Document:

Exhibit 10.3

 

Execution Version

 

 

Dated June 15, 2018

CO - BORROWER SECURITY AGREEMENT

between

FLY ALADDIN FUNDING LIMITED

as Borrower

FLY ALADDIN MALTACO LIMITED,

as Fly Malta

and

WILMINGTON TRUST (LONDON) LIMITED

as Security Trustee

 

TABLE OF CONTENTS

 

	 	 	
Page

	 	 	 
	
1.

	
DEFINITIONS AND INTERPRETATION

	
1

	 	 	 
	
2.

	
COVENANT TO PAY

	
3

	 	 	 
	
3.

	
ASSIGNMENT AND FIXED CHARGE

	
3

	 	 	 
	
4.

	
NOTICES OF ASSIGNMENT

	
4

	 	 	 
	
5.

	
CONTINUING SECURITY

	
4

	 	 	 
	
6.

	
GRANTORS’ CONTINUING OBLIGATIONS

	
5

	 	 	 
	
7.

	
ENFORCEABILITY OF SECURITY

	
6

	 	 	 
	
8.

	
FURTHER ASSURANCES

	
8

	 	 	 
	
9.

	
POWER OF ATTORNEY

	
9

	 	 	 
	
10.

	
POWERS OF RECEIVER

	
10

	 	 	 
	
11.

	
RESERVED

	
11

	 	 	 
	
12.

	
APPLICATION OF MONIES

	
11

	 	 	 
	
13.

	
CONDITIONAL DISCHARGE ONLY

	
11

	 	 	 
	
14.

	
WAIVER AND INVALIDITY

	
11

	 	 	 
	
15.

	
INDEPENDENT SECURITY

	
12

	 	 	 
	
16.

	
SUCCESSORS AND ASSIGNS

	
13

	 	 	 
	
17.

	
MISCELLANEOUS

	
13

	 	 	 
	
18.

	
LAW AND JURISDICTION

	
13

	
Schedule 1

	
Notice of Assignment and Charge to HoldCo Intercompany Loan Counterparty

	
Sch. 1-1

	 	 	 
	
Schedule 2

	
Acknowledgement of Assignment From HoldCo Intercompany Loan Counterparty

	
Sch. 2-1

	 	 	 
	
Schedule 3

	
Notice of Assignment and Charge to HoldCo Security Trustee

	
Sch. 3-1

	 	 	 
	
Schedule 4

	
Acknowledgement of Assignment From HoldCo Security Trustee

	
Sch. 4-1

	 	 	 
	
Schedule 5

	
Notice of Assignment and Charge to Derivatives Creditor

	
Sch. 5-1

	 	 	 
	
Schedule 6

	
Acknowledgement of Assignment From Derivatives Creditor

	
Sch. 6-1

	 	 	 
	
Schedule 7

	
Notice and Acknowledgement of Assignment to the Servicer

	
Sch. 7-1

 

- i -

THIS CO-BORROWER SECURITY AGREEMENT (this “Agreement”) is made by way of deed on June 15, 2018

BETWEEN:

	(1)	
FLY ALADDIN FUNDING LIMITED, a private company limited by shares incorporated under the laws of Ireland with registered number 621583 having its registered office at West Pier Business Campus, Dun Laoghaire, Co. Dublin, A96 N6T7, Ireland (the “Borrower”);

	(2)	
FLY ALADDIN MALTACO LIMITED, a company registered and incorporated under the laws of Malta with registered number C 86155 having its registered office at 188, 21st September Avenue, Naxxar NXR 1012, Malta (“Fly Malta” and, together with the Borrower, the “Grantors”);

	(3)	
WILMINGTON TRUST (LONDON) LIMITED, in its capacity as security trustee for the Secured Parties (the “Security Trustee” which includes any successor or co-trustee appointed pursuant to the Credit Agreement).

INTRODUCTION:

The Grantors have agreed to execute this Agreement as security for the Obligations.

THIS DEED WITNESSES as follows:

	1.	
DEFINITIONS AND INTERPRETATION

	1.1	
Incorporated Terms

Except where expressly defined in this Agreement, terms and expressions defined in Section 1.01 of the Credit Agreement shall have the same meanings when used herein and the rules of interpretation set out in Section 1.02 of the Credit Agreement shall apply to this Agreement.

	1.2	
Definitions

In this Agreement, including the Recitals hereto, the following words and expressions shall, except where the context otherwise requires, have the following respective meanings:

“Assigned Property” means all of each Grantor’s right, title and interest, present and future in and to any:

		(a)	
HoldCo Facility Property;

		(b)	
HoldCo Security Trust;

		(c)	
Servicing Agreement Property; and

		(d)	
Derivatives Agreement Property,

 

together with all other proceeds relating to or arising from any of the above and all cash and other property at any time and from time to time receivable or distributable in respect of or in exchange therefor.

“Credit Agreement” means that certain Senior Secured Credit Agreement, dated June 15, 2018 among the Borrower, Fly Malta, the Lenders party thereto, the Security Trustee and BNP Paribas, as the Administrative Agent.

“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Trustee.

“Derivatives Agreement Property” means all of the right, title and interest, present and future, of the Grantors in, to and under each Derivatives Agreement including, without limitation, the right to compel performance by the counterparty to any Derivatives Agreement and all claims for damages in respect of any breach by the counterparty of any Derivatives Agreement.

“HoldCo Facility Property” means all of the right, title and interest, present and future, of the Grantors in, to and under each Holdco Intercompany Loan Document including, without limitation, the right to compel performance by the counterparty to any Holdco Intercompany Loan Document and all claims for damages in respect of any breach by the counterparty of any Holdco Intercompany Loan Document.

“HoldCo Security Trust” means all of the right, title and interest, present and future, of the Grantors in, to and under the “Collateral” as such term is defined in the HoldCo Intercompany Credit Agreement and to the trust created in favor of the HoldCo Security Trustee pursuant to the HoldCo Intercompany Credit Agreement.

“Receiver” means a receiver, receiver and manager or, where permitted by law, an administrative receiver and that term will include any appointee made under a joint or several appointment.

“Security Period” means the period from the date hereof until such time as all Obligations have been unconditionally and irrevocably discharged in full.

