Exhibit 4.3

EXECUTION VERSION

SERVICING AGREEMENT

THIS SERVICING AGREEMENT dated as of October 15, 2020 (this “Agreement”), is among BBAM US LP, a Delaware limited partnership (“BBAM”), BBAM AVIATION SERVICES LIMITED, a company incorporated under the laws of Ireland (“BBAM Ireland” and together with BBAM, the “Servicers,” each a “Servicer”) and FLY LEASING LIMITED, a company incorporated under the laws of Bermuda (together with its affiliates and subsidiaries collectively referred to herein as, the “Company”).

WHEREAS, the Company is the owner (directly or indirectly) of certain aircraft (the “Aircraft”) identified in Schedule 3.17(a) (as such schedule may be amended, restated or supplemented from time to time) of that certain Term Loan Credit Agreement (the "Credit Agreement") dated on or about the date hereof among Fly Willow Funding Limited, as borrower,  the Company and Fly Willow Aircraft Holdings DAC, each as a guarantor party, Royal Bank of Canada, as administrative agent, Bank of Utah as collateral agent and such other parties as may be identified therein and has leased the Aircraft pursuant to certain aircraft lease agreements described in further detail in Schedule 3.17(b) of the Credit Agreement (collectively, the "Leases", which term shall include any subsequent leases for the Aircraft during the term of this Agreement); and

WHEREAS, the Company wishes to engage BBAM and BBAM Ireland, collectively, as Servicers to provide certain administrative and management services with respect to the Aircraft during the term of the Lease and each of BBAM and BBAM Ireland hereby accepts such appointment and agrees to provide such services, all in accordance with the terms hereof.

NOW, THEREFORE, it is agreed as follows:

For purposes of this Agreement capitalized terms not defined herein shall have the meanings provided in the Lease.

1.          Administration and Servicing Obligations; Term.

 

The Company hereby appoints BBAM and BBAM Ireland, collectively, to act as the exclusive servicer in respect of its interest in the Aircraft and the Lease and for the acquisition and disposition of the Aircraft.  The term of this Agreement will commence on the date hereof and, unless terminated earlier in accordance with Section 10, shall end on the earlier of the Maturity Date (as defined in the Credit Agreement) or the date on which the Company ceases to own the Aircraft; provided that in either such case, the affairs of the Company in relation to the Aircraft have been wound up and the Company shall have performed its payment and other obligations under this Agreement (the “Term”).  Pursuant to this appointment, BBAM and BBAM Ireland will perform the services listed in Schedule 1 to this Agreement.  All services listed on Schedule 1 hereto, together with all activities undertaken by the Servicers in connection with this Agreement, the Lease or the Aircraft, are referred to collectively as the “Services”.

 

2.          Compensation for Services.

 

In consideration of the Servicers performing the Services, the Company shall pay the Servicers the following fees (collectively, the “Fees”):

 

(a)          a servicing fee equal to 3.5% of the monthly rents (excluding maintenance reserves or other supplemental rent) actually collected (including the application of a deposit for monthly rent owed) which fee shall be deemed fully earned upon receipt of any monthly rent and is payable monthly in arrears on the first day of each calendar month;

 

(b)          as administrative fee equal to (i) $10,000 per month plus (ii) $1,000 multiplied by the number of Aircraft per month, which shall be deemed fully earned upon the first day of each calendar month, shall be prorated for any partial month and is payable monthly in arrears on the first day of each calendar month; and

(c)          a disposition fee equal to 1.5% of the gross consideration collected with respect to the sale of the Aircraft, which such fee shall be deemed fully earned upon receipt of such sales proceeds and is payable upon such receipt; provided however, no such Fee shall be payable on the sale of the Aircraft related to a refinancing or a transfer of the Aircraft among the Company’s subsidiaries.

3.          Servicer’s Expenses.

 

Except as provided in Section 4 hereof, all reasonable out-of-pocket expenses (including without limitation, reasonable attorneys’ fees) incurred by each Servicer (and any Servicer delegate) in connection with the performing the Services will be reimbursable by the Company to each Servicer upon receipt of invoice.  The Servicers shall be under no obligation to incur material costs and may condition the performance of any Services that would require the same upon the receipt of an appropriate cost advance from the Company.  The Company will provide customary directors’ and officers’ liability insurance for any employees of the Servicer who act as directors or officers of the Company.

