ARCADIA STATEMENT

As a starting point, Arcadia Brewing Company remains committed to Battle Creek, and to the
continuity of our business downtown. To paraphrase a famous quote about GM, we believe whats good
for Battle Creek is good for Arcadia, and vice versa. Additionally, we at the outset want to acknowledge
that BCU was the driving force behind Arcadia becoming established in 1996, and want to give a nod to
the City of Battle Creek for its recent efforts to support Arcadia and help us in our effort to stay
downtown.
As for the lease issue with BCU, there is a significant amount of history with BCU and Arcadia,
so the list below is meant to provide some context. Two items we want to clear up right away: (1) we
never asked for $0 in rent; in negotiating a lease with BCU we have asked to be given credit for the
amount owed to us by BCU, as detailed below; and (2) we have not demanded more and more
financial resources from Battle Creek, rather, we have requested what we believe is owed to us by
BCU and furthermore, what is fair. As further background, BCU purchased the building in 2004 and
some Arcadia stock. BCU was paid back, in full, for this stock purchase. This transaction allowed Arcadia
to stay in Battle Creek, and Arcadia met its obligations to BCU, which resulted in minimizing BCUs
financial exposure for this transaction. At the time, this represented an economic development agency that
was working hard to keep a resource in the community. Furthermore, we met our obligations to BCU. It is
our hope that Arcadia and BCU can re-establish channels of communication and negotiate terms that will
allow Arcadia to stay downtown. That has to take place, however, with a clear eye on the facts. In
summary:

For 10 years, from October 2004 until October 2014, we operated under a lease with BCU.
For 10 years we paid rent and all maintenance and upkeep of the building.

The lease rate was fair given the condition of the building. The building needs serious
updating and upgrades, and the condition of the building, we believe, was worsened as a
result of the streetscape and building projects carried out by BCU. The second floor of the
building is unimproved, mostly vacated, and only suitable for storage.

The original lease dictated by BCU required Arcadia to pay for all maintenance and repairs
to the building. BCU did not expend dollars maintaining the building for these 10 years;
rather, Arcadia did. This property was one of, if not the only performing real estate asset
that BCU came to own in the Downtown. Any remaining value in the building that BCU
will receive as a result of a sale is the result of Arcadias investments.

The original lease provides that upon termination BCU is to pay Arcadia for the value of
certain repairs and improvements Arcadia paid for with regard to the building, in an
amount based on the value of those improvements for their useful life. Arcadia terminated
the lease in October of 2014. Arcadia submitted to BCU, multiple times, documentation of
the costs to be reimbursed by BCU. Arcadia submitted annual reports to BCU detailing all
maintenance, repairs, and improvements to the building, as required by the terms of the
Lease. Arcadia had to submit these reports multiple times, presumably because they were
misplaced or lost by BCU. We provided these reports again when Arcadia terminated the
Lease in 2014. Arcadia believes that it is owed slightly over $90,000 by BCU. BCU has
not paid anything to Arcadia for this obligation. Arcadia has not pursued collection efforts
against BCU, and has been, for the past two years, trying to negotiate a lease with BCU so
that our future in Battle Creek could be solidified.

Since October 2014, Arcadia has not paid rent. In light of the amount owed to Arcadia and
BCUs nonpayment of this amount, Arcadia has been setting off rent owed to BCU against
the amount BCU owes to Arcadia for capital improvements and maintenance to BCUs
building. For the entire term of the lease Arcadia met its obligations under the lease (i.e.,
maintenance and rent). Arcadia merely expects the same from BCU. While BCU contends
that it has made tax and maintenance payments out of goodwill, we would counter that
these payments are made out of an obligation owed to Arcadia.

BCU has, for the past year, been paying, in part, for maintenance of the building, as well as
property taxes. This has been carried out as a result of conversations between Arcadia and
BCU. With BCUs non-payment of the amount owed to Arcadia for maintenance of the
building during the term of the lease, Arcadia sought to have BCU be directly responsible
for maintenance going forward. However, despite statements from BCU officials that they
would pay property taxes and maintenance going forward, real property taxes have been
delinquent (and some remain unpaid), and contractors have gone unpaid.