“Servicing Agreement Property” means all of the right, title and interest, present and future, of the Grantors in, to and under the Servicing Agreement (and any replacement Servicing Agreement in accordance with the terms of the Credit Agreement), including, without limitation, the right to compel performance by the Servicer of its obligations under the Servicing Agreement and all claims for damages in respect of any breach by the Servicer of the Servicing Agreement.

	1.3	
Third party rights

		(a)	
Unless expressly provided to the contrary in any Loan Document, a person who is not a party hereto has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

 

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		(b)	
Notwithstanding any term of the Loan Documents, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

	1.4	
Role of the Security Trustee

In acting hereunder, the Security Trustee does so pursuant to its terms of appointment under the Credit Agreement and is entitled to the protections set out therein.

	2.	
COVENANT TO PAY

	2.1	
Obligations

The Grantors hereby acknowledge to the Security Trustee that the amount secured by this Agreement and in respect of which this Agreement and the security hereby created is enforceable is the full amount of the Obligations for the time being and from time to time and hereby covenants with the Security Trustee that the Assigned Property is so assigned and/or charged for the full payment, performance and discharge of the Obligations for the time being and from time to time. Each Grantor hereby acknowledges to the Security Trustee the liability of such Grantor in respect of the Obligations and covenants with the Security Trustee that it shall pay to the Security Trustee all monies constituting the Obligations.

	3.	
ASSIGNMENT AND FIXED CHARGE

	3.1	
Assignment

As a continuing security for the payment, performance and discharge of the Obligations, each Grantor hereby assigns and agrees to assign to the Security Trustee, on behalf of the Secured Parties, all of its right, title and interest, present and future, in the Assigned Property.

	3.2	
Fixed Charge

Notwithstanding and in addition to the assignment of the Assigned Property in accordance with Clause 3.1 (Assignment), as security for payment and discharge by the Grantors to the Secured Parties of the Obligations, the Grantors hereby charge the Assigned Property, with full title guarantee and by way of first fixed charge in favour of the Security Trustee.

	3.3	
Security Trustee assumes no obligations

The Security Trustee shall not become subject to any liability or obligation of either Grantor in relation to the Assigned Property by virtue of the assignments and charges contained in this Agreement and each Grantors shall at all times remain liable to perform all obligations expressed to be assumed by it in respect of the Assigned Property.

 

- 3 -

	4.	
NOTICES OF ASSIGNMENT

	4.1	
HoldCo Facility Property

Upon the Borrower entering into any HoldCo Intercompany Loan Document, the Borrower will execute and deliver to the relevant counterparty a notice of assignment and charge in respect of such HoldCo Intercompany Loan Document substantially in the form set out in Schedule 1 (Notice of Assignment and Charge to HoldCo Intercompany Loan Counterparty) and shall procure that such Person executes an acknowledgement substantially in the form set out in Schedule 2 (Acknowledgement of Assignment from HoldCo Intercompany Loan Counterparty).

	4.2	
HoldCo Security Trust

Upon the execution of this Agreement, the Borrower will execute and deliver to the HoldCo Security Trustee and any other relevant counterparty a notice of assignment and charge in respect of the HoldCo Security Trust substantially in the form set out in Schedule 3 (Notice of Assignment and Charge to HoldCo Security Trustee) and shall procure that such Person executes an acknowledgement substantially in the form set out in Schedule 4 (Acknowledgement of Assignment from HoldCo Security Trustee).

	4.3	
Servicing Agreement Property

Upon the execution of this Agreement and, if a new servicer is appointed to manage the Portfolio Aircraft, upon the appointment of any such replacement servicer, the applicable Grantors will execute and deliver to the Servicer (or, if applicable, any such replacement servicer) a notice of assignment and charge in respect of the Servicing Agreement and shall procure that the Servicer executes an acknowledgement thereto, in each case substantially in the form set out in Schedule 7 (Notice and Acknowledgement of Assignment to the Servicer).

	4.4	
Derivatives Agreement Property

Upon the execution of this Agreement and, upon either Grantor entering into any Hedging Agreement after the date hereof, such Grantor will execute and deliver to the relevant Derivatives Creditor a notice of assignment and charge in respect of the Derivatives Agreement substantially in the form set out in Schedule 5 (Notice of Assignment and Charge to Derivatives Creditor) and shall procure that such Hedging Counterparty executes an acknowledgement substantially in the form set out in Schedule 6 (Acknowledgement of Assignment from Derivatives Creditor).

	5.	
CONTINUING SECURITY

	5.1	
Security

Throughout the Security Period, the Lien constituted by this Agreement shall:

 

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		(a)	
be a continuing security for the payment, satisfaction and discharge in full of the Obligations;

		(b)	
not be considered as satisfied or discharged or prejudiced by any intermediate payment, satisfaction or settlement of the whole or any part of the Obligations or any other matter or thing whatsoever;

		(c)	
be in addition to and shall not operate so as in any way to prejudice or affect or be prejudiced or affected by any Lien, guarantee, indemnity or other right or remedy which the Security Trustee (or any person on its behalf) may now or at any time hereafter hold for or in respect of the Obligations or any part thereof; and

		(d)	
not be prejudiced by any time or indulgence granted to any person, or any abstention or delay by the Security Trustee in perfecting or enforcing any Lien, guarantees, rights or remedies that the Security Trustee may now or hereafter have from or against either Grantor or any other person, or any waiver, act, omission, unenforceability or invalidity of any such lien, security, guarantee, right or remedy.

	5.2	
Security Trustee’s Consent

The giving by the Security Trustee of any consent to any act which by the terms of this Agreement requires such consent shall not prejudice the right of the Security Trustee to withhold or give consent to the doing of any other similar act.

	5.3	
Scope of the Agreement

This Agreement and the Lien hereby constituted shall extend to and cover any sum, or sums of money or other obligations which shall from time to time constitute the balance of the Obligations.

	6.	
GRANTORS’ CONTINUING OBLIGATIONS

Notwithstanding anything herein contained:

		(a)	
each Grantor shall remain liable under the Loan Documents to which it is a party to perform all the obligations assumed by it thereunder;

		(b)	
the Security Trustee shall not be under any further obligation or liability under the Loan Documents to which either Grantor is a party by reason of this Agreement or anything arising out of, or in connection with, it; and

		(c)	
the Security Trustee shall not be under any obligation of any kind:

		(i)	
to assume or to perform or fulfil any obligation of either Grantor in, under or pursuant to the Loan Documents to which such Grantor is a party or be under any liability whatsoever as a result of any failure of such Grantor to perform any of its obligations in connection therewith;

 

- 5 -

		(ii)	
to enforce against any of the parties thereto any term or condition of the Loan Documents or to enforce any rights and benefits hereby assigned or to which the Security Trustee may at any time be entitled (except as otherwise provided in the Loan Documents); and/or

		(iii)	
to make any enquiries as to the nature or sufficiency of any payment received by the Security Trustee hereunder or to make any claim or to take any action to collect any monies hereby assigned.

