Pabst Farms Lease

NET LEASE AGREEMENT


PABST FARMS-RDC, LLC - Landlord


ROUNDY'S, INC. - Tenant


Dated: May 19, 2004


TABLE OF CONTENTS


ARTICLE I
TERM OF LEASE


Page Section 1.1 Term of Lease 1 Section 1.2 Options to Extend 1


ARTICLE II
CONSTRUCTION OF IMPROVEMENTS


Section 2.1 Landlord's Improvements 1 Section 2.2 Force Majeure 2 Section 2.3 Possession of Demised Premises 3 Section 2.4 Construction Guaranty 4 Section 2.5 Tenant's Acceptance of Demised Premises 5 Section 2.6 Repair and Maintenance 5 Section 2.7 Change Orders 5 Section 2.8 Definition of Substantial Completion 5 Section 2.9 Tenant Improvements 5


ARTICLE III
BASIC RENT


Section 3.1 Basic Rent 6 Section 3.2 Basic Rent Adjustment 6 Section 3.3 Additional Rent 6 Section 3.4 Delinquent Payments 6 Section 3.5 Independent Obligations 6


ARTICLE IV
USE OF DEMISED PREMISES


Section 4.1 Permitted Use 6 Section 4.2 Preservation of Demised Premises 7 Section 4.3 Acceptance of Demised Premises 7 Section 4.4 Declaration 7


ARTICLE V
PAYMENT OF TAXES, ASSESSMENTS, ETC.


Section 5.1 Payment of Impositions 7 Section 5.2 Tenant's Right to Contest Impositions 8 Section 5.3 Levies and Other Taxes 8 Section 5.4 Evidence of Payment 9 Section 5.5 Escrow for Impositions 9 Section 5.6 Landlord's Right to Contest Impositions 9


ARTICLE VI
INSURANCE


Section 6.1 Property Insurance 9 Section 6.2 Additional Insurance Coverages 10 Section 6.3 Insurance Provisions 10 Section 6.4 Waiver of Subrogation 11 Section 6.5 Tenant's Business and Personal Property Insurance 11 Section 6.6 Unearned Premiums 11 Section 6.7 Blanket Insurance Coverage 11


ARTICLE VII
UTILITIES


Section 7.1 Payment of Utilities 11 Section 7.2 Additional Charges 12


ARTICLE VIII
REPAIRS


Section 8.1 Tenant's Repairs 12 Section 8.2 Maintenance 12 Section 8.3 Tenant's Waiver of Claims Against Landlord 12 Section 8.4 Prohibition Against Waste 12 Section 8.5 Landlord's Right to Effect Repairs 13 Section 8.6 Misuse or Neglect 13


ARTICLE IX
COMPLIANCE WITH LAWS AND ORDINANCES


Section 9.1 Compliance with Laws and Ordinances 13 Section 9.2 Compliance with Permitted Encumbrances 13 Section 9.3 Tenant's Obligations 13 Section 9.4 Tenant's Right to Contest Laws and Ordinances 13 Section 9.5 Compliance with Hazardous Materials Laws 14 Section 9.6 Hazardous Materials Representation by Landlord 14 Section 9.7 Cost of Compliance with Hazardous Materials Laws 14 Section 9.8 Discovery of Hazardous Materials 15 Section 9.9 Indemnification 15 Section 9.10 [Intentionally Omitted] 15 Section 9.11 Acts or Omissions Regarding Hazardous Materials 15 Section 9.12 Existing Monitoring Wells 15 Section 9.13 Survival 16


ARTICLE X
MECHANIC'S LIENS AND OTHER LIENS


Section 10.1 Freedom from Liens 16 Section 10.2 Landlord's Indemnification 16 Section 10.3 Removal of Liens 16


ARTICLE XI
INTENT OF PARTIES


Section 11.1 Net Lease 17 Section 11.2 Entry by Landlord 17 Section 11.3 Interest on Unpaid Amounts 17


ARTICLE XII
DEFAULTS OF TENANT


Section 12.1 Event of Default 18 Section 12.2 Surrender of Demised Premises 18 Section 12.3 Reletting by Landlord 19 Section 12.4 Survival of Tenant's Obligations 18 Section 12.5 Damages 19 Section 12.6 No Waiver 19 Section 12.7 Landlord's Remedies 20 Section 12.8 Bankruptcy 20 Section 12.9 Waiver by Tenant 20


ARTICLE XIII
DESTRUCTION AND RESTORATION


Section 13.1 Destruction and Restoration 20 Section 13.2 Application of Insurance Proceeds 21 Section 13.3 Continuance of Tenant's Obligations 21 Section 13.4 Completion of Restoration 21 Section 13.5 Termination of Lease 21


ARTICLE XIV
CONDEMNATION


Section 14.1 Condemnation of Entire Demised Premises 22 Section 14.2 Partial Condemnation/Termination of Lease 22 Section 14.3 Partial Condemnation/Continuation of Lease 23 Section 14.4 Continuance of Obligations 24 Section 14.5 Adjustment of Rent 24


ARTICLE XV
ASSIGNMENT, SUBLETTING, ETC.


