Note 9. Commitments and Contingencies

Operating Leases

The Company leases various manufacturing facilities and transportation equipment under leases classified as operating leases, expiring at various dates through 2025. These leases provide that the Company pay taxes, insurance, and other expenses on the leased property and equipment. Rent expense for all leases was approximately $1.1 million and $1.4 million in fiscal 2018 and 2017, respectively.

Future minimum rental payments due under these leases are as follows (in thousands):


Fiscal Year	Amount
2019	$	620
2020		598
2021		594
2022		594
2023		273
Thereafter		380

	$	3,059

Related Party Leases

Included above are leases for manufacturing and warehouse facilities leased from the Company’s chief executive officer and Ordway Properties, LLC (an entity in which the chief executive officer has an ownership interest in) under operating leases expiring at various dates through 2025. Rent expense under these leases totaled approximately $0.5 million in fiscal 2018 and $0.4 million in fiscal 2017.

On July 3, 2017, the Company and Ordway Properties, LLC purchased Honeyhill Properties, LLC which is the owner of the building at 510 Henry Clay Blvd. in Lexington, KY for $1,500,000. Video Display Corporation invested $500,000 towards the purchase price and is accounting for the investment under the cost method since Ordway Properties, LLC is the majority owner. During the period ending November 30, 2017 the Company reduced its share in the LLC by $125,000, selling to Ordway Properties, LLC. There was no gain or loss on the sale. The Company is a one third owner in Honeyhill Properties, LLC with Ordway Properties, LLC being a two thirds owner. The building is the new facility for the Company’s Lexel Imaging subsidiary, which had previously signed a five (5) year lease agreement with Honeyhill Properties, LLC on June 15, 2017 before the sale took place.

Future minimum rental payments due under these leases with related parties are as follows (in thousands):


Fiscal Year	Amount
2019	$	588
2020		594
2021		594
2022		594
2023		273
Thereafter		379

	$	3,022

Legal Proceedings

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.

On May 19, 2017, Lexel Imaging’s Chapter 11 Bankruptcy case was dismissed upon approval of a settlement agreement between Lexel Imaging (Lexel) and its landlord, Alidade Bull Lea, LLC (Alidade). The settlement agreement required Lexel to surrender possession of the rental property on or before September 30, 2017 and remit to Alidade all past due rent of approximately $232 thousand. Lexel was also required to make payments totaling $100 thousand into an escrow account by July 28, 2017. These funds were held by Alidade’s counsel until full and timely compliance with the settlement agreement was met, at which time the funds were returned to Lexel. The Company complied with all of the stipulations and successfully vacated the building on September 15, 2017.