	7.	
ENFORCEABILITY OF SECURITY

	7.1	
Enforcement

The Security Trustee may by written notice to Grantors at any time when an Event of Default has occurred and is continuing declare the security hereby created to be enforceable and such notice shall be conclusive for the purposes of this Agreement and thereafter the Security Trustee shall be entitled without further notice or demand to put into force and exercise all the powers and remedies possessed by it according to Applicable Law as Security Trustee of the Assigned Property and in particular (but without limitation):

		(a)	
to sell, call in, collect and convert into money the Assigned Property with all such powers in that respect as are conferred by Applicable Law and by way of extension thereof such sale, calling in, collection and conversion may be made for such consideration as the Security Trustee shall deem fit, whether the same shall consist of cash or shares or debentures in some other company or companies or other property of whatsoever nature or partly of one and partly of some other species of consideration and whether such consideration shall be presently payable or by instalments or at some future date and whether such deferred or future payments shall be secured or not and in all other respects and manner and for any other consideration as the Security Trustee shall think fit and without being liable to account for any loss of or deficiency in such consideration and so that Section 103 (Regulation of Exercise of Power of Sale) of the Law of Property Act 1925 shall not apply to this Agreement or to the power of sale, calling in, collection or conversion hereinbefore contained;

		(b)	
to settle, arrange, compromise or submit to arbitration any accounts, claims, questions or disputes whatsoever which may arise in connection with the Assigned Property or in any way relating to this security and execute releases or other discharges in relation thereto;

		(c)	
to bring, take, defend, compromise, submit to arbitration or discontinue any actions, suits or proceedings whatsoever, civil or criminal, in relation to the Assigned Property;

		(d)	
to exercise any and all rights of the Grantors under or in connection with the Assigned Property including any and all rights of the Grantors to demand or otherwise require payment of any amount under the Assigned Property;

 

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		(e)	
exercise any other remedy in respect of the Assigned Property set forth under and in accordance with the Loan Documents;

		(f)	
collect, receive or compromise and give a good discharge for all claims then outstanding or thereafter arising in respect of, or under, the Assigned Property and to take over or institute all such suits, legal actions or other proceedings in connection therewith as the Security Trustee may consider fit;

		(g)	
to execute and do all such acts, deeds and things as the Security Trustee may consider necessary or proper for or in relation to any of the purposes aforesaid;

		(h)	
otherwise to put into force and effect all rights, powers and remedies available to the Security Trustee, pursuant to Applicable Law or otherwise, as assignee of the Assigned Property (to the extent assigned hereunder) and the rights of the Grantors in relation to the Assigned Property; and/or

		(i)	
appoint any person or persons as agent or contractor as otherwise (on an exclusive or a non-exclusive basis) as the Security Trustee thinks fit and on such terms as the Security Trustee thinks fit for or in relation to any of the powers or purposes referred to in any of paragraphs (a) to (h) above;

		(j)	
to appoint a Receiver of all or any part of the Assigned Property upon such terms as to remuneration and otherwise as the Security Trustee shall deem fit and the Security Trustee may from time to time remove any receiver so appointed and appoint another in his stead and to fix (at or after the time of his appointment) the remuneration of any such Receiver. A Receiver so appointed shall be the agent of the Grantors and the Grantors shall be liable for such Receiver’s actions, remunerations and defaults to the exclusion of liability on the part of the Receiver or (as the case may be) the Security Trustee.

Nothing herein contained shall render the Security Trustee liable to any such Receiver for his remuneration, costs, charges or expenses or otherwise.

	7.2	
Law of Property Act 1925

Sections 109(6) and 109(8) of the Law of Property Act 1925 shall not apply in relation to any Receiver appointed under Clause 7.1 (Enforcement).

	7.3	
Grantors’ Covenant

If, upon receipt of the notice specified in Clause 7.1 (Enforcement) and before the Security Trustee exercises any of its rights in Clause 7.1 (Enforcement), either Grantor receives monies from any party in respect of the Assigned Property, such Grantor shall promptly pay to or to the order of the Security Trustee all such monies received in accordance with the provisions of this Agreement and the Credit Agreement. For the avoidance of doubt, each Grantor shall hold all such monies on trust for the Security Trustee (who shall receive such monies as it directs) until the payment of such monies is effected.

 

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	7.4	
Reserved

	7.5	
Scope of the Security Trustee’s Liability

The Security Trustee shall not be liable as assignee or chargee in respect of the Assigned Property to account or be liable for any loss upon the realisation thereof or for any neglect or default of any nature whatsoever in connection therewith for which any assignee or chargee may be liable as such except in the case of fraud, gross negligence or wilful misconduct upon its part.

	7.6	
Power of Sale

The Security Trustee may exercise its power of sale hereunder in such a way as it in its absolute discretion may determine and shall not in any circumstances be answerable for any loss occasioned by any such sale or resulting from any postponement thereof except in the case of fraud, gross negligence or wilful misconduct upon its part.

	7.7	
Sale of the Assigned Property

		(a)	
Upon any sale by the Security Trustee of the whole or any part of the Security Trustee’s right, title and interest in and to the Assigned Property, the purchaser shall not be bound to see or enquire whether the power of sale of the Security Trustee has arisen, the sale shall be deemed for all purposes hereof to be within the power of the Security Trustee and the receipt of the Security Trustee for the purchase money shall effectively discharge the purchaser who shall not be concerned with the manner of application of the proceeds of sale or be in any way answerable therefor.

		(b)	
The power of sale or other disposal in Clause 7.6 (Power of Sale) shall operate as a variation and extension of the statutory power of sale under Section 101 of the Law of Property Act 1925 and such power shall arise (and the Obligations shall be deemed due and payable for that purpose) on execution of this Agreement.  The restrictions contained in Sections 93 and 103 of Law of Property Act 1925 shall not apply to this Agreement or to any exercise by the Security Trustee of its right to consolidate mortgages or its power of sale.

