Item
1.01. Entry into a Material Definitive
Agreement.
On
September 27, 2007 (the “Effective Date”), Optical Communication Products, Inc.
(the “Company”) entered into an Agreement of Purchase and Sale and Escrow
Instructions (the “Sale Agreement”) with DS Ventures, LLC (the “Buyer”) pursuant
to which the Company has agreed to sell its Woodland Hills, California facility
(the “Premises”), located at 6101 Variel Avenue in the city of Los Angeles,
California, to the Buyer for a price of $28,000,000 in cash (the “Purchase
Price”). The Premises consist primarily of an approximately
148,671-square-foot industrial/office building, on-site parking spaces, and
the
underlying land with improvements and all fixtures attached
thereto. The closing of the Sale Agreement is tentatively set for
December 20, 2007.
Concurrently
with the execution of the Sale Agreement, the Company entered into a Standard
Industrial/Commercial Single-Tenant Lease—Net (the “Lease Agreement”, and
together with the Sale Agreement, the “Sale and Leaseback Agreements”) with the
Buyer pursuant to which the Company will lease back the Premises from the Buyer
to use in the normal course of the Company’s business. The term of
the Lease Agreement is set to commence on the closing date of the Sale Agreement
and will continue for 18 months thereafter unless earlier terminated by the
Company, with the Company having a right to terminate the Lease Agreement
effective at any time 6 or more months after the commencement
date. The base rent per the Lease Agreement is fixed at $100,000 per
month.
The
Sale
and Leaseback Agreements contain representations and warranties that are
customary for such transactions. Pursuant to the Sale Agreement, the
Buyer will have the right, at its sole risk and expense, during the 30 calendar
days following the Effective Date (the “Due Diligence Period”), to conduct a
physical inspection and examination of the Premises and certain matters
(including environmental and land use matters) relating to the Premises and
may
elect to terminate the Sale Agreement during such Due Diligence Period for
any
reason or for no reason.
On
or
before October 5, 2007, the Buyer will deposit $1,000,000 into an escrow
account, such deposit to be applied to the purchase price at Closing and
released to the Company in two separate tranches: (i) $400,000 immediately
thereafter and (ii) $600,000 at the expiration of the Due Diligence Period,
such
deposit to be refundable to the Buyer only if the sale is not consummated as
a
result of the termination of the Sale Agreement by the Buyer under certain,
predetermined circumstances . Upon the closing of the Sale Agreement,
the expected net proceeds from the sale, or approximately $27,000,000, will
be
used to fund working capital needs.
There
is
no material relationship between the Company and the Buyer or any affiliate,
director, officer or associate of the Company.
The
foregoing description of the Sale and Leaseback Agreements do not purport to
be
complete and are qualified in their entirety by reference to such
agreements.