Section 15.1 Restriction on Transfer 25 Section 15.2 Restriction From Further Assignment and Sublease 25 Section 15.3 Landlord's Termination Rights 25 Section 15.4 Tenant's Failure to Comply 26 Section 15.5 Sharing of Excess Rent 26 Section 15.6 Not Applicable to Certain Excluded Transactions 26


ARTICLE XVI
SUBORDINATION, NONDISTURBANCE,
NOTICE TO MORTGAGEE AND ATTORNMENT


Section 16.1 Subordination by Tenant 26 Section 16.2 Landlord's Default 26 Section 16.3 Attornment 27 Section 16.4 Mortgagee Requested Changes 27


ARTICLE XVII
SIGNS


Section 17.1 Tenant's Signs 28


ARTICLE XVIII
REPORTS BY TENANT


Section 18.1 Annual Statements 28


ARTICLE XIX
CHANGES AND ALTERATIONS


Section 19.1 Tenant's Changes and Alterations 28


ARTICLE XX
MISCELLANEOUS PROVISIONS


Section 20.1 Entry by Landlord 30 Section 20.2 Exhibition of Demised Premises 30 Section 20.3 Indemnification 30 Section 20.4 Notices 31 Section 20.5 Quiet Enjoyment 31 Section 20.6 Landlord's Continuing Obligations 31 Section 20.7 Estoppel 32 Section 20.8 Delivery of Corporate Documents 32 Section 20.9 Memorandum of Lease 32 Section 20.10 Severability 33 Section 20.11 Successors and Assigns 33 Section 20.12 Captions 33 Section 20.13 Relationship of Parties 33 Section 20.14 Entire Agreement 33 Section 20.15 No Merger 33 Section 20.16 Possession and Use 33 Section 20.17 No Surrender During Lease Term 33 Section 20.18 Surrender of Demised Premises 33 Section 20.19 Holding Over 34 Section 20.20 Landlord Approvals 34 Section 20.21 Survival 34 Section 20.22 Attorneys' Fees 34 Section 20.23 Landlord's Limited Liability 34 Section 20.24 Broker 34 Section 20.25 Governing Law 34 Section 20.26 Joint and Several Liability 34 Section 20.27 Time is of the Essence 34 Section 20.28 Tenant's Authority 34 Section 20.29 Conditions Precedent 35 Section 20.30 Counterparts; Facsimile 35


ARTICLE XXI
OPTION TO EXPAND


Section 21.1 Option to Expand 35 Section 21.2 Plans and Specifications 35 Section 21.3 Force Majeure 36 Section 21.4 (Intentionally Deleted) 36 Section 21.5 Guaranty of Improvements 36 Section 21.6 (Intentionally Deleted) 36 Section 21.7 Acceptance of Phase Two Improvements 36 Section 21.8 Construction of Phase Two Improvements 36 Section 21.9 Contractors 36 Section 21.10 Landlord's Right to Inspect 37 Section 21.11 Property of the Landlord 37


ARTICLE XXII
RIGHT OF FIRST OPPORTUNITY


EXHIBITS


Exhibit "A" Legal Description and Permitted Encumbrances Exhibit "B" Outline Plans and Specifications Exhibit "C" Final Plans Exhibit "D" Cost of the Work Exhibit "E" Form of Nondisturbance, Attornment and Subordination
Agreement Exhibit "F" Site Plan Exhibit "G" Total Project Cost Budget Exhibit "H" Tenant Improvements


NET LEASE AGREEMENT


THIS NET LEASE AGREEMENT ("Lease"), made this 19th day of May, 2004, by and between PABST FARMS-RDC, LLC, a Wisconsin limited liability company ("Landlord") and ROUNDY'S, INC., a Wisconsin corporation ("Tenant").