		(c)	
A certificate in writing by an officer or agent of the Security Trustee that the power of sale or disposal has arisen and is exercisable shall, in the absence of manifest error, be prima facie evidence of that fact in favour of a purchaser of all or any part of the Assigned Property.

	8.	
FURTHER ASSURANCES

The Grantors shall, at no cost to the Security Trustee, from time to time sign, seal, execute, acknowledge, deliver, file and register any additional documents, instruments, agreements, certificates, consents and assurances and do such other acts and things as the Security Trustee may reasonably request from time to time for the purposes of perfecting the security granted by this Agreement or to establish, maintain, protect or preserve the rights of the Security Trustee under this Agreement and the Lien intended to be constituted by this Agreement or for the exercise of the rights, powers and remedies of the Security Trustee provided by or pursuant to this Agreement or by Applicable Law in each case in accordance with the rights vested in it under this Agreement.

 

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	9.	
POWER OF ATTORNEY

	9.1	
Power of Attorney

Each Grantor hereby by way of security irrevocably appoints the Security Trustee and every Receiver, and any person nominated for such purpose by the Security Trustee in writing under hand by an officer of the Security Trustee, severally as attorney and agent of such Grantor for such Grantor and in its name and on its behalf (with full power of substitution) and as its act and deed to sign, seal, execute, deliver and do all such lawful assurances, acts and things which the Security Trustee may deem to be necessary or advisable in order to give full effect to the purposes of this Agreement including to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for any and all monies due under or arising out of the Assigned Property, to endorse any cheque, draft or other document, instrument or order in connection therewith and to make any claim or to take any action or to institute any suit, legal action or other proceeding which the Security Trustee may consider to be necessary or advisable in connection with the Assigned Property, and generally in such Grantor’s name and on its behalf to exercise all or any of the powers, authorities and discretions conferred by or pursuant to this Agreement or Applicable Law on the Security Trustee and, without prejudice to the generality of the foregoing, to seal and deliver and otherwise perfect any deed, assurance, agreement, instrument, notice, act or thing which the Security Trustee may deem appropriate for the purpose of exercising any of such powers, authorities and discretions provided that the Security Trustee shall not be entitled to exercise the power of attorney granted hereunder except at any time when an Event of Default has occurred and is continuing.

	9.2	
Ratification

The power conferred by Clause 9.1 (Power of Attorney) shall be a general power of attorney under the Powers of Attorney Act 1971 and each Grantor hereby unconditionally and irrevocably ratifies and confirms and agrees to ratify and confirm whatever any such attorney appointed pursuant to Clause 9.1 (Power of Attorney) shall lawfully do or purport to do in the exercise or purported exercise of all or any of the powers, authorities and discretions conferred pursuant to Clause 9.1 (Power of Attorney) provided that such undertaking to ratify and confirm shall apply only to the Security Trustee’s exercise of the power of attorney granted hereunder at any time when an Event of Default has occurred and is continuing.

 

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	10.	
POWERS OF RECEIVER

	10.1	
Additional Powers of Receiver

Any Receiver appointed under Clause 7.1 (Enforcement) shall have all the powers conferred on a receiver by Applicable Law (save that Section 103 of the Law of Property Act 1925  shall not apply) and by way of addition to but without limiting those powers:

		(a)	
the Receiver shall be entitled to act individually or together with any other person appointed or substituted as Receiver;

		(b)	
the Receiver shall have all the powers given to the Security Trustee hereunder of taking possession of, calling in, collecting, converting into money and selling, leasing and dealing with the Assigned Property or any part thereof and generally shall be entitled to the same protection and to exercise the same powers and discretions as are given to the Security Trustee hereunder and shall also have such other of the powers and discretions given to the Security Trustee under this Agreement as the Security Trustee may from time to time confer on him;

		(c)	
the Receiver shall have power to make any payment and incur any expenditure which the Security Trustee is by this Agreement expressly or impliedly authorised to make or incur. Any expenses incurred by the Receiver in the proper exercise of any of his powers hereunder may be paid or retained by him out of any monies coming into his hands as receiver or may be paid by the Security Trustee in which case they shall be treated as expenses properly incurred by the Security Trustee;

		(d)	
the Receiver shall in the exercise of his powers, authorities and discretions conform with the reasonable directions from time to time made and given by the Security Trustee;

		(e)	
the Security Trustee may at any time require security to be given for the due performance of the Receiver’s duties as receiver; and

		(f)	
the Security Trustee may from time to time determine what funds the Receiver shall be at liberty to keep in hand with a view to the performance of his duties as receiver.

	10.2	
No Liabilities

Neither the Security Trustee nor the Receiver shall be liable to account as assignee of the Assigned Property and neither the Security Trustee nor any Receiver shall be liable for any loss arising from or in connection with any act, neglect, default or omission (but not including any fraud, gross negligence or wilful misconduct) for which a mortgagee in possession might be liable as such.

	10.3	
Other Powers of Receiver

The foregoing powers of appointment of a Receiver shall be in addition to any statutory or other powers of the Security Trustee under the Law of Property Act 1925 and the Receiver shall in any event have and be entitled to exercise all the rights, powers and remedies conferred upon the Security Trustee by this Agreement and by Law with respect to the Assigned Property.

 

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	10.4	
Application of Monies Received

All monies received by a Receiver in exercise of the rights, powers and remedies conferred upon a Receiver by this Agreement or by Law shall (subject to the claims of creditors ranking in priority to the Security Trustee) be applied in accordance with the provisions of Section 2.18 (Application of Collections; Proceeds of Collateral) of the Credit Agreement.

	10.5	
Remuneration of Receiver

Every Receiver so appointed shall be entitled to remuneration for his services at a rate to be fixed by agreement between him and the Security Trustee (or, failing such agreement, to be fixed by the Security Trustee) appropriate to the work and responsibilities involved upon the basis of charging from time to time adopted in accordance with his current practice or the current practice of his firm and without being limited to the maximum rate specified in Section 109(6) of the Law of Property Act 1925.

	10.6	
Exclusion of Statutory Provisions

Sections 103, 109(6) and 109(8) of the Law of Property Act 1925 shall not apply in relation to any Receiver appointed pursuant to Clause 7.1(i).

