MARSH SUPERMARKETS INC, 10-K/A, 1997-07-15

MARSH SUPERMARKETS INC
10-K/A, 1997-07-15
GROCERY STORES

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended March 29, 1997

Commission File Number: 0-1532

MARSH SUPERMARKETS, INC.
(Exact name of registrant as specified in its charter)

INDIANA 35-0918179
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

9800 CROSSPOINT BOULEVARD
INDIANAPOLIS, INDIANA 46256-3350
(Address of principal executive offices) (Zip Code)

317-594-2100
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Class A Common Stock
Class B Common Stock
7% Convertible Subordinated Debentures, due 2003

Registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of the Registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K:
--

Aggregate market value of Class A Common Stock held by non-affiliates of
the Registrant as of June 2, 1997: $41,350,335. This calculation assumes all
shares of Common Stock beneficially held by officers and members of the Board of
Directors of the Registrant are owned by "affiliates", a status which each of
the officers and directors individually disclaims.

At June 2, 1997, there were 3,849,426 shares of Class A Common Stock and
4,544,232 shares of Class B Common Stock outstanding.

Portions of the 1997 Annual Report to Shareholders for the year ended
March 29, 1997 are incorporated by reference into Parts I and II.

Portions of the Proxy Statement for the Annual Shareholders' Meeting to
be held August 5, 1997 are incorporated by reference into Part III.

<PAGE> 2

PART I

ITEM 1. BUSINESS

GENERAL

At March 29, 1997, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
88 supermarkets and 182 Village Pantry convenience stores in central Indiana and
western Ohio. The Company believes that Marsh supermarkets have one of the
largest market shares of supermarket chains operating in its market area and
Village Pantry has one of the largest market shares of convenience stores in its
market area. Marsh owns and operates a specialized convenience store
distribution business which serves its Village Pantry stores as well as over
1,400 unaffiliated convenience stores in a ten state area. Marsh also owns and
operates a food services division which provides upscale catering, vending,
concession, and business cafeteria management services.

SUPERMARKETS

At March 29, 1997, the Company operated 88 supermarkets, 75 in central Indiana
and 13 in western Ohio. The 37 stores in the Indianapolis metropolitan market
area constitute the Company's major market. The remaining supermarkets operate
in 35 other communities. Revenues from supermarket operations represent
approximately 69% of the Company's fiscal 1997 consolidated sales and other
revenues.

The Company's supermarket merchandising strategy emphasizes service, quality and
convenient one-stop shopping at competitive prices. Of the Company's
supermarkets, 61 are open 24 hours a day and 14 are open until midnight, with
the remainder having various other schedules. All stores are open seven days a
week.

The Company believes providing quality merchandise is an important factor in
maintaining and expanding its customer base. In recent years, the Company has
devoted a greater proportion of new and remodeled stores to fresh, high quality
perishables, such as produce, delicatessen items, baked goods, prepared foods,
seafood and floral items. The Company believes fresh produce is an important
customer draw; therefore, it focuses on buying premium quality produce
worldwide. An extension of this theme is convenient, high quality, ready to eat
meals. The "Chef Fresh" program offers take-home items for immediate consumption
in 57 stores. These products are prepared in the Company's central kitchen and
the geographic concentration of the supermarkets enables the Company to deliver
fresh items to its stores quickly and frequently. Central kitchen is now a
shared facility, providing fresh items to most divisions.

The Company's new and expanded large supermarket store format offers customers
convenient one-stop shopping. Its Marsh supermarkets feature an extended line of
traditional grocery store items as well as service and specialty departments
such as delicatessens, bakeries, prepared foods, prime cut meats, fresh seafood,
floral and video rental. The Company features nationally advertised and
distributed merchandise along with products under its own trademarks, service
marks and trade names. Service and specialty departments included in Marsh
supermarkets include delicatessens (88 stores), hot prepared foods (59),
bakeries (88), prime cut service meat (58), fresh service seafood (59), floral
shops (58), imported cheese shops (50), wines and beer (82), salad bars (37),
video rental (73), cosmetic counters (16), shoe repair (18), and dry cleaners
(3). Twenty-three of the Company's supermarkets include pharmacies in food and
drug combination stores. To combat increasing competition from other retail
formats, such as wholesale clubs, 54 of the Company's supermarkets also include
warehouse-type sections offering large size and multi-pack products typically
featured by wholesale clubs, priced competitively with club prices. In addition,
banks or savings institutions operate branch facilities in 36 of the Company's
stores, and 33 stores offer ATM machines. Home delivery of orders placed by
customers via telephone or fax is offered to the Indianapolis metropolitan
market.

The Company's superstore format is in excess of 75,000 square feet, and its
modern conventional supermarket format is approximately 55,000 to 65,000 square
feet. The Company currently operates five superstores and ten modern
conventional supermarkets. Approximately one-third of the sales area in these
stores is devoted to merchandising fresh, high quality perishable products such
as delicatessens, bakeries, prepared foods and produce, and approximately 5,000
square feet are devoted to warehouse-type merchandising of bulk club pack
merchandise.

The Company has developed a smaller, low-price supermarket format with limited
service and specialty departments as an alternative to the large, full service
supermarket. As of March 29, 1997, the Company

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operated fourteen of its supermarkets under this concept. Subsequent to March
29, 1997, a conventional Marsh supermarket was converted to this format and an
additional store was acquired. The stores operate under the trade name LoBill
Foods. There is an ongoing development program within the Company's market area
to remodel selected Marsh supermarkets to the LoBill format. The Company
believes the LoBill format offers an opportunity to maximize its market area by
expanding into smaller communities and inner city metropolitan areas that can be
better served by that format and to appeal to the price motivated consumer in
markets currently serviced by traditional Marsh stores.

The Company's supermarkets range in size from 15,000 to 81,500 square feet. The
average size is approximately 37,700 square feet. The Company has an ongoing
development program of constructing larger Marsh supermarkets within its market
area and remodeling, enlarging and replacing existing supermarkets. Future
development will continue to focus on a food and drug combination store format
of approximately 50,000 to 60,000 square feet, with superstores in excess of
80,000 square feet in select locations. The Company believes a larger store
format enables it to offer a wider variety of products and expanded service and
specialty departments, thereby strengthening its competitive position. The
following summarizes the number of stores by size categories:

<TABLE>
<CAPTION>
Number
Square Feet of Stores
----------- ---------
<S> <C>
More than 70,000 . . . . . . . . . . . . . . . . . . 5
50,000 - 70,000 . . . . . . . . . . . . . . . . . . 10
40,000 - 49,999 . . . . . . . . . . . . . . . . . . 7
30,000 - 39,999 . . . . . . . . . . . . . . . . . . 34
20,000 - 29,999 . . . . . . . . . . . . . . . . . . 29
Less than 20,000 . . . . . . . . . . . . . . . . . . 3
--
88
==
</TABLE>

The Company advertises through various media, including circulars, newspapers,
radio and television. Printed circulars are used extensively on a weekly basis
to advertise featured items. The focus of the television campaign promotes a
quality and service image rather than specific products and prices. The
Indianapolis television market covers approximately 80% of the Company's stores.
Various sales enhancement promotional activities, including free grocery and
other programs designed to encourage repeat shoppers, are conducted as an
important part of the Company's merchandising strategy. The Company utilizes a
frequent shopper card program, "Fresh I.D.E.A.(R)." This card functions as a
check cashing card, video rental card and automatically provides electronic
coupons. Further, a customer may select a VISA(R) co-branded credit card option
for their Fresh I.D.E.A. card, and earn rebates on all credit card purchases,
regardless of the merchant. The rebates are funded by the bank partner.

CONVENIENCE STORES

At March 29, 1997, the Company operated 182 convenience stores under the Village
Pantry trade name. These self-service stores offer a broad selection of grocery,
bakery, dairy and delicatessen items including freshly prepared food products.
Approximately 57% of the stores also offer petroleum products. Revenues from the
convenience stores represented approximately 13% of the Company's fiscal 1997
consolidated sales and other revenues. Carry-out cold beer, a high-volume item
typically found in convenience stores in other states, may be sold only by
package liquor stores and taverns in Indiana; accordingly, it is not sold in the
Company's convenience stores in Indiana. In Indiana, all but nine of the
Company's convenience stores are open 24 hours a day; the remaining stores close
at 11:00 P.M. or midnight. All stores are open seven days a week.

These stores offer fresh pastry products and sandwiches prepared in the stores.
The Company has added higher margin food and beverage products, such as
store-prepared pizza (38 stores), broasted chicken (43), and self-service
fountain drinks, as well as sit-down eating areas in 62 stores. The Company is a
Taco Bell Express franchisee in three stores which extends the fast food variety
available. Two of the stores include drive-thru service. The Company has also
partnered with Shell Oil Company in the Kokomo market area whereby the Company
receives a fixed fee and a commission based on fuel sales above a base level,
and does not have capital invested in the fuel inventory or dispensing
equipment. It is anticipated that the relationship with the Shell Oil Company
will be expanded into additional markets. The Company also added drive-thru car
washes at two store locations.

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The Company has an ongoing program of remodeling, upgrading and replacing
existing Village Pantry stores with particular emphasis on developing locations
that will yield a high volume of gasoline sales. New stores generally average
3,700-4,500 square feet, compared to 1,800-2,500 square feet for older stores.
The larger size accommodates the aforementioned new food products. In
constructing new, and remodeling and expanding existing stores, the Company
tailors the format to each specific market, with heavy emphasis on food service
in areas which the Company believes to be less susceptible to intense
competition from major fast food operators, such as smaller towns and high
density neighborhoods.

CONVENIENCE STORE DISTRIBUTING COMPANY ("CSDC")

CSDC serves the Company's Village Pantry stores and over 1,400 unaffiliated
stores in a ten state area. CSDC distributes a wide range of products typically
sold in convenience stores, including groceries, cigarette and other tobacco
products, snack items, housewares and health and beauty care products. Customers
have the opportunity to order most product lines in single units. CSDC owns a
210,000 square foot warehouse and distribution facility in Richmond, Indiana,
which the Company estimates is operating at 75% of capacity. CSDC utilizes its
own trucks and drivers for its transportation needs. The CSDC sales and
marketing staff of approximately 43 employees services existing customers and
actively solicits new customers. CSDC accounted for approximately 17% of the
Company's fiscal 1997 consolidated sales and other revenues.

CRYSTAL FOOD SERVICES

The Company's food service operation does business under the trade name Crystal
Food Services. It offers a range of services including banquet hall catering,
special events catering, concession services, vending, and cafeteria management.
The Company focuses on presenting expertly prepared cuisine, of unsurpassed
freshness and quality in all of its food service operations. The Company began
its food service operations in 1993 with ALLtimate Catering and expanded in
January 1995 with the acquisition of Crystal Catering. In May 1995, the Company
expanded again with the acquisition of Martz and Associates Food Services. The
Company intends to expand the food services operations through the solicitation
of new customers and possible acquisition of businesses that will complement the
existing operations.

The combination of these operations has created a unique range of services,
products and facilities. The Company's banquet hall facilities include the
Crystal Yacht Club, the Marott, the Indiana Roof Ballroom, the Murat Shrine
Centre, and the Victorian Manor/Schnull-Rausch House. The Company does special
event catering at the Indianapolis Motor Speedway, Conner Prairie Museum,
Indianapolis Museum of Art, the Eiteljorg Western Museum of Art, the RCA Tennis
Championships, and the Horizon Convention Center in Muncie, Indiana. The Company
also provides concession services at the Indianapolis Zoo, Conner Prairie and
the Indiana State Fairgrounds, and cafeteria management to 10 major employers
and vending services to over 100 clients throughout the greater Indianapolis
area. The Company's food service operation also provides meals at the child
development centers for Marsh and Eli Lilly in Indianapolis.

SUPPLY AND DISTRIBUTION

The Company supplies its supermarkets from three Company-operated distribution
facilities. Dry grocery and frozen food products are distributed from a 409,000
square foot leased facility in Indianapolis. Produce and meat products are
distributed from a 191,000 square foot perishable products facility in Yorktown,
Indiana. Non-food products are distributed from 180,000 square feet of a 388,000
square foot Company owned warehouse in Yorktown. In addition, the Company leases
a 172,000 square foot warehouse for storage of forward purchases of merchandise
and seasonal items. Additional outside warehouse space is leased as needed to
meet seasonal demand.

The Company's distribution centers are modern and highly automated. Merchandise
is controlled through an on-line computerized buying and inventory control
system. In fiscal 1997, the perishable products facility was expanded by
approximately 67,000 square feet to allow for future growth of all perishable
commodities. The receiving dock was modified to enhance product flow. Also, new
state-of-the-art banana rooms were added to ensure high quality bananas with
consistent color. The Company believes its distribution centers are adequate for
its needs for the foreseeable future without major additional capital
investment. The Company estimates the supermarket distribution centers currently
operate at approximately 75% of capacity. Approximately 80% of the delivery
trips from distribution centers to supermarkets are 75 miles or less. The
Company also operates a commissary and a central kitchen to produce products
sold through the delicatessen departments of its supermarkets and convenience
stores and to third parties through CSDC.

4
<PAGE> 5

The Company believes centralized direct buying from major producers and growers
and its purchasing and distribution functions provide it with advantages
compared to purchasing from a third-party wholesaler. Direct buying, centralized
purchasing, and controlled distribution reduce merchandise cost by allowing the
Company to minimize purchases from wholesalers and distributors and to take
advantage of volume buying opportunities and forward purchases of merchandise.
Centralized purchasing and distribution promote a consistent merchandising
strategy throughout the Company's supermarkets. Rapid inventory turnover at the
warehouse permits the Company's stores to offer consistently fresh, high-quality
products. Through frequent deliveries to the stores, the Company is able to
reduce in-store stockroom space and increase square footage available for retail
selling.

Some products, principally bakery, dairy and beverage items, and snack foods are
delivered directly to the supermarkets and convenience stores by distributors of
national and regional brands.

CSDC supplies grocery, produce, housewares, health and beauty care, and
cigarette and tobacco products to the Company's convenience stores. Also, CSDC
supplies cigarette and tobacco products to the Company's supermarkets.

The Company's supermarket transportation function is performed by Ruan
Transportation Management Systems ("Ruan"), an unaffiliated transportation
management and equipment leasing company. This service is provided under a seven
year contract, dated September 18, 1987, which is automatically renewed for
successive one year terms unless canceled by Ruan or the Company at least sixty
days prior to the anniversary date, subject to early cancellation in stages
under certain conditions. Under the arrangement, Ruan employs the drivers,
dispatchers and maintenance personnel who perform the Company's distribution
function. A subsidiary of the Company leases most of its tractor/trailer fleet
from Ruan under long-term, full service leases.

MANAGEMENT INFORMATION SYSTEMS

All of the Company's supermarkets are equipped with electronic scanning checkout
systems to minimize item pricing, provide more efficient and accurate checkout
line operation, and provide product movement data for merchandising decisions
and other purposes. The checkout systems are integrated with the Company's
frequent shopper card program to provide customer specific data to facilitate
individualized marketing programs. Point-of-sale electronic funds transfer and
credit card systems are in place in the supermarkets. Through the use of a bank
debit card, a customer can authorize the immediate transfer of funds from their
account to the Company at the point of purchase.

The Company utilizes in-store micro-computers in the supermarkets to automate
various tasks, such as electronic messaging, processing the receiving and
billing of vendor direct-store-delivered (DSD) merchandise, processing of video
rentals, processing pharmacy records in the 23 food and drug combination stores,
and time keeping for payroll processing. Future supermarket applications
currently under development include computer-assisted reordering, an electronic
shelf tag program and a business television satellite program. All convenience
stores are equipped with micro-computers for electronic transmission of
accounting and merchandising data to headquarters, electronic messaging and
processing DSD merchandise receiving and billing.

Additionally, the Company plans to upgrade supermarket front-end systems and
scale equipment, and begin to implement new inventory/procurement distribution
software.

COMPETITION

The retail food industry is highly competitive. Marsh believes competitive
factors include quality perishable products, service, price, location, product
variety, physical layout and design of store interior, ease of ingress and
egress to the store and minimal out-of-stock conditions. Marsh endeavors to
concentrate its efforts on all of these factors with special emphasis on
maintaining high quality store conditions, high quality perishable products,
expanded service and specialty departments, and competitive pricing.

The Company believes it is one of the largest supermarket chains operating in
its market area. The Company's supermarkets are subject to competition from
local, regional and national supermarket chains, independent supermarkets, and
other retail formats, such as discount stores and wholesale clubs. The number of

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<PAGE> 6

competitors and degree of competition experienced by the Company's supermarkets
vary by location, with the Indianapolis metropolitan market generally being
subject to more price competition than the smaller markets. The principal
supermarket chain competitors are The Kroger Co., Super Valu Food Stores, Inc.,
operating in the Indianapolis market through its "Cub Foods" stores, and Meijer,
Inc.

The Company believes Village Pantry is one of the largest convenience store
chains in its market area. Major competitors are petroleum marketing companies
which have converted or expanded gasoline locations to include convenience food
operations. National convenience store chains do not have a significant presence
in the Company's marketing area. The Company believes the principal competitive
factor for convenience stores is location, and it actively pursues the
acquisition of attractive sites for replacing existing stores and future
development of new stores. Also in 1998, additional Village Pantry stores will
be converted to the Shell brand, with Shell Oil providing the capital for
upgrading existing fuel operations at these stores.

The Company believes the primary competitive factors in CSDC's wholesale
distribution business are pricing, and the timeliness and accuracy of
deliveries. CSDC's major competitors are McLane Company, Inc. and several
regional wholesale distributors.

SEASONALITY

Marsh's supermarket sales are subject to some seasonal fluctuation, as are other
retail food chains. Traditionally, higher sales occur during the third quarter
holiday season, and lower sales occur in the warm weather months of the second
quarter. Convenience store sales traditionally peak in the summer months.

EMPLOYEES

The Company has approximately 12,800 employees. Approximately 7,440 employees
are employed on a part-time basis. All employees are non-union, except
approximately 200 supermarket distribution facility employees who are unionized
under two three-year collective bargaining agreements which extend to May, 2001.
The Company considers its employee relations to be excellent.

The Company opened a child development center in fiscal 1997 in an effort to
help employees meet day care needs. The operation is located in a 12,500 square
foot facility near one of the Company's supermarkets in Carmel, Indiana. Marsh
owns the building and the equipment. The operations are run by an unaffiliated
child care firm. The service is limited to the Company's employees and immediate
family members and operates five days a week and holidays.

REGULATORY MATTERS

As a retailer of alcoholic beverages, tobacco products and gasoline, the Company
is subject to federal and state statutes, ordinances and regulations concerning
the storage and sale of these products. The Company is aware of the existence of
petroleum contamination at 21 Village Pantry locations and has commenced
remediation at each of these sites. The cost of remediation varies significantly
depending on the extent, source and location of the contamination, geological
and hydrological conditions and other factors.

ITEM 2. PROPERTIES

The following table summarizes the per unit and aggregate size of the retail
facilities operated by Marsh, together with an indication of the age of the
total square footage operated.

<TABLE>
<CAPTION>
Per Store
Footage Operated Average 0-5 Years 5-10 Years Over 10 Years
---------------- ------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Supermarkets 3,321,000 37,700 37% 31% 32%
Convenience Stores 514,000 2,800 17% 37% 46%
---------
3,835,000
=========
</TABLE>

6
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Owned and leased retail facilities are summarized as follows:

<TABLE>
<CAPTION>
Convenience
Supermarkets Stores
------------ ------
<S> <C> <C>
Owned 34 129
Leased:
Fixed rentals only 26 28
Fixed plus contingent rentals 28 25
-- ---
54 53
-- ---
88 182
== ===
Lease expirations:
Within five years 32 46
Five to ten years 16 6
Beyond ten years 6 1
-- ---
54 53
== ===
</TABLE>

All leases, except for six supermarkets and fifteen Village Pantry stores, have
one to four renewal options for periods of two to five years each. The majority
of leases provide for payment of property taxes, maintenance and insurance by
the Company. In addition, the Company is obligated under leases for 13 closed
stores, of which 10 were subleased at March 29, 1997.

One supermarket (considered owned for purposes of the foregoing analysis) is
leased under an equity lease arrangement pursuant to which ownership is
transferred to the Company at the expiration of the lease.

The non-perishable grocery products warehouse in Indianapolis is leased with an
initial lease term expiring in 2000 and options available through 2014. The
facility, constructed in 1969, is located on a 44 acre site and has a total of
409,000 square feet, of which 382,000 are utilized for grocery warehousing
operations. The remainder consists of a floral design center and office space.

A 191,000 square foot refrigerated perishable products handling facility in
Yorktown, Indiana, serves as the distribution center for meat, produce and
delicatessen items. The facility was completed in 1981 and was financed by an
economic development bond . Ownership of the warehouse was reconveyed to the
Company in 1996, and the facility was expanded and updated in fiscal 1997.

Marsh owns an additional 388,000 square foot facility in Yorktown, Indiana.
Approximately 180,000 square feet of this facility is used as a distribution
center for non-food products, approximately 21,000 square feet is used by the
retail maintenance department, and an additional 55,000 square feet of warehouse
space is leased to third parties. The portion of this facility formerly utilized
for the Company's corporate offices currently is vacant.

The Company leases a 172,000 square foot warehouse in Indianapolis for storage
of forward purchases of merchandise and seasonal items as well as housing the
Company's product reclamation center.

The 160,000 square foot corporate headquarters in Indianapolis is owned by the
Company. This facility was completed and occupied in May 1991.

CSDC owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana.

ITEM 3. LEGAL PROCEEDINGS

There are no pending legal proceedings to which Marsh is a party which are
material to its business, financial condition or results of operations or which
would otherwise be required to be disclosed under this item.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders during the fourth
quarter of fiscal 1997.

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<PAGE> 8

EXECUTIVE OFFICERS OF REGISTRANT

Information required by Item 10 with respect to the Registrant's executive
officers is set forth below. Each officer has been elected for a term to expire
in August 1997 or upon election of the officer's successor by the Board of
Directors.

<TABLE>
<CAPTION>
NAME POSITION AGE FAMILY RELATIONSHIP
---- -------- --- -------------------

<S> <C> <C> <C>
DON E. MARSH Chairman of the Board, President 59 Son of Garnet R. Marsh,
and Chief Executive Officer brother of C. Alan Marsh
and of William L. Marsh

Mr. Don E. Marsh has held his current position as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company for more than
the past five years. He has been employed by the Company in various supervisory
and executive capacities since 1961.
- -----------------------------------------------------------------------------------------------------------
C. ALAN MARSH Vice Chairman of the Board and 55 Son of Garnet R. Marsh,
Senior Vice President-Corporate brother of Don E. Marsh
Development and William L. Marsh

Mr. C. Alan Marsh has held his current position since February 1992. For more than five years prior thereto,
he served as President and Chief Operating Officer, Marsh Village Pantries, Inc. He has been employed by the
Company in various supervisory and executive capacities since 1965.

- -----------------------------------------------------------------------------------------------------------
FRANK J. BRYJA President and Chief Operating 55 None
Officer, Supermarket Division

Mr. Frank J. Bryja has held his current position since August 1996. For more than five years prior thereto,
he served as Vice President-Merchandising. He has been employed by the Company in various supervisory and
executive capacities since 1965.

- -----------------------------------------------------------------------------------------------------------
P. LAWRENCE BUTT Vice President, Counsel 55 None
and Secretary

Mr. P. Lawrence Butt has held his current position for more than the past five years. He has been employed
by the Company in various executive capacities since 1977.

- -----------------------------------------------------------------------------------------------------------
DOUGLAS W. DOUGHERTY Vice President, Chief Financial 53 None
Officer and Treasurer

Mr. Douglas W. Dougherty has been employed by the Company as Chief Financial Officer since March 1994. His
prior experience includes senior financial executive positions with Hartmarx, Inc. from November 1990 to
March 1994. Prior experience includes senior management positions at Dayton Hudson Corp. and The May
Department Stores Company.

- -----------------------------------------------------------------------------------------------------------
WILLIAM L. MARSH Vice President - General Manager, 53 Son of Garnet R. Marsh,
Property Management brother of Don E. Marsh
and C. Alan Marsh

Mr. William L. Marsh has held his current position for more than the past five years. In May 1991, he was
elected a director of the Company. He has been employed by the Company in various supervisory and
executive capacities since 1974.
</TABLE>

8
<PAGE> 9

<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RONALD R. WALICKI President and Chief Operating 59 None
Officer, Village Pantry Division

Mr. Ronald R. Walicki has held his current position since August 1996. Prior thereto, he served as
President and Chief Operating Officer, Supermarket Division since February 1994, and as President and
Chief Operating Officer of Marsh Village Pantries, Inc. since February 1992. He has been employed by the
Company in various supervisory and management positions since 1965.

- -----------------------------------------------------------------------------------------------------------
THEODORE R. VARNER President and Chief Operating 61 None
Officer, Convenience Store
Distributing Company Division

Mr. Theodore R. Varner has held his current position since August 1994. For more than five years prior
thereto, he served as Vice President - General Manager, Convenience Store Distributing Company Division.

- -----------------------------------------------------------------------------------------------------------
DAVID M. REDDEN Senior Vice President - Human Resources 49 None

Mr. David M. Redden has held his current position since August 1996. Prior thereto, he served as President
and Chief Operating Officer, Village Pantry Division Since February 1994, as Vice President - General Manager,
Supermarket Division from February 1992 to February 1994 and as Vice President - Warehousing and Transporation
from April 1988 to February 1992. He has been employed by the Company in various supervisory and management
positions since 1969.
- -----------------------------------------------------------------------------------------------------------
JACK J. BAYT President and Chief Operating 40 None
Officer, Crystal Food Services Division

Mr. Jack J. Bayt has held his current position since January 1995. For more than five years prior
he was President and Chief Executive Officer of Crystal Catering of Indiana, Inc.
- -----------------------------------------------------------------------------------------------------------
MARK A. VARNER Corporate Controller 47 None

Mr. Mark A. Varner has held his current position since 1990. He has been employed by the Company in
various accounting positions since 1971.

- -----------------------------------------------------------------------------------------------------------
</TABLE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

Information on Common Stock and Shareholder Matters on pages 15 and 36 of the
1997 Annual Report to Shareholders for the year ended March 29, 1997 is
incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data on page 14 of the 1997 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 16 through 19 of the 1997 Annual Report to Shareholders for
the year ended March 29, 1997 is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and notes thereto on pages 21 to 32 of the
1997 Annual Report to Shareholders are incorporated herein by reference.

Quarterly Financial Data on page 15 of the 1997 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.

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<PAGE> 10

PART III

In accordance with Instruction G(3), except as indicated in the following
sentence, the information called for by Items 10, 11, 12 and 13 is incorporated
by reference from the Registrant's definitive Proxy Statement pursuant to
Regulation 14A, to be filed with the Commission not later than 120 days after
March 29, 1997, the end of the fiscal year covered by this report. As permitted
by instruction G(3), the information on executive officers called for by Item 10
is included in Part I of this Annual Report on Form 10-K.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) The following consolidated financial statements of Marsh
Supermarkets, Inc. and subsidiaries, included in the 1997 Annual
Report to Shareholders for the year ended March 29, 1997 are
incorporated by reference in Item 8.

Consolidated Balance Sheets as of March 29, 1997 and March 30, 1996.

Consolidated Statements of Income for each of the three years in the
period ended March 29, 1997.

Consolidated Statements of Changes in Shareholders' Equity for each
of the three years in the period ended March 29, 1997.

Consolidated Statements of Cash Flows for each of the three years in
the period ended March 29, 1997.

Notes to consolidated financial statements.

Report of Independent Auditors.

(2) The following consolidated financial statement schedules of Marsh
Supermarkets, Inc. and subsidiaries are included in Item 14(d):

Note: All schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions, or are inapplicable, and therefore have
been omitted.

(3) The following exhibits are included in Item 14(c):

<TABLE>
<S> <C> <C>
Exhibit 3 (a) - Restated Articles of Incorporation, as amended as of May 15,
1991 - Incorporated by reference to Form 10-K for the year
ended March 30, 1991.
(b) - By-Laws as amended as of February 16, 1996 - Incorporated by
reference to Form 10-K for the year ended March 30, 1996.

10
<PAGE> 11

<TABLE>
<S> <C> <C>
(e) - Rights Agreement, dated as of August 1, 1989, between Marsh
Supermarkets, Inc. and National City Bank, as successor to
Merchants National Bank and Trust Company of Indianapolis -
Incorporated by reference to Form 10-Q for the quarter ended
October 14, 1989.
(f) - Amendment No. 1, dated as of May 1, 1991, to Rights
Agreement, dated as of August 1, 1989 - Incorporated by
reference to Form 10-K for the year ended March 30, 1991.
(g) - Note Agreement, dated as of October 15, 1992, for $35,000,000
8.54% Senior Notes, Series A, due December 31, 2007, and
$15,000,000 8.13% Senior Notes, Series B, due December 31, 2004
- Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
(h) - Society National Bank, as Trustee, including form of Indenture
- Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13% Senior Notes,
Series B, due December 31,2004.
(j) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
30, 2003.

Exhibit 10 (a) - Agreements between Ruan Leasing Company and Marsh Supermarkets,
Inc., dated September 18, 1987 - Incorporated by reference to
Registration Statement on Form S-2 (File No. 33-17730).
(b) - Lease agreements relating to warehouse located at 333 South
Franklin Road, Indianapolis, Indiana - Incorporated by
reference to Registration Statement on Form
S-2 (File No. 33-17730).

Management Contracts and Compensatory Plans.

(c) - Marsh Supermarkets, Inc. 1987 Stock Option Plan - Incorporated
by reference to Registration Statement on Form S-8 (File No.
33-33427).
(d) - Amendment to the Marsh Supermarkets, Inc. 1987 Stock Option
Plan - Incorporated by reference to Proxy Statement, dated
March 22, 1991, for a Special Meeting of Shareholders held May
1, 1991.
(e) - Amended and Restated Employment and Severance Agreements,
dated December 3, 1992 - Incorporated by reference to
Registration Statement on Form S-2 (File No. 33-56738).
(f) - Marsh Supermarkets, Inc. 1980 Marsh Stock Plan - Incorporated
by reference to Registration Statement on Form S-8 (File No.
2-74859).
(g) - Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock Plan
- Incorporated by reference to Proxy Statement, dated March 22,
1991, for a Special Meeting of Shareholders held May 1, 1991.
(h) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(i) - Indemnification Agreements - Incorporated by reference to Form
10-Q for quarter ended January 6, 1990.
(j) - Marsh Supermarkets, Inc. 1991 Employee Stock Incentive Plan -
Incorporated by reference to Proxy Statement, dated March 22,
1991, for a Special Meeting of Shareholders held May 1, 1991.
(k) - Marsh Supermarkets, Inc. Executive Life Insurance Plan -
Incorporated by reference to Form 10-K for the year ended March
30, 1991.
(l) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(m) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for Outside
Directors - Incorporated by reference to Proxy Statement, dated
June 25, 1992, for the Annual Meeting of Shareholders held
August 4, 1992.
(n) - Employment contracts, dated January 1, 1995 - Incorporated by
reference to Form 10-Q for the quarter ended January 7, 1995.
</TABLE>

11
<PAGE> 12

<TABLE>
<S> <C> <C>
(o) - Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan - Incorporated by reference to Proxy Statement,
dated June 22, 1995, for Annual Meeting of Shareholders held
August 1, 1995.
(p) - Form of Severance Benefits Agreements, dated as of January 1,
1996.
(q) - Form of Split Dollar Insurance Agreement for the benefit of
Don E. Marsh.

Exhibit 11 - Statement re: Computation of Per Share Earnings.

Exhibit 13 - 1997 Annual Report to Shareholders (only portions specifically
incorporated by reference are included herein).

Exhibit 21 - Subsidiaries of the Registrant.

Exhibit 23 - Consent of Independent Auditors.

Exhibit 27 - Financial Data Schedule.
</TABLE>

(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Registrant with respect
to the fourth quarter of its fiscal year ended March 29, 1997.

12
<PAGE> 13

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

MARSH SUPERMARKETS, INC.

July 11, 1997 By:/s/ Douglas W. Dougherty
---------------------------
Vice President, Chief
Financial Officer and
Treasurer

13
<PAGE> 14

<TABLE>
<CAPTION>
Exhibit Index Page No.
------------- --------

<S> <C> <C> <C>
Exhibit 3 (a) - Restated Articles of Incorporation, as amended as of May 15,
1991 - Incorporated by reference to Form 10-K for the year
ended March 30, 1991.
(b) - By-Laws, as amended as of February 16, 1996 - Incorporated
by reference to Form 10-K for the year ended March 30, 1996.

Exhibit 4 (a) - Articles V, VI and VII of the Company's Restated Articles of
Incorporation, as amended as of May 15, 1991 - Incorporated by
reference to Form 10-K for the year ended March 30, 1991.
(b) - Articles I and IV of the Company's By-Laws, as amended as of
August 7, 1990 - Incorporated by reference to Form 10-Q for the
quarter ended January 5, 1991.
(c) - Agreement of the Company to furnish a copy of any agreement
relating to certain long-term debt and leases to the Securities
and Exchange Commission upon its request - Incorporated by
reference to Form 10-K for the year ended March 27, 1987.
(d) - Note Agreement, dated as of May 1, 1988, for $25,000,000
9.48% Senior Notes due June 30, 2003 - Incorporated by
reference to Form 10-Q for the quarter ended June 25, 1988.
(e) - Rights Agreement, dated as of August 1, 1989, between Marsh
Supermarkets, Inc. and National City Bank, as successor to
Merchants National Bank and Trust Company of Indianapolis -
Incorporated by reference to Form 10-Q for the quarter ended
October 14, 1989.
(f) - Amendment No. 1, dated as of May 1, 1991, to Rights
Agreement, dated as of August 1, 1989 - Incorporated by
reference to Form 10-K for the year ended March 30, 1991.
(g) - Note Agreement, dated as of October 15, 1992, for $35,000,000
8.54% Senior Notes, Series A, due December 31, 2007, and
$15,000,000 8.13% Senior Notes, Series B, due December 31, 2004
- Incorporated by reference to Registration Statement on Form
S-2 (File No. 33-56738).
(h) - Indenture, dated as of February 15, 1993, between Marsh
Supermarkets, Inc. and Society National Bank, as Trustee,
including form of Indenture - Incorporated by reference to
Registration Statement on Form S-2 (File No. 33-56738).
(i) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $35,000,000 8.54% Senior Notes, Series A,
due December 31, 2007, and $15,000,000 8.13% Senior Notes,
Series B, due December 31,2004.
(j) - Amendment to Note Agreements and Assumption Agreement, dated
March 29, 1997, for $25,000,000 9.48% Senior Notes, due June
30, 2003.

Management Contracts and Compensatory Plans.

14
<PAGE> 15

<TABLE>
<S> <C> <C>
(h) - Supplemental Retirement Plan of Marsh Supermarkets, Inc. and
Subsidiaries - Incorporated by reference to Registration
Statement on Form S-2 (File No. 33-17730).
(i) - Indemnification Agreements - Incorporated by reference to
Form 10-Q for the quarter ended January 6, 1990.
(j) - Marsh Supermarkets, Inc. 1991 Employee Stock Incentive Plan -
Incorporated by reference to Proxy Statement, dated March 22,
1991, for a Special Meeting of Shareholders held May 1, 1991.
(k) - Marsh Supermarkets, Inc. Executive Life Insurance Plan -
Incorporated by reference to Form 10-K for the year ended March
30, 1991.
(l) - Marsh Supermarkets, Inc. Executive Supplemental Long-Term
Disability Plan - Incorporated by reference to Form 10-K for
the year ended March 30, 1991.
(m) - Marsh Supermarkets, Inc. 1992 Stock Option Plan for Outside
Directors - Incorporated by reference to Proxy Statement, dated
June 25, 1992, for the Annual Meeting of Shareholders held
August 4, 1992.
(n) - Employment contracts, dated January 1, 1995 - Incorporated by
reference to Form 10-Q for the quarter ended January 7, 1995.
(o) - Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
Incentive Plan - Incorporated by reference to Proxy Statement,
dated June 22, 1995, for Annual Meeting of Shareholders held
August 1, 1995.
(p) - Form of Severance Benefits Agreements, dated as of January 1,
1996.
(q) - Form of Split Dollar Insurance Agreement for the benefit of
Don E. Marsh.

Exhibit 11 - Statement re: Computation of Per Share Earnings.

Exhibit 13 - Annual Report to Shareholders (only portions specifically
incorporated by reference are included herein).

Exhibit 21 - Subsidiaries of the Registrant.

Exhibit 23 - Consent of Independent Auditors.

Exhibit 27 - Financial Data Schedule.
</TABLE>

<PAGE> 1
EXHIBIT 4(i)

================================================================================

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

AMENDMENT TO NOTE AGREEMENTS
AND
ASSUMPTION AGREEMENT

Dated as of March 28, 1997

Re: Note Agreements dated as of October 15, 1992
and
$35,000,000 Original Principal Amount of 8.54% Senior Notes, Series A,
Due December 31, 2007
and
$15,000,000 Original Principal Amount of 8.13% Senior Notes, Series B,
Due December 31, 2004

================================================================================
<PAGE> 2

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

AMENDMENT TO NOTE AGREEMENTS
AND
ASSUMPTION AGREEMENT

Dated as of
March 28, 1997

To the Holder (the "Holder") Named on
Schedule I hereto which is a
signatory to this Agreement

Ladies and Gentlemen:

Reference is made to the separate Note Agreements dated as of October
15, 1992 (the "Note Agreements"), between Marsh Supermarkets, Inc., an Indiana
corporation (the "Company"), and the original institutional purchasers of the
following described Notes, under and pursuant to which $35,000,000 aggregate
principal amount of 8.54% Senior Notes, Series A, Due December 31, 2007 and
$15,000,000 aggregate principal amount of 8.13% Senior Notes, Series B, Due
December 3l, 2004 of the Company (together the "Notes") were originally issued.
You and the other parties named in Schedule I hereto are herein sometimes
referred to as the "Holders".

The Company deems it desirable to transfer its retail operations and
all personnel, assets and liabilities relating thereto to Marsh Supermarkets,
LLC, an Indiana limited liability company and a Wholly-owned Subsidiary of the
Company (the "Additional Obligor"). In connection with and in consideration for,
among other things, such transfer of assets, the Additional Obligor is willing
to become a joint and several obligor on all obligations of the Company under
the Notes and the Note Agreements, as amended hereby, and by its execution and
delivery of this Amendment to Note Agreements and Assumption Agreement (this
"Agreement") and whether or not the Company and the Additional Obligor shall
hereafter execute and deliver the Exchange Notes pursuant to Section 4 hereof,
the Additional Obligor does from and after the date hereof undertake and become
a joint and
<PAGE> 3

several obligor in respect of all of the obligations of the Company
under the Notes and under the Note Agreements, as the same are amended hereby.

In connection with such transfer of assets by the Company and
undertaking as joint and several obligation by the Additional Obligor, the
Company and the Additional Obligor desire to amend certain provisions of the
Note Agreements and hereby request that you accept the amendments as set forth
below in the manner herein provided.

NOW, THEREFORE, in consideration of the premises and the benefits to
the Company and the Additional Obligor and for the purpose of inducing the
Holder to enter into this Agreement and the transactions contemplated hereby,
the Company and the Additional Obligor agree as follows:

SECTION 1. JOINT AND SEVERAL OBLIGATION; CONSENT.

Subject to the terms and provisions hereof and from and after the date
hereof, the Additional Obligor hereby irrevocably, absolutely, unconditionally
and expressly assumes, as a joint and several obligor with the Company (i) the
due and punctual payment of all of the principal of, and interest and premium,
if any, on the Notes and all other amounts to be paid under or pursuant to the
Note Agreements, as amended hereby, in accordance with the terms of the Notes
and of the Note Agreements, as so amended, and (ii) the due and punctual
observance and performance of all covenants and provisions contained in the Note
Agreements, as amended hereby. From and after the date hereof, all interest
accrued on the Notes shall become the joint and several obligation of the
Company and the Additional Obligor and shall be paid on the next scheduled
interest payment date thereunder. The Company and the Additional Obligor each
for itself covenants and agrees that its obligations and liabilities under the
Note Agreements, as amended, and in respect of the Notes shall be their joint
and several obligations, which obligations in each such case shall be those of a
primary obligor and not a guarantor, surety or other secondary party and shall
not be discharged, impaired or varied by reason of any breach or default by the
Company or the Additional Obligor or for any reason except payment of the
principal of, and interest and premium, if any, on the Notes and any other
amounts payable under the Notes and the Note Agreements, as amended, and in
accordance with the terms of the Notes and the Note Agreements, as amended, and
then only to the extent of such payments.