4.          Other Parties.

 

It is acknowledged and agreed that the Servicers may, in order to discharge the Services, engage other parties to provide services or render advice where the Servicers believe this is appropriate; provided that any such other party is reputable in the industry and selected in accordance with the Standard of Care.  Except as provided in Section 3, such engagement shall be at the Servicers’ expense and shall not in any way affect the Servicers’ responsibility to the Company to provide the Services.

5.          Standard of Care; Conflicts Standard; Limitations on Liability; Indemnity.

 

The Servicers shall use reasonable care and diligence at all times in the performance of the Services consistent with the customary commercial practice of major international aircraft lessors in the management, servicing and marketing of commercial jet aircraft and related assets and with no less care and diligence than the Servicers would use in providing the Services with respect to aircraft that are owned or managed by the Servicers (the “Standard of Care”); provided, however, that the Company acknowledges and agrees that the Servicers’ ability to use such care and diligence may be limited or restricted by the provisions of this Agreement or by any other agreement that is binding on the Company (including the Lease) or by actions or omissions of the Company.

The Company acknowledges and agrees that:  (a) in addition to providing the Services to the Company under this Agreement, the Servicers shall be entitled to manage, service and market from time to time the separate assets and businesses of the Servicers, theirs affiliates, and other third parties (the assets of the parties described in this sentence are collectively referred to as the “Other Assets”); and (b) in the course of conducting such activities, the Servicers may from time to time have conflicts of interest in performing the Services.  If any such conflicts of interest arise, the Servicers agree to perform the Services in good faith and, without prejudice to the generality of the foregoing, to the extent that the Aircraft and such Other Assets are similar in terms of objectively identifiable characteristics relevant for purposes of the particular Services to be performed, the Servicers shall not discriminate against the Aircraft on an unreasonable basis.

The relationship between the Servicers and the Company is an agency relationship.  The Servicers shall not be under any fiduciary duty or other implied obligation or duty to the Company arising out of this Agreement, it being agreed that the rights and obligations of the parties hereto shall only be those expressly provided for in this Agreement.

Neither of the Servicers nor any affiliate of the Servicers to whom duties of the Servicers are delegated pursuant to this Agreement, nor any agent, contractor, vendor, member, partner, manager, director, officer, employee of the Servicers or any such affiliate or any other person who serves at the request of any of the foregoing in connection with this Agreement (each severally, a "BBAM Covered Person") shall be liable, responsible or accountable in damages or otherwise to the Company for any losses, damages, liabilities, demands or expenses suffered by the Company or which directly or indirectly arise out of, in connection with or related to, the Lease, the Aircraft or the performance by the Servicers or any BBAM Covered Person of the Services, or any mistakes of judgment or for action or inaction, except to the extent attributable to the gross negligence or willful misconduct of the Servicers or such BBAM Covered Person.  In no case shall the liability of the Servicers exceed the revenues actually received by the Servicers from the Company pursuant to this Agreement.

The Company agrees on demand to indemnify, defend and hold harmless the Servicers and any BBAM Covered Person from and against all claims, demands, costs, expenses and liabilities incurred by the Servicers or any BBAM Covered Person which directly or indirectly arise out of, in connection with or are related to, the Lease, the Aircraft or the performance by the Servicers or any BBAM Covered Person of the Services, unless caused by the gross negligence or willful misconduct of the Servicers or any BBAM Covered Person.  The obligations of the Company under this Section 5 shall survive the termination of this Agreement pursuant to Section 10 hereof or otherwise.

 

6.          Transaction Approval Requirements.

 

The Servicers shall not do any of the following without the prior approval of the Company:

 

 

 

 

 

 

7.          Notices.

 

Any notice or communication under or in connection with this Agreement shall be in writing and shall be delivered personally or by post, telex, facsimile (confirmed as received by the recipient) or cable to the respective addresses or telex or fax numbers given below or such other address or telex or fax number as the recipient may have notified to the sender in writing.  Proof of posting or dispatch shall be deemed proof of receipt:

 

Any party by notice given in accordance with this Section 7 to the other party may designate another address or person for receipt of notices hereunder.