	11.	
RESERVED

	12.	
APPLICATION OF MONIES

All monies received by the Security Trustee pursuant to this Agreement shall be applied in payment and discharge of the Obligations as provided for in Section 2.18 (Application of Collections; Proceeds of Collateral) of the Credit Agreement.

	13.	
CONDITIONAL DISCHARGE ONLY

Any settlement or discharge between the Security Trustee and either Grantor shall be conditional upon no security or payment to the Security Trustee or any Secured Party being avoided or set aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, liquidation, winding up, insolvency, dissolution, reorganisation, amalgamation or other analogous event or proceedings for the time being in force.

	14.	
WAIVER AND INVALIDITY

	14.1	
No Waiver

No failure to exercise and no delay in exercising on the part of the Security Trustee any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right, power or privilege preclude the further exercise of such one or any other right, power or privilege.  The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by Applicable Law.

 

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	14.2	
Partial Invalidity

If, at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any Applicable Law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of that provision under the Applicable Law of any other jurisdiction will in any way be affected or impaired.

	15.	
INDEPENDENT SECURITY

	15.1	
Additional Security

This Agreement and the security hereby created shall be in addition to and not in substitution for or derogation of any other security (whether given by either Grantor or otherwise) now or from time to time hereafter held by the Security Trustee or any of the other Secured Parties in respect of or in connection with any or all of the monies and liabilities hereby secured and Section 93 of the Law of Property Act 1925 shall not apply.

	15.2	
Exercise of Rights of Security Trustee

The Security Trustee need not, before exercising any of the rights, powers or remedies conferred upon it by this Agreement or by Applicable Law (a) take action or obtain judgment against either Grantor or any other person in any court, (b) make or file claim or proof in a winding-up or liquidation of either Grantor or of any other person or (c) enforce or seek to enforce the recovery of the monies and liabilities hereby secured or any other security.

	15.3	
Further Rights of Security Trustee

The Security Trustee (a) may in its discretion grant time or other indulgence or make any other arrangement in respect of any of the monies and liabilities hereby secured or of any other security therefor or of any other company or companies, person or persons not parties hereto or (b) may (subject to the provisions of the Loan Documents) agree to vary any provision of any document, agreement or instrument entered into in connection with the Obligations without prejudice to this security, and the security created by this Agreement shall not be in any way discharged or impaired by reason of any other circumstance which might (but for this provision) constitute a legal or equitable discharge of such security.

	15.4	
No Liability

None of the Security Trustee, its nominee(s) or any Receiver appointed pursuant to this Agreement shall be liable by reason of (a) taking any action permitted by this Agreement, (b) any neglect or default in connection with the Assigned Property or (c) the taking possession or realisation of all or any part of the Assigned Property, except, in each case, in the case of fraud, gross negligence or wilful misconduct upon its part.

 

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	16.	
SUCCESSORS AND ASSIGNS

	16.1	
Successors to the Agreement

This Agreement shall be binding upon and inure to the benefit of each Grantor, the Security Trustee and each of the Secured Parties and their respective successors and permitted assigns and transferees.

	16.2	
Assignment of the Borrower’s Rights

Neither Grantor may assign any of its rights or transfer or purport to transfer any of its obligations hereunder without the prior written consent of the Security Trustee.

	17.	
MISCELLANEOUS

	17.1	
This Agreement cannot be amended or modified without the prior written consent of the Security Trustee and each Grantor.

	17.2	
The provisions of Sections 10.01 (Notices), 10.06 (Counterparts; Integration; Effectiveness) and 10.15 (Treatment of Certain Information; Confidentiality) of the Credit Agreement shall be incorporated mutatis mutandis into this Agreement.

	18.	
LAW AND JURISDICTION

	18.1	
This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English Law.

	18.2	
The provisions of Section 10.09 (Governing Law; Jurisdiction; Service of Process; Etc.) of the Credit Agreement shall be incorporated mutatis mutandis into this Agreement.

IN WITNESS WHEREOF this Agreement has been executed as a deed by the parties hereto and is intended to be and is hereby delivered as a deed on the day and year first before written.

 

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EXECUTION PAGE

BORROWER SECURITY AGREEMENT

	
EXECUTED AND DELIVERED AS A DEED by Declan Cotter

	 
	
as attorney for

	
/s/ Declan Cotter

	
FLY ALADDIN FUNDING LIMITED

	
	 	 
	
in the presence of:

	 
	 	 

	
Signature of Witness:

	/s/ Edel Hannon	 

	
Name of Witness:

	Edel Hannon	 

	
Address of Witness:

	
West Pier Business

	 

	
Campus, Dun Laoghaire

	 

	
Co. Dublin

	 

	
Occupation of Witness:

	Admin	 

 

The Borrower

 

	
FLY ALADDIN MALTACO LIMITED

	 
	 	 
	
/s/ Brian Farrugia

	 
	
Name: Brian Farrugia

	 
	
Duly authorized for and on behalf of 

Fly Aladdin MaltaCo Limited

	 

 

	
The Security Trustee

	 	 
	 	 	 
	
EXECUTED AS A DEED BY

	
)

	 
	
WILMINGTON TRUST

	
)

	 
	
(LONDON) LIMITED

	
)

	
/s/ Keith Reader

	 	 	
Authorised Signatory

	
as Security Trustee

	
)

	 
	
in the presence of

	
)

	
Delegated Signatory

	 	 	 
	
Signature: /s/ Chris Hurford

	 	 
	 	 	 
	
Name: Chris Hurford

	 	 
	 	 	 
	
Address: 

	Third Floor,	 	 
		
1 King’s Arms Yard,

	 	 
		
London, EC2R 7AFExhibit 10.4

 