Arcadia has diligently working with BCU since 2013 to come to mutually satisfactory
lease terms. Arcadia shrunk its footprint in the building, and now only occupies
approximately 11,000 square feet, opening the rest of the building up to additional
development. Arcadia has been requesting a lease during this time period, and the parties
were close to reaching agreement on lease terms. In the interest of getting a lease in place,
Arcadia was willing to take a significant discount on the amount owed to it by BCU.
However, it was recently communicated to Arcadia that BCU had entered into a purchase
agreement for the building, and would no longer be negotiating a lease. Arcadia now has
to negotiate a new lease with the new owner. Similar to submitting documentation of
expenses without receiving a corresponding payment, Arcadia is frustrated that its efforts
to negotiate and get to acceptable terms on a lease have not born fruit.

In 2012, BCU was informed by Arcadia that ,with road closures to Jackson Street and the
area around Arcadia/Kellogg campus relative to vehicular and truck traffic restrictions,
further growth by Arcadia would have to occur outside of Arcadias downtown location.

Arcadia is not in a position to purchase the building and make the necessary improvements
to the property. Furthermore, given that Arcadia is now only in a portion of the first floor
of the building, we believe that downtown Battle Creek would be better served by
developing the building into a multi-use property (with potential office, residential, or
retail spaces). Arcadia is not a property developer. For these reasons, Arcadia did not
purchase the building. Instead, we had hoped that BCU would fully utilize the property,
and now hope that a private developer will. Arcadia believes that full development and use
of the building will better serve downtown. Arcadia met with multiple developers at
BCUs request, and met with one on our own. A commercial contractor, at our request,
undertook a study of the building and detailed the renovations that need to be made. We
provided this report to BCU, and believe BCU may have misplaced this document as well.

Recent announcement of an Arcadia Ale & Smokehouse in Lansing is a project in which

Arcadia is licensing the use of its concept and brand with absolutely no ownership for
Arcadia. Furthermore, Arcadia was forced to recently downsize its brewing operation in

Battle Creek to a pub sized system based upon the building being vigorously marketed for
sale by BCU.

Arcadia has not taken advantage of Battle Creek and its resources in any way. Arcadia
remains committed to both Kalamazoo and Battle Creek. Economic development cannot be
seen as territorial or parochial; rather, it is regional. A strong Arcadia in Kalamazoo should
equate to a strong Arcadia in Battle Creek. We have never demanded or received grants,
abatements, or other Battle Creek community resources, and have paid every penny plus
generous interest on all monies borrowed from BCU. We have requested what is owed to
us under our lease, nothing more. As BCU has not paid us that amount, we have attempted
to collect that amount through non-payment of rent, requesting BCU pay for maintenance,
etc. We have attempted, during this time, to maintain an open dialogue with BCU in order
to stabilize our future in Battle Creek.

Instead of focusing on Arcadias expansion in Kalamazoo in a pejorative manner on social media, we

could encourage BCU to focus on meeting its obligations and working to keep Arcadia in Battle Creek.
We are currently in discussions with the potential new owner about a lease. We hope to have productive
conversations with BCU regarding remaining issues concerning our prior lease. We want to stay in Battle
Creek.
Finally, Arcadia and BCU historically had a working relationship, and we are grateful to BCU for the
work done in the past to help Arcadia stay in Battle Creek. We recognize that BCU has had its challenges
recently, including a significant amount of turnover at the board and administrative level. We hope that
BCU works through these challenges and, despite its intent to withdraw from downtown development,
will find in itself the commitment to come to the table and work to keep Arcadia downtown. And let me
be clear: were not seeking any favors, exceptions, and were not looking to obtain something that we
have no claim to. Rather, were only seeking to be treated fairly.
Sincerely,
ARCADIA BREWING COMPANY
Mardy & Tim Suprise