8.	Commitments and Contingencies

Operating Leases

Landec leases land, facilities, and equipment under operating lease agreements with various terms and conditions, which expire at various dates through fiscal year 2023. Certain of these leases have renewal options.

The approximate future minimum lease payments under these operating leases at May 29, 2016 are as follows (in thousands):

	Amount
FY 2017	$	3,353
FY 2018		2,625
FY 2019		1,330
FY 2020		612
FY 2021		198
Thereafter		432
Total	$	8,550

Rent expense for operating leases, including month to month arrangements was $4.5 million, $5.0 million and $4.4 million for the fiscal years 2016, 2015 and 2014, respectively.

Capital Leases

On September 3, 2015, Lifecore leased a 65,000 square foot building in Chaska, MN, two miles from its current facility. The initial term of the lease is seven years with two five-year renewal options. The lease contains a buyout option at any time after year seven with the purchase price equal to then mortgage balance on the lessor’s loan secured by the building. The lease is a capital lease. Included in property, plant and equipment as of May 29, 2016 is $3.8 million associated with this capital lease. The monthly lease payment is initially $34,000 and increases by 2.4% per year. Lifecore and the lessor made capital improvements prior to occupancy and thus the lease did not become effective until January 1, 2016. Lifecore initially will use the building for warehousing and final packaging. Apio entered into a capital lease for office equipment for which the value of $133,000 is included in property, plant and equipment as of May 29, 2016.

Future minimum lease payments under capital leases for each year presented as are follows (in thousands):

FY 2017	$	453
FY 2018		462
FY 2019		472
FY 2020		483
FY 2021		486
Thereafter		3,950
Total minimum lease payment		6,306
Less: amounts representing interest and taxes		(2,445	)
Total		3,861
Less current portion included in other accrued liabilities		(57	)
Long-term capital lease obligation	$	3,804

Purchase Commitments

At May 29, 2016, the Company was committed to purchase $23.7 million of produce during fiscal year 2017 in accordance with contractual terms at market rates. Payments of $30.5 million, $16.8 million, and $7.1 million were made in fiscal years 2016, 2015, and 2014, respectively, under similar arrangements.

Legal Contingencies

In the ordinary course of business, the Company is involved in various legal proceedings and claims related to matters such as wage and hour claims.

The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s consolidated financial statements. However, depending on the nature and timing of any such dispute, an unfavorable resolution of a matter could materially affect the Company’s future results of operations or cash flows, or both, of a particular quarter.

During the twelve months ended, May 29, 2016, the Company has recorded a charge to income in the amount of $775,000 or $0.02 per diluted share after taxes, which is the Company’s best estimate of settlement charges for all legal matters currently underway.