Subject to the satisfaction of the conditions set forth in ss.3 hereof,
the Holder hereby waives the provisions of ss.5.11 of the Note Agreements, to
the extent such Section would prevent the transfer of assets referred to above.

SECTION 2. AMENDMENTS TO SECTION 5 OF THE NOTE AGREEMENT.

Section 2.1. Amendments to Section 5.1. Section 5.1 of the Note
Agreement shall be amended in its entirety as follows:

-2-
<PAGE> 4

Section 5.1 Corporate Existence, Etc. The Company will
preserve and keep in force and effect, and will cause each
Subsidiary to preserve and keep in force and effect, its legal
existence as a corporation or limited liability company, as the
case may be, and all licenses and permits necessary to the
proper conduct of its business; provided that the foregoing
shall not prevent any transaction permitted by ss.5.11.

Section 2.2. Amendment to Section 5.6 Section 5.6(a) of the Note
Agreements shall be amended in its entirety to read as follows:

(a) The Company will not and will not permit any
Restricted Subsidiary to create, assume or incur or in any
manner become liable in respect of any Indebtedness for money
borrowed, except:

(1) the Notes;

(2) Indebtedness of the Company and any Restricted
Subsidiary outstanding as of the date of this Agreement
and reflected on the balance sheet of the Company as of
June 20, 1992;

(3) other Funded Debt of the Company and the Addition-
al Obligor, provided that, at the time of issuance thereof
and after giving effect thereto and to the application of
the proceeds thereof, Consolidated Funded Debt shall not
exceed 60% of Consolidated Net Tangible Assets;

(4) other Funded Debt of Restricted Subsidiaries other
than the Additional Obligor, provided that (i) at the
time of issuance thereof and after giving effect thereto
and to the application of the proceeds thereof, Funded
Debt of such Restricted Subsidiaries plus Secured Funded
Debt of the Company and of the Additional Obligor (other
than Indebtedness secured by liens permitted by clauses
(a) through (h) of ss.5.7) shall not exceed 15% of
Consolidated Net Tangible Assets, and (ii) the Company
and the Additional Obligor would be permitted to incur at
least $1 of additional Funded Debt under the provisions
of ss.5.6(a)(3);

(5) unsecured Current Debt of the Company and of the
Additional Obligor; and

-3-
<PAGE> 5

(6) Current Debt or Funded Debt of a Restricted
Subsidiary to the Company or to a Wholly-owned Restricted
Subsidiary.

Section 2.3. Amendments to Section 5.7. The last sentence of Section
5.7 of the Note Agreements shall be amended to read in its entirety as follows:

Notwithstanding the foregoing provisions of this ss.5.7, the
Company and any Restricted Subsidiary may create, incur, issue
or assume liens securing Indebtedness in an aggregate amount
which, together with all unsecured Funded Debt of Restricted
Subsidiaries (other than the obligation of the Additional
Obligor on the Notes and any other Funded Debt of the Additional
Obligor permitted under ss.5.6(a)(3)), and other Indebtedness of
the Company and its Restricted Subsidiaries secured by liens
which (if originally created, incurred, issued or assumed at
such time) would otherwise be subject to the foregoing
restrictions (other than liens permitted under clauses (a)
through (h) above), does not at the time exceed 15% of
Consolidated Net Tangible Assets.

Section 2.4. Amendment to Section 5.8. Clause (ii) of the last sentence
of Section 5.8 of the Note Agreements shall be amended in its entirety to read
as follows:

(ii) at any time when a business entity becomes a Restricted
Subsidiary, all investments of such business entity at such time
shall be deemed to have been made by such business entity, as a
Restricted Subsidiary, at such time,

Section 2.5. Amendment to Section 5.11. Section 5.11 of the Note
Agreements shall be amended in its entirety to read as follows:

Section 5.11. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, and will not permit any Restricted
Subsidiary to (i) consolidate with or be a party to a merger
with any other corporation or (ii) sell, lease or otherwise
dispose of all or any substantial part of the assets of the
Company or its Restricted Subsidiaries, provided, however, that:

(1) any Restricted Subsidiary may merge or consoli-
date with or into the Company or, except in the case of
the Additional Obligor, with or into any Wholly-owned
Restricted Subsidiary so long as in any merger or
consolidation involving the Company, the Company
shall be the surviving or continuing corporation;

-4-
<PAGE> 6

(2) the Company may consolidate or merge with any
other corporation or sell, lease or otherwise dispose of
all of its assets to any other corporation if (i) either
the Company shall be the surviving or continuing
corporation or the corporation formed by or resulting from
such merger or consolidation, if not the Company, or to
which such assets shall have been sold, leased or
otherwise disposed of (hereinafter referred to as the
"surviving corporation"), shall be a corporation organized
under the laws of any state of the United States and shall
expressly assume the obligation of the Company under this
Agreement and the Notes, (ii) at the time of such
transaction and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be
continuing, and (iii) after giving effect to such
transaction the Company or the surviving corporation would
be permitted to incur at least $1.00 of additional Funded
Debt under the provisions of ss.5.6(a)(3); and

(3) any Restricted Subsidiary may sell, lease or
otherwise dispose of all or any substantial part of its
assets to the Company or, except in the case of the
Additional Obligor, to any Wholly-owned Restricted
Subsidiary.

(b) The Company will not permit any Restricted Subsidiary
to issue or sell any shares of stock of any class (including as
"stock" for the purposes of this ss.5.11, any warrants, rights
or options to purchase or otherwise acquire stock or other
Securities exchangeable for or convertible into stock) of, or
ownership interest of any class in, such Restricted Subsidiary
to any Person other than the Company or a Wholly-owned
Restricted Subsidiary if, after giving effect to such issuance
or sale, less than 80% of the Voting Stock or ownership interest
of such Restricted Subsidiary is owned by the Company and/or one
or more of its Wholly-owned Restricted Subsidiaries.

(c) The Company will not sell, transfer or otherwise
dispose of any ownership interest in the Additional Obligor or
any Indebtedness of the Additional Obligor. The Company will not
sell, transfer or otherwise dispose of any shares of stock or
ownership interest in any other Restricted Subsidiary or any
Indebtedness of any other Restricted Subsidiary, and will not
permit any Restricted Subsidiary to sell, transfer or otherwise
dispose of (except to the Company or a Wholly-owned Restricted
Subsidiary) any shares of stock or ownership interest or any
Indebtedness of any other Restricted Subsidiary if, after giving
effect to such sale, transfer or disposition, less than 80% of
the

-5-

<PAGE> 7

Voting Stock or controlling ownership interest, as the case
may be, of such Restricted Subsidiary is owned by the Company
and/or one or more of its Wholly-owned Restricted Subsidiaries,
unless:

(1) simultaneously with such sale, transfer or
disposition, all shares of stock and all Indebtedness of
such Restricted Subsidiary at the time owned by the
Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;

(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the
retention of such stock or ownership interest and
Indebtedness is no longer in the best interests of the
Company;

(3) such stock or ownership interest and
Indebtedness is sold, transferred or otherwise disposed of
to a Person, for a cash consideration and on terms
reasonably deemed by the Board of Directors to be adequate
and satisfactory;

(4) the Restricted Subsidiary being disposed of
shall not have any continuing investment in the Company or
any other Subsidiary not being simultaneously disposed of;
and

(5) such sale or other disposition does not involve
a substantial part (as hereinafter defined) of the assets
of the Company and its Restricted Subsidiaries.

As used in this Section 5.11, a sale, lease or other
disposition of assets shall be deemed to be a "substantial part"
of the assets of the Company or its Restricted Subsidiaries only
if the net book value of such assets when added to the net book
value of all other assets sold, leased or otherwise disposed of
by the Company and its Restricted Subsidiaries (other than in
the ordinary course of business) during the most recent
twelve-month period, exceeds 10% of the Consolidated Net
Tangible Assets of the Company and its Restricted Subsidiaries
determined as of the end of the immediately preceding fiscal
quarter. Sales or other realization on delinquent receivables
shall not be included in any computation of sales or other
dispositions thereunder.

-6-

<PAGE> 8
Section 2.6. Amendment to Section 5.16. Section 5.16 of the Note
Agreements shall be amended in its entirety to read as follows:

Section 5.16. Designation of Subsidiaries. The Company may
from time to time designate any Unrestricted Subsidiary:

(i) that is organized under the laws of the United
States or any State thereof;

(ii) that conducts substantially all of its business
and has substantially all of its assets within the United
States; and

(iii) of which more than 80% (by number of votes) of
the Voting Stock or, if such Unrestricted Subsidiary is
not a corporation, more than 80% of the ownership
interest, is owned by the Company and/or one or more
Wholly-owned Restricted Subsidiaries,

as a Restricted Subsidiary if immediately thereafter such
Subsidiary is in compliance with all of the covenants of this
Agreement applicable to Restricted Subsidiaries and the Company
would be permitted to incur at least $1.00 of additional Funded
Debt under the provisions of ss.5.6(a)(3). The Company may
rescind the designation of any Restricted Subsidiary (other than
the Additional Obligor) if immediately thereafter (i) such
Subsidiary shall not own, directly or indirectly, any
Indebtedness or capital stock of, or other ownership interest
in, any Restricted Subsidiary or any Indebtedness of the Company
and (ii) the Company would be permitted to incur at least $1.00
of additional Funded Debt under the provisions of ss.5.6(a)(3).
Each change in the designation of a Subsidiary shall be made by
resolution of the Board of Directors of the Company and the
Company shall within 10 days after such action give written
notice thereof to the holders of the Notes.

SECTION 3. AMENDMENTS TO SECTION 8.1 OF THE NOTE AGREEMENTS.

Section 3.1. Amendment to Definition of "Affiliate". The second
sentence of the definition of Affiliate shall be amended to read as follows :

The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of
Voting Stock (or in the case of a Person which is not a
corporation, equity interest), by contract or otherwise.

-7-

<PAGE> 9

Section 3.2. Amendment to definition of "Minority Interests". The first
sentence of the definition of Minority Interests shall be amended to read as
follows:

"Minority Interests" shall mean any shares of stock, in the
case of a corporation, or ownership interests, in the case of a
limited liability company, of any class of a Restricted
Subsidiary (other than directors' qualifying shares as required
by law) that are not owned by the Company and/or one or more of
its Restricted Subsidiaries.

Section 3.3. Amendment to definition of "Person". The definition of
Subordinated Debt shall be amended in its entirety to read as follows:

"Person " shall mean an individual, partnership, corpora-
tion, limited liability company, trust or unincorporated
organization, and a government or agency or political
subdivision thereof.

Section 3.4. Amendment to definition of "subsidiary". The definition of
subsidiary shall be amended to read as follows :

The term "subsidiary" shall mean, as to any particular
parent business entity, any business entity of which such parent
business entity and/or one or more business entities which are
themselves subsidiaries of such parent business entity, (a) in
the case of any corporation own more than 50% of the Voting
Stock, or (b) in the case of any limited liability company or
other business entity, own a majority of the outstanding
interests in such limited liability Company or other business
entity. The term "Subsidiary " shall mean a subsidiary of the
Company.

Section 3.5. Amendment to definition of "Wholly-owned". The definition
of Wholly-owned shall be amended to read as follows :

"Wholly-owned" when used in connection with any Subsidiary
shall mean (a) in the case of a corporation, a Subsidiary of
which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all
Indebtedness for borrowed money shall be owned by the Company
and/or one or more of its Wholly-owned Subsidiaries and (b) in
the case of a limited liability company or other business entity
shall mean a Subsidiary of which all of the outstanding
ownership interests (except nominal amounts of interests
required to be held other than by such Person under applicable
law) shall be owned by the Company and/or one or more of its
Wholly-owned subsidiaries.

-8-

<PAGE> 10

Section 3.6. Additional Definition. Section 8.1 of the Note Agreement
shall be amended by inserting the following definition in Section 8. 1 in the
correct alphabetical order:

"Additional Obligor" shall mean Marsh Supermarkets, LLC,
an Indiana limited liability company.

SECTION 4. AMENDMENT TO FORMS OF NOTES; EXCHANGE OF NOTES.

The respective forms of Notes, Series A and Series B, attached to the
Note Agreements as Exhibits A and B shall be amended to provide as set forth in
Exhibits A and B hereto. As provided in Section 2 hereof, from and after the
date of this Agreement, each Note, Series A and Series B, currently outstanding
shall be deemed amended to provide as set forth for the appropriate series in
Exhibits A and B, hereto whether or not the Holder elects to exchange such Note
pursuant to the following sentence. On or after the date hereof, the Holder may
exchange the Note or Notes currently held by it (individually an "Old Note" and
collectively the "Old Notes") for a new Note or Notes substantially in the form
attached to this Agreement as Exhibits A and B, respectively (individually a
"New Note" and collectively the "New Notes"). Upon surrender of any Old Note at
its office, the Company will deliver in exchange therefor within 10 business
days, without expense to such Holder, a New Note for the same series and in the
same aggregate principal amount as the then unpaid principal amount of such Old
Note, dated as of the date to which interest has been paid on such Old Note and
registered in the name of such Holder.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

The Company and the Additional Obligor each represent and warrant that
all representations and warranties set forth in Exhibit C to this Agreement are
true and correct as of the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in full.

SECTION 6. SUBSIDIARIES AND RESTRICTED SUBSIDIARIES.

Upon the execution and delivery of this Agreement, Annex A to the Note
Agreements shall be updated and restated to read as Annex A attached to this
Agreement.

SECTION 7. CONDITIONS PRECEDENT.

The effectiveness and validity of this Agreement is subject to the
satisfaction of the following conditions precedent:

(a) The Holder shall have received the following, each of which
must be satisfactory in form and substance to the Holder:

(i) this Agreement, duly executed by the Company; and

-9-
<PAGE> 11

(ii) an opinion of counsel to the Company and the Additional
Obligor, addressed to the Holders, to the effect provided in
paragraphs 1, 2 and 3 of Exhibit C hereto.

(b) This Agreement shall have been executed and delivered by
Holders of not less than 66-2/3% of the unpaid principal balance of the
Notes.

(c) The Company shall have paid (by wire transfer of immediately
available funds) to all Holders of the outstanding Notes, as an
amendment fee and in consideration for the execution and delivery of
this Agreement by the requisite Holders, an amount equal to 0.125% of
the unpaid principal amount of the Notes held by such Holders as set
forth in Schedule I attached hereto.

Upon satisfaction of the conditions set forth above, this Amendment to Note
Agreements and Assumption Agreement shall be a binding agreement of the Company,
the Additional Obligor and the Holders; provided that the effectiveness of the
amendments contemplated hereby shall be determined pursuant to Section 8.1.

SECTION 8. MISCELLANEOUS.

Section 8.1. Effective Date; Ratification. The amendments contemplated by
this Agreement shall be effective as of the date (the "Effective Date") upon
which (a) all conditions set forth in Section 7 hereof have been satisfied, (b)
the Company consummates transfer of assets and related transactions contemplated
by this Agreement, and (c) the fees and expenses of Chapman and Cutler provided
for in Section 8.4 shall have been paid by the Company. Except as amended
herein, the terms and provisions of the Note Agreements are hereby ratified,
confirmed and approved in all respects.

Section 8.2. Successors and Assigns. This Agreement shall be binding upon
the Company and the Additional Obligor and their respective successors and
assigns and shall inure to the benefit of the Holders and to the benefit of
their successors and assigns, including each successive holder or holders of any
Notes.

Section 8.3. Counterparts. This Agreement may be executed in any number
of counterparts, each executed counterpart constituting an original but all
together one and the same instrument.

Section 8.4. Fees and Expenses. Whether or not the Effective Date occurs,
the Company agrees to pay all reasonable fees and expenses of the Holders and of
special counsel to the Holders in connection with the preparation of this
Amendment to Note Agreements and Assumption Agreement.

Section 8.5. No Legend Required. Any and all notices, requests,
certificates and other instruments including, without limitation, the Notes, may
refer to the Note Agreement or the Note Agreement dated as of October 15, 1992
without making specific reference to this Amendment to Note Agreements and
Assumption Agreement, but nevertheless all such

-10-
<PAGE> 12

references shall be deemed to include this Amendment to Note Agreements and
Assumption Agreement unless the context shall otherwise require.

Section 8.6. Governing Law. This Agreement and the Notes shall be
governed by and construed in accordance with Indiana law.

-11-
<PAGE> 13

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Note Agreements and Assumption Agreement as of March 28, 1997.

MARSH SUPERMARKETS, INC.

By: /s/
-------------------------------
Its

MARSH SUPERMARKETS, LLC

By: MARSH SUPERMARKETS, INC.,
Its Chief Operating Officer

By: /s/
-------------------------------
Its

-12-

<PAGE> 14

Accepted as of March 28, 1997 :

FIRST COLONY LIFE INSURANCE COMPANY

By:
----------------------------------
Its

AMERICAN UNITED LIFE INSURANCE COMPANY

By:
----------------------------------
Its

WOODMEN ACCIDENT AND LIFE COMPANY

By:
----------------------------------
Its

GUARANTEE LIFE INSURANCE COMPANY

By:
----------------------------------
Its

GREAT-WEST LIFE AND ANNUITY INSURANCE
COMPANY

By:
----------------------------------
Its

PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY

By:
----------------------------------
Its

-13-

<PAGE> 15

SCHEDULE I

<TABLE>
<CAPTION>
ORIGINAL
PRINCIPAL PRINCIPAL BALANCE
NAME OF AMOUNT OF OF NOTES AMENDMENT
NOTEHOLDER NOTES ISSUED OUTSTANDING FEE PAYABLE
<S> <C> <C> <C>

First Colony Life Insurance $20,000,000 $20,000,000 $25,000
Company

American United Life $10,000,000 $10,000,000 $12,500
Insurance Company

Great-West Life and Annuity $ 10,000,000 $7,272,728.02 $9,090.91
Insurance Company

Principal Mutual Life $ 5,000,000 $3,636,364.01 $4,545.46
Insurance Company

Woodmen Accident and Life $ 2,500,000 $2,500,000 $3,125
Company

Guarantee Life Insurance $ 2,500,000 $2,500,000 $3,125
Company (formerly
Guarantee Mutual Life
Company)

</TABLE>

SCHEDULE I
(to Amendment to Note Agreements
and Assumption Agreement)

-14-

<PAGE> 16

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

8.54% Senior Note, Series A, Due December 31, 2007

PPN #___________

$ ___________ ____________, 19__

No. AR-

MARSH SUPERMARKETS, INC., an Indiana corporation (the "Company"), and
MARSH SUPERMARKETS, LLC, an Indiana limited liability company (the "Additional
Obligor") (the Company and the Additional Obligor being herein sometimes
together referred to as the "Co-Obligors"), for value received, hereby jointly
and severally promise to pay to

or registered assigns,
on the 31st day of December, 2007,
the principal amount of

DOLLARS ($________)

and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 8.54% per annum from the date hereof until maturity, payable
semiannually on June 30 and December 31 in each year commencing December 31,
1992, and at maturity. The Co-Obligors agree to pay interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 10.54% per annum after the date due,
whether by acceleration or otherwise, until paid. Both the principal hereof and
interest hereon are payable at the principal office of the Company in
Indianapolis, Indiana, in coin or currency of the United States of America which
at the time of payment shall be legal tender for the payment of public and
private debts.

This Note is one of the 8.54% Senior Notes, Series A, of the Co-Obligors
in the aggregate principal amount of $35,000,000 issued or to be issued under
and pursuant to the terms and provisions of separate and several Note
Agreements, each dated as of October 15, 1992, entered into by the Company with
the original purchasers therein referred to, as amended by an Amendment to Note
Agreements and Assumption Agreement dated as of March 28, 1997 entered into by
the Co-Obligors and a requisite percentage of the then holders of the
outstanding Notes, and this Note and the holder hereof are entitled equally and

EXHIBIT A
(to Amendment to Note Agreements
and Assumption Agreement)

-15-

<PAGE> 17

ratably with the holders of all other Notes outstanding under the Note
Agreements, as amended, to all the benefits and security provided for thereby or
referred to therein, to which Note Agreements, as amended, reference is hereby
made for the statement thereof.

