7/7/09

MARCUS CORPORATION
VARIABLE INCENTIVE PLAN (VIP) TERMS

Plan Sponsor:

The plan will be sponsored by The Marcus Corporation (“Marcus Corporation” or the “Company”).

Plan Objectives:

The objectives of The Marcus Corporation’s Variable Incentive Plan are to:

Effective Date:

The Variable Incentive Plan, as amended, will become effective as of July 7, 2009 for plan years ending May 2010 and beyond.

Plan Year:

A Plan Year is from approximately June 1 ^st to May 31 ^st (coincides with The Marcus Corporation’s fiscal year).

Administration:

The Plan will be administered by the Compensation Committee of The Marcus Corporation’s Board of Directors (the “Committee”), which reserves the authority to amend, interpret, or terminate the plan in whole or in part at any time. The Committee may delegate responsibility for the plan’s ministerial functions to such officers of the Company as it determines in its sole discretion from time to time.

Eligibility and Participation:

All salaried employees are eligible to participate. Participants will be selected annually by the Chairman and Chief Executive Officer. Participating positions will vary by division, district or facility (“Business Unit”).

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Base Salary:

Base Salary used to determine actual incentive awards will be an individual’s actual rate of Base Salary in effect at the end of the Plan Year, without regard to voluntary salary reductions, such as under the 401(k) Plan, Flexible Benefit Spending Plan, etc. See sections discussing New Hires, Promotions, and Transfers for additional information.

Target Incentive Opportunity:

Each participant’s target incentive opportunity will be expressed as either a percentage of Base Salary, a percentage of a selected financial measure, a fixed dollar amount or a combination thereof and will be recommended annually by the CEO and Division Presidents, provided, however, that the target incentive opportunity for the Company’s named executive officers shall be determined by the Committee. Target incentive awards will be earned if relevant Company or Business Unit financial targets are achieved. In addition, VIP-eligible employees will have a portion of their incentive opportunity based on the achievement of individual strategic or business level goals other than the selected financial targets.

VIP incentive opportunities will be communicated to employees by the CEO and Division Presidents after Company, Business Unit and Individual goals are set at the beginning of each fiscal year.

Incentive Opportunity Weighting and Allocation:

The percentage of incentive opportunity that will be determined by the achievement of Company and/or Business Unit financial performance can vary by level and position within the organization. These weightings may be revised annually based on the CEO’s discretion and The Marcus Corporation’s business objectives, provided, however, that the weightings for the Company’s named executive officers shall be determined by the Committee.

Examples:

An operating VP’s incentive opportunity might be weighted 80% based upon achievement of financial performance goals and 20% based upon achievement of individual goals, with the 80% incentive opportunity based upon financial performance goals further weighted 80% based upon achievement of his Business Unit goals and 20% based upon achievement of total division and/or consolidated Company goals.

A corporate staff member’s incentive opportunity may be weighted 60% based upon achievement of consolidated Company financial performance goals and 40% based upon achievement of Individual goals.

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Financial Performance Goals:

The financial performance goals of the Company or a Business Unit shall be based on one or more of the following objective financial measures, either in absolute terms or in comparison to prior year performance or publicly available industry standards or indices: revenues, gross operating profit, operating income, pre-tax earnings, net earnings, earnings per share, earnings before interest, taxes, depreciation and amortization (EBITDA), economic profit, operating margins and statistics, financial return and leverage ratios, total shareholder return metrics or a Company-specific financial metric, such as Adjusted EBITDA, Adjusted Pre-tax Income (API) or Adjusted Division Income (ADI). Additional financial measures not named could be considered if the Compensation Committee determined that the specific measure contributes to achieving the primary goal of the VIP incentive program – sustained growth in long-term shareholder value. The Compensation Committee retains the ability to consider whether an adjustment of the financial goals for any year is necessitated by exceptional circumstances. This ability is intended to be narrowly and infrequently used.

Individual Performance Factors:

A portion of individual incentive amounts will be paid based on other individual quantitative or qualitative performance factors, developed pursuant to the Company’s or Business Unit’s operating plan or the Individual performance management process for the Plan Year. In all cases, the Plan administrators reserve the right to not pay any incentives based on individual performance measures if a previously identified financial measure is below a predetermined level.

Individual Performance:

The Compensation Committee, on its own or at the recommendation of the CEO, reserves the right to eliminate a participant’s incentive award on the basis of sub-standard individual performance. All participants with a performance rating below a predetermined level will be reviewed for this purpose.

Incentive Award Calculation:

The first step in determining an incentive payment is to compare the actual Company or Business Unit financial measure earned during the Plan Year to the applicable target financial performance goal. If the actual financial performance equals the applicable target financial performance goal, then 100% of the applicable individual’s target incentive opportunity based upon achievement of the financial measure has been earned. If the actual financial performance is equal to or less than a pre-determined Threshold level of achievement, then 0% of the applicable individual’s target incentive opportunity based upon the achievement of the financial measure will have been earned. Conversely, if the actual financial performance is equal to or greater than a pre-determined Maximum level of achievement, then 200% of the applicable individual’s target incentive opportunity based upon achievement of the financial measure has been earned.

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The table below illustrates how the “interval” created by this threshold and maximum level of achievement helps determine the actual incentive payout applicable to the financial measure: