Comfort Inn 2011 Annual Report Download - page 106

Table of Contents
The Company maintains a Master Aircraft Lease Agreement with LP_C, LLC (“LPC”), which is owned by family members of the Company’s largest
shareholder. The agreement permits the Company to lease the aircraft owned by LPC. During 2011, 2010 and 2009, the Company incurred $0.5 million, $0.7
million and $0.4 million, respectively, pursuant to the lease agreement.
The Company subleases space in its corporate headquarters complex for use by a non-profit organization. Several family members of the Company's
largest shareholder serve as members of the board of directors of this non-profit organization. Beginning in 2004, the Company has donated a portion of the
value of the subleased space to the non-profit organization. The remaining portion of the rent for the space was paid by a family member of the Company's
largest shareholder. During the years ended December 31, 2010 and 2009, the Company received rent payments under this agreement totaling approximately
$8 thousand and $41 thousand, respectively. Beginning in April of 2010 and continuing through March 2013 (which is the expiration date of the Company's
master lease), the Company began donating the entire space utilized by the non-profit organization, as a result, no further rent payments will be received.
The Company maintains a lease agreement on behalf of a family member of the Company’s largest shareholder for 1,950 square feet of office space
located in Chevy Chase, Maryland. The lease has a 5 year term ending in 2013 with annual lease payments totaling approximately $72,000. The Company
currently provides use of the entire leased space free of charge and reimburses the family member for the taxes incurred related to the personal use of the office
space. These payments total approximately $40,000 per year.
In December 2008, the Company's board of directors approved an arrangement with an entity controlled by the family members of the Company's
largest shareholder to permit this entity to utilize services of a particular Company employee. Under the terms of the agreement, the related party is permitted to
utilize up to 50% of the designated employee's overall working time and in return is required to reimburse the Company for 50% of the Company's overall
costs associated with the individual's employment. During the year ended December 31, 2011, 2010 and 2009, the Company received payments pursuant to
this arrangement totaling $0.2 million, $0.1 million and $0.1 million, respectively.
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During the year ended December 31, 2011 the Company recorded a $6.6 million charge in SG&A and marketing and reservation expenses related to
termination benefits provided to employees separating from service with the Company. These expenses include $5.8 million of salary and benefits
continuation and $0.8 million related to the acceleration of share-based compensation for terminated employees. At December 31, 2011, approximately $4.6
million of the salary and benefits continuation payments remain to be remitted.
During the year ended December 31, 2010 , the Company recorded a $3.3 million charge in SG&A and marketing and reservation expenses related to
salary and benefit continuation termination benefits provided to employees separating from service with the Company. At December 31, 2011, all salary and
benefit continuation termination benefits incurred during the year ended December 31, 2010 had been remitted.
During the year ended December 31, 2009, the Company recorded a $5.4 million charge in SG&A and marketing and reservation expenses related to
termination benefits provided to employees separating from service with the Company. These expenses included $4.7 million of salary and benefits
continuation and $0.7 million related to the acceleration of share-based compensation for terminated employees. At December 31, 2011, approximately $0.4
million of these salary and benefits continuation payments remain to be remitted.
During the year ended December 31, 2011, the Company remitted termination benefits totaling $4.5 million, including $3.2 million related to
termination benefits incurred in prior years. At December 31, 2011, approximately $5.4 million of termination benefits remained to be paid and were included
in current and non-current liabilities in the Company’s consolidated financial statements, including approximately $0.5 million of benefits incurred prior to
2009. The Company expects $4.5 million of these benefits to be paid within the next twelve months.
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The Company filed suit in United States District Court against a franchisee for breach of contract, trademark infringement, fraudulent inducement and
negligent misrepresentation. The franchisee has filed an arbitration action against the Company alleging wrongful termination of its franchise agreements. The
parties have agreed to litigate all claims in an arbitration action. The Company denies the franchisees' asserted claims and is currently defending the litigation.
The Company is a defendant in a number of lawsuits arising in the ordinary course of business. In the opinion of management and the Company's legal
counsel, the ultimate outcome of any such lawsuit individually or collectively will not
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