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EXHIBIT 10 (ar)
AGREEMENT
This agreement, dated as of the 24th day of October, 2005 (the
"Agreement"), is by and between Marsh
Supermarkets, Inc., an Indiana corporation
(the "Corporation"), and Mark A. Varner
(the "Executive").
WHEREAS, the Compensation Committee (the "Committee") of the
Board
of Directors (the "Board") of the
Corporation has determined that it is in the
best interests of the Corporation and its
shareholders to assure that the
Corporation will have the continued
dedication of the Executive and to encourage
the Executive's full and undivided
attention and dedication to the Corporation;
and
WHEREAS, the Committee has determined that entering into this
Agreement will promote the foregoing
objectives;
NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND, THE PARTIES AGREE
AS
FOLLOWS:
SECTION 1. EMPLOYMENT PERIOD. The Corporation hereby agrees to
continue the Executive in its employ,
subject to the terms and conditions of
this Agreement, for the period commencing
on the Effective Date and ending on
the expiration of the Change of Control
Period (the "Employment Period"). The
Employment Period shall terminate upon the
termination of Executive's employment
for any reason.
SECTION 2. TERMS OF EMPLOYMENT. (a) Position and Duties. (1)
During
the Employment Period, (A) the Executive's
position (including status, offices,
titles and reporting requirements),
authority, duties and responsibilities shall
be at least commensurate in all material
respects with the most significant of
those held, exercised and assigned at any
time during the 120-day period
immediately preceding the Effective Date
and (B) the Executive's services shall
be performed at the office where the
Executive was employed immediately
preceding the Effective Date or at any
other location less than 35 miles from
such office.
(2) During the Employment Period, and excluding any periods of
vacation and sick leave to which the
Executive is entitled, the Executive agrees
to devote his full time and attention
during normal business hours to the
business and affairs of the Corporation
and, to the extent necessary to
discharge the responsibilities assigned to
the Executive hereunder, and to use
the Executive's reasonable best efforts to
perform faithfully and efficiently
such responsibilities. During the
Employment Period, it shall not be a violation
of this Agreement for the Executive to (A)
serve on non-public corporate, civic
or charitable boards or committees, (B)
deliver lectures, fulfill speaking
engagements or teach at educational
institutions and (C) manage personal
investments or attend to family matters, so
long as such activities do not
significantly interfere with the
performance of the Executive's responsibilities
as an employee of the Corporation in
accordance with this Agreement. It is
expressly understood and agreed that, to
the extent that any such activities
have been conducted by the Executive prior
to the Effective Date and disclosed
to the Board or the Committee, the
continued conduct of such activities (or the
conduct of activities similar in nature and
scope thereto) subsequent to the
Effective Date shall not thereafter be
deemed to interfere with the performance
of the Executive's responsibilities to the
Corporation.
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(b) COMPENSATION. (1) BASE SALARY. During the Employment Period,
the
Executive shall receive an annual base
salary (the "Annual Base Salary") at an
annual rate at least equal to 12 times the
highest monthly base salary paid or
payable, including any base salary that has
been earned but deferred, to the
Executive by the Corporation in respect of
the 12-month period immediately
preceding the month in which the Effective
Date occurs. The Annual Base Salary
shall be paid at such intervals as the
Corporation pays executive salaries
generally. During the Employment Period,
the Annual Base Salary shall be
reviewed at least annually, beginning no
more than 12 months after the last
salary increase awarded to the Executive
prior to the Effective Date. Any
increase in the Annual Base Salary shall
not serve to limit or reduce any other
obligation to the Executive under this
Agreement. The Annual Base Salary shall
not be reduced after any such increase and
the term "Annual Base Salary" shall
refer to the Annual Base Salary as so
increased.
(2) ANNUAL BONUS. In addition to the Annual Base Salary, the
Executive shall be eligible to receive, for
each fiscal year ending during the
Employment Period, an annual bonus (the
"Annual Bonus") in cash up to the
Executive's target bonus (which shall not
be less than the current target bonus
of 35% of Annual Base Salary) most recently
established before the Effective
Date under the Corporation's Management
Incentive Plan, or under any successor
plan (the "Target Bonus"). Each such Annual
Bonus shall be paid no later than
the end of the third month of the fiscal
year next following the fiscal year for
which the Annual Bonus is awarded, unless
the Executive shall elect to defer the
receipt of such Annual Bonus.
(3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment
Period, the Executive shall be entitled to
participate in all cash incentive,
equity incentive, savings and retirement
plans, practices, policies, and
programs applicable generally to other peer
executives of the Corporation, but
in no event shall such plans, practices,
policies and programs provide the
Executive with incentive opportunities
(measured with respect to both regular
and special incentive opportunities, to the
extent, if any, that such
distinction is applicable), savings
opportunities and retirement benefit
opportunities, in each case, less
favorable, in the aggregate, than the most
favorable of those provided by the
Corporation for the Executive under such
plans, practices, policies and programs as
in effect at any time during the
90-day period immediately preceding the
Effective Date.