WITNESSETH:


Landlord, for and in consideration of the rents, covenants and agreements hereinafter reserved, mentioned and contained on the part of Tenant, its successors and assigns, to be paid, kept, observed and performed, has leased, rented, let and demised, and by these presents does lease, rent, let and demise unto Tenant, and Tenant does hereby take and hire, upon and subject to the conditions and limitations hereinafter expressed, all that parcel of land situated in the Town of Summit and the City of Oconomowoc, County of Waukesha and State of Wisconsin, described in Exhibit "A" attached hereto and made a part hereof, together with any appurtenant easements now existing or hereafter created (the "Land"), together with all improvements located on and to be constructed thereon. Landlord's Improvements (as defined in Article II) and all other improvements, machinery, equipment, fixtures and other property, real, personal or mixed (except Tenant's trade fixtures, but including the Tenant Improvements) installed or located thereon, together with all additions, alterations and replacements thereof are hereinafter referred to as the "Improvements." The Land and the Improvements are hereinafter referred to as the "Demised Premises." The Demised Premises are subject to the easements, restrictions, reservations and other encumbrances set forth in said Exhibit "A" (the "Permitted Encumbrances"). The structures located upon and being a part of the Demised Premises which are constructed for human occupancy or for storage of goods, merchandise, equipment, or other personal property are collectively called the "Building." Landlord's development of the Land and construction of Landlord's Improvements as contemplated by this Lease are referred to sometimes herein as the "Project."


ARTICLE I
TERM OF LEASE


Section 1.1 Term of Lease. The initial term of this Lease shall commence on the Interim Commencement Date (as defined in Section 2.3) and shall end on the last day of the calendar month during which occurs the Fifteenth (15th) anniversary of the Final Commencement Date (as defined in Section 2.3). The initial term of the Lease, as set forth above, is sometimes hereinafter referred to as the "Initial Term." The Initial Term, together with any Extension Terms (as hereinafter defined, if any) or any extensions to or modifications of the Initial Term, is sometimes hereinafter referred to as the "Term".


Section 1.2 Options to Extend. Tenant shall have the right, to be exercised as hereinafter provided, to extend the Initial Term of this Lease for seven (7) consecutive periods of five (5) years each, on the following terms and conditions and subject to the limitations hereinafter set forth, each five (5) year extension period being in this Lease sometimes referred to as an "Extension Term."


(a) That at the time of exercise of the applicable extension option and at the commencement of the Extension Term, this Lease shall be in full force and effect and no Event of Default (as hereinafter defined) shall then exist, but Landlord shall have the right, at its sole discretion, to waive the non-default condition herein.


(b) That each Extension Term shall be upon the same terms, covenants and conditions as in this Lease with the exception that the annual Basic Rent for the applicable Extension Term shall be increased by an amount equal to ten percent (10%) of the annual Basic Rent in effect for the year immediately prior to the commencement of the Extension Term.


(c) That Tenant shall notify Landlord of its desire to extend the Term of this Lease for the applicable Extension Term by notifying Landlord, in writing at least three hundred sixty-five (365) days prior to commencement of the applicable Extension Term.


ARTICLE II
CONSTRUCTION OF IMPROVEMENTS


Section 2.1 Landlord's Improvements.


(a) Outline Plans and Specifications. Landlord agrees to furnish all of the material, labor, and equipment for the construction on the Land of the improvements specified on the Outline Plans and Specifications which are attached hereto and made a part hereof as Exhibit "B," excluding, however, the Tenant Improvements (as hereinafter defined) ("Landlord's Improvements"). Landlord's Improvements shall be constructed in a good and workmanlike manner in accordance with the Outline Plans and Specifications and Landlord agrees to complete the construction thereof in accordance with the applicable building code as it is presently interpreted and enforced by the governmental bodies having jurisdiction thereof. Landlord agrees to cause plans and specifications to be prepared in accordance with the Outline Plans and Specifications and the aforesaid building code and to submit the same (i) to Tenant for its approval and (ii) to Tenant's insurance carrier, at the address designated by Tenant, for review to establish coverage pricing. Tenant agrees that it will not withhold its approval except for just and reasonable cause and will not act in an arbitrary or capricious manner with respect to the approval of the plans and specifications. The plans and specifications shall be approved by Landlord and Tenant by affixing thereon the signature or initials of an authorized officer or employee of each of the respective parties hereto and copies thereof shall be attached to each party's copy of this Lease and made a part hereof as Exhibit "C." The plans and specifications as finally approved by Landlord and Tenant are hereinafter referred to as the "Final Plans". Such Exhibit "C" shall be in lieu of and shall replace Exhibit "B" except as to nonconstruction matters contained in Exhibit "B" such as allowances and exclusions not expressly and specifically superseded by Exhibit "C." The signature of an authorized officer or employee for Landlord, and the signatures of (i) Darren W. Karst or Edward G. Kitz and (ii) Michael J. Schmitt for Tenant, shall be deemed conclusive evidence of the approval indicated by such signatures. Landlord agrees to appoint competent personnel to work with Tenant in the preparation of the Final Plans for the Landlord's Improvements and Tenant agrees to appoint an officer or employee of Tenant to work with Landlord in the preparation of the Final Plans for the Landlord's Improvements. When Landlord requests Tenant to specify details or layouts or to approve plans and specifications, Tenant shall respond within five (5) business days after Landlord's written request, subject to the provisions of the Outline Plans and Specifications, so as not to delay completion of the Landlord's Improvements. Tenant shall pay to Landlord all increased costs or damages incurred by Landlord attributable to any Tenant Delay (as hereinafter defined).


