Page 40 - Apple Supply Chain Co-op Inc. 2016 Annual Report.

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2016 and 2015

NOTE 3 - COMMITMENTS AND CONTINGENCIES

During 2013, the Company entered into a service agreement with an unrelated third party to provide a web-
based interface that allows the Company to access vendor data. The service agreement is for six years.
Under the agreement, the Company pays a monthly subscription fee. For each of the years ended
December 31, 2016 and 2015, the Company paid approximately $1,329,000 in subscription fees.

The approximate future minimum payments under the subscription agreement are as follows:

2017 $ 1,329,000
2018 1,329,000
2019 110,750

$ 2,768,750

Effective January 1, 2015, the Company entered into a renewed two-year agreement with an unrelated
third party to provide produce management services. The agreement includes an automatic one-year
renewal if neither party terminates. The Company is required to compensate the provider through annual
fixed fees. During 2016 and 2015, the total fixed service fee recognized under this agreement was $540,000
and $875,000, respectively. Effective January 1, 2017, the Company renewed this agreement for an
additional two years at a fixed fee rate of $560,000 per year.

Rental expense for office space under operating leases amounted to approximately $233,000 and $220,000
for the years ended December 31, 2016 and 2015, respectively. The Company has commitments related
primarily to minimum lease payments.

The approximate future minimum payments under the leases are as follows:

2017 $ 213,944
2018 210,193
2019 210,193
2020 210,193
2021 175,159

$ 1,019,682

NOTE 4 - 401(k) PLAN

The Company maintains a defined contribution retirement plan under Section 401(k) of the Internal
Revenue Code. Employees with one year of service and who are at least 21 years of age are eligible to
participate in the plan. Once an employee becomes eligible, the plan entry date is the first day of month
after their one year anniversary date. Eligible employees may contribute up to 100% of pretax annual
compensation, not to exceed maximum dollar limits established by law. The Company matches dollar for
dollar up to the first 3% of employee contributions and 50% of the employee elective contributions between
3% and 5%. Employees are fully vested in the Company match. A five-year vesting schedule will be applied
to any additional discretionary match that is made. Company contributions to the plan were $196,971 and
$176,738 for the years ended December 31, 2016 and 2015, respectively.

(Continued)

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