case of the Company to:

Fly Leasing Limited

West Pier Business Campus

Dun Laoghaire

County Dublin, A96 N6T7, Ireland

Facsimile: +353 1 231 1901

Attention: Chief Executive Officer

 

with a copy to:

 

Jones Day

250 Vesey Street

New York, New York 10281

Facsimile: +1 (212) 755-7306

Attention: Boris Dolgonos, Esq.

 

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In the case of the Investor and Guarantor to:

 

AirAsia Berhad

RedQ

Jalan Pekeliling 5

Kuala Lumpur International Airport (KLIA2)

64000 KLIA

Selangor Darul Ehsan

Malaysia

Facsimile: + 60 3 8775 1689 /+ 60 3 8775 1799

Attention: Regional Head, Finance and Regional Head, Corporate Finance and Treasury

 

with a copy to:

 

Milbank Tweed Hadley & McCloy LLP

12 Marina Boulevard

Marina Bay Financial Centre #36-03 Tower 3

Singapore, SG 018982

Facsimile: +65 6428.2500

Attn: Paul Ng, Esq.

 

Milbank Tweed Hadley & McCloy LLP

28 Liberty Street

New York, NY  10005

Facsimile: (212) 822-5629

Attn: Dean Sattler, Esq.

 

or (in either case) to such other address or fax number as the relevant party may have notified to the others in accordance with this Section 5.5.

 

(b)          Any Notice may be delivered by hand or, sent by fax or prepaid registered post or registered airmail in the case of international service.  Without prejudice to the foregoing, any Notice shall conclusively be deemed to have been received: (i) on the next Business Day in the place to which it is sent, if sent by fax; (ii) five Business Days from the time of posting, if sent by post (including the date of postage); (iii) five Business Days from the time of posting, if sent by airmail (including the date of postage); or (iv) at the time of delivery, if delivered by hand.

5.6          Expenses  Each party shall bear and pay the costs and expenses (including the fees and expenses of its own advisers) incurred by it in connection with the preparation, negotiation, entry into and performance of this Agreement and the Registration Rights Agreement.

5.7          Variation  Except as otherwise specified herein, no amendment or variation of this Agreement shall be effective unless in writing and signed by or on behalf of each of the parties hereto.

 

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5.8          Waiver  Waiver of any breach of this Agreement or of any right, power, authority, discretion or remedy arising upon a breach of or default under this Agreement, must be in writing and signed by the parties granting the waiver and shall not be considered as a waiver of any subsequent breach of the same or any other provision hereof.

5.9          Indulgence  No failure on the part of a party to exercise, and no delay on its part in exercising, any right or remedy under this Agreement, shall operate as a waiver thereof or of any other right, power or privilege, nor will any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.

5.10        Counterparts  This Agreement may be entered into in any number of counterparts, all of which taken together shall constitute one and the same instrument.  Any party may enter into this Agreement by executing any such counterpart.  Delivery of a counterpart of this Agreement by e-mail attachment or fax shall be an effective mode of delivery.

5.11        Severability  If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable under the laws of any jurisdiction, that shall not affect (a) the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or (b) the legality, validity or enforceability under the laws of any other jurisdiction of that or another provision of this Agreement.

5.12        Titles and Subtitles  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

[THIS SPACE LEFT BLANK INTENTIONALLY]

 

- 14 -

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	 	FLY LEASING LIMITED
	 	 	 
	 	
By:

	
/s/ Colm Barrington

	 	 	
Name: Colm Barrington

	 	 	
Title:   Chief Executive Officer

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	 	AIRASIA GROUP BERHAD
	 	 	 
	 	
By:

	
/s/ Datuk Kamarudin Meranun

	 	 	
Name: Datuk Kamarudin Meranun

	 	 	
Title:   Director

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	 	AIRASIA BERHAD
	 	 	 
	 	
By:

	
/s/ Datuk Kamarudin Meranun

	 	 	
Name: Datuk Kamarudin Meranun

	 	 	
Title:   Director

 

EXHIBIT A

DEFINITIONS

Capitalized terms used but not defined herein shall have the meanings given to such terms in the SPA for all purposes of the Agreement.  The following terms shall have the respective meanings for all purposes of the Agreement:

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act; provided that (i) the Company shall not be deemed an Affiliate of the Investor and (ii) the Investor shall not be deemed an Affiliate of the Company.

