NOTE 17. SUBSEQUENT EVENTS

Subsequent Property Activity

Subsequent to December 31, 2015, the Company has sold three hotel properties. After repayment of the associated loans, proceeds from these sales will be used to fund future acquisitions and for general corporate purposes. The sold properties and the related gross proceeds are as follows:

61-room Super 8 in Kirksville, Missouri on January 4, 2016 for $1,525.

133-room Super 8 in Lincoln, Nebraska on January 7, 2016 for $2,800.

170-room Savannah Suites in Greenville, South Carolina on January 8, 2016 for $2,700.

Subsequent to December 31, 2015, one additional hotel property met the criteria to be considered held for sale. Investment in hotel property, net of $619 and debt of $1,582 related to this property remain classified in the December 31, 2015 balance sheet as held for use.

Subsequent Equity Transactions

On March 16, 2016, as discussed in the Company’s Current Report on Form 8-K dated the same, the Company entered into a series of agreements providing for:

the issuance and sale of Condor’s Series D Cumulative Convertible Preferred Stock (“Series D preferred stock) under a private transaction to SREP III Flight-Investco, L.P. (“SREP”), an affiliate of StepStone Group LP;

the exchange of all of Condor’s outstanding Series C preferred stock for Series D preferred stock; and

the cash redemption of all of Condor’s outstanding Series A preferred stock and Series B preferred stock.

On March 16, 2016, the Company and SREP entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which Condor issued and sold 3,000,000 shares of Series D preferred stock to SREP on the same date for an aggregate purchase price of $30,000. The Stock Purchase Agreement required that $20,147 of the purchase price be deposited into an escrow account for purposes of effecting the redemption of the Series A and Series B preferred stock and that the remaining amount of the purchase price be delivered to Condor.

Simultaneously, the Company entered into an Agreement (the “Exchange Agreement”) with RES pursuant to which all 3,000,000 outstanding shares of Series C preferred stock were exchanged for 3,000,000 shares of Series D preferred stock. Under the Exchange Agreement, in lieu of payment of accrued and unpaid dividends in the amount of $4,947 on the Series C preferred stock, Condor (a) paid to RES an amount of cash equal to $1,484, (b) issued to RES 245,156 shares of Series D preferred stock (such that RES, IRSA and their affiliates do not beneficially own in excess of 49% of the voting stock of Condor) and (c) issued to RES a promissory note, bearing interest at 6.25% per annum, in the principal amount of $1,012 and convertible into a number of shares of Series D preferred stock that would have otherwise been issued on account of the remaining accrued and unpaid dividends but for the foregoing 49% limitation (the “Note”). If Series D preferred stock is outstanding, RES at its option may at any time elect to convert the Note, in whole or part, by notice delivered to the Company, into a number of shares of Series D preferred stock, determined by dividing the principal amount of the Note to be converted by $10.00. Any time the Series D preferred stock is required by its terms to be converted into common stock of the Company, the Note will be automatically converted into the number of shares of common stock that RES would have received had RES converted this Note into Series D preferred stock immediately prior to the conversion of the Series D preferred stock. Any such conversion shall be reduced such that RES, together with its affiliates, does not beneficially own more than 49% of the voting stock of the Company and shall reduce the principal amount of the Note proportionally.

The Series D preferred stockholders will rank senior to the Company’s common stock and any other preferred stock issuances and receives preferential cumulative cash dividends at a rate of 6.25% per annum of the $10.00 face value per share. Dividends on the Series D preferred stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement. Whenever the dividends on the Series D preferred stock are in arrears for four consecutive quarters, then upon notice by holders in the aggregate not less than 40% of the outstanding Series D preferred stock, the Company will (a) take all appropriate action reasonably within its means to maximize the assets legally available for paying such dividends and to monetize such assets (for example, but without limiting the generality of the foregoing, by selling or liquidating all of some of the Company’s assets or by selling the Company as a going concern), (b) pay out of all such assets legally available (including any proceeds from any sale or liquidation of such assets) the maximum possible amount of such unpaid dividends, and (c) thereafter, at any time and from time to time when additional assets of the Company (including any proceeds from any sale or liquidation of such assets) become legally available to pay such unpaid dividends, pay such remaining unpaid dividends until all dividends accumulated on the Series D preferred stock have been fully paid.

The Series D preferred stock is convertible, at the option of the holder, at any time into common stock at a rate of $1.60 per share of common stock, which is equal to a rate of 6.25 shares of common stock for each share of Series D preferred stock. The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends. All outstanding shares of Series D preferred stock will be converted into this number of shares of common stock automatically upon closing of a Qualified Offering (defined as a single offering of common stock of at least $50,000 or up to three offerings in the aggregate of at least $75,000 with certain minimum prices per share) without any further action by the holders of such shares or the Company.

The Series D preferred stock is redeemable by the Company at any time subject to certain restrictions, in whole or in a partial redemption of up to $30,000, at $12.00 per share on or before March 16, 2019, $13.00 per share from March 16, 2019 to March 16, 2020, and $14.00 per share on or after March 16, 2020, plus all accrued and unpaid dividends. If a Qualified Offering has not occurred on or before March 31, 2021, holders that hold in the aggregate not less than 40% of the outstanding shares of the Series D preferred stock have the right to elect to have the Company fully liquidate in a commercially reasonable manner as determined by the Board of Directors of the Company to provide for liquidation distributions to the holders of the Series D preferred stock in an amount per share of Series D preferred stock equal to $14.00 in cash plus accrued and unpaid dividends. Once this right has been exercises and the Company has been notified, the dividend rate on the Series D preferred stock after March 31, 2021 will increase from 6.25% per annum to 12.5% per annum. The holders of Series D preferred stock vote their Series D preferred stock as a single class with the holders of the common stock on all matters submitted to such holders for vote or consent. For each such vote or consent, each share of Series D preferred stock entitles the holder to cast one vote for each whole vote (rounded to the nearest whole number) that such holder would be entitled to cast had such holder converted its Series D preferred stock into shares of common stock as of the date immediately prior to the record date for determining the shareholders of the Company eligible to vote on any such matter.

Pursuant to the Stock Purchase Agreement, on March 16, 2016, Condor issued notices to redeem all of the outstanding Series A and Series B preferred stock on April 15, 2016 as follows:

all 803,270 outstanding shares of the Series A preferred stock will be redeemed at the redemption price of $10.00 per share plus $2.084940 per share in accrued and unpaid dividends (plus compounded interest) through the redemption date; and

all 332,500 outstanding shares of the Series B preferred stock will be redeemed at the redemption price of $25.00 per share plus $6.354167 per share in accrued and unpaid dividends through the redemption date.

With notice given, and the redemption funds deposited in escrow, all rights of the holders of the Series A and Series B preferred stock terminated, except the right to receive the redemption price.