Jamba Juice 2007 Annual Report Download - page 130

Table of Contents
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NOTE 4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Other Commitments and Contingencies (continued)
Marketing Requirement (continued)
The policy terms are subject to change at any time at JJC’s sole discretion and JJC may perform audits as deemed necessary to ensure the spending is
timely and relates to bona fide marketing activities. Pursuant to the Amendment discussed in Note 1, national marketing fund contributions are deferred
retroactively from January 1, 2003 until the earlier of the time that the Company maintains positive cash flow for four consecutive quarters or June 30, 2008,
at which time the deferred contributions become payable over a 12 month period and include interest based on the Company’s prevailing rate, as calculated
quarterly.
At December 13, 2005, unpaid marketing fund contributions in the amount of $267,000, were included in accrued liabilities. As of December 13,
2005, the Company was in compliance with these marketing requirements.
Distributor Agreements
The Company entered into two third-party distributor agreements whereby most of the Company’s retail and restaurant inventory is purchased. Either
party, given proper notice as specified in these agreements, may terminate these agreements at any time.
Litigation
The Company may be involved in litigation arising from transactions in the ordinary course of business. Management believes that the ultimate liability,
if any, resulting from transactions in the ordinary course of business will not have a material effect on the financial condition and results of operations of the
Company.
NOTE 5. EMPLOYEE BENEFIT PLAN
The Company offers a 401(K) retirement savings plan (the “Plan”), where eligible employees may contribute up to 25 percent of their compensation, as
defined. The Company may make discretionary profit sharing contributions based on the employees’ compensation, as defined. Administrative expenses and
other costs to administer the Plan, unless paid directly by the Company, are paid for by the Plan. The Company made no discretionary contributions in 2005.
NOTE 6. RELATED PARTY TRANSACTIONS
Coffee Partners Hawaii
In 2001, the Company entered into a management agreement with Coffee Partners Hawaii (CPH), a Hawaii general partnership and affiliated entity.
Under the terms of this agreement, certain administrative services and/or support such as accounting, payroll administration, executive management, store
development, marketing, human resources, and training are to be provided to the Company in return for a management fee. The agreement also provides for
certain management and development consulting services to be provided to CPH by the Company. In 2005, the Company incurred CPH management fees of
approximately $172,000.
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