A Person shall be deemed to “Beneficially Own” securities:

(i)            which such Person or any of such Person’s Affiliates, directly or indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of one or more conditions (whether or not within the control of such Person), compliance with regulatory requirements or otherwise) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise; or

 

(ii)           which such Person or any of such Person’s Affiliates, directly or indirectly, has the right to vote or dispose of or has “Beneficial Ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; or

 

(iii)          which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate thereof) with which such Person (or any of such Person’s Affiliates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting or disposing of any Company Securities.

“Affiliate Airline” shall mean any airline in respect of which the Guarantor (i) has direct or indirect ownership or control and “control” for this purpose means the power to direct the management and the policies of such airlines whether through the ownership of voting capital, by contract or otherwise; or (ii) owns directly more than thirty percent (30%) of the voting capital; or holds more than thirty percent (30%) of the directors' voting rights; or by contractual arrangement is entitled to exercise more than thirty percent (30%) of the voting capital or directors' voting rights; and such airline is engaged as its primary business as a scheduled airline primarily involved in the carriage of passengers.  Without prejudice to the requirement that clause (i) or (ii) above must be satisfied at the relevant time, as of the date of this Agreement it is acknowledged that the following entities satisfy the above requirements: AirAsia X Berhad, Thai AirAsia X Co., Ltd., Thai AirAsia Co., Ltd., PT. Indonesia AirAsia, PT Indonesia AirAsia Extra, AirAsia (India) Limited, AirAsia Japan Co., Ltd., Philippines AirAsia Inc. and AirAsia, Inc.

“Board” shall mean the board of directors of the Company.

“Broad Distribution” with respect to Company Securities, shall mean a distribution of Company Securities that will not result in the acquisition by any other Person of Beneficial Ownership of any such Company Securities to the extent that, after giving effect to such acquisition, such acquiring Person would Beneficially Own in excess of 10% of the Voting Power of the Company.

 

“Change of Control” shall mean a single transaction or a series of related transactions, whether by way of purchase, acquisition, tender, exchange or other similar offer or recapitalization, reclassification, consolidation, merger, amalgamation, share exchange or other business combination transaction, in which any Person or Group (other than the Company or its Affiliates) becomes the Beneficial Owner of more than 50.0% of the outstanding Voting Power of the Company.

“Code” shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and interpretations thereof or thereunder by the Internal Revenue Service.

“Company Securities” shall mean (i) any Common Shares and (ii) any other securities of the Company entitled to vote generally in the election of directors of the Company.

“Competitor” shall mean a Person who engages in the business of the leasing of commercial aircraft or aircraft engines to third parties.

“Depositary” shall mean Deutsche Bank Trust Company Americas.

“Encumbrance” means, whether arising under any contract or otherwise, any claims, security interests, liens, encumbrances, pledges, mortgages, hypothecations, rights of others, assessments, voting trust agreements, options, rights of first offer, proxies, title defects, factoring or conditional sale or other agreement on deferred terms or charges or other restrictions or limitations of any nature whatsoever.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Generally Accepted Accounting Principles” shall mean United States generally accepted accounting principles and practices as in effect from time to time and applied consistently throughout the periods involved.

“Governmental Authority” shall mean any foreign governmental authority, the United States of America, any state of the United States and any political subdivision of any of the foregoing, and any agency, instrumentality, department, commission, board, bureau, central bank, authority, court or other tribunal, in each case whether executive, legislative, judicial, regulatory or administrative, having jurisdiction over the Investor, the Company, any of the Company’s Subsidiaries or their respective property.

“Group” shall have the meaning set forth in Section 13(d) of the Exchange Act as in effect on the Completion Date.

 

“Indebtedness” means, with respect to a Person: (i) any indebtedness for borrowed money, whether or not having recourse to the borrower; (ii) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument; (iii) all obligations of such Person under any capital leases; (iv) any obligation under any factoring, securitization or other similar facility or arrangement; (v) any reimbursement obligation with respect to letters of credit (including standby letters of credit to the extent drawn upon), bankers’ acceptances or similar facilities; (vi) any obligation issued or assumed as the deferred purchase price of property or services, including any earnout arrangements; (vii) all obligations under any interest rate or currency protection agreement or swaps, forward contracts and similar agreements; and (viii) all guarantees issued in respect of the obligations described in clauses (i)-(vii) above of any other Person (contingent or otherwise), in each case including the aggregate principal amount of, and any accrued interest and applicable pre-payment charges, fees, penalties or premiums with respect to such obligations; provided that, Indebtedness shall not include, with respect to the Company or any of its Subsidiaries, inter-company indebtedness solely between the Company and a Subsidiary thereof, or between one Subsidiary of the Company and another.