Execution Version

DEED OF LIMITED GUARANTY BY FLY LEASING LIMITED OF FLY ALADDIN FUNDING LIMITED

FOR VALUE RECEIVED, on this 15 day of June, 2018, Fly Leasing Limited (the “Guarantor”), pursuant to that certain Senior Secured Credit Agreement (as amended and supplemented from time to time, the “Credit Agreement”), dated as of 15 day of June, 2018 among Fly Aladdin Funding Limited, as borrower (the “Borrower”), Fly Aladdin MaltaCo Limited (“Fly Malta”), the Lenders party thereto (the “Lenders”), BNP Paribas, not in its individual capacity, except as expressly stated therein, but solely as administrative agent (the “Administrative Agent”) and Wilmington Trust (London) Limited, not in its individual capacity, except as expressly stated therein, but solely as security trustee (the “Security Trustee”) (each of the Lenders, the Administrative Agent, the Security Trustee and any Derivatives Creditor, together with their respective successors and permitted assigns, referred to herein as a “Guaranteed Party” and, collectively, the “Guaranteed Parties”), does hereby unconditionally and irrevocably (a) guarantee to each Guaranteed Party (i) the due and punctual performance and observance by the Borrower and Fly Malta of each of the Performance Obligations (as defined in Schedule I hereto), and (ii) the due and punctual payment by the Borrower and Fly Malta of each of its Recourse Obligations (as defined in Schedule II) under and in accordance with the terms of the Loan Documents (such performance, payment and other obligations of the Borrower and Fly Malta being referred to herein as the “Obligations” and, individually, each an “Obligation”), (b) undertake with each of the Guaranteed Parties that, in the event of any nonpayment or nonperformance of any Obligation, the Guarantor shall pay or perform, or cause such payment or performance to be made of, such nonpayment or nonperformance and (c) agrees with each of the Guaranteed Parties that it will, as an independent and primary obligation, immediately on written demand, indemnify such Guaranteed Party against any cost, loss or liability suffered by it if any of the Obligations is or becomes unenforceable, invalid or illegal for any reason, and the amount of the cost, loss or liability will be equal to the amount which such Guaranteed Party would otherwise have been entitled to recover.  The Guarantor further agrees to pay all expenses (including, without limitation, all reasonable fees and disbursements of counsel), that may be paid or incurred by any Guaranteed Party in lawfully enforcing any rights with respect to, or collecting, any or all of the Obligations and/or lawfully enforcing any rights with respect to, or collecting against, the Guarantor under this Guaranty.

Capitalized terms used but not defined herein shall have the meaning given such terms (whether by reference to another document or otherwise) in the Credit Agreement.

		1.	
Waiver of Notice.  The Guarantor hereby waives notice of acceptance of this Guaranty, and agrees that, in its capacity as a guarantor, it shall not be required to consent to, or to receive any notice of, any supplement to or amendment of, or waiver or modification of the terms of, the Credit Agreement or any of the other Loan Documents that may be made or given as provided therein. The Guarantor further waives any right it may have of first requiring a Guaranteed Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Guarantor under this Guaranty.  This waiver applies irrespective of any law or any provision of a Loan Document to the contrary.

 

		2.	
Representations and Warranties.  The Guarantor represents, warrants and covenants on the date hereof that:

		2.1	
the Guarantor is duly formed, validly existing and in good standing under the laws of its state of organization; the execution, delivery and performance of this Guaranty do not and will not violate any provision of the organizational documents of the Guarantor or any Applicable Law to or binding on the Guarantor or violate or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, loan or other material agreement, instrument or document to which the Guarantor is a party or by which the Guarantor or any of its properties is bound, or any law, governmental rule, regulation, judgment or order binding on the Guarantor;

		2.2	
this Guaranty has been duly authorized, executed and delivered by the Guarantor and constitutes a legal, valid, binding and enforceable obligation of the Guarantor;

		2.3	
there are no pending or, to the Guarantor’s knowledge, threatened investigations, suits or proceedings against any Borrower Group Company or affecting any Borrower Group Company or its properties;

		2.4	
it has kept (and will keep) its assets and liabilities as reflected in its books and records separate and identifiable from those of each Borrower Group Company;

		2.5	
it has kept (and will keep) adequate records to permit the segregation and identification of its assets and liabilities from those of each Borrower Group Company;

		2.6	
it is operated and will be operated as an independent, separate and distinct legal entity from each Borrower Group Company, has not held (and will not hold) itself out to the public as a division of any Borrower Group Company, and will observe all formalities necessary to remain a legal entity separate and distinct from, and independent of each Borrower Group Company;

		2.7	
where relevant, it has held (and will hold) itself out to the public (including to any of its creditors) under its own name as a separate and distinct legal entity from each Borrower Group Company;

		2.8	
where relevant, in correspondence between it and a third party, has made (and will make) apparent that it is a separate entity from each Borrower Group Company;

 

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		2.9	
it has and will pay its obligations in the ordinary course of business as a legal entity separate and distinct from each Borrower Group Company; and

		2.10	
it will ensure that all transactions between it and each Borrower Group Company shall only be on an arms-length basis and on commercially reasonable terms.

		3.	
Covenants.  The Guarantor covenants as follows:

		3.1	
Except as expressly contemplated by the Basic Documents, the Guarantor shall not amend or directly or indirectly assign, convey or otherwise transfer any of its right, title or interest in and to this Guaranty or any of the other Loan Documents without the prior written consent of the Security Trustee.

		3.2	
The Guarantor covenants that it will not directly or indirectly create, incur, assume or suffer to exist any Liens (other than Permitted Encumbrances and any other Liens expressly permitted pursuant to the Basic Documents) attributable to it, with respect to any of the properties or assets of the Collateral, that it shall, at its own cost and expense, promptly take such action as may be necessary to discharge duly any such Lien, and that it will cause restitution to be made to the Collateral in the amount of any diminution of the value thereof as the result of any Liens thereon attributable to it.

		3.3	
The Guarantor covenants that it will, pursuant to Section 5.15 of the Credit Agreement, immediately upon the occurrence of a Trigger Event, unless cured, and for so long as the same is continuing, (i) deposit into the Operations Reserve Account an amount equal to the Maintenance Rent received pursuant to all Leases that has not been utilized by the applicable Lessees pursuant to the terms of the applicable Lease and to pay all Maintenance Rent received by such Person after the occurrence of the Trigger Event that is continuing into the Operations Reserve Account and (ii) deposit into the Security Deposits Reserve Account an amount equal to the Security Deposits received pursuant to all Leases that has not been utilized by the applicable Lessees pursuant to the terms of the applicable Lease and to pay all Security Deposits received by such Person after the occurrence of the Trigger Event that is continuing into the Security Deposits Reserve Account.

		4.	
Waiver and forbearance; Continuing Guaranty.

		4.1	
No failure or delay or lack of demand, notice or diligence in exercising any right under this Guaranty shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right under this Guaranty.