(4) WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as
the case may be, shall be eligible
for participation in and shall receive all
benefits under welfare benefit plans,
practices, policies and programs provided
by the Corporation (including, without
limitation, medical, prescription, dental,
disability, vision, group life plans
and programs) to the extent applicable
generally to other peer executives of the
Corporation, but in no event shall such
plans, practices, policies and programs
provide the Executive with benefits that
are less favorable, in the aggregate,
than the most favorable of such plans,
practices, policies and programs in
effect for the Executive at any time during
the 90-day period immediately
preceding the Effective Date.
(5) EXPENSES. During the Employment Period, the Executive shall
be
entitled to receive prompt reimbursement
for all reasonable expenses incurred by
the Executive in accordance with the most
favorable policies, practices and
procedures of the Corporation in effect for
the Executive at any time during the
90-day period immediately preceding the
Effective Date.
(6) FRINGE BENEFITS. During the Employment Period, the
Executive
shall be entitled to fringe benefits,
including, without limitation, in
accordance with the most favorable plans,
practices, programs and policies of
the Corporation in effect for the Executive
at any time during the 90-day period
immediately preceding the Effective
Date.
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(7) OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or
offices of a size and with
furnishings and other appointments, and to
personal secretarial and other
assistance, at least equal to the most
favorable of the foregoing provided to
the Executive by the Corporation at any
time during the 90-day period
immediately preceding the Effective
Date.
(8) VACATION. During the Employment Period, the Executive shall
be
entitled to paid vacation in accordance
with the most favorable plans, policies,
programs and practices of the Corporation
as in effect for the Executive at any
time during the 90-day period immediately
preceding the Effective Date
SECTION 3. TERMINATION OF EMPLOYMENT. (a) Death or Disability.
The
Executive's employment shall terminate
automatically if the Executive dies
during the Employment Period. If the
Corporation determines in good faith that
the Disability (as defined herein) of the
Executive has occurred during the
Employment Period (pursuant to the
definition of "Disability"), it may give to
the Executive written notice in accordance
with Section 11(b) of its intention
to terminate the Executive's employment. In
such event, the Executive's
employment with the Corporation shall
terminate effective on the 30th day after
receipt of such notice by the Executive
(the "Disability Effective Date"),
provided that, within the 30 days after
such receipt, the Executive shall not
have returned to full-time performance of
the Executive's duties. "Disability"
means the absence of the Executive from the
Executive's duties with the
Corporation on a full-time basis for 180
consecutive days as a result of
incapacity due to mental or physical
illness that is determined to be total and
permanent by a physician selected by the
Corporation or its insurers and
acceptable to the Executive or the
Executive's legal representative.
(b) CAUSE. The Corporation may terminate the Executive's
employment
during the Employment Period for Cause.
"Cause" means:
(1) the willful and continued failure of the Executive to
perform
substantially the Executive's obligations hereunder, including his
duties
(as
contemplated by Section 2(a)(1)(A)) with the Corporation (other
than
any such
failure resulting from incapacity due to physical or mental
illness or
following the Executive's delivery of a Notice of Termination
for Good
Reason), after a written demand for substantial performance is
delivered
to the Executive by the Board or the Chief Executive Officer of
the
Corporation that specifically identifies the manner in which the
Board
or the
Chief Executive Officer of the Corporation believes that the
Executive
has not substantially performed the Executive's duties, or
(2) the willful engaging by the Executive in illegal conduct or
gross
misconduct that is materially and demonstrably injurious to the
Corporation.
For purposes of this Section 3(b), no act,
or failure to act, on the part of the
Executive shall be considered "willful"
unless it is done, or omitted to be
done, by the Executive in bad faith or
without reasonable belief that the
Executive's action or omission was in the
best interests of the Corporation. Any
act, or failure to act, based upon
authority given pursuant to a resolution duly
adopted by the Board or upon the written
instructions of the Chief Executive
Officer of the Corporation or a senior
officer of the Corporation or based upon
the advice of counsel for the Corporation
shall be conclusively presumed to be
done, or omitted to be done, by the
Executive in good faith and in the best
interests of the Corporation. The cessation
of employment of the Executive shall
not be deemed to be for Cause unless and
until there shall have been delivered
to the Executive a copy of a resolution
duly adopted by the affirmative vote of
a majority of both the entire membership of
the Board and the non-employee
members of the Board, at a
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meeting of the Board called and held for
such purpose (after reasonable notice
is provided to the Executive and the
Executive is given an opportunity, together
with counsel for the Executive, to be heard
before the Board), finding that, in
the good faith opinion of the Board, the
Executive is guilty of the conduct
described in Section 3(b)(1) or 3(b)(2),
and specifying the particulars thereof
in detail.
(c) GOOD REASON. During the Employment Period, the Executive's
employment may be terminated by the
Executive for Good Reason or by the
Executive voluntarily without Good Reason.
