Convertible Promissory Notes and Voting Agreements
On November 19, 2020, the Company entered into separate Convertible Promissory Notes and Loan Agreements (the Notes) in
favor of (a) SREP III FlightInvestco 2, L.P. (SREP), an affiliate of StepStone Group LP (StepStone), for $7,220,443, and (b) Efanur S.A. (Efanur), an affiliate of IRSA
Inversiones y Representaciones Sociedad Anónima (IRSA), for $2,779,557. Pursuant to the Notes, the Company borrowed $10,000,000 from SREP and Efanur and used the proceeds to repay loans outstanding under the Credit
Agreement. Each of the Notes matures upon the earliest to occur of (a) the closing of a Rights Offering (as defined below) or a Non-Rights Offering Conversion (as defined below) in an amount equal to
the outstanding principal balance of the respective Note, (b) the acceleration of the respective Note on or after the occurrence of an Event of Default (as defined in the respective Note) and (c) January 2, 2023.
Each of the Notes accrues interest at 10.00% per annum (exclusive of any portion of the principal that is used in a Rights Offering and, in
the case of the Note in favor of SREP, any backstop commitment), provides for the interest rate to increase to 20% upon an Event of Default or if any amounts under the applicable Note are outstanding after May 31, 2021, provides for the
capitalization of interest and provides for the payment of all accrued and unpaid interest and principal on the maturity date. Each of the Notes also provides, subject to a Make Whole Fee (as defined in the respective Note) payable to SREP and
Efanur, as applicable, for the interest rate to increase to 25% upon a determination by the disinterested members of the board of directors of the Company (a) not to proceed with, or to terminate, a Rights Offering, (b) to prohibit a Non-Rights Offering Conversion or (c) not to seek shareholder approval of the transactions contemplated by the Notes, including the issuance of shares of common stock of the Company and the conversion price
(Shareholder Approval), because the failure to make any such determination would reasonably be expected to constitute a breach of the directors duties under Maryland law (a Board Decision).
Subject to receipt of Shareholder Approval or a Board Decision, SREP and Efanur may elect to convert the principal due under the applicable
Note into common stock of the Company in connection with any future rights offering commenced by the Company for 4,000,000 shares of common stock of the Company at a price of $2.50 per share (a Rights Offering). Pursuant to
the Note in favor of SREP, the Company has committed to offer to SREP the option to purchase any shares of common stock of the Company underlying any unexercised rights in any such Rights Offering.
If any amounts remain unpaid on the applicable Note after May 31, 2021 (or, if earlier, the termination, rescission or rejection of the
Rights Offering), subject to receipt of Shareholder Approval or a Board Decision, SREP and Efanur may elect to convert the principal due under the applicable Note into 4,000,000 shares of common stock of the Company at a price of $2.50 per share (a
Non-Rights Offering Conversion).
The issuance of shares in a Rights Offering
or Non-Rights Offering Conversion is subject to receipt of the Shareholder Approval, which the Company has committed to seek at a special meeting of shareholders expected to be held no later than
January 31, 2021.
In the event of a Board Decision in order to accept an unsolicited cash offer for newly issued common stock or
securities convertible into common stock of the Company, then upon consummation of any such sale, the Company is required to pay SREP and Efanur a Make Whole Fee as set forth in their respective Note.
SREP and Efanur have entered into separate subordination and standstill agreements with KeyBank National Association that govern the rights of
SREP and Efanur, as applicable, to seek payment under and enforce remedies under the applicable Note.
The foregoing summary of the
respective Notes does not purport to be complete and is qualified in its entirety by reference to the Notes, copies of which are attached as Exhibits 10.4 and 10.5 and are incorporated herein by reference.
In connection with the entry into of the Notes, on November 19, 2020, the Company entered into separate voting agreements (the
Voting Agreements) with (a) StepStone Group Real Estate LP, StepStone Rep III (GP), LLC, StepStone Group Real Estate Holdings LLC and SREP Flight-Investco, L.P. (collectively, the StepStone Shareholders),
which are affiliates of SREP and StepStone, and (b) the Real Estate Investment Group VII L.P., Real Estate Strategies L.P. and Efanur S.A. (collectively, the IRSA Shareholders), which are affiliates of Efanur and
IRSA. Pursuant to the Voting Agreements, each of the StepStone Shareholders and IRSA Shareholders separately committed to vote their voting securities in the Company at a special meeting of shareholders to approve the issuance of the common
stock, and any change of control that could result from the issuance of the common stock, in a Rights Offering or a Non-Rights Offering Conversion, as required pursuant to NYSE American Company Guide Rule 713.
The aggregate voting power of the StepStone Shareholders and IRSA Shareholders committed to vote affirmatively for such matters is sufficient to assure approval of such matters at a shareholders meeting.