NOTE 11 — OPERATING LEASE

On October 31, 2016, Torotel entered into a Second Amendment (“Amendment”) to the lease for one of its manufacturing facility located in Olathe, Kansas. The Amendment became effective as of January 1, 2017, and served to extend the lease term through December 31, 2026 and expand the leased space from approximately 14,137 square feet to approximately 72,388 square feet. The Amendment provides that the monthly base rate in the first two years of the extended term is $26,844, escalating thereafter. The Amendment required Torotel to increase its security deposit from $12,750 to $55,000 and provide a letter of credit as additional security. Additionally, the Amendment addresses other terms and conditions by which Torotel may continue to lease the facility or terminate the lease, and provides Torotel two separate options to extend the lease term for additional five year periods.

Future minimum lease payments on this operating lease are as follows:


Years Ending April 30,

2017	$	53,000
2018		322,000
2019		329,000
2020		362,000
2021		402,000
2022		427,000
2023		442,000
2024		452,000
2025		456,000
2026		467,000
2027		350,000
Total	$	4,062,000