This Note and the other Notes outstanding under the Note Agreements, as
amended, may be declared due prior to their expressed maturity dates and certain
prepayments are required to be made thereon, all in the events, on the terms and
in the manner and amounts as provided in the Note Agreements.

The Notes are not subject to prepayment or redemption at the option of
the Co-Obligors prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in
Section 2 of the Note Agreements.

This Note is registered on the books of the Co-Obligors and is
transferable only by surrender thereof at the principal office of the
Co-Obligors duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of principal, premium, if any,
and interest on this Note shall be made only to or upon the order in writing of
the registered holder.

MARSH SUPERMARKETS, INC.

By:__________________________
Its

MARSH SUPERMARKETS, LLC

By: MARSH SUPERMARKETS, INC.
Its Chief Operating Officer

By:__________________________
Its

-2-

<PAGE> 18

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

8.13% Senior Note, Series B, Due December 31, 2004

PPN #___________

$ _____________ ________, 19__

No. BR-

or registered assigns,
on the 31st day of December, 2004,
the principal amount of

DOLLARS ($__________)

and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 8.13% per annum from the date hereof until maturity, payable
semiannually on June 30 and December 3l in each year commencing December 31,
1992, and at maturity. The Co-Obligors agree to pay interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 10.13% per annum after the date due,
whether by acceleration or otherwise, until paid. Both the principal hereof and
interest hereon are payable at the principal office of the Company in
Indianapolis, Indiana, in coin or currency of the United States of America which
at the time of payment shall be legal tender for the payment of public and
private debts.

This Note is one of the 8.13% Senior Notes, Series B, of the Co-Obligors
in the aggregate principal amount of $15,000,000 issued or to be issued under
and pursuant to the terms and provisions of separate and several Note
Agreements, each dated as of October 15, 1992, entered into by the Company with
the original purchasers therein referred to, as amended by an Amendment to Note
Agreements and Assumption Agreement dated as of March 28, 1997 entered into by
the Co-Obligors and a requisite percentage of the then holders of the
outstanding Notes, and this Note and the holder hereof are entitled equally and

EXHIBIT B
(to Amendment to Note Agreements
and Assumption Agreement)

<PAGE> 19

The Notes are not subject to prepayment or redemption at the option of the
Co-Obligors prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in Section
2 of the Note Agreements.

This Note is registered on the books of the Co-Obligors and is transfera-
ble only by surrender thereof at the principal office of the Co-Obligors duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.

MARSH SUPERMARKETS, INC.

By
-----------------------------
Its

MARSH SUPERMARKETS, LLC

By MARSH SUPERMARKETS, INC.
Its Chief Operating Officer

By
-----------------------------
Its

-2-

<PAGE> 20

REPRESENTATIONS AND WARRANTIES

The Company and the Additional Obligor each represent and warrants to each
Holder as follows:

1. Corporate Organization and Authority. The Company, and
each Restricted Subsidiary, is a corporation or limited liability company, as
the case may be, duly organized and validly existing under the laws of its
jurisdiction of organization.

2. Transaction is Legal and Authorized. The execution, delivery and
performance of the Amendment to Note Agreements and Assumption Agreement and
compliance by the Company and the Additional Obligor with all of the provisions
of the Amendment to Note Agreements and Assumption Agreement:

(a) are within the corporate powers of the Company and the Additional
Obligor;

(b) will not violate any provisions of any law or any order of any court
or governmental authority or agency and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute
a default under the Articles of Incorporation or Articles of Organization
of the Company or the Additional Obligor or any indenture or other
agreement or instrument to which the Company or the Additional Obligor is a
party or by which either may be bound or result in the imposition of any
Liens or encumbrances on any property of the Company or the Additional
Obligor; and

(c) have been duly authorized by proper corporate action on the part of
the Company and the Additional Obligor (no action by the stockholders of
the Company and the Additional Obligor being required by law, by the
Articles of Incorporation or Articles of Organization or By-laws of the
Company or the Additional Obligor or otherwise) and the Amendment to Note
Agreements and Assumption Agreement have been executed and delivered by the
Company and the Additional Obligor and constitute the legal, valid and
binding obligation, contract and agreement of the Company enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).

3. Governmental Consent. No approval, consent or withholding of objection
on the part of any regulatory body, state, Federal or local, is necessary in
connection with the execution and delivery by the Company or the Additional
Obligor of the Amendment to Note Agreements and Assumption Agreement or
compliance by the Company or the Additional Obligor with any of the provisions
of the Amendment to Note Agreements and Assumption Agreement.

EXHIBIT C
(to Amendment to Note Agreements
and Assumption Agreement)

<PAGE> 21

4. No Defaults. No Default or Event of Default (as defined in the Note
Agreements, as amended) has occurred and is continuing. Neither the Company nor
any Restricted Subsidiary is in default in the payment of principal or interest
on any Indebtedness or is in default under any instrument or instruments or
agreements under and subject to which any Indebtedness has been issued, and no
event has occurred and is continuing under the provisions of any such instrument
or agreement which with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.

5. Subsidiaries. Annex A attached hereto states the name of each of the
Company' s Subsidiaries, its jurisdiction of incorporation or organization and
the percentage of its Voting Stock or ownership interest owned by the Company
and/or its Subsidiaries. The Company and each Subsidiary has good and marketable
title to all of the shares or ownership interest it purports to own of the stock
or ownership interest of each Subsidiary, free and clear in each case of any
lien. All such shares or ownership interest have been duly issued and are fully
paid and non-assessable.

-2-

<PAGE> 22

SUBSIDIARIES OF THE COMPANY

1. RESTRICTED SUBSIDIARIES:
<TABLE>
<CAPTION>

PERCENTAGE OF VOTING
STOCK OR OTHER
JURISDICTION OF OWNERSHIP INTEREST
INCORPORATION OR OWNED BY COMPANY AND
NAME OF SUBSIDIARY ORGANIZATION EACH OTHER SUBSIDIARY
<S> <C> <C>
C. E. Publishing, Inc. 100%

Crystal Food Services, LLC 100%

Contract Transport, Inc. Indiana 100%

Convenience Store Ohio 100%
Distributing Company
(a partnership)

Mar Properties, Inc. Indiana 100%

Maraines Greenery, Inc. Indiana 100%

Limited Holdings, Inc. 100%

LoBill, LLC l00%

Marlease, Inc. Indiana 100%

Marsh Drugs Inc. Indiana 100%

Marsh International, Inc., 100%

Marsh P.Q., Inc. Indiana 100%

Marsh Supermarkets, LLC Indiana 100%

Marsh Village Pantries, Inc. Indiana 100%

Mundy Realty, Inc. Indiana 100%

North Marion Development Indiana 100%
Corporation

S.C.T., Inc. Indiana 100%

</TABLE>

<PAGE> 23

PERCENTAGE OF VOTING
STOCK OR OTHER
JURISDICTION OF OWNERSHIP INTEREST
INCORPORATION OR OWNED BY COMPANY AND
NAME OF SUBSIDIARY ORGANIZATION EACH OTHER SUBSIDIARY
<S> <C> <C>

Trademark Holdings Corp. Delaware 100%

Village Pantry, LLC Indiana 100%

Walnut Hills Association 100%
(a partnership)

2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):

NONE

</TABLE>

-2-

<PAGE> 1
EXHIBIT 4(j)

================================================================================

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

AMENDMENT TO NOTE AGREEMENTS
AND
ASSUMPTION AGREEMENT

Dated as of March 28, 1997

Re: Note Agreements dated as of May 1, 1988
and
$25,000,000 Original Principal Amount of 9.48% Senior Notes
Due June 30, 2003

================================================================================

<PAGE> 2

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

AMENDMENT TO NOTE AGREEMENTS
AND
ASSUMPTION AGREEMENT

Re: Note Agreements dated as of May 1, 1988
and
$25,000,000 Original Principal Amount of 9.48% Senior Notes
Due June 30, 2003

Dated as of
March 28, 1997
To the Holder (the "Holder") Named on
Schedule I hereto which is a
signatory to this Agreement

Ladies and Gentlemen:

Reference is made to the separate Note Agreements dated as of May 1, 1988
(the "Note Agreements"), between Marsh Supermarkets, Inc., an Indiana
corporation (the "Company"), and the original institutional purchasers of the
following described Notes, under and pursuant to which $25,000,000 aggregate
principal amount of 9.48% Senior Notes, Due June 30, 2003 of the Company (the
"Notes") were originally issued. You and the other parties named in Schedule I
hereto are herein sometimes referred to as the "Holders".

The Company deems it desirable to transfer its retail operations and all
personnel, assets and liabilities relating thereto to Marsh Supermarkets, LLC,
an Indiana limited liability company and a Wholly-owned Subsidiary of the
Company (the "Additional Obligor"). In connection with and in consideration for,
among other things, such transfer of assets, the Additional Obligor is willing
to become a joint and several obligor on all obligations of the Company under
the Notes and the Note Agreements, as amended hereby, and by its execution and
delivery of this Amendment to Note Agreements and Assumption Agreement (this
"Agreement") and whether or not the Company and the Additional Obligor shall
hereafter execute and deliver the Exchange Notes pursuant to Section 4 hereof,
the Additional Obligor does from and after the date hereof undertake and become
a joint and several obligor in respect of all of the obligations of the Company
under the Notes and under the Note Agreements, as the same are amended hereby.

In connection with such transfer of assets by the Company and undertaking
as joint and several obligation by the Additional Obligor, the Company and the
Additional Obligor

<PAGE> 3

desire to amend certain provisions of the Note Agreements and hereby request
that you accept the amendments as set forth below in the manner herein provided.

NOW, THEREFORE, in consideration of the premises and the benefits to the
Company and the Additional Obligor and for the purpose of inducing the Holder to
enter into this Agreement and the transactions contemplated hereby, the Company
and the Additional Obligor agree as follows:

SECTION 1. JOINT AND SEVERAL OBLIGATION; CONSENT.

Subject to the satisfaction of the conditions set forth in ss.3 hereof, the
Holder hereby waives the provisions of ss.5.11 of the Note Agreements, to the
extent such Section would prevent the transfer of assets referred to above.

SECTION 2. AMENDMENTS TO SECTION 5 OF THE NOTE AGREEMENT.

Section 2.1. Amendment to Section 5.1. Section 5.1 of the Note Agreement
shall be amended in its entirety as follows:

Section 5.1 Corporate Existence, Etc. The Company will preserve and
keep in force and effect, and will cause each Subsidiary to preserve and
keep in force and effect, its legal existence as a corporation or limited
liability company, as the case may be, and all licenses and permits
necessary to the proper

-2-
<PAGE> 4

conduct of its business; provided that the foregoing shall not
prevent any transaction permitted by ss.5.11.

Section 2.2. Amendment to Section 5.6 Section 5.6(a) of the Note Agreements
shall be amended in its entirety to read as follows:

(a) The Company will not and will not permit any
Restricted Subsidiary to create, assume or incur or in any manner
become liable in respect of any Indebtedness for money borrowed,
except:

(1) the Notes;

(2) Indebtedness of the Company and any
Restricted Subsidiary outstanding as of the date of this
Agreement and reflected on the balance sheet of the Company
as of April 2, 1988;

(3) other Funded Debt of the Company and the
Additional Obligor, provided that, at the time of issuance
thereof and after giving effect thereto and to the
application of the proceeds thereof, Consolidated Funded
Debt shall not exceed 60% of Consolidated Net Tangible
Assets;

(4) other Funded Debt of Restricted
Subsidiaries other than the Additional Obligor, provided
that (i) at the time of issuance thereof and after giving
effect thereto and to the application of the proceeds
thereof, Funded Debt of such Restricted Subsidiaries plus
Secured Funded Debt of the Company and of the Additional
Obligor (other than Indebtedness secured by liens permitted
by clauses (a) through (h) of ss.5.7) shall not exceed 15%
of Consolidated Net Tangible Assets, and (ii) the Company
and the Additional Obligor would be permitted to incur at
least $1 of Additional Funded Debt under the provisions of
ss.5.6(a)(3);

(5) unsecured Current Debt of the Company
and of the Additional Obligor; and

(6) Current Debt or Funded Debt of a
Restricted Subsidiary to the Company or to a Wholly-owned
Restricted Subsidiary.

Section 2.3. Amendments to Section 5.7. The last sentence of Section 5.7 of
the Note Agreements shall be amended to read in its entirety as follows :

-3-
<PAGE> 5

Notwithstanding the foregoing provisions of this ss.5.7, the Company
and any Restricted Subsidiary may create, incur, issue or assume liens
securing Indebtedness in an aggregate amount which, together with all
unsecured Funded Debt of Restricted Subsidiaries (other than the
obligation of the Additional Obligor on the Notes and any other Funded
Debt of the Additional Obligor permitted under ss.5.6(a)(3)), and
other Indebtedness of the Company and its Restricted Subsidiaries
secured by liens which (if originally created, incurred, issued or
assumed at such time) would otherwise be subject to the foregoing
restrictions (other than liens permitted under clauses (a) through (h)
above), does not at the time exceed 15% of Consolidated Net Tangible
Assets.

Section 2.4. Amendment to Section 5.8. Clause (ii) of the last sentence of
Section 5.8 of the Note Agreements shall be amended in its entirety to read as
follows:

(ii) at any time when a business entity becomes a Restricted
Subsidiary, all investments of such business entity at such time shall
be deemed to have been made by such business entity, as a Restricted
Subsidiary, at such time,

Section 2.5. Amendment to Section 5.11. Section 5.11 of the Note Agreements
shall be amended in its entirety to read as follows:

Section 5.11. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, and will not permit any Restricted
Subsidiary to (i) consolidate with or be a party to a merger with any
other corporation or (ii) sell, lease or otherwise dispose of all or
any substantial part of the assets of the Company or its Restricted
Subsidiaries, provided, however, that:

(1) any Restricted Subsidiary may merge or consolidate with
or into the Company or, except in the case of the Additional
Obligor, with or into any Wholly-owned Restricted Subsidiary so
long as in any merger or consolidation involving the Company),
the Company shall be the surviving or continuing corporation;

-4-
<PAGE> 6

be a corporation organized under the laws of any state of the
United States and shall expressly assume the obligation of the
Company under this Agreement and the Notes, (ii) at the time of
such transaction and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be
continuing, and (iii) after giving effect to such transaction the
Company or the surviving corporation would be permitted to incur
at least $1.00 of additional Funded Debt under the provisions of
ss.5.6(a)(3); and

(3) any Restricted Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the
Company or, except in the case of the Additional Obligor, to any
Wholly-owned Restricted Subsidiary.

(b) The Company will not permit any Restricted Subsidiary to
issue or sell any shares of stock of any class (including as "stock" for
the purposes of this ss.5.11, any warrants, rights or options to purchase
or otherwise acquire stock or other securities exchangeable for or
convertible into stock) of, or ownership interest of any class in, such
Restricted Subsidiary to any Person other than the Company or a
Wholly-owned Restricted Subsidiary if, after giving effect to such issuance
or sale, less than 80% of the Voting Stock or ownership interest of such
Restricted Subsidiary is owned by the Company and/or one or more of its
Wholly-owned Restricted Subsidiaries.

(c) The Company will not sell, transfer or otherwise dispose of
any ownership interest in the Additional Obligor or any Indebtedness of the
Additional Obligor. The Company will not sell, transfer or otherwise
dispose of any shares of stock or ownership interest in any other
Restricted Subsidiary or any Indebtedness of any other Restricted
Subsidiary, and will not permit any Restricted Subsidiary to sell,
transfer or otherwise dispose of (except to the Company or a Wholly-owned
Restricted Subsidiary) any shares of stock or ownership interest or any
Indebtedness of any other Restricted Subsidiary if, after giving effect to
such sale, transfer or disposition, less than 80% of the Voting Stock or
controlling ownership interest, as the case may be, of such Restricted
Subsidiary is owned by the Company and/or one or more of its Wholly-owned
Restricted Subsidiaries, unless:

(1) simultaneously with such sale, transfer or disposition,
all shares of stock and all Indebtedness of such Restricted
Subsidiary at the time owned by the Company and

-5-
<PAGE> 7

by every other Subsidiary shall be sold, transferred or disposed
of as an entirety;

(2) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the
retention of such stock or ownership interest and Indebtedness is
no longer in the best interests of the Company;

(3) such stock or ownership interest and Indebtedness is
sold, transferred or otherwise disposed of to a Person, for a
cash consideration and on terms reasonably deemed by the Board of
Directors to be adequate and satisfactory;

(4) the Restricted Subsidiary being disposed of shall not
have any continuing investment in the Company or any other
Subsidiary not being simultaneously disposed of; and

(5) such sale or other disposition does not involve a
substantial part (as hereinafter defined) of the assets of the
Company and its Restricted Subsidiaries.

As used in this ss.5.11, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the
Company or its Restricted Subsidiaries only if the net book value of
such assets when added to the net book value of all other assets sold,
leased or otherwise disposed of by the Company and its Restricted
Subsidiaries (other than in the ordinary course of business) during
the most recent twelve-month period, exceeds 10% of the Consolidated
Net Tangible Assets of the Company and its Restricted Subsidiaries
determined as of the end of the immediately preceding fiscal quarter.
Sales or other realization on delinquent receivables shall not be
included in any computation of sales or other dispositions thereunder.

Section 2.6. Amendment to Section 5.16. Section 5.16 of the Note Agreements
shall be amended in its entirety to read as follows:

Section 5.16. Designation of Subsidiaries. The Company may
from time to time designate any Unrestricted Subsidiary:

(i) that is organized under the laws of the United States or
any State thereof;

-6-
<PAGE> 8

(ii) that conducts substantially all of its business and
has substantially all of its assets within the United States; and

(iii) of which more than 80% (by number of votes) of the
Voting Stock or, if such Unrestricted Subsidiary is not a
corporation, more than 80% of the ownership interest, is owned by
the Company and/or one or more Wholly-owned Restricted
Subsidiaries,

as a Restricted Subsidiary if immediately thereafter such Subsidiary
is in compliance with all of the covenants of this Agreement
applicable to Restricted Subsidiaries and the Company would be
permitted to incur at least $1.00 of additional Funded Debt under the
provisions of ss.5.6(a)(3). The Company may rescind the designation of
any Restricted Subsidiary (other than the Additional Obligor) if
immediately thereafter (i) such Subsidiary shall not own, directly or
indirectly, any Indebtedness or capital stock of, or other ownership
interest in, any Restricted Subsidiary or any Indebtedness of the
Company and (ii) the Company would be permitted to incur at least
$1.00 of additional Funded Debt under the provisions of ss.5.6(a)(3).
Each change in the designation of a Subsidiary shall be made by
resolution of the Board of Directors of the Company and the Company
shall within 10 days after such action give written notice thereof to
the holders of the Notes.

SECTION 3. AMENDMENTS TO SECTION 8.1 OF THE NOTE AGREEMENTS.

Section 3.1. Amendment to Definition of "Affiliate". The second sentence of
the definition of Affiliate shall be amended to read as follows :

The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of Voting Stock
(or in the case of a Person which is not a corporation, equity
interest), by contract or otherwise.

Section 3.2. Amendment to definition of "Minority Interests". The first
sentence of the definition of Minority Interests shall be amended to read as
follows:

"Minority Interests" shall mean any shares of stock, in the case of a
corporation, or ownership interests, in the case of a limited liability
company, of any class of a Restricted Subsidiary (other than directors'
qualifying shares as required by law) that are not owned by the Company
and/or one or more of its Restricted Subsidiaries.

-7-
<PAGE> 9

Section 3.3. Amendment to definition of "Person". The definition of
Subordinated Debt shall be amended in its entirety to read as follows:

"Person " shall mean an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, and a
government or agency or political subdivision thereof.

Section 3.4. Amendment to definition of "subsidiary". The definition of
subsidiary shall be amended to read as follows :

The term "subsidiary" shall mean, as to any particular parent
business entity, any business entity of which such parent business
entity and/or one or more business entities which are themselves
subsidiaries of such parent business entity, (a) in the case of any
corporation own more than 50% of the Voting Stock, or (b) in the case
of any limited liability company or other business entity, own a
majority of the outstanding interests in such limited liability
company or other business entity. The term "Subsidiary " shall mean a
subsidiary of the Company.