"Good Reason" means:
(1) the assignment to the Executive of any duties inconsistent
in
any
respect with the Executive's position (including status,
offices,
titles and
reporting requirements), authority, duties or responsibilities
as
contemplated by Section 2(a), or any other diminution in such
position,
authority,
duties or responsibilities (whether or not occurring solely as
a result
of the Corporation's ceasing to be a publicly traded entity),
excluding
for this purpose an isolated, insubstantial and inadvertent
action not
taken in bad faith and that is remedied by the Corporation
promptly
after receipt of notice thereof given by the Executive;
(2) any failure by the Corporation to comply with any of the
provisions
of Section 2(b), other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is remedied
by the
Corporation promptly after receipt of notice thereof given by
the
Executive;
(3) the Corporation's requiring the Executive to be based at
any
office or
location other than as provided in Section 2(a)(1)(B);
(4) any purported termination by the Corporation of the
Executive's
employment
otherwise than as expressly permitted by this Agreement; or
(5) any failure by the Corporation to comply with and satisfy
Section
9(c).
For purposes of this Section 3(c), any good
faith determination of Good Reason
made by the Executive with respect to
termination of employment during the
Employment Period shall be conclusive. The
Executive's mental or physical
incapacity following the occurrence of an
event described above in clauses (1)
through (5) shall not affect the
Executive's ability to terminate employment for
Good Reason.
(d) NOTICE OF TERMINATION. Any termination by the Corporation
for
Cause, or by the Executive for Good Reason,
shall be communicated by Notice of
Termination to the other party hereto given
in accordance with Section 11(b).
"Notice of Termination" means a written
notice that (1) indicates the specific
termination provision in this Agreement
relied upon, (2) to the extent
applicable, sets forth in reasonable detail
the facts and circumstances claimed
to provide a basis for termination of the
Executive's employment under the
provision so indicated, and (3) if the Date
of Termination (as defined herein)
is other than the date of receipt of such
notice, specifies the Date of
Termination (which Date of Termination
shall be not more than 30 days after the
giving of such notice). The failure by the
Executive or the Corporation to set
forth in the Notice of Termination any fact
or circumstance that contributes to
a showing of Good Reason or Cause shall not
waive any right of the Executive or
the Corporation, respectively, hereunder or
preclude the Executive or the
Corporation, respectively, from asserting
such fact or circumstance in enforcing
the Executive's or the Corporation's
respective rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (1) if the
Executive's employment is terminated by the
Corporation for Cause, or by the
Executive for Good Reason, the date of
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receipt of the Notice of Termination or any
later date specified in the Notice
of Termination, (which date shall not be
more than 30 days after the giving of
such notice), as the case may be, (2) if
the Executive's employment is
terminated by the Corporation other than
for Cause or Disability, the Date of
Termination shall be the date on which the
Corporation notifies the Executive of
such termination, and (3) if the
Executive's employment is terminated by reason
of death or Disability, the Date of
Termination shall be the date of death of
the Executive or the Disability Effective
Date, as the case may be.
SECTION 4. OBLIGATIONS OF THE CORPORATION UPON TERMINATION. (a)
OTHER THAN FOR CAUSE, DEATH OR DISABILITY,
OR GOOD REASON. If, during the
Employment Period, the Corporation
terminates the Executive's employment other
than for Cause or Disability or the
Executive terminates employment for Good
Reason:
(1) the Corporation shall pay to the Executive, in a lump sum
in
cash
within 30 days after the Date of Termination, the aggregate of
the
following
amounts:
(A) the sum of (i) the Executive's Annual Base Salary through
the Date of Termination to the extent not theretofore paid, (ii)
the
product of (x) any earned Annual Bonus for the current fiscal
year
and (y) a fraction, the numerator of which is the number of days
in
the current fiscal year through the Date of Termination and the
denominator of which is 365, and (iii) any accrued vacation pay,
in
each case, to the extent not theretofore paid (the sum of the
amounts described in subclauses (i), (ii) and (iii), the
"Accrued
Obligations");
(B) the amount equal to the product of (i) two and (ii) the
sum of (x) the Executive's Annual Base Salary, and (y) the higher
of
(I) the Target Bonus and (II) the Annual Bonus actually paid or
payable, including any bonus or portion thereof that has been
earned
but deferred (and annualized for any fiscal year consisting of
less
than 12 full months or during which the Executive was employed
for
less than 12 full months), for the most recently completed
fiscal
year before the Date of Termination, if any (such higher amount,
the
"Highest Annual Bonus"); and
(2) for
two years after the Executive's Date of Termination, or such
longer period as may be provided by the
terms of the appropriate plan, program,
practice or policy, the Corporation shall
continue medical and welfare benefits
to the Executive and/or the Executive's
family at least equal to those that
would have been provided to them in
accordance with the plans, programs,
practices and policies described in Section
2(b)(4) and Section 2(b)(6), as
applicable, if the Executive's employment
had not been terminated (or, at the
election of the Corporation, pay Executive
a lump sum cash benefit equal t
