Comfort Inn 2014 Annual Report Download - page 92

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Table of Contents
amount of the commitments under the Old Credit Facility (regardless of usage) ranging from 20 to 45 basis points based upon the credit rating of the
Company.
Fixed Rate Collateralized Mortgage
On December 30, 2014, a court awarded the Company title to an office building as settlement for a portion of an outstanding loan receivable for which
the building was pledged as collateral. In conjunction with the court award, the Company also assumed the $9.5 million mortgage on the property with a
fixed interest rate of 7.26%. The mortgage which is collateralized by the office building requires monthly payments of principal and interest and matures in
December 2020 with a a balloon payment due of $6.9 million. At the time of acquisition, the Company determined that the fixed interest rate of 7.26%
exceeded market interest rates and therefore the Company increased the carrying value of the debt by $1.2 million to record the debt at fair value. The fair
value adjustment will be amortized over the remaining term of the mortgage utilizing the effective interest method.
Economic Development Loans
The Company entered into economic development agreements with various governmental entities in conjunction with the relocation of its corporate
headquarters in April 2013. In accordance with these agreements, the governmental entities agreed to advance approximately $4.4 million to the Company to
offset a portion of the corporate headquarters relocation and tenant improvement costs in consideration of the employment of permanent, full-time employees
within the jurisdictions. At December 31, 2014, the Company had been advanced approximately $3.5 million pursuant to these agreements and expects to
receive the remaining $0.9 million over the next several years, subject to annual appropriations by the governmental entities. These advances bear interest at
a rate of 3% per annum.
Repayment of the advances is contingent upon the Company achieving certain performance conditions. Performance conditions are measured annually
on December 31st and primarily relate to maintaining certain levels of employment within the various jurisdictions. If the Company fails to meet an annual
performance condition, the Company may be required to repay a portion or all of the advances including accrued interest by April 30th following the
measurement date. Any outstanding advances at the expiration of the Company's ten year corporate headquarters lease in 2023 will be forgiven in full. The
advances will be included in long-term debt in Company's consolidated balance sheets until the Company determines that the future performance conditions
will be met over the entire term of the agreement and the Company will not be required to repay the advances. The Company accrues interest on the portion
of the advances that it expects to repay. The Company was in compliance with all current performance conditions as of December 31, 2014.
 
The Company sponsored an unfunded non-qualified defined benefit plan (“SERP”) for certain senior executives. The Company accounted for the SERP
in accordance with applicable guidance which required the Company to (a) recognize in its statement of financial position an asset for a plan’s over funded
status or a liability for a plan’s underfunded status; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the
employer’s fiscal year; and (c) recognize changes in the funded status of a defined benefit post-retirement plan in the year in which the changes occur. The
plan assets and benefit obligations were measured as of the Company’s fiscal year end.
On December 26, 2011, the Company's board of directors approved the termination of the SERP effective immediately. Pursuant to this termination, the
Company effectuated the termination of the SERP through the payment of lump sum distributions to all SERP participants based upon the actuarial
equivalent commuted lump sum value of the full accrued benefit earned by each such participant, using actuarial and other assumptions on December 27,
2012. No assets were held with respect to the SERP, therefore benefits were funded when paid to participants.
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