Section 3.5. Amendment to definition of "Wholly-owned". The definition of
Wholly-owned shall be amended to read as follows :

"Wholly-owned" when used in connection with any Subsidiary shall
mean (a) in the case of a corporation, a Subsidiary of which all of
the issued and outstanding shares of stock (except shares required as
directors' qualifying shares) and all Indebtedness for borrowed money
shall be owned by the Company and/or one or more of its Wholly-owned
Subsidiaries and (b) in the case of a limited liability company or
other business entity shall mean a Subsidiary of which all of the
outstanding ownership interests (except nominal amounts of interests
required to be held other than by such Person under applicable law)
shall be owned by the Company and/or one or more of its Wholly-owned
Subsidiaries.

Section 3.6. Additional Definition. Section 8.1 of the Note Agreement shall
be amended by inserting the following definition in Section 8.1 in the correct
alphabetical order:

"Additional Obligor" shall mean Marsh Supermarkets, LLC, an
Indiana limited liability company.

SECTION 4. AMENDMENT TO FORMS OF NOTES; EXCHANGE OF NOTES.

The form of Note attached to the Note Agreements as Exhibits A shall
be amended to provide as set forth in Exhibit A hereto. As provided in
Section 2 hereof, from and after

-8-
<PAGE> 10

the date of this Agreement, each Note currently outstanding shall be deemed
amended to provide as set forth for in Exhibit A, hereto whether or not the
Holder elects to exchange such Note pursuant to the following sentence. On or
after the date hereof, the Holder may exchange the Note or Notes currently held
by it (individually an "Old Note" and collectively the "Old Notes") for a new
Note or Notes substantially in the form attached to this Agreement as Exhibit A
(individually a "New Note" and collectively the "New Notes"). Upon surrender of
any Old Note at its office, the Company will deliver in exchange therefor within
10 business days, without expense to such Holder, a New Note in the same
aggregate principal amount as the then unpaid principal amount of such Old Note,
dated as of the date to which interest has been paid on such Old Note and
registered in the name of such Holder.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

SECTION 6. SUBSIDIARIES AND RESTRICTED SUBSIDIARIES.

Upon the execution and delivery of this Agreement, Annex A to the Note
Agreements shall be updated and restated to read as Annex A attached to this
Agreement.

SECTION 7. CONDITIONS PRECEDENT.

The effectiveness and validity of this Agreement is subject to the
satisfaction of the following conditions precedent:

(a) The Holder shall have received the following, each of which
must be satisfactory in form and substance to the Holder:

(i) this Agreement, duly executed by the Company; and

(ii) an opinion of counsel to the Company and the Additional
Obligor, addressed to the Holders, to the effect provided in
paragraphs 1, 2 and 3 of Exhibit C hereto.

(b) This Agreement shall have been executed and delivered by
Holders of not less than 66-2/3% of the unpaid principal balance of
the Notes.

-9-
<PAGE> 11

SECTION 8. MISCELLANEOUS.

Section 8.3. Counterparts. This Agreement may be executed in any number
of counterparts, each executed counterpart constituting an original but all
together one and the same instrument.

Section 8.6. Governing Law. This Agreement and the Notes shall be
governed by and construed in accordance with Indiana law.

-10-
<PAGE> 12

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Note
Agreements and Assumption Agreement as of March 28, 1997.

MARSH SUPERMARKETS, INC.

By: /s/ Douglas W. Dougherty
-------------------------------------
Its

MARSH SUPERMARKETS, LLC

By: MARSH SUPERMARKETS, INC.,
Its Chief Operating Officer

By: /s/ Douglas W. Dougherty
------------------------------------
Its

-11-
<PAGE> 13

Accepted as of March 28, 1997 :

PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY

By:
--------------------------------
Its

THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY

By: MIMLIC Asset Management Company

By
----------------------------
Its

STATE MUTUAL LIFE INSURANCE COMPANY

By
---------------------------------
Its

-12-
<PAGE> 14

SCHEDULE I

<TABLE>
<CAPTION>
ORIGINAL PRINCIPAL
PRINCIPAL BALANCE OF
NAME OF AMOUNT OF NOTES ADMENDMENT
NOTEHOLDER NOTES ISSUED OUTSTANDING FEE PAYABLE

<S> <C> <C> <C>
Principal Mutual Life Insurance $21,000,000 $14,700,000 $18,375
Company

The Minnesota Mutual Life $ 3,400,000 $ 2,380,000 $ 2,975
Insurance Company

State Mutual Life $ 300,000 $ 210,000 $262.50
Insurance Company

Auer & Co. $ 300,000 $ 210,000 $262.50
</TABLE>

SCHEDULE I
(to Amendment to Note Agreements
and Assumption Agreement)

<PAGE> 15

MARSH SUPERMARKETS, INC.
MARSH SUPERMARKETS, LLC

9.48% Senior Note Due June 30, 2003

PPN #___________

$ , 19
------------------- ----------- ---

No. R-

or registered assigns,
on the 30th day of June, 2003,
the principal amount of

DOLLARS ($ )
--------

and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 9.48% per annum from the date hereof until maturity, payable
semiannually on June 30 and December 31 in each year commencing December 31,
1988, and at maturity. The Co-Obligors agree to pay interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 11.48% per annum after the date due,
whether by acceleration or otherwise, until paid. Both the principal hereof and
interest hereon are payable at the principal office of the Company in
Indianapolis, Indiana, in coin or currency of the United States of America which
at the time of payment shall be legal tender for the payment of public and
private debts.

This Note is one of the 9.48% Senior Notes of the Co-Obligors in the
aggregate principal amount of $25,000,000 issued or to be issued under and
pursuant to the terms and provisions of separate and several Note Agreements,
each dated as of May 1, 1988, entered into by the Company with the original
purchasers therein referred to, as amended by an Amendment to Note Agreements
and Assumption Agreement dated as of March 28, 1997 entered into by the
Co-Obligors and a requisite percentage of the then holders of the outstanding
Notes, and this Note and the holder hereof are entitled equally and ratably
with
EXHIBIT A
(to Amendment to Note Agreements
and Assumption Agreement)

<PAGE> 16

the holders of all other Notes outstanding under the Note Agreements, as
amended, to all the benefits and security provided for thereby or referred to
therein, to which Note Agreements, as amended, reference is hereby made for the
statement thereof,

MARSH SUPERMARKETS, INC.

By:
------------------------------------
Its

MARSH SUPERMARKETS, LLC

By: MARSH SUPERMARKETS, INC.
Its Chief Operating Officer

By:
-----------------------------------
Its

-2-

<PAGE> 17

REPRESENTATIONS AND WARRANTIES

The Company and the Additional Obligor each represent and warrants to each
Holder as follows:

1. Corporate Organization and Authority. The Company, and each Restricted
Subsidiary, is a corporation or limited liability company or partnership, as
the case may be, duly organized and validly existing under the laws of its
jurisdiction of organization.

(a) are within the corporate powers of the Company and the Additional
Obligor;

(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the Articles of Incorporation or Articles of
Organization of the Company or the Additional Obligor or any indenture or
other agreement or instrument to which the Company or the Additional
Obligor is a party or by which either may be bound or result in the
imposition of any Liens or encumbrances on any property of the Company or
the Additional Obligor; and

(c) have been duly authorized by proper corporate action on the part
of the Company and the Additional Obligor (no action by the stockholders of
the Company and the Additional Obligor being required by law, by the
Articles of Incorporation or Articles of Organization or By-laws of the
Company or the Additional Obligor or otherwise) and the Amendment to Note
Agreements and Assumption Agreement have been executed and delivered by the
Company and the Additional Obligor and constitute the legal, valid and
binding obligation, contract and agreement of the Company enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).

EXHIBIT C
(to Amendment to Note Agreements
and Assumption Agreement)

<PAGE> 18

-2-

<PAGE> 19

SUBSIDIARIES OF THE COMPANY

1. RESTRICTED SUBSIDIARIES:

<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
STOCK OR OTHER
OWNERSHIP INTEREST OWNED
JURISDICTION OF BY COMPANY AND
INCORPORATION OR EACH OTHER
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARY

C. E. Publishing, Inc. 100%

Crystal Food Services, LLC 100%

Contract Transport, Inc. Indiana 100%

Convenience Store Ohio 100%
Distributing Company
(a partnership)

Mar Properties, Inc. Indiana 100%

Maraines Greenery, Inc. Indiana 100%

Limited Holdings, Inc. 100%

LoBill, LLC l00%

Marlease, Inc. Indiana 100%

Marsh Drugs Inc. Indiana 100%

Marsh International, Inc., 100%

Marsh P.Q., Inc. Indiana 100%

Marsh Supermarkets, LLC Indiana 100%

Marsh Village Pantries, Inc. Indiana 100%

Mundy Realty, Inc. Indiana 100%

North Marion Development Indiana 100%
Corporation

S.C.T., Inc. Indiana 100%
</TABLE>

<PAGE> 20

<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
STOCK OR OTHER
OWNERSHIP INTEREST
OWNED BY
JURISDICTION OF COMPANY
INCORPORATION OR AND EACH OTHER
NAME OF SUBSIDIARY ORGANIZATION SUBSIDIARY

<S> <C> <C>
Trademark Holdings Inc. Delaware 100%

Village Pantry, LLC Indiana 100%

Walnut Hills Association 100%
(a partnership)
</TABLE>

2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):

NONE

-2-

<PAGE> 1

EXHIBIT 10(p)

SEVERANCE BENEFITS AGREEMENT

THIS SEVERANCE BENEFITS AGREEMENT ("Agreement"), made and entered into
as of January 1, 1996 (the "Effective Date"), by and between MARSH
SUPERMARKETS, INC., an Indiana corporation with its principal office at 9800
Crosspoint Boulevard, Indianapolis, Indiana, and RONALD R. WALICKI of 715
PLEASANT POINT CIRCLE, CICERO, INDIANA 46034 (the "Employee").

R E C I T A L S

A. Employee has been an employee of the COMPANY (as such italicized
term and each other term hereinafter italicized is defined in Section 6 below)
since 1960 and is currently serving as PRESIDENT AND CHIEF OPERATING OFFICER,
VILLAGE PANTRY DIVISION.

B. The Company recognizes Employee's contribution to the past growth
and success of the COMPANY have been substantial and that it is in the best
interests of the COMPANY to assure the COMPANY of Employee's continued services
for the benefit of the COMPANY.

C. In order to induce Employee to remain in the employ of the
COMPANY, the Company is willing to pay to Employee the benefits set forth in
this Agreement in the event of a severance of Employee's employment, except as
the result of death, RETIREMENT or termination for CAUSE, subsequent to a
CHANGE IN CONTROL.

NOW, THEREFORE, in consideration of the premises and in consideration
of the mutual terms and conditions hereinafter set forth, the COMPANY and
Employee agree as follows:

1. TERM. The term of this Agreement shall be for a period which
commences on the Effective Date and ends after payment or provision of all
BENEFITS following a CHANGE IN CONTROL (the "Term"). Either party shall have
the right to terminate this Agreement at any time prior to a CHANGE IN CONTROL.

2. CHANGE IN CONTROL. No BENEFITS shall be payable under this
Agreement unless and until there shall have been a CHANGE IN CONTROL while
Employee is an employee of the COMPANY. Notwithstanding anything contained in
this Agreement to the contrary, the BOARD OF DIRECTORS may determine that an
event otherwise constituting a CHANGE IN CONTROL shall not be considered a
CHANGE IN CONTROL for purposes of this Agreement because such event has been
approved by the BOARD OF DIRECTORS. Such determination by the BOARD OF
DIRECTORS shall be effective only if it is made by the BOARD OF DIRECTORS prior
to the occurrence of the event which would otherwise be a CHANGE IN CONTROL or
after such event if made by the BOARD OF DIRECTORS, a majority of which is
composed of the same members as constituted the BOARD OF DIRECTORS immediately
prior to the event that would otherwise be a CHANGE IN CONTROL.
<PAGE> 2

Upon a CHANGE IN CONTROL while Employee is an employee of the COMPANY,
Sections 3 through 7 of this Agreement and all of their provisions shall become
operative immediately and shall survive the Term.

3. SEVERANCE FOLLOWING CHANGE IN CONTROL. If a CHANGE IN CONTROL
shall have occurred while Employee is an employee of the COMPANY, Employee
shall be entitled to the BENEFITS upon the subsequent severance of Employee's
employment with the COMPANY (a) by Employee for REASON or (b) by the COMPANY
for any reason other than death, RETIREMENT or for CAUSE. In the event the
COMPANY terminates Employee's employment for death, RETIREMENT or for CAUSE,
Employee shall not be entitled to the BENEFITS. Notwithstanding anything
contained in this Agreement to the contrary, the COMPANY shall have the right
to terminate Employee's employment at any time after a CHANGE IN CONTROL,
subject to Employee's right to receive the compensation described in Section 4
below.

Following a CHANGE IN CONTROL any termination by the COMPANY of
Employee's employment for any reason or any termination by Employee for REASON
shall be communicated to Employee or to the COMPANY, respectively, by written
NOTICE OF TERMINATION. For purposes of this Agreement, no purported
termination of employment after a CHANGE IN CONTROL shall be effective without
a NOTICE OF TERMINATION.

4. COMPENSATION UPON SEVERANCE AFTER A CHANGE IN CONTROL. Upon
Employee's termination of employment with the COMPANY after a CHANGE IN
CONTROL, Employee shall have the right to receive from the COMPANY those
payments or benefits, or both, applicable to such termination as hereinafter
set forth:

(a) CAUSE. In the event Employee's employment is terminated by the
COMPANY for CAUSE, the COMPANY shall pay to Employee (or to Employee's
survivors) Employee's full base salary through the DATE OF TERMINATION
at the rate in effect at the time of death or on the date that NOTICE
OF TERMINATION is given, and the COMPANY shall have no further
obligation to Employee under this Agreement.

(b) Death or RETIREMENT. If Employee's employment is terminated by
death or RETIREMENT, whether voluntary or by the COMPANY, Employee, or
Employee's spouse in the event of Employee's death, shall receive
LIFETIME MEDICAL BENEFITS, together with Employee's full base salary
through the DATE OF TERMINATION at the rate in effect at the time of
RETIREMENT.

(c) Other or Resignation for REASON. In the event Employee's
employment is terminated (i) by the COMPANY for any reason other than
death, RETIREMENT or for CAUSE, or (ii) by Employee for REASON, the
COMPANY shall pay to Employee, as severance pay, the BENEFITS, subject
to adjustment pursuant to Section 4 (d) below.

(d) Golden Parachute Savings Provisions. In the event the COMPANY
determines that any payment or benefit to Employee under this
Agreement, or any other

2
<PAGE> 3

payment to Employee in the nature of compensation, made as a result of
a CHANGE IN CONTROL, would result in the payment of an EXCESS
PARACHUTE PAYMENT and provides to Employee, within thirty (30) days
after the DATE OF TERMINATION or Employee's actual date of
termination, whichever date first occurs, an OPINION, the BENEFITS
shall be adjusted so that the PRESENT VALUE of the BENEFITS does not
exceed three hundred percent (300%) of Employee's ANNUALIZED
INCLUDIBLE COMPENSATION minus One Dollar ($1.00), or such other
formula to determine a PARACHUTE PAYMENT as may be in effect pursuant
to an amendment of Section 280G(b)(2)(A)(ii) of the CODE, in
accordance with the written instructions of Employee of the payments
Employee elects to have reduced or delayed in order to avoid any
payments being deemed EXCESS PARACHUTE PAYMENTS. If Employee does not
agree with the OPINION or the calculation presented and is unable to
resolve any such dispute with the COMPANY within ten (10) days after
receipt of the OPINION, Employee may seek a judicial determination of
Employee's rights under this Agreement. Any reduction in BENEFITS
will be applied against the BENEFITS pursuant to or described in this
Agreement in the order of priority designated by Employee.

(e) Regardless of the reason for Employee's termination of employment
after a CHANGE IN CONTROL, Employee shall be entitled to: (i)
Employee's rights under any option agreements or grants under the 1987
Stock Option Plan, the 1991 Employee Stock Incentive Plan or any other
similar plan adopted by the Board of Directors after the Effective
Date, which rights shall be determined under the terms and conditions
of the respective plans, including the determination of whether a
CHANGE IN CONTROL has occurred for purposes of each such plan under
the definition thereof in such plan, and (ii) whatever benefits to
which Employee is entitled to receive by reason of Employee's
participation in the COMPANY'S various welfare and retirement plans,
in accordance with the respective rules of each of such plans, except
that the determination of whether a CHANGE IN CONTROL has occurred for
payment of benefits under the Supplemental Retirement Plan (effective
April 1, 1987) shall be made under the definition of CHANGE IN CONTROL
contained in Section 6(f) of this Agreement.

5. OBLIGATION TO REMAIN AN EMPLOYEE. In the event any other
corporation, person or GROUP begins a tender or exchange offer, circulates a
proxy to shareholders or takes other steps to effect a CHANGE IN CONTROL,
Employee agrees not to leave voluntarily the employ of the COMPANY and to
render services to the COMPANY commensurate with Employee's position, until
such other corporation, person or GROUP has abandoned or terminated efforts to
effect a CHANGE IN CONTROL or until a CHANGE IN CONTROL has occurred.

6. DEFINITIONS. The following definitions shall be applicable to and
govern the interpretation of this Agreement:

3
<PAGE> 4

(a) ACTUARIAL EQUIVALENT: An amount determined by using the same
methods and assumptions utilized under the PENSION PLAN immediately
prior to a CHANGE IN CONTROL.

(b) ANNUALIZED INCLUDIBLE COMPENSATION: The average of Employee's
total compensation from the COMPANY that was included in Employee's
gross income for federal income tax purposes during the period ending
December 31 immediately preceding the CHANGE IN CONTROL and beginning
five (5) years before such December 31, consistent with the definition
of that term in Section 280G(d)(1) of the CODE and the Treasury
regulations promulgated thereunder.

(c) BENEFITS: The benefits more particularly described on the
Schedule of Benefits attached hereto, made a part hereof and marked
"Exhibit A".

(d) BOARD OF DIRECTORS: The Board of Directors of the COMPANY.

(e) CAUSE: The delivery to Employee of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the BOARD OF DIRECTORS at a meeting of the BOARD OF
DIRECTORS called and held for that purpose (after reasonable notice to
Employee and an opportunity for Employee, together with Employee's
counsel, to be heard before the BOARD OF DIRECTORS) finding that, in
the good faith opinion of the BOARD OF DIRECTORS, Employee was guilt
of an act or acts of dishonesty constituting a felony and resulting or
intended to result directly or indirectly in substantial gain or
personal enrichment of Employee at the expense of the COMPANY and
specifying the particulars thereof in detail.

(f) CHANGE IN CONTROL: The happening of any one of the following
events:

(1) The COMPANY shall cease to be a publicly-owned corporation
having its outstanding common stock traded in the over-the-counter
market or other national exchange; or

(2) Any person or entity, including a GROUP, is or becomes the
beneficial owner, directly or indirectly, of securities of the
COMPANY representing 35% or more of the combined voting power of
the COMPANY'S then outstanding securities that may be cast for the
election of directors of the COMPANY; or

(3) During any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the BOARD OF
DIRECTORS cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by
the COMPANY'S shareholders, of each director of the COMPANY first
elected during such period was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of any such period; or

4
<PAGE> 5

(4) The shareholders of the COMPANY approve (a) any merger,
consolidation or other business combination of the COMPANY with an
other PERSON or any affiliate thereof, other than a merger or
consolidation that would result in the outstanding Class A Common
Stock of the COMPANY immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into common stock of the surviving entity) at least sixty percent
(60%) of the outstanding Class A Common Stock of the COMPANY or
such surviving entity outstanding immediately after such merger or
consolidation; (b) a plan of complete liquidation of the COMPANY;
or (c) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions) of all, or substantially
all, of the assets of the COMPANY.

(g) CODE: The Internal Revenue Code as amended and in effect at the
time.

(h) COMPANY: Marsh Supermarkets, Inc. and any successor to its
business and/or assets which executes and delivers the agreement
provided for in Section 7 of this Agreement or which otherwise becomes
bound by all of the terms and provisions of this Agreement by the
operation of law.