		4.2	
This Guaranty is an absolute, unconditional and continuing guaranty of payment and not of collection and will extend to the ultimate balance of the Obligations, regardless of any intermediate payment or discharge in whole or in part.  The Guarantor waives any right to require that any right to take action against the Borrower or Fly Malta be exhausted or that resort be made to any security prior to action being taken against the Guarantor.

 

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		4.3	
In the event that this Guaranty or any Loan Document to which the Borrower or Fly Malta is a party shall be terminated, rejected or disaffirmed as a result of bankruptcy, insolvency, reorganization, arrangement, composition, readjustment, liquidation, dissolution, examinership or similar proceedings with respect to the Borrower or Fly Malta, the Guarantor’s obligations hereunder to the Guaranteed Parties shall continue to the same extent as if the same had not been so terminated, rejected or disaffirmed.  The Guarantor hereby waives all rights and benefits that might, in whole or in part, relieve it from the performance of its duties and obligations by reason of any proceeding as specified in the preceding sentence, and the Guarantor agrees that it shall be liable for all sums guaranteed, in respect of and without regard to, any modification, limitation or discharge of the liability of the Borrower or Fly Malta that may result from any such proceedings and notwithstanding any stay, injunction or other prohibition issued in any such proceedings.  Furthermore, the obligation of the Guarantor hereunder will not be discharged by:  (a) any extension or renewal with respect to any obligation of the Borrower or Fly Malta under the Loan Documents; (b) any modification of, or amendment or supplement to, any such agreement; (c) any furnishing or acceptance of additional security or any release of any security; (d) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to the Borrower or Fly Malta or any change in the structure of the Borrower or Fly Malta; (e) any change in ownership of the shares of capital stock of the Guarantor or the Borrower or Fly Malta or any merger or consolidation of any thereof into or with any other person; (f) any assignment, transfer, participation or other arrangement by which any Lender transfers its interests in its Loans; (g) any assignment, transfer or other arrangement by which any Lessee transfers its interests in or loses control of the use of an Aircraft or any part thereof; or (h) any other occurrence whatsoever, except payment in full of all Recourse Obligations and performance in full of all the Obligations in accordance with the terms and conditions of the Loan Documents.

		4.4	
The Guarantor understands and agrees that its obligations hereunder shall be continuing, absolute and unconditional without regard to, and the Guarantor hereby waives any defense to, or right to seek a discharge of, its obligations hereunder with respect to (a) the validity, legality, regularity or enforceability of any Loan Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or from time to time held by any Guaranteed Party; (b) any defense, setoff or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Borrower or Fly Malta against any Guaranteed Party; or (c) any other circumstances whatsoever (with or without notice to or knowledge of the Borrower or Fly Malta or the Guarantor) that constitute, or might be construed to constitute, an equitable or legal discharge of the Borrower or Fly Malta or the Obligations, or of the Guarantor under this Guaranty, in bankruptcy or in any other instance.

 

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		4.5	
The Guarantor expressly acknowledges and agrees that: the Guarantor hereby expressly consents to any modification, extension, amendment, waiver, release or change in the Credit Agreement, any increase, reduction or change in the credit facilities granted to the Borrower or securities obtained under the Credit Agreement, or any time or other concession granted from time to time by any Guaranteed Party to the Borrower provided always that the liability of the Guarantor shall not exceed the Obligations.

		5.	
Limited Recourse; Non-Petition.

		5.1	
Notwithstanding any payment or payments made by the Guarantor hereunder or any setoff or application of funds of the Guarantor by any Guaranteed Party hereof, the Guarantor  shall not be entitled to be subrogated to any of the rights of any Guaranteed Party against the Borrower or Fly Malta or any collateral, security or guaranty or right of setoff held by any Guaranteed Party for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any reimbursement from the Borrower or Fly Malta in respect of payments made by the Guarantor hereunder, until all amounts and performance owing to each Guaranteed Party by the Borrower and Fly Malta on account of the Obligations are paid and performed in full.  The obligations of the Guarantor hereunder either shall be automatically reinstated if and to the extent that any payment by or on behalf of the Borrower or Fly Malta in respect of any of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations as a result of any proceedings in bankruptcy or reorganization or similar proceedings and the Guarantor agrees that it will reimburse such holders on demand for all reasonable expenses (including, without limitation, all reasonable fees and disbursements of counsel) incurred by such holders in connection with such rescission or restoration.

		5.2	
The Guarantor agrees that neither it nor any person acting on its behalf shall in respect of a claim under this Guaranty or any other Loan Document be entitled to petition or take any corporate action or other steps or legal proceedings for the winding-up, dissolution, court protection, examinership, reorganization, liquidation, bankruptcy or insolvency of either the Borrower or Fly Malta or for the appointment of a receiver, administrator, manager, administrative receiver, trustee, liquidator, examiner, sequestrator or similar officer in respect of either the Borrower or Fly Malta or any of their respective revenues or assets.

 

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		5.3	
Neither the Guarantor nor any person acting on its behalf shall have any recourse against any director, shareholder, or officer of either the Borrower or Fly Malta (provided that they are not guilty of fraud, negligence, recklessness or wilful default) in respect of any obligations, covenant or agreement entered into or made by such Person pursuant to, or in connection with, this Guaranty or any other Loan Document.

		6.	
Set-Off. The Guarantor hereby authorizes each Guaranteed Party, at any time after a sum has become due and payable by the Guarantor under this Guaranty, to apply any sum or credit balance to which the Guarantor may be entitled hereunder or under any other Loan Document against any amounts which are due and payable by the Guarantor hereunder or under any other Loan Document but at the relevant time remain unpaid.

		7.	
Costs and Expenses. The Guarantor agrees to pay all reasonable costs and expenses (including, without limitation, all reasonable fees and disbursements of legal counsel), that may be paid or incurred by any Guaranteed Party in connection with this Guaranty.

		8.	
Miscellaneous.

		8.1	
Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

		8.2	
No provision of this Guaranty may be amended, supplemented or modified except in accordance with Section 10.02 of the Credit Agreement.

		8.3	
The paragraph and Section headings in this Guaranty are for convenience and they form no part of this Guaranty and shall not affect its interpretation.

		8.4	
This Guaranty shall be binding upon the successors and assigns of the Guarantor; provided, that no transfer, assignment or delegation by the Guarantor without the consent of the Guaranteed Parties shall release the Guarantor from its liabilities hereunder.