“Knowledge” of the Company shall mean the knowledge of any of the Chief Executive Officer, Chief Financial Officer of the Company, assuming due and reasonable inquiry.

“Lock-Up Period” shall mean the period commencing on the date of the FLY Share Closing and ending on the date of the delivery of the final Portfolio C aircraft to the Company under the Portfolio C Agreements.

“Material Adverse Effect” means any change, effect, or occurrence that (a) has or results in a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) materially impairs or delays the ability of the Company to promptly perform its obligations hereunder; provided, however, that no changes, effects or occurrences resulting from, relating to, or arising out of the following shall be taken into account when determining whether a Material Adverse Effect has occurred or may, would or could occur: (i) the effect of any change in the U.S. or foreign economies to the extent that it does not materially and disproportionately affect the Company and its Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its Subsidiaries operate; (ii) the effect of any change that generally affects any industry or market in which the Company and its Subsidiaries operate to the extent that it does not materially and disproportionately affect the Company and its Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its Subsidiaries operate; (iii) the effect of any change arising in connection with any international or national calamity, commencement, continuation or escalation of a war, armed hostilities or act of terrorism to the extent that it does not materially and disproportionately affect the Company and its Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its Subsidiaries operate; and (iv) the effect of any changes in applicable Laws or Generally Accepted Accounting Principles (or the interpretation thereof) to the extent such effect does not materially and disproportionately affect the Company and its Subsidiaries, taken as a whole, relative to other participants in the industries in which the Company and its Subsidiaries operate.

“NYSE” shall mean the New York Stock Exchange.

 

“Permitted Encumbrances” means (i) Encumbrances for taxes not yet due and payable or that are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Generally Accepted Accounting Principles have been established in the Company’s consolidated balance sheet included in the Latest Interim Report; (ii) mechanics’, carriers’, workmen’s, repairmen’s, materialmen’s and other Encumbrances arising by operation of Law and incurred in the ordinary course of business; (iii) pledges or deposits to secure obligations under workers’ compensation Laws or similar Laws or to secure public or statutory obligations; (iv) pledges and deposits to secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds and other obligations of a similar nature, in each case in the ordinary course of business; (v) easements, encroachments, declarations, covenants, conditions, reservations, limitations and rights of way (unrecorded and of record) and other similar restrictions or encumbrances of record, and zoning, building and other similar ordinances, regulations, variances and restrictions, in each case that do not and would not reasonably be expected to materially adversely affect the subject property; and (vi) as to leased real property, all Encumbrances created or incurred by any owner, landlord, sublandlord or other Person in title, in each case that do not and would not reasonably be expected to materially adversely affect the subject property.

“Person” shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, Governmental Authority or any other form of legal entity.

“Portfolio C Agreements” shall mean (i) that certain Aircraft Sale and Purchase Agreement, dated as of February 28, 2018, between Asia Aviation Capital, Fly Aladdin Holdings Limited and AirAsia Berhad, and (ii) that certain Aircraft Sale and Purchase Agreement, dated as of February 28, 2018 between Asia Aviation Capital, Incline Aladdin Holdings Limited and AirAsia Berhad.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Subsidiary” of any Person shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than fifty percent (50%) of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Third Party Offer” shall mean a bona fide offer to enter into a transaction that results in a Change of Control by a Person, other than (x) the Investor or any of its Affiliates or (y) any other Person acting on behalf of or as part of a Group with the Investor.

 

“Transfer” shall mean, with respect to any Company Securities, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, charge, encumber, hypothecate or otherwise transfer such Company Securities or any participation or interest therein, whether directly or indirectly (including by means of any hedging or derivative transactions that may have a similar effect to the foregoing), or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, charge, encumbrance, hypothecation, or other transfer of such Company Securities or any participation or interest therein (or any hedging or derivative transactions that may have a similar effect to the foregoing) or any agreement or commitment to do any of the foregoing.

“Voting Period” shall mean the period commencing on the Completion Date and ending on the later of (i) the date on which the Investor ceases to Beneficially Own Company Securities representing at least 10% of the Voting Power of the Company and (ii) the expiration of the Lock-Up Period.

“Voting Power of the Company” shall mean the total number of votes that may be cast in the election of directors of the Company if all Company Securities were present and voted at a general meeting held for such purpose.

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