(i) DATE OF TERMINATION: Following a CHANGE IN CONTROL either the
date on which: (a) Employee delivers NOTICE OF TERMINATION to the
COMPANY if Employee's employment with the COMPANY is terminated by
Employee; or (b) NOTICE OF TERMINATION is given by the COMPANY if the
COMPANY terminates Employee's employment for any other reason.
Notwithstanding the foregoing, if a dispute concerning Employee's
termination by the COMPANY arises, the DATE OF TERMINATION shall be
the date on which that dispute is finally determined either by mutual
written agreement of the parties or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected),
provided that Employee notified the COMPANY of the existence of the
dispute within thirty (30) days after receiving NOTICE OF TERMINATION
from the COMPANY.

(j) EARNINGS: The same definition as the term "Earnings" as defined
and computed in the PENSION PLAN.

(k) EXCESS PARACHUTE PAYMENT(S): As defined in Section 280G of the
CODE.

(l) GROUP: Same definition as the term "group" as used in Section 13
(d)(3) of the Securities Exchange Act of 1934.

(m) LIFETIME MEDICAL BENEFITS: The requirement that, upon a
severance of employment of Employee as an employee of the COMPANY, the
COMPANY shall provide coverage for Employee and Employee's spouse for
their respective lifetimes under the COMPANY'S group medical, dental
and vision benefit plans, programs or arrangements (collectively, the
"Medical Plan"), at no expense to Employee or to

5
<PAGE> 6

Employee's spouse, as if Employee had continued as an employee of the
COMPANY, provided that such participation is possible under the terms
and provisions of the Medical Plan. Any future increases in benefits
available to employees of the COMPANY generally under the Medical Plan
shall also be provided to Employee and to Employee's spouse, at no
expense to Employee or to Employee's spouse. In the event that
participation in any Medical Plan by Employee or Employee's spouse is
not possible, or if the benefits provided to Employee and to
Employee's spouse (after taking into account any Medicare benefits
provided by Title XVIII of the Social Security Act) are reduced to a
level below the level of such benefits on the DATE OF TERMINATION, or
if Employee or Employee's spouse elects at any time by notice, in
writing, to the COMPANY, the COMPANY shall arrange to provide both
Employee and Employee's spouse with benefits substantially similar to
those which they were eligible to receive under the Medical Plan
immediately prior to the DATE OF TERMINATION, such benefits to be
provided at the COMPANY'S expense by means of an individual insurance
policies, or if such policies cannot be obtained, from the COMPANY'S
assets. These benefits shall continue after the death of Employee to
Employee's spouse, if Employee's spouse survives Employee, for
Employee's spouse's lifetime. If at any time after the DATE OF
TERMINATION, Employee should accept employment with another employer
and if either Employee or Employee's spouse, or both, should be
covered under that employer's medical benefit plans, then on the
effective date that such coverage commences, the obligation of the
COMPANY to provide Medical Plan benefits to whoever of Employee or
Employee's spouse, or both, is covered under the medical benefit plans
of the other employer shall terminate. The Medical Plan benefits
provided to Employee and to Employee's spouse after the DATE OF
TERMINATION are intended by the parties to be in lieu of the rights of
Employee and his spouse to continuation of coverage (commonly known as
"COBRA") under Section 601 et seq. of the Employee Retirement Income
Security Act of 1964, as amended, and Section 4908B of the CODE, as
either of the foregoing statutes may be amended. In addition,
LIFETIME MEDICAL BENEFITS shall include the requirement that, if any
Medical Plan benefits provided to Employee or to Employee's spouse are
subject to federal and/or state income taxes, including the
alternative minimum tax, the COMPANY will pay to Employee or to
Employee's spouse, the full amount of such taxes, plus such additional
amount as may be necessary so that the net payment after taxes is
sufficient to reimburse Employee or Employee's spouse for all taxes
imposed on the provision of Medical Plan benefits.

(n) NOTICE OF TERMINATION: Notice which shall indicate the specific
termination provision of the Agreement relied upon and shall set forth
the facts and circumstances claimed to provide the basis for
termination of Employee's employment under the provision so indicated.

(o) OPINION: An opinion of independent accounting advisors to the
COMPANY immediately prior to the CHANGE IN CONTROL that Employee will
be considered to have received EXCESS PARACHUTE PAYMENTS if Employee
were to receive the full amounts owing pursuant to or described in
this Agreement and setting forth with

6
<PAGE> 7

particularity the smallest amount by which the payment due Employee
would have to be reduced to avoid the imposition of any excise tax or
the denial of any deduction pursuant to Sections 280G and 4999 of the
CODE.

(p) PARACHUTE PAYMENT: A "parachute payment" as determined in
accordance with Section 280G of the CODE.

(q) PENSION PLAN: The Employees' Pension Plan of Marsh Supermarkets,
Inc. and Subsidiaries or any successor plan, as in effect on the DATE
OF TERMINATION.

(r) PERSON: Same definition as the term "person" in Sections 13 (d)
and 14 (d) of the Securities Exchange Act of 1934.

(s) PRESENT VALUE: The present value of the amount of cash paid, the
fair market value of property transferred, or the fair market value of
benefits provided under each paragraph of this Agreement (and of any
other payments to Employee in the nature of compensation, contingent
upon a CHANGE IN CONTROL) shall be determined as of the time this
Agreement becomes operative (or such other time as may be established
by Treasury regulations issued under Section 280G of the CODE
utilizing a discount rate equal to 120% of the interest rate factor
specified in Section 1274 (d) of the CODE, as in effect at the time of
the present value calculation (or such other rate as may be
established by Treasury regulations issued under Section 280G of the
CODE).

(t) REASON: Following a CHANGE IN CONTROL there is, in Employee's
sole judgment, a change in the stature of the position in the COMPANY
held by Employee immediately prior to such CHANGE IN CONTROL,
occasioned by a change in the nature or scope of Employee's
responsibilities or duties, or a reduction in the aggregate
compensation paid to Employee for the performance thereof, or for any
other reason.

(u) RETIREMENT: Severance by the COMPANY or by Employee of
Employee's employment with the COMPANY based on Employee attaining age
of sixty-five (65), which is the COMPANY'S normal retirement age.

7. SUCCESSORS; BINDING AGREEMENT.

(a) The COMPANY will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the COMPANY
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the COMPANY would be required to
perform it if no such succession had taken place. Failure of the
COMPANY to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle
Employee to compensation from the COMPANY in the same amount and on
the same terms as Employee would be

7
<PAGE> 8

entitled hereunder if such succession had not occurred, except that
for the purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the DATE OF
TERMINATION.

(b) This Agreement shall inure to the benefit of and be enforceable
by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts are still payable
hereunder, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there is no designee, to
Employee's estate.

8. NOTICES. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally, mailed by United
States certified mail, return receipt requested, postage prepaid, or sent by
prepaid express mail, addressed as follows:

If to the COMPANY:

Marsh Supermarkets, Inc.
9800 Crosspoint Boulevard
Indianapolis, Indiana 46256-3350
Attn.: Corporate Secretary

If to Employee:

To the address set forth on the first page of this Agreement.

Either party may change the address to which notices are to be sent by
written notice to the other party. Notice of change in notice address shall be
effective only upon receipt by the other party.

9. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged following a CHANGE IN CONTROL unless such waiver,
modification or discharge is agreed to in writing signed by Employee and such
officer of the COMPANY specifically designated by the BOARD OF DIRECTORS.
Prior to a CHANGE IN CONTROL, this agreement may be terminated or amended in
writing by the COMPANY at any time, effective upon notice thereof to the
Employee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions at the same or at any subsequent time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be govern by the laws of
the State of Indiana.

8
<PAGE> 9

10. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

11. CONFIDENTIALITY. Employee shall retain in confidence any and all
confidential information known to Employee concerning the COMPANY or its
businesses so long as such information is not otherwise publicly disclosed.

IN WITNESS WHEREOF, the COMPANY by its duly authorized officers, and
Employee have caused to be executed and executed, respectively, this Agreement
as of the Effective Date.

MARSH SUPERMARKETS, INC. MARSH SUPERMARKETS, INC.

By: /s/ Don E. Marsh By: /s/ Stephen M. Huse
------------------------------- -----------------------------
Don E. Marsh, Chairman of the Stephen M. Huse, Chairman
Board, President and Chief Salary Committee of the
Executive Officer Board of Directors

Attest: /s/ P. Lawrence Butt
---------------------------
P. Lawrence Butt, Secretary

"COMPANY"
/s/ RONALD R. WALICKI
-----------------------------
RONALD R. WALICKI
WITNESS: "Employee"

- ----------------------------
<PAGE> 10

EXHIBIT A

SCHEDULE OF BENEFITS

A. Employee's full base salary through the DATE OF TERMINATION at the rate in
effect on the date NOTICE OF TERMINATION is given, and an amount equal to the
amount, if any, of any bonus or other awards made to Employee which have not
yet been paid to Employee.

B. An amount (the "Termination Payment") equal to the product of (x) the sum
of Employee's annual base salary at the highest rate in effect during the
twelve (12) month period immediately preceding the DATE OF TERMINATION plus the
amount of the highest annual bonus awarded to Employee during the thirty-six
(36) months ended on the DATE OF TERMINATION (whether or not fully paid),
multiplied by (y) the number three (3); provided, however, that in the event
there are fewer than thirty-six (36) whole or partial months remaining from the
DATE OF TERMINATION until Employee's normal RETIREMENT date, the amount
calculated pursuant to this paragraph shall be reduced by multiplying it by a
fraction, the numerator of which shall be the number of whole or partial months
so remaining to Employee's normal RETIREMENT date and the denominator of which
shall be thirty-six (36).

C. The Termination Payment shall not be included as part of Employee's last
twelve (12) months of Earnings for purposes of calculating Employee's benefits
under the PENSION PLAN. In lieu of the Termination Payment being included in
EARNINGS, but in addition to the benefits to which Employee is entitled under
the PENSION PLAN, a lump sum cash payment in an amount equal to the ACTUARIAL
EQUIVALENT of the retirement pension to which Employee would have been entitled
under the terms of the PENSION PLAN determined as of the DATE OF TERMINATION,
deeming Employee to be 100% vested, assuming Employee had accumulated three (3)
additional years of continual service (after termination pursuant to Section 3)
at Employee's annual base salary at the rate in effect on the DATE OF
TERMINATION under the PENSION PLAN, reduced by (y) the single sum ACTUARIAL
EQUIVALENT of Employee's actual accrued benefit pursuant to the terms of the
PENSION PLAN, determined as of the DATE OF TERMINATION, deeming Employee to be
100% vested. In the event there is less than thirty-six (36) months remaining
from the DATE OF TERMINATION until Employee's normal RETIREMENT date, the
thirty-six (36) month period of additional accruals shall be reduced to a
period not to exceed the time period from the DATE OF TERMINATION until
Employee's normal RETIREMENT date.

D. The COMPANY shall maintain in full force and effect for the continued
benefit of Employee and Employee's dependents, beneficiaries and estate, to the
extent applicable, all life and accident plans, programs and arrangements in
which Employee was entitled to participate immediately prior to the DATE OF
TERMINATION, provided that continued participation by Employee is possible
under the general terms and provisions of such plans programs and arrangements,
until the earliest of the third anniversary of the Date of Termination, the
date Employee is eligible to participate in similar plans, programs or

10
<PAGE> 11

arrangements provided by any subsequent employer, or the date Executive attains
age 65 (the earliest of these three dates is hereinafter referred to as the
"Coverage Termination Date"). In the event that the participation by Employee
in any such plan, program or arrangement is barred or would violate any
applicable non-discrimination rule, the COMPANY shall arrange to provide
Employee with benefits substantially similar to those which Employee is
entitled to receive under such plan, program or arrangement for such period.

E. Employee shall receive, in addition to any other amounts or benefits which
may be paid to Employee, LIFETIME MEDICAL BENEFITS.

F. The COMPANY shall pay all legal and accounting fees and expenses incurred
by Employee in contesting or disputing Employee's termination following a
CHANGE IN CONTROL or in seeking to obtain or enforce any right or benefit
provided by this Agreement if Employee is successful, in whole or in part,
whether as a result of a court judgment or otherwise.

G. Employee shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for herein be reduced by any
compensation earned by Employee as a result of employment by another employer
or otherwise after the DATE OF TERMINATION.

H. No more than thirty (30) days after the DATE OF TERMINATION, or if an
OPINION is delivered timely to Employee by the COMPANY pursuant to Section
4(d), no more than sixty (60) days after the DATE OF TERMINATION, the COMPANY
shall pay to Employee on a lump sum the amounts required under paragraphs A, B
and C of this Schedule of BENEFITS. The COMPANY shall provide the fringe
benefits specified in paragraphs D and E of this Schedule of BENEFITS on an
uninterrupted basis. The COMPANY shall pay any legal and accounting expenses
under paragraph F of this Schedule of BENEFITS within five (5) days after
receipt of notice from Employee of the amount of such expenses.

<PAGE> 1

EXHIBIT 10(q)

SPLIT DOLLAR INSURANCE AGREEMENT

THIS SPLIT DOLLAR INSURANCE AGREEMENT (the "Agreement") is entered
into effective the ___ day of January, 1997, by Marsh Supermarkets, Inc., an
Indiana corporation (the "Company") and American National Trust and Investment
Management Company, Trustee of the Don E. Marsh 1983 Irrevocable Trust for
Marilyn Lois Marsh dated March 9, 1983 ("Owner").

Recitals

A. The Owner has acquired a policy of life insurance in the face
amount of Two Million Five Hundred Thousand Dollars ($2,500,000) (the
"Policy"), issued by Massachusetts Mutual Life Insurance Company (the
"Insurer"), insuring the life of Don E. Marsh, an employee of the Company (the
"Insured"), which Policy is described in Exhibit A attached hereto and make a
part hereof.

B. The Owner is the Trustee of an irrevocable trust for the benefit
of certain family members of the Insured. The Owner desires to maintain life
insurance on the life of the Insured for the beneficiaries of such trust and
desires that such life insurance have an equity or cash value feature. The
Owner is willing to pay life insurance premiums equal to the annual cost of
current life insurance protection on the life of the Insured as measured by the
lower of the PS-58 rate, set forth in the then applicable Internal Revenue
Service Revenue Ruling, or the Insurer's current published premium rate of
annually renewable term insurance for standard risks. The Company, in the
interests of the Insured as a valuable employee of the Company and his family,
and as an investment of Company assets, desires to pay the balance of the
annual premium due. The only interest of the Company with respect to the
<PAGE> 2

Policy is the payment due to the Company by reason of its advances of the
premiums due with respect to the Policy as hereinafter described.

C. The Owner is the owner of the Policy and possesses all incidents
of ownership in and to the Policy.

D. In order to secure the recovery of the advances by the Company
with respect to the Policy ("Company Advances") in the event of the termination
of this Agreement, the Company wishes to have a limited collateral assignment
of death benefits payable to the Owner under the policy and cash values
accumulated in favor of the Owner under the policy.

E. The parties intend that by such collateral assignment the Company
shall have only the right to receive recovery of the Company Advances under
this Agreement, with the Owner retaining all other ownership rights in the
Policy, as specified in this Agreement.

Agreement

NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:

1. Ownership. The Owner shall be the sole and absolute owner of the
Policy and shall have the exclusive right to exercise all ownership rights
granted by the terms of the Policy, including, but not .limited to, the rights
to designate beneficiaries, select settlement and dividend options, borrow on
the security of the Policy and to surrender or cancel the Policy. All such
rights may be exercised by the Owner without the Company's consent. With
respect to the exercise of the right to borrow on the security of the Policy,
the Owner agrees that the

-2-
<PAGE> 3

Owner will not borrow on the security of the Policy in any manner so as to
impair the security of the Company under any collateral assignment executed in
favor of the Company pursuant to the terms of this Agreement to secure the
recovery of the Company Advances under the applicable provisions of this
Agreement. If requested by the Company, the Owner will produce information
verified by the Insurer showing the amount of indebtedness on the Policy at the
time of such request.

2. Owner's Premium Payment Obligation. Under the terms of this
Agreement the Owner shall pay that amount of the premiums due on the Policy
equal to the annual cost of current life insurance protection on the life of
the Insured as measured by the lower of the PS-58 Rate, as set forth in the
then applicable Internal Revenue Service Revenue Ruling, or the Insurer's
current published premium rate of annually renewable term insurance for
standard risks. In addition to the foregoing payments, the Owner may elect to
pay additional Policy premium amounts by policy loan or other borrowing. Upon
making such election, the Owner shall deliver notice of such election to the
Company on or before the Policy premium due date.

3. Company's Payment Premiums as Investments. The Company for its
own account and as an investment of general Company assets shall pay all Policy
premium amounts not paid by the Owner pursuant to paragraph 2 of this
Agreement. Such payments shall be referred to as the "Company Advances". The
Company shall pay all such amounts of the Policy premiums not paid by the Owner
until the death of the Insured, by reason of the valuable services of the
Insured as an employee of the Company.

-3-
<PAGE> 4

4. Manner of Payment. On or before the due date of each Policy
premium, or within the grace period provided therein, the Company shall notify
the Owner of the exact amount due from the Owner. The Owner shall pay its
required amount to the Insurer prior to the premium due date, or within the
grace period provided therein. The Company shall then be responsible to pay
the balance of the premium to the Insurer and shall promptly furnish the Owner
with evidence of timely payment. If the Owner fails to make its required
payment, the Company, in its sole discretion, may elect to pay the Owner's
portion of the premium payment and shall be entitled to recover such payment in
accordance with the provisions of this Agreement.

5. Dividends. Dividends on the Policy shall be applied as elected by
the Owner.

6. Payment of Company Death Benefit or Termination Amount.

(a) Death of lnsured. Upon the death of the Insured, the Company
shall be entitled to payment by the Insurer from the death benefit payable
under the Policy an amount which shall be equal to the lesser of the cash
surrender value of the Policy immediately prior to the Insured's death or
the Company Advances ("Company Death Benefit"). The Company and the Owner
shall take all action necessary under the terms of the Policy to obtain the
Company Death Benefit payable to the Company.

(b) Other Termination. Upon the termination of this Agreement prior
to the death of the Insured, the Company shall have the right to receive an
amount equal to the lesser of the cash surrender value of the Policy or the
Company Advances ("Termination Amount"), and after the payment of such
amount, the Company shall have no further interest in the Policy or under
this Agreement.

(c) Payment to Owner Third Party. Upon the death of the Insured, the
person, trust or other beneficiary designated in writing by the Owner, who
may be referred to for purposes of administration by the Insurer as the
"Third Party", shall receive all amounts not paid to the Company under the
provisions of paragraph 6(a) of this Agreement.

-4-
<PAGE> 5

7. Collateral Assignment. To secure the recovery by the Company of
the Company Death Benefit or the Termination Amount, the Owner shall execute a
limited assignment of amounts payable under the Policy by the Insurer in the
event of the surrender of the Policy or the death of the Insured in favor of
the Company in the form attached hereto as Exhibit B (the "Collateral
Assignment"). The Collateral Assignment shall specifically limit the rights of
the Company thereunder to the recovery of the Company Death Benefit or the
Termination Amount in the event of death of the Insured or other termination of
this Agreement.

8. Absolute Limitation on Company Rights. In no event shall the
Company have any right to borrow against the Policy, to surrender or cancel the
Policy, or to assign its interest in the Policy, unless specifically provided
otherwise in this Agreement. The Company shall neither have nor exercise any
right as collateral assignee of the Policy which could in any way defeat or
impair the Owner' s right to receive the cash surrender value or the death
benefit payable under the Policy in excess of the amount due the Company
hereunder. All provisions of this Agreement and of the Collateral Assignment
shall be construed so as to carry out such intention.

9. Payments by Insurer and Claims Procedure. The Insurer may pay
benefits under the Policy either by separate checks to the parties or agent
assignees entitled thereto, or by a joint check. If the Insurer pays by joint
check, the Owner and the Company shall divide the benefit as provided herein.

Benefits shall be payable in accordance with the provisions of this
Agreement. Should the Owner or its beneficiary as designated in writing fail to
receive benefits to which

-5-
<PAGE> 6

such Owner or beneficiary believes he is entitled, a claim may be filed. Any
claim for a benefit under this Agreement shall be filed by the Owner or
beneficiary (claimant) under this Agreement by written communication which is
made by the claimant or the claimant' s authorized representative which is
reasonable calculated to bring the claim to the attention of the Fiduciary
under this Agreement.