(b) Total Project Costs/Basic Rent. The general construction contract between the Landlord and Opus North Corporation (the "General Contractor") for the Landlord's Improvements shall be "open-book" to Tenant, and all subcontracts will be competitively bid to a minimum of three (3) subcontractors, unless otherwise agreed to by Tenant. "Total Project Costs" shall mean all costs and expenses of Landlord in constructing, developing and designing the Landlord's Improvements, including, without limitation, construction costs, a General Contractor fee equal to 3.25% of the Cost of the Work as shown on Exhibit D attached hereto, financing fees and interest, legal fees, due diligence costs, broker leasing commissions, land cost (at $95,000 per acre for land within the City of Oconomowoc and $85,000 per acre for land within the Town of Summit, prorated for any partial acres), Impositions (as hereinafter defined) from the date of construction start to the Final Commencement Date, a developer fee (fixed at $1,000,000.00), all costs and fees incurred by Landlord to secure the permanent financing and to lock the interest rate and a return on equity (comprised of land cost above plus cash required by Landlord's lender) based on a return of 8% per annum from the date of construction start to the Final Commencement Date, contractor bonding costs, construction guarantee fees and costs (net of applicable Wisconsin Department of Transportation grants) relating to any required improvements or any land contributions relating to Highway 67 (the "Highway 67 Improvements"). A proposed budget showing the projected Total Project Costs, which the parties understand are subject to change when the actual costs are determined, is attached hereto as Exhibit G (the "Total Project Cost Budget"). Except as provided below, there shall be no deduction from Total Project Costs for any portion of the Land taken, sold or contributed for purposes of the Highway 67 Improvements. The portion of the Total Project Cost Budget allocated to the cost of the Land shall be reduced by any proceeds received by Landlord or Landlord's ground lessor for any portion of the Land taken or sold for purposes of the Highway 67 Improvements.


The annual Basic Rent for each of the first five (5) years of the Initial Term shall be determined by multiplying the Total Project Costs by eight and 8/10ths (8.8%) percent (the "Rental Factor") and shall then be fixed for the first five (5) year period. Thereafter, the annual Basic Rent shall increase by eight percent (8%) and then is fixed for each of years six (6) through ten (10) and increase by an additional nine percent (9%) and then is fixed for each of years eleven (11) through fifteen (15). For example, if Total Project Costs equal $70,000,000, the annual Basic Rent for each of the first five (5) years of the Initial Term would be $6,160,000 ($70,000,000 x .088 = $6,160,000). The Basic Rent would then increase for each of years six (6) through ten (10) to $6,652,800 ($6,160,000 x 1.08) and would then increase again for each of years eleven (11) through fifteen (15) to $7,251,552 ($6,652,800 x 1.09). Total Project Costs are also subject to increase or decrease by change orders as provided in Section 2.7. The Rental Factor is subject to increase pursuant to the provisions of Section 2.3(c).


Section 2.2 Force Majeure. If Landlord is delayed in completing the Landlord's Improvements and/or delivering the Demised Premises to Tenant and the delay in such completion or delivery is caused or contributed to by act or neglect of Tenant, or those acting for or under Tenant (a "Tenant Delay"), labor disputes, inclement weather, casualties, acts of God or the public enemy, governmental embargo restrictions, shortages of fuel, labor, or building materials, action or non-action of public utilities, or of local, state or federal governments affecting the work, or other causes beyond Landlord's reasonable control, then the time of completion of said construction and delivery shall be extended for the additional time required due to such delay. Such delays are each hereinafter referred to as an "Excused Delay."


Section 2.3 Possession of Demised Premises.


(a) Early Occupancy of Dry Box Area/Interim Commencement Date. Landlord and Tenant acknowledge and agree
that Tenant desires to occupy and commence business operations in the portion of the Building from
which it will conduct food distribution for dry box goods (the "Dry Box Area") prior to Landlord
achieving Substantial Completion of the Landlord's Improvements. The Dry Box Area will be separately
delineated in the Final Plans. Landlord agrees to allow Tenant early occupancy into the Dry Box Area
on the following terms: (i) Tenant's use and occupancy of the Dry Box Area shall be subject to such
reasonable restrictions as Landlord may impose so that such use and occupancy does not interfere with
Landlord's completion of the balance of the Landlord's Improvements; (ii) Tenant shall pay to Landlord
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