Annual report pursuant to Section 13 and 15(d)

Subsequent Events

v3.7.0.1
Subsequent Events
 12 Months Ended
Oct. 02, 2016
Subsequent Events [Abstract]  
Subsequent Events

Note 18 — Subsequent Events

 

Lease Renewal

 

The premises for the business unit which we acquired from L-3 Communications, Inc., the Applied Optics Center, in November 2014 consists of approximately 56,633 square feet of space, of which approximately 12,000 square feet was subleased through September 30, 2016 to L-3 Communications Mobile Vision Inc. under a separate Memorandum of Understanding dated October 27, 2014, which was not renewed. On November 17, 2016, we received a countersigned new lease for the Applied Optics Center from the landlord for 44,867 square feet, dated October 21, 2016, which lease expires on October 31, 2021 (with a lease term which commenced retroactive to October 1, 2016).

 

  • The monthly base rent is $19.4 thousand through September 30, 2017 and escalates approximately 3% October 1, each year thereafter through 2021. The monthly rent includes approximately $4.9 thousand for additional Common Area Maintenance fees and taxes (CAM), to be adjusted annually based on actual expenses incurred by the landlord. The initial rent including CAM is $24.3 thousand beginning November 1, 2016.
  • The lease includes a one month base rent abatement for October 1 through October 31, 2016 for $19.4 thousand.
  • There are two renewal terms which are each five years in duration. Our obligations to make payments under the lease are secured by a $250,000 standby letter of credit which we can reduce to $125,000 on October 31, 2019.
  • Our monthly base rent (including payment for operating expenses) under the new lease is $24,340.35.

 

Credit Facility — Avidbank

 

In order to meet the security requirement under the lease, we entered into a letter of credit with Avidbank on October 17, 2016 in the amount of $250,000, which expires on October 17, 2017 and is renewable by us for successive one year periods unless the bank notifies us no later than 60 days prior to the end of the initial or any extended term that it shall not renew the letter of credit.

 

In order to accommodate this letter of credit, Avidbank, on the same date, increased our line of credit to $2.2 million from $2.0 million.

 

Equity Transactions – Related Party

 

On October 31, 2016, Longview Fund, L.P. converted $2.7 million of the Sileas note principal in exchange for 800,000 shares of Optex Systems Holdings common stock. The Sileas note balance to the Longview Fund, LP as of October 31, 2016 is $15.1 million.

 

On October 31, 2016, Longview Fund L.P. authorized the return to Optex Systems Holdings’ treasury of 197,299 common shares, held by Sileas Corporation in settlement of $157 thousand of accounts receivable due for expenses paid by Optex Systems Inc. on behalf of the Sileas Corporation. The shares were subsequently cancelled in satisfaction of the outstanding accounts receivable balance as of October 31, 2016.

 

Executive Compensation

 

On November 4, 2016 the Optex Systems Holdings Board of Directors approved executive bonus payments of $35.7 thousand to Karen Hawkins, CFO and $48.9 thousand to Danny Schoening CEO pursuant to their respective employment agreements. The $84.6 thousand of bonuses were paid on December 9, 2016.