Note 6 - Commitments and Contingencies

Investor Relations - IRTH Communications

On April 6, 2016 Optex Systems Holdings Inc. executed an investor relations services agreement with IRTH Communications. The material terms of the agreement are as follows:

On April 29, 2016, Optex Systems Holdings, Inc. issued 40,000 common “restricted” shares at a market price of $2.35 per share ($94,000) in support of the IRTH Communications agreement.

Rental Payments under Non-cancellable Operating Leases

Optex Systems Holdings leases its office and manufacturing facilities for the Optex Systems, Inc., Richardson address and the Applied Optics Center Dallas address, under non-cancellable operating leases.

The leased facility under Optex Systems Inc. at 1420 Presidential Drive, Richardson, Texas consists of 49,100 square feet of space and expires March 31, 2021. Pursuant to the terms of the most recent amendment to the Richardson site facilities lease, there was no base rent payment due from January 1, 2014 through March 31, 2014, with payments beginning April 2014, and annual rental payment inflationary increases between 3.4% and 4.8% occurring each year beginning in 2016. As of June 26, 2016 the unamortized deferred rent was $108 thousand as compared to $106 thousand as of September 27, 2015. Deferred rent expense is amortized monthly over the life of the lease.

The leased facility under the Applied Optics Center at 9839 and 9827 Chartwell Drive, Dallas, Texas, consists of 56,633 square feet of space at the premises. The term of the lease expires September 30, 2016. We are currently in negotiations with the property manager to renew the lease with a reduced floor space for an additional five years by September 30, 2016.

Approximately 12,000 square feet covered under the current Applied Optics Center lease, is subleased under a separate Memorandum of Understanding dated October 27, 2014, to L-3 Communications Mobile Vision Inc. The sublease term is for November 2014 through September 2016. The sublease is treated as a reduction in the company facilities rental and CAM expenses in the statement of operations. L-3 has notified Optex that it will not be renewing the sublease at the end of the current term. We are negotiating with the property manager to exclude a substantial portion of the floor space currently associated with the L-3 Mobile Vision Inc. address from the Optex lease renewal.

As of June 26, 2016, the remaining minimum lease and estimated adjusted common area maintenance (CAM) payments under the non-cancelable office and facility space leases are as follows:

Non-cancellable Operating Leases Minimum Payments

Total facilities rental and CAM expense for both facility lease agreements as of the three and nine months ended June 26, 2016 was $169 and $473 thousand. Total expense under facility lease agreements as of the three and nine months ended June 28, 2015 was $181 and $435 thousand.