8.          Governing Law.

 

This Agreement, and all matters arising out of or relating to this Agreement (whether in contract or tort), shall governed by, and shall be construed in accordance with, the laws of the State of New York, without regard to conflict of law principles.

 

9.          Non‑Exclusive Jurisdiction in New York.

 

The parties hereby consent to the non‑exclusive jurisdiction of any state or Federal court located in the County of New York, New York.  Nothing herein will prevent any party from bringing suit in any other appropriate jurisdiction.  The parties hereby agree that service of process may be made upon each of them by mailing copies of the summons and complaint to the person to be served by air mail, certified or registered mail to the address set forth in Section 7, postage prepaid, return receipt requested, or in accordance with the Hague Convention, if applicable.

 

10.          Termination, Resignation.

The parties hereto agree that BBAM’s and BBAM Ireland’s appointment as Servicers may be terminated prior to the expiry of the Term at the election of the Company, by written notice to the Servicers, if a “Termination Event” occurs and is not cured within the applicable cure periods described below.  For purposes of this Section 10, each of the events described in the following paragraphs shall constitute a Termination Event:

 

Each of Servicers shall be entitled to resign their appointment prior to the expiry of the Term if the Company shall fail to pay in full any Fee, reimbursable expense or such other amount payable to the Servicers hereunder within 5 days after receipt of written notice from the Servicers of such failure.

 

Upon the occurrence of a Termination Event or any resignation of the Servicers pursuant to this Section 10, the Servicers shall as soon as reasonably practicable wind up their performance of the Services and, if applicable, reasonably assist the Company in transitioning to a replacement servicer.  So long as the Servicers are continuing to perform any of the Services, all provisions of this Agreement shall remain applicable, including provisions relating to the payment of Fees and reimbursement of expenses.  The Servicers shall continue in their role until a replacement servicer has assumed servicing responsibilities or the affairs of the Company in relation to the Aircraft have been wound up, as applicable; provided, however, in no event shall the Servicers be obligated to perform any of the Services during any period in which they are not be paid, nor shall the Servicers be obligated to assist in transitioning to a replacement servicer or winding up the Company for a period in excess of 120 days.  Within thirty (30) days following the date that the Servicers’ appointment terminates, all Fees that have been earned by the Servicers, but not yet paid, and all expenses and other amounts that have become payable hereunder to the Servicers, but not yet paid, shall be paid by the Company.

11.          Confidentiality.

 

This Agreement is confidential and neither party shall disclose any or all of its content to any third party, other than to its affiliates, the Administrative Agent, the Collateral Agent and the Lenders (as such terms are defined in the Credit Agreement), including any potential assignee, transferee or participant of such Lender ( provided, such assignees, transferees or participants agree to be bound by the confidentiality provisions of the Credit Agreement) and, in the case of the Servicers, any party to which it makes a delegation pursuant to Section 4 hereof, without the prior consent of the other party.

 

12.          Counterparts.

 

This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

 

13.          Amendment.

 

This Agreement shall not be amended or varied otherwise then by an instrument in writing executed by the parties hereto.

 

14.          Illegality.

 

If any provision of this Agreement becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

 

15.          No Services requiring authorisation.

 

Notwithstanding any other provision of this Agreement, the Parties acknowledge and agree that the Servicers shall not and shall not be required to undertake any activity or perform any service that would require any Servicer to obtain an authorisation or registration from a regulatory or govermental authority, including the Central Bank of Ireland, pursuant to, inter alia, the European Union (Markets in Financial Instruments) Regulations 2017, the European Union (Insurance Distribution) Regulations 2018, the European Union (Payment Services) Regulations 2018, the European Union (Alternative Investment Fund Managers) Regulations 2013, the Central Bank Act 1971, the Central Bank Act 1997, the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 or any other applicable law (each as may be amended from time to time). In particular, the Servicers are not required to provide any service with respect to financial isntruments within the meaning of the European Union (Markets in Financial Instruments) Regulations 2017, including for the avoidance of doubt, shares in Aircraft-owning companies, bonds and derivatives.

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

 

SCHEDULE 1

 

STANDARD SERVICING OBLIGATIONS