If a claim for a benefit is wholly or partially denied, a written
notice of the decision shall be furnished to the claimant by the Fiduciary or
his designee within a reasonable period of time after receipt of the claim,
which notice shall notice shall include the following information:

(a) The specific reason or reasons for the denial;

(b) Specific reference to the pertinent provisions of this Agreement
upon which the denial is based;

(c) A description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and

(d) An explanation of the claim review procedures under this
Agreement.

In order that a claimant may appeal a denial of a claim, a claimant or
his duly authorized representative:

(a) May request a review by written application to the Fiduciary or
his designee not later that 60 days after receipt by the claimant of
written notification of denial of a claim;

(b) May review pertinent documents; and

-6-
<PAGE> 7

A decision on review of a denied claim shall be made not later than 60
days after the Fiduciary's receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered within a reasonable period of time, but not later
than 120 days after receipt of a request for review. The decision on review
shall be in writing and shall include the specific reason(s) for the decision
and the specific reference(s) to the pertinent provisions of this Agreement on
which the decision is based.

Notwithstanding anything contained in this Agreement to the contrary,
any claim for a death benefit under an insurance policy held subject to this
Agreement shall be filed with the Insurer by the claimant or his authorized
representative on the form or forms prescribed for such purpose by the Insurer.
The Insurer shall have sole authority for determining whether a death claim
shall or shall not be paid, either in whole or in part, in accordance with the
terms of such insurance contract which may have been purchased on the life of
the Insured.

10. Termination During Lifetime of Insured. This Agreement shall
terminate on the surrender or cancellation of the Policy by the Owner, who has
the sole and exclusive right to surrender or cancel. Upon any termination of
this Agreement, the Owner shall have the following rights:

(a) The Owner may surrender the Policy, in which event, if the net
cash surrender proceeds are less than the Company Advances, the Owner shall
have no obligation to pay the difference to the Company.

(b) The Owner may direct the Company to assign its interest under the
Policy and this Agreement to any one or more persons, firms or entities as
shall come within the provisions of Sections 101 (a)(2)(A) or 101
(a)(2)(B) of the Internal Revenue Code of 1986, as amended, providing for
the exclusion from

-7-
<PAGE> 8

the gross income of such assignee the proceeds payable to such assignee as
owner of such assigned Policy upon the death of the Insured, in which event
such assignee shall pay to the Company an amount equal to the lesser of the
cash surrender value of the Policy or the Company Advances.

(c) For sixty (60) days after the date of termination of this
Agreement, the Owner shall have the option of obtaining the release of the
Collateral Assignment to the Company. To obtain such release, the Owner
shall pay to the Company an amount equal to the lesser of the cash
surrender value of the Policy or the Company Advances. Upon receipt of
such amount, the Company shall release the Collateral Assignment by
executing and delivering to the Owner an appropriate instrument of release.

11. Obligations of lnsurer. The Insurer shall be fully discharged
from its obligations under the Policy by payment of the Policy death benefit to
the beneficiary or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a part of
this Agreement, or any modification or amendment to this Agreement. No
provision of this Agreement, nor of any modification or amendment hereof, shall
in any way be construed as enlarging, changing, varying, or in any way
affecting the obligations of the Insurer as expressly provided in the Policy,
except insofar as the provisions hereof are made a part of the Policy by the
Collateral Assignment executed by the Owner and filed with the Insurer.

12. Appointment of Fiduciary. The Company is hereby designated as
the named Fiduciary under this Agreement. The Fiduciary shall have authority
to control and manage the operation and administration of this Agreement.

13. Amendment. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto, or their
respective successors or assigns, and may not be otherwise terminated except as
provided herein.

-8-
<PAGE> 9

14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company and the Owner and their respective
successors, assigns, heirs, executors, administrators and beneficiaries.

15. Specific Enforcement. The Owner shall be entitled to specific
enforcement of all obligations of the Company under this Agreement.

16. Notices. All notices consents or demands required or permitted
to be given under the provisions of this Agreement shall be sent by certified
mail to:

Owner: American National Trust and Investment
Management Company, Trustee
320 South High Street
Muncie, Indiana 47305

Company: Marsh Supermarkets, Inc.
9800 Crosspoint Boulevard
Indianapolis, Indiana 46256-3350

Notice shall be effective when received by the recipient.

17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.

-9-
<PAGE> 10

IN WITNESS WHEREOF the parties have signed this Agreement effective
this ___ day of January, 1997.

MARSH SUPERMARKETS, INC.

By: /s/
------------------------------------

AMERICAN NATIONAL TRUST AND INVESTMENT
MANAGEMENT COMPANY

By: /s/
------------------------------------
Trust Administrator, Trustee,
Don E. Marsh 1983 Irrevocable Trust
for Marilyn Lois Marsh, dated
March 9, 1983

-10-
<PAGE> 11

The following life insurance policy is subject to the attached
Split-Dollar Insurance Agreement:

OWNER: American National Trust and Investment Management
Company, Trustee u/a Don E. Marsh 1 983 Irrevocable
Trust for Marilyn Lois Marsh dated March 9, 1983

INSURER: Massachusetts Mutual Life Insurance Company

INSURED: Don E. Marsh

POLICY NUMBER: __________________

FACE AMOUNT: $2,500,000

DATE OF ISSUE: _____________, 199_

EXHIBIT A

<PAGE> 1

EXHIBIT 11 -STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(All amounts in thousands except per share amounts)

<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
March 29, March 30, April 1,
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Primary earnings per share:
- ---------------------------
Average shares outstanding 8,395 8,403 8,424
Net effect of dilutive stock options - based
on the Treasury Stock method using
average market price 38 36 5
------ ------ ------
Total primary shares and equivalents 8,433 8,439 8,429
====== ====== ======

Net income (loss) $ (244) $9,033 $8,573
------ ------ ------
Per primary share amount $ (.03) $1.07 $ 1.02
====== ====== ======

Fully diluted earnings per share:
- ---------------------------------
Average shares outstanding 8,395 8,403 8,424
Net effect of dilutive stock options - based on the
Treasury Stock method using higher of
average market or last price 74 47 6
Assumed conversion of 7% convertible
subordinated debentures 1,290 1,290 1,290
------ ------ ------
Total shares and equivalents 9,759 9,740 9,720
====== ====== ======

Net income (loss) $ (244) $9,033 $8,573
Add 7% convertible subordinated debentures
interest, net of tax benefit 877 895 948
------ ------ ------
Total $ 633 $9,928 $9,521
------ ------ ------
Per fully diluted share amount $ .06 (a) $ 1.02 $ 0.98
====== ====== ======
</TABLE>

(a) For financial reporting purposes, adjusted to exclude the effects of
antidilutive stock options and convertible subordinated debentures of
$.09.

<PAGE> 1
EXHIBIT 13

SELECTED FINANCIAL DATA (in thousands, except per share amounts)

<TABLE>
<CAPTION>
March 29, March 30, April 1, April 2, March 27,
As of and for the year ended 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales and other revenues ....................... $ 1,451,730 $1,390,543 $1,303,261 $1,263,191 $1,170,398
Income (loss) before income taxes and changes
in accounting principles....................... ( 249) 14,284 12,790 13,517 15,569
Income (loss) before cumulative effect of
changes in accounting principles............... ( 244) 9,033 8,573 8,526 9,828
Cumulative effect of accounting changes......... - - - 1,941 -
----------- ----------- ---------- ---------- ----------
Net Income (loss)............................... $ ( 244)(a) $ 9,033 $ 8,573 $ 10,467 $ 9,828
=========== =========== ========== ========== ==========

Income (loss) per share before cumulative effect
of changes in accounting principles
Primary....................................... $ (.03) $ 1.07 $ 1.02 $ 1.01 $ 1.24
Fully diluted (b)............................. (.03) 1.02 .98 .97 1.23

Net income (loss) per share
Primary....................................... $ (.03) $ 1.07 $ 1.02 $ 1.24 $ 1.24
Fully diluted (b)............................. (.03) 1.02 .98 1.17 1.23

Dividends declared per share.................... $ .44 $ .44 $ .44 $ .44 $ .44

Total assets.................................... $ 395,631 $ 387,294 $ 378,471 $ 375,683 $ 352,511
Long-term liabilities........................... 145,429 135,066 143,102 148,818 155,444
Total shareholders' equity...................... 115,448 118,158 114,314 109,794 101,539
</TABLE>

a) Reflects a $4.6 million after tax charge resulting from the adoption of
Statement of Financial Accounting Standards (FAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," a $1.6 million after tax charge resulting from the decision to curtail
the accrual of benefits under the Company's qualified defined benefit
pension plan, and various other charges not normally recurring.

b) Earnings (loss) per share reflect dilutive options and convertible
debentures issued in March 1993.

14
<PAGE> 2
SELECTED QUARTERLY FINANCIAL DATA (unaudited)
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
------------------------------------------ -----------------------------------------
1997 1996
Fourth Third Second First Fourth Third Second First
------------------------------------------ -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales and other revenues.................. $328,671 $338,116 $449,099 $335,844 $316,022 $329,275 $425,781 $319,465
Gross profit.............................. 82,565 82,153 109,180 81,246 79,884 79,685 105,037 78,744
Selling, general and administrative....... 71,063 71,391 95,444 80,736 69,391 69,202 91,891 66,538
Depreciation and amortization............. 4,571 4,461 5,633 9,064 4,488 4,456 5,779 4,234
-------- -------- -------- -------- -------- -------- -------- --------
Operating profit(loss).................... 6,931 6,301 8,103 ( 8,554) 6,005 6,027 7,367 7,972
Interest and debt expense amortization.... 3,200 2,992 3,824 3,014 3,084 3,099 3,854 3,050
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss)
before income tax provision............. 3,731 3,309 4,279 (11,568) 2,921 2,928 3,513 4,922
Income taxes (credit)..................... 1,608 1,303 1,540 (4,456) 1,067 1,115 1,282 1,787
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)......................... $ 2,123 $ 2,006 $ 2,739 $ (7,112) $ 1,854 $ 1,813 $ 2,231 $ 3,135
======== ======== ======== ======== ======== ======== ======== ========

Net income (loss) per share -
Per primary share outstanding............. $ .25 $ .24 $ .33 $ (.85)(a) $ .22 $ .21 $ .26 $ .37
Assuming full dilution.................... .25 .23 .31 (.85)(a) .21 .21 .26 .34

Common stock prices:
Class A- High...................... $15.25 $ 14.37 $12.25 $13.00 $14.12 $14.00 $15.75 $12.00
Low....................... 12.25 10.75 11.25 11.50 11.75 11.75 11.50 9.75

Class B- High...................... 14.37 11.75 11.75 13.12 13.75 13.25 14.00 11.00
Low....................... 11.62 9.75 9.75 11.50 12.00 10.75 10.50 9.25

Cash Dividend: Class A................... $ .11 $ .11 $ .11 $ .11 $ .11 $ .11 $ .11 $ .11
Class B................... .11 .11 .11 .11 .11 .11 .11 .11
</TABLE>

Cash dividends have been paid on the common stock during each quarter of the
past 37 years.

(a) Adjusted to exclude the effects of antidilution of $.03 and $.13 per share
for primary and fully diluted calculations, respectively.

- --------------------------------------------------------------------------------

Quarterly earnings per share are based on weighted average shares outstanding
and dilutive effect of options and convertible securities outstanding for the
quarter. The sum of the quarters may not equal the full year earnings per share
amount.

The first, third and fourth quarters are 12 weeks, and the second quarter is 16
weeks.

Unusual or infrequently occurring items recognized in net income in the
quarterly results are as follows:
Fourth quarter 1997: Income per fully diluted share increased $.10 from the
sale of a closed supermarket.
First quarter 1997: Loss per fully diluted share included $.47 from
reducing the carrying amounts of impaired assets and
$.15 from curtailment of the defined benefit pension
plan.
Fourth quarter 1996: Income per fully diluted share increased $.14 from
sales of surplus real estate.
Second quarter 1996: Income per fully diluted share increased $.03 from
sales of surplus real estate.
First quarter 1996: Income per fully diluted share increased $.02 from
sales of surplus real estate.

15
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations
The following discussion includes certain forward-looking statements. Actual
results could differ materially from those reflected by the forward-looking
statements in the discussion, and a number of factors could adversely affect
future results, liquidity and capital resources. These factors include
softness in the general retail food industry, the entry of new competitive
stores in the Company's market, the stability of distribution incentives from
suppliers, the level of discounting by competitors, the timely and on-budget
completion of store construction, expansion conversion and remodeling, the
level of margins achievable in the Company's operating divisions and their
ability to minimize operating expenses. Although management believes it has
the business strategy and resources needed for improved operations, future
revenue and margin trends cannot be reliably predicted.

The following table sets forth certain income statement components, expressed
as a percentage of sales and other revenues, and the year to year percentage
changes in such components:

<TABLE>
<CAPTION>
Percentage of Revenues
Year Ended Percentage Change
------------------------------ -----------------
March 29, March 30, April 1, 1997 1996
1997 1996 1995 vs. 1996 vs. 1995
---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C>
Sales and other revenues.................... 100.0% 100.0% 100.0% 4.4% 6.7%
Gross profit................................ 24.5 24.7 24.0 3.4 9.6
Selling, general and administrative......... 21.9 21.4 20.6 7.3 10.6
Depreciation and amortization............... 1.6 1.4 1.4 25.2 2.6
Operating profit............................ 0.9 2.0 2.0 ( 53.3) 4.9
Interest and debt amortization expense...... 0.9 0.9 1.0 ( 0.4) ( 1.5)
Income (loss) before income taxes........... 0.0 1.0 1.0 (101.7) 11.7
Income taxes................................ 0.0 0.4 0.3 (100.1) 24.5
Net income (loss)........................... 0.0 0.6 0.7 (102.8) 5.4
===== ===== =====
</TABLE>

Sales and Other Revenues
Consolidated sales and other revenues of $1,451.7 million increased $61.2
million, or 4.4%, in 1997 from 1996. Consolidated sales and other revenues for
1997 include gains from sales of real estate of $1.8 million, compared to $2.8
million from sales of real estate in 1996. Supermarkets, convenience stores
(Village Pantry), convenience wholesale (CSDC), and food service (Crystal Food
Services) revenues accounted for 69%, 13%, 17%, and 1%, respectively, of
consolidated revenues. Approximately $20.1 million of the increase was from
supermarkets, $9.5 million from Village Pantry, $28.6 million from CSDC, and
$4.9 million from Crystal Food Services. Retail sales (excluding fuel sales)
increased 2.3%. Sales in comparable stores (including replacement supermarkets
and convenience stores and format conversions) in 1997 increased 0.8% from 1996.
Low rates of food price inflation and competitive activity constrained
comparable stores sales growth. The revenue increase in supermarkets was due
principally to new stores opened since July 1995. The increase in Village
Pantry revenues was primarily in stores open both full years. The increase in
CSDC resulted from the addition of new customers and volume increases from
existing customers. At the end of 1997, CSDC served 1,400 non-related stores,
compared to 1,360 at the end of 1996. The increase in Crystal Food Services
sales and other revenues is attributable to the addition of two major venues
and five lesser venues, as well as increases at existing service sites.

In 1996, revenues increased $87.3 million, or 6.7%, from 1995. Supermarket,
Village Pantry, CSDC and Crystal Food Services revenues accounted for 71%, 13%,
15% and 1%, respectively, of 1996 consolidated revenues. The supermarket,
Village Pantry, CSDC and Crystal Food Services operations increased revenues
compared to 1995 by $45.5 million, $3.6 million, $22.0 million and $14.5
million, respectively. The revenue increases in supermarkets and Village Pantry
were due principally to stores opened in 1996. CSDC sales increased due to new
customers and volume increases from existing customers. The increase in food
service sales and other revenues was attributable to the acquisitions of Crystal
Catering in January 1995, and Martz & Associates Food Services, Inc. in May
1995. Excluding fuel sales, retail sales in comparable stores improved 1.1% in
1996 from 1995.

Comparable store sales in the fourth quarter of 1997 improved 2.1% over the same
quarter of 1996, the best quarterly performance of this measure in three years.
With the pace of new competitive openings slowing, the Company believes that
current marketing and merchandising programs are positioned to achieve
improvement in the comparable store sales trend.

16
<PAGE> 4
Gross Profit
Gross Profit is net of warehousing, transportation and promotional expenses.
In 1997, gross profit of $355.1 million increased $11.8 million, or 3.4%,
compared to 1996. The increase was primarily attributable to improvements of
$7.6 million in supermarkets, $1.4 million in Village Pantry, $287,000 in CSDC
and $3.6 million in Crystal Food Services. Expressed as a percentage of
revenues, consolidated gross profit was 24.5% in 1997, a decrease of 0.2% from
24.7% in 1996. The decrease was primarily due to increases in fuel sales of
Village Pantry and wholesale sales of CSDC, which have gross profit margins
significantly lower than the average of the Company's other operations.
Supermarket and Crystal Food Services margin percent to sales improved in 1997,
while Village Pantry and CSDC margin percent to sales declined slightly, due to
higher sales of fuel and cigarettes, respectively, at margin rates lower than
food products.

In 1996, consolidated gross profit increased $30.1 million, or 9.6%, from the
previous year. Expressed as a percentage of revenues, consolidated gross
profit was 24.7% in 1996 and 24.0% in 1995. The 0.7% improvement was primarily
attributable to a five-fold increase in sales of the Crystal Food Services,
related to the aforementioned acquisitions, which have gross profit margins
significantly higher than the average of the Company's other operations. The
Crystal Food Services increase was accompanied by improvements in supermarket
and CSDC margins. Gains in these margins more than offset a decline in Village
Pantry, resulting from a disproportionate increase in fuel sales, which have a
lower margin rate than food products, accompanied by decreased fuel margins in
the second half of 1996.

Selling, General and Administrative Expenses
Selling, general and administrative expenses in 1997, compared to 1996,
increased $21.6 million, or 7.3%, to $318.6 million. Expressed as a percentage
of revenues, selling, general and administrative expenses increased 0.5% to
21.9% in 1997 from 21.4% in 1996. This compared to a 0.8% increase in 1996
from 1995. The increased expenses were primarily attributable to increases of
$17.1 million in supermarkets, $1.9 million in Village Pantry and $3.2 million
in Crystal Food Services. The increase in supermarkets was primarily
attributable to selling expenses in stores opened since July 1995 and charges
not normally recurring, including: $2.6 million in charges related to future
lease obligations and the write-down of land values for stores impaired due to
competitive openings since May 1994; $2.4 million from the decision to curtail
the accrual of benefits under the Company's qualified defined benefit pension
plan; $1.3 million for reorganization expenses primarily related to personnel
expenses for recruiting and relocation, as well as expenses related to internal
management, and $1.5 million primarily related to adjustments in merchandising
allowances and payments to employees in lieu of wage increases. The
reorganization expenses were designed to make the Company more merchandising
focused and to improve further the Company's prepared foods programs.

Wages in identical stores increased 2.1% from 1996, following a 1.6% increase
in 1996 from 1995. A tight labor market resulted in a shift to more full-time
employees, wage increases and increased overtime. Retailers generally offset
wage increases with higher gross margin rates, higher same store sales, and
productivity gains. The Company expects a tight labor market to continue, but
implemented labor productivity changes in 1997 aimed at reducing the recent
increases in wage costs, while continuing to maintain high customer service
levels. The Company also expects improvements in gross margin rates and same
store sales, further offsetting wage cost increases.

Selling, general and administrative expenses in 1996, compared to 1995,
increased $28.4 million, or 10.6%, to $297.0 million. The increased expenses
were primarily attributable to increases of $18.0 million in supermarkets, $2.0
million in Village Pantry and $8.9 million in Crystal Food Services. The
increase in supermarkets resulted primarily from increases in occupancy
expenses related to stores opened during 1995 and 1996, retail wages and related
expenses, and advertising and promotional expenses.

Depreciation and Amortization Expense
Depreciation and amortization expense increased $4.8 million from 1996 to $23.7
million in 1997, and included $4.9 million in FAS 121 charges primarily related
to the adjustment of building and equipment carrying costs of eight supermarkets
and twelve convenience stores. Depreciation and amortization expense for 1996
increased $481,000 from 1995 due primarily to opening new stores. Expressed as
a percentage of revenues, depreciation and amortization expense was 1.6% for
1997, compared to 1.4% for both 1996 and 1995.