		8.5	
Upon the unconditional and irrevocable payment in full of the Obligations and provided no Event of Default has occurred and is continuing, the Guaranteed Parties shall, at the request and cost of the Guarantor, release the Guarantor from its obligations under this Guaranty. The Guaranteed Parties shall, at the Guarantor’s cost, execute all such notices and agreements as the Guarantor shall reasonably request to give effect to such release.

 

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		8.6	
All monies received, recovered or realised by any Guaranteed Party under or pursuant to this Guaranty (including the proceeds of any conversion of currency) may in its discretion be credited to and held in any suspense or impersonal account pending their application from time to time in or towards the discharge of this Guaranty.

		8.7	
All notices, requests and demands to or upon the Guarantor or any beneficiary shall be made in accordance with the terms of Section 10.01 of the Credit Agreement and, if delivered to the Guarantor, shall be addressed to Fly Leasing Limited, West Pier Business Campus, Dun Laoghaire, Co. Dublin, A96 N6T7, Ireland, with a copy to BBAM US LP, 50 California Street, 14th Floor, San Francisco, CA 94111, USA, or to such other address as the Guarantor shall provide to the Guaranteed Parties in writing.

		8.8	
No person who is not a party to this Guaranty (other than any Guaranteed Party) may enforce the terms of this Guaranty and the provisions of the Contracts (Rights of Third Parties) Act 1999 shall not apply to this Guaranty.

		8.9	
This Guaranty, and any non-contractual obligations arising out of or in connection with this Guaranty, shall be governed by, and construed in accordance with, English law.

		8.10	
The Guarantor hereby irrevocably and unconditionally agrees for the benefit of the Guaranteed Parties that the English courts shall have exclusive jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute arising out of or in connection with this Guaranty (including a dispute relating to the existence, validity or termination of this Agreement or the consequences of its nullity or any non-contractual obligation arising out of or in connection with this Guaranty) (a “Dispute”) and submits itself and its property to the jurisdiction of the English courts with respect to Disputes. Nothing in this Clause 6.9 shall limit the right of any Guaranteed Party to bring proceedings arising out of or in connection with this Guaranty or any non-contractual obligations arising out of or in connection with the same against the Guarantor to the extent allowed by applicable law (a) in any court of competent jurisdiction or (b) concurrently in more than one jurisdiction.

		8.11	
The Guarantor (for the benefit of each Guaranteed Party) (a) waives to the fullest extent permitted by law any objection which it may now or hereafter have to the English courts on grounds of inconvenient forum or otherwise as regards proceedings arising out of or in connection with this Guaranty or any non-contractual obligations arising out of or in connection with the same; and (b) agrees that a judgment or order of any of the English courts arising out of or in connection with this Guaranty or any non-contractual obligations arising out of or in connection with the same is conclusive and binding on it and may be enforced against it in the English courts or the courts of any other jurisdiction.

 

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		8.12	
Without prejudice to any other mode of service allowed under any relevant law, the Guarantor irrevocably appoints BBAM UK Limited at Venture House, Arlington Square, Downshire Way, Bracknell, RG12 1WA, England, as its agent for service of process in relation to any proceedings before the English courts in connection with this Guaranty or any non-contractual obligations arising out of or in connection with the same and agrees that failure by an agent for service of process to notify the Guarantor of the process will not invalidate the proceedings concerned.  If any person appointed as an agent for service of process is unable or unwilling for any reason to act or ceases to be effectively appointed as agent for service of process, the Guarantor must immediately (and in any event within five (5) Business Days of such event taking place) appoint another agent in England on terms acceptable to the Administrative Agent.  Failing this, the Administrative Agent may appoint another agent for this purpose at the Guarantor’s cost, in which case the Guarantor shall reimburse the Administrative Agent the amount of the cost on demand.

		8.13	
The Guarantor irrevocably and unconditionally (a) agrees not to claim any immunity from proceedings brought by a Guaranteed Party against it in relation to this Guaranty and to ensure that no such claim is made on its behalf, (b) consents generally to the giving of any relief or the issue of any process in connection with those proceedings and (c) waives all rights of immunity in respect of it or its assets.

In witness whereof the parties have caused this Guaranty to be executed as a deed by the duly authorised representatives of the parties and this Guaranty is intended to be and is hereby delivered on the date first above written.

[Intentionally Left Blank]

 

- 8 -

	
EXECUTED AND DELIVERED AS A DEED 

for and on behalf of 

FLY LEASING LIMITED

	
	 	 
		
/s/ Colm Barrington

	 
	
By:

	Colm Barrington	 
	 	 
	
its:

	Chief Executive Officer and Director	 

 

SCHEDULE I

DEFINITION OF PERFORMANCE OBLIGATIONS

“Performance Obligations” means:

(i)             The Borrower and Fly Malta’s representations and warranties in Sections 3.01 (Organization; Powers), 3.12 (Special Purpose Status, Etc.) and 3.14 (Solvency) of the Credit Agreement.

(ii)           The Borrower and Fly Malta’s covenants under Sections 5.20 (Special Purpose Entity Requirements), 6.01 (Indebtedness), 6.02 (Liens), 6.09 (Modifications of Certain Documents), 6.10 (Limitation on Business Activities), and 6.12 (Non-Petition, Material Actions) of the Credit Agreement.

 

Schedule I-1

 

SCHEDULE II

DEFINITION OF RECOURSE OBLIGATIONS

“Recourse Obligations” means the obligation of the Borrower and Fly Malta pursuant to Section 5.15 of the Credit Agreement to, immediately upon the occurrence of a Trigger Event, unless cured, and for so long as the same is continuing, (i) deposit into the Operations Reserve Account an amount equal to the Maintenance Rent received pursuant to all Leases that has not been utilized by the applicable Lessees pursuant to the terms of the applicable Lease and to pay all Maintenance Rent received by such Person after the occurrence of the Trigger Event that is continuing into the Operations Reserve Account and (ii) deposit into the Security Deposits Reserve Account an amount equal to the Security Deposits received pursuant to all Leases that has not been utilized by the applicable Lessees pursuant to the terms of the applicable Lease and to pay all Security Deposits received by such Person after the occurrence of the Trigger Event that is continuing into the Security Deposits Reserve Account.

Schedule II-1

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