Operating Profit
Operating profit (earnings from continuing operations before interest and taxes)
was $12.8 million, or 0.9% of consolidated revenues for 1997, compared to $27.4
million, or 2.0%, in 1996. The gross profit increase of $11.8 million was more
than offset by increases of $21.6 million in selling, general and administrative
expenses and $4.8 million in depreciation and amortization expense. Operating
expenses were impacted by the FAS 121 and other charges not normally recurring,
as previously discussed.

As a percentage of revenues, operating profit was 2.0% in 1996 and 1995.
Operating profit increased 4.9% in 1996 from 1995 as improved gross profit
exceeded increases in operating expenses.

After year end, the Company restructured its retail operating units to compete
more effectively in the capital markets and reduced certain expenses
approximating $3.0 million annually.

17
<PAGE> 5
Interest Expense
Interest expense was $13.0 million in 1997, compared to $13.1 million in 1996.
Lower debt interest costs were essentially offset by a lower level of
capitalized construction interest. Interest expense in 1996 decreased $205,000
as a result of lower debt principal amounts and an increased level of
capitalized construction interest.

Income Taxes
The effective income tax rate for 1997 is not meaningful; the effective income
tax rate was 36.8% in 1996 and 33.0% in 1995. Income tax expense/(credit) was
($5,000) in 1997, $5.3 million in 1996 and $4.2 million in 1995. The 1997
decrease in tax expense was essentially due to lower pre-tax earnings. The
1996 effective rate increase resulted from a dramatic decrease in Targeted Jobs
Tax Credits and a decreased level of charitable donations as compared to 1995.
The benefit of Targeted Jobs Tax Credits was significantly less in 1996, since
the credit expired for employees hired after December 31, 1994.

Net Income (Loss)
Net loss for 1997 was $244,000, compared to net income of $9.0 million, or 0.6%
of revenues, for 1996. Supermarket and Village Pantry net income declined as a
result of the FAS 121 charges and other charges not normally recurring, taken
in 1997. Net income improved in Crystal Food Services, but declined slightly
in CSDC.

Net income for 1996 of $9.0 million improved from $8.6 million in 1995. Fiscal
1996 benefited from the sale of surplus real estate and marketable securities
and a favorable LIFO adjustment. Supermarket and Village Pantry earnings were
lower than the prior year, while CSDC and Crystal Food Services increased.

Other
In the retail food industry, changes in product cost generally result in higher
or lower retail prices with gross margin percentages remaining relatively
stable. Periods of very moderate food price inflation or price deflation tend
to affect operating results adversely since revenues are reduced while
inflationary increases continue in certain expense categories. Through the use
of the LIFO inventory costing method, current costs are reflected in the cost
of merchandise sold.

Capital Expenditures
Capital expenditures and major capital projects completed during the last three
years consisted of:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Capital expenditures (millions).......... $33.6 $22.7 $30.6
==== ==== ====
Supermarkets
New/acquired stores.................... 1 3 1
Closed stores.......................... 3 1 0
Major remodels/expansions.............. 0 0 0
Convenience stores
New/acquired stores.................... 3 1 5
Closed stores.......................... 2 1 1
</TABLE>

All years include land acquisitions for future store development.

During 1997, the Company opened the following stores:

<TABLE>
<CAPTION>
SQUARE
TYPE/CATEGORY FEET LOCATION OPENED
- ------------- ------ -------- ------
<S> <C> <C> <C>
Supermarket Replacement 65,000 Muncie, IN Nov. 8, 1996
LoBill Conversion 32,000 Indianapolis, IN Apr. 1, 1996
LoBill Conversion 22,000 Portland, IN Jul. 26, 1996
LoBill Conversion 17,000 Union City, OH Jul. 26, 1996
LoBill Conversion 22,000 Indianapolis, IN Sep. 26, 1996
Convenience New 4,500 Cambridge City, IN Jun. 13, 1996
Convenience New 4,500 Albany, IN Jul. 11, 1996
Convenience New 4,500 Frankfort, IN Oct. 25, 1996
</TABLE>

Subsequent to March 29, 1997, the Company acquired a new LoBill store in
Hamilton, Ohio and completed the conversion of a Marsh supermarket to the LoBill
format in Connersville, Indiana. The acquisition and conversion were completed
with both stores opening in April 1997.

During 1996, the Company opened the following stores:

<TABLE>
<CAPTION>
SQUARE
TYPE/CATEGORY FEET LOCATION OPENED
- ------------- ------ -------- ------
<S> <C> <C> <C>
Superstore New 81,000 Lafayette, IN July 25, 1995
Supermarket Replacement 60,000 Muncie, IN Aug. 3, 1995
Supermarket New 57,000 Indianapolis, IN Nov. 3, 1995
LoBill Conversion 26,000 Anderson, IN Apr. 6, 1995
LoBill Conversion 27,000 Muncie, IN Apr. 6, 1995
LoBill Conversion 39,000 Anderson, IN May 1, 1995
LoBill Conversion 22,000 Indianapolis, IN Sep. 26, 1995
Convenience New 4,600 Muncie, IN Jun. 29, 1995
</TABLE>

In addition to these projects, the Company increased the perishable warehouse
facility square footage in Yorktown, Indiana in 1997 to 191,000 square feet
from 124,000 square feet and constructed a central kitchen in an existing
storeroom in Noblesville, Indiana. In 1996, the Company purchased the assets
of Martz & Associates Food Services, Inc. for $1.0 million in cash and the
issuance of 43,416 shares of Class B Common Stock. In 1995, the Company
purchased the assets of Crystal Catering, the largest caterer in Indianapolis,
and its affiliated companies for $4.8 million. An additional $900,000 of
purchase price is contingent upon the cumulative performance of Crystal Food
Services for 1996 through 1998.

For 1998, the Company plans to open one new Marsh supermarket which is a
replacement store, remodel two Marsh supermarkets, open three new convenience
stores and acquire several sites for future development. Additionally, the
Company plans to upgrade supermarket front end systems and scale equipment, and
begin to implement new inventory procurement/distribution software. Also, in
1998, additional Village Pantry stores will be converted to the Shell brand,
with Shell Oil providing the capital for upgrading existing fuel operations at
these stores. The cost of these projects and other capital commitments is
estimated to be $30 to $35 million. Of this amount, the Company plans to fund
$10 million through equipment leasing, and believes it can finance the balance
with current cash balances and internally generated funds.

The Company's plans with respect to store construction, expansion, conversion
and remodeling may be revised in light of changing conditions, such as
competitive influences,

18
<PAGE> 6
its ability to successfully negotiate site acquisitions or leases, zoning
limitations and other governmental regulations. The timing of projects is
subject to normal construction and other delays. It is possible that projects
described above may not commence, others may be added, and a portion of planned
expenditures with respect to projects commenced during the current fiscal year
may carry over to the subsequent fiscal year.

Liquidity and Capital Resources
As presented in the Consolidated Statements of Cash Flows, net cash provided by
operating activities during 1997 was $30.4 million. This was a $3.3 million, or
12.2%, increase from the $27.1 million reported for 1996. The most significant
changes in working capital were a $1.8 million increase in accounts receivable,
a $1.5 million decrease in inventory and a $5.9 million increase in accounts
payable and accrued expenses. The increase in accounts receivable is largely
attributable to increased sales by CSDC to credit customers. The inventory
decrease is attributable to reduced carrying levels of cigarettes. The increase
in accounts payable and accrued expenses is attributable to increases in
accrued wages and fringe benefits, merchandising promotional costs, workers
compensation reserves and other accrued expenses.

For 1997, investing activities consisted of $29.8 million in expenditures for
acquisition of property, equipment and land for expansion, net of dispositions,
and $3.4 million in other investing activities (primarily acquisition of rental
video tapes to be amortized over two years). The Company's capital requirements
are traditionally financed through internally generated funds, long-term
borrowings and lease financings, including capital and operating leases. The
Company anticipates continued access to such financing sources.

The $4.2 million decrease in notes payable to banks from March 30, 1996 to March
29, 1997, was offset by increased borrowing under revolving credit agreements,
reported as long-term debt.

At March 29, 1997, the Company's long-term debt and capital lease obligations
amounted to $145.4 million, compared to $135.1 million at March 30, 1996. Of the
total long-term debt and capital lease obligations at March 29, 1997, 85% are at
fixed rates of interest averaging 8.7%, and 15% are at fluctuating rates of
interest averaging 5.8%.

Bank revolving credit agreements provide $40 million of financing, of which $20
million was utilized at March 29, 1997. Commitments for short-term bank
borrowings provide an additional $15 million. At March 29, 1997, $10.8 million
was outstanding on short-term bank borrowings.

The Company's senior note agreements prohibit additional long-term borrowings
if the Company's total long-term liabilities, including capital lease
obligations, would exceed 60% of the Company's consolidated net tangible assets.
The most restrictive of these agreements limit additional long-term borrowings
to approximately $25 million as of March 29, 1997. The senior note agreements
also prohibit the Company from entering into any operating leases having an
original term greater than three years, unless consolidated income available for
fixed charges, as defined in the agreements, exceeds 150% of the current four
year average of fixed charges in three of the four most recently completed
fiscal years. As of March 29, 1997, fixed charges exceeded 150% of consolidated
income available for fixed charges in two of the four most recently completed
fiscal years. Accordingly, the Company will not be able to enter into any lease
with a term in excess of three years in 1998.

The Company continually reviews its financing alternatives and may seek to raise
additional capital or seek to refinance its existing indebtedness through public
or private offerings of equity or debt

Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards (FAS) 121,
"Accounting for the Impairment Of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," in the first quarter of 1997. The statement establishes
accounting standards for recognizing and measuring the impairment of long-lived
assets, and requires the carrying amount of any impaired assets be reduced to
fair value. The adoption of this standard resulted in a charge to earnings of
$4.6 million, net of tax, in the first quarter of 1997, and is more fully
discussed in Note A to the consolidated financial statements. The Company
expects prospective earnings to improve approximately $900,000 annually
($565,000 after tax, or $.06 per fully diluted share) as a result of adopting
FAS 121.

In October 1995, FAS 123 "Accounting for Stock Based Compensation" was issued.
This statement defines a fair value based method of accounting for stock and
stock options issued to compensate employees and others. However, FAS 123
allows companies to continue using existing methods for recognizing the expense
of these plans if they provide pro forma disclosures in the financial
statements and earnings per share using the fair value method prescribed in the
statement. The Company intends to follow the current accounting approach and
the prescribed disclosures are included in Note H to the consolidated financial
statements. FAS 123 has no impact on the Company's 1997 consolidated financial
position or results of operations.

In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings per Share," which is required to be adopted for both interim and
annual financial statements ending after December 15, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact of FAS 128 on the calculation of both primary and
fully diluted earnings per share for fiscal years 1997 and 1996 is not expected
to be material.

19
<PAGE> 7
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of Marsh Supermarkets, Inc.

We have audited the accompanying consolidated balance sheets of Marsh
Supermarkets, Inc. and subsidiaries as of March 29, 1997 and March 30, 1996,
and the related consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the period ended March 29,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted audited
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Marsh
Supermarkets, Inc. and subsidiaries at March 29, 1997 and March 30, 1996, and
the consolidated results of their operations and their and their cash flows for
each of the three years years in the period ended March 29, 1997, in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Indianapolis, Indiana
May 15, 1997

<PAGE> 8
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
YEAR ENDED March 29, 1997 March 30, 1996 April 1, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales and other revenues.............................. $ 1,451,730 $1,390,543 $1,303,261
Cost of merchandise sold, including warehousing and
transportation...................................... 1,096,586 1,047,193 990,037
------------ ---------- ----------
Gross profit.......................................... 355,144 343,350 313,224
Selling, general and administrative................... 318,634 297,022 268,666
Depreciation and amortization......................... 23,729 18,957 18,476
------------ ---------- ----------
Operating profit...................................... 12,781 27,371 26,082
Interest and debt expense amortization - Note C....... 13,030 13,087 13,292
------------ ---------- ----------
Income (loss) before income taxes..................... ( 249) 14,284 12,790

Income taxes (credit) - Note G........................ ( 5) 5,251 4,217
------------ ---------- ----------
NET INCOME (LOSS).................................. $( 244) $ 9,033 $ 8,573
============ ========== ==========

EARNINGS (LOSS) PER SHARE:
Primary............................................. $ ( .03) $ 1.07 $ 1.02
============ ========== ==========
Fully diluted....................................... $ ( .03) $ 1.02 .98
============ ========== ==========
DIVIDENDS PER SHARE................................... $ .44 $ .44 $ .44
============ ========== ==========
</TABLE>

- -------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

21
<PAGE> 9

CONSOLIDATED BALANCE SHEETS (in thousands)

<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents...................................... $ 12,529 $ 12,822
Accounts receivable, less allowances of $848 in 1997, and
$970 in 1996........................................... 25,634 23,790
Inventories -- Note B..................................... 88,262 89,746
Prepaid expenses.......................................... 5,362 4,764
Recoverable income taxes.................................. 941 361
Deferred income taxes -- Note G........................... 650 1,510
-------- --------
TOTAL CURRENT ASSETS.............................. 133,378 132,993
Property and Equipment -- Note C
Land...................................................... 48,565 44,311
Buildings................................................. 144,201 134,107
Fixtures and equipment.................................... 103,220 100,469
Leasehold improvements.................................... 47,910 46,670
Construction in progress.................................. 2,430 5,912
Property under capital leases............................. 9,214 13,014
-------- --------
355,540 344,483
Allowances for depreciation and amortization.............. 122,859 114,552
-------- --------
TOTAL PROPERTY AND EQUIPMENT...................... 232,681 229,931
Other assets................................................ 29,572 24,370
-------- --------
$395,631 $387,294
======== ========
</TABLE>

See Notes to Consolidated Financial Statements.

22
<PAGE> 10

<TABLE>
<CAPTION>
MARCH 29, MARCH 30,
1997 1996
-------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks.................................... $ 10,755 $ 15,000
Accounts payable.......................................... 54,132 54,629
Employee compensation and other liabilities............... 11,957 10,329
State and local taxes..................................... 10,786 10,579
Other accounts payable and accrued expenses............... 18,474 15,923
Dividends payable......................................... 923 924
Current maturities of long-term liabilities............... 7,097 7,022
-------- --------
TOTAL CURRENT LIABILITIES......................... 114,124 114,406
Long-term Liabilities
Long-term debt -- Note C.................................. 141,264 129,854
Capital lease obligations -- Note D....................... 4,165 5,212
-------- --------
TOTAL LONG-TERM LIABILITIES....................... 145,429 135,066
Deferred Items
Income taxes -- Note G.................................... 7,865 9,700
Other..................................................... 12,765 9,964
-------- --------
TOTAL DEFERRED ITEMS.............................. 20,630 19,664
Shareholders' Equity -- Notes C and H
Series A Junior Participating Cumulative Preferred Stock:
Authorized: 5,000,000 shares; Issued: None
Class A Common Stock, no par value:
Authorized: 15,000,000 shares; Issued: 4,695,253....... 8,552 8,552
Class B Common Stock, no par value:
Authorized: 15,000,000 shares; Issued: 5,265,158....... 16,232 16,232
Retained earnings......................................... 98,474 102,414
Cost of Common Stock in treasury
Class A: 1997 -- 844,662; 1996 -- 844,555 shares....... (3,977) (3,976)
Class B: 1997 -- 720,586; 1996 -- 720,303 shares....... (3,511) (3,500)
Additional minimum pension liability...................... -- (1,258)
Notes receivable -- stock options......................... (322) (306)
-------- --------
TOTAL SHAREHOLDERS' EQUITY........................ 115,448 118,158
-------- --------
$395,631 $387,294
======== ========
</TABLE>

23
<PAGE> 11

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
CLASS A CLASS B COST OF
COMMON COMMON RETAINED STOCK IN
STOCK STOCK EARNINGS TREASURY OTHER TOTAL
------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 2, 1994............... $8,552 $15,461 $ 92,204 $(6,070) $ (353) $109,794
Net income........................... 8,573 8,573
Cash dividends declared.............. (3,699) (3,699)
Issuance of shares -- Crystal
Catering acquisition.............. 513 415 928
Repurchase of 125,425 shares......... (1,323) (1,323)
Other................................ 41 41
------ ------- -------- ------- ------- --------
Balance at April 1, 1995............... 8,552 15,974 97,078 (6,978) (312) 114,314
Net income........................... 9,033 9,033
Cash dividends declared.............. (3,696) (3,696)
Issuance of shares -- Martz &
Associates acquisition............ 258 198 456
Repurchase of 62,250 shares.......... (696) (696)
Additional minimum pension
liability......................... (1,258) (1,258)
Other................................ (1) 6 5
------ ------- -------- ------- ------- --------
Balance at March 30, 1996.............. 8,552 16,232 102,414 (7,476) (1,564) 118,158
Net loss............................. (244) (244)
Cash dividends declared.............. (3,694) (3,694)
Restricted stock grant of 500
shares............................ (2) 2 --
Repurchase of 2,390 shares........... (28) (28)
Exercise of stock options -- 1,500
shares............................ 14 14
Minimum pension liability reversal... 1,258 1,258
Other................................ (16) (16)
------ ------- -------- ------- ------- --------
Balance at March 29, 1997.............. $8,552 $16,232 $ 98,474 $(7,488) $ (322) $115,448
====== ======= ======== ======= ======= ========
</TABLE>

See Notes to Consolidated Financial Statements.

24
<PAGE> 12

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
MARCH 29, MARCH 30, APRIL 1,
YEAR ENDED 1997 1996 1995
- ---------- --------- --------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................................... $ (244) $ 9,033 $ 8,573
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 23,729 18,957 18,476
Amortization of other assets........................... 5,343 5,488 6,408
Increase (decrease) in deferred income taxes........... (1,724) 219 (1,464)
Changes in operating assets and liabilities:
Accounts receivable.................................. (1,844) (5,673) (2,097)
Inventories.......................................... 1,484 (7,338) 4,358
Prepaid expenses and recoverable income taxes........ (1,178) 916 919
Accounts payable and accrued expenses................ 5,895 5,148 414
Other operating activities............................. (1,069) 346 (388)
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES......... 30,392 27,096 35,199

INVESTING ACTIVITIES
Acquisition of property, equipment and land held for
expansion.............................................. (33,594) (22,736) (30,607)
Disposition of property, equipment and land held for
expansion.............................................. 3,827 2,045 2,835
Other investing activities, principally acquisition of
rental video tapes..................................... (3,400) (4,397) (6,803)
------- ------- -------
NET CASH USED FOR INVESTING ACTIVITIES............ (33,167) (25,088) (34,575)

FINANCING ACTIVITIES
Proceeds (repayments) of short-term borrowings............ (4,245) 8,000 3,000
Proceeds of long-term borrowings.......................... 47,580 68,200 10,000
Payments of long-term debt and capital lease
obligations............................................ (37,141) (76,357) (17,345)
Purchase of Class A and Class B Common Stock for
treasury............................................... (28) (696) (1,323)
Cash dividends paid....................................... (3,697) (3,699) (3,702)
Other financing activities................................ 13 -- --
------- ------- -------
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES...................................... 2,482 (4,552) (9,370)

NET DECREASE IN CASH AND EQUIVALENTS........................ (293) (2,544) (8,746)
Cash and equivalents at beginning of year................... 12,822 15,366 24,112
------- ------- -------
CASH AND EQUIVALENTS AT END OF YEAR......................... $12,529 $12,822 $15,366
======= ======= =======
</TABLE>

See Notes to Consolidated Financial Statements.

25
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts or as otherwise noted)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed in preparation of the consolidated
financial statements are:

FISCAL YEAR
The Company's fiscal year ends on Staturday of the thirteenth week of each
calendar year. All references herein to "1997", "1996" and "1995" relate to
the fiscal years ended March 29, 1997, March 30, 1996 and April 1, 1995,
respectively.

BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Marsh
Supermarkets, Inc. and all majority-owned subsidiaries ("the Company").
Investments in partnerships are accounted for by the equity method. Significant
inter-company accounts and transactions have been eliminated. The Company is
principally involved in a single significant business segment, the distribution
and retail sale of food and related products through supermarkets, convenience
stores and food services.

USE OF ESTIMATES
Preparation of the consolidated financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The more significant estimates include allowances
for doubtful accounts, provisions for self-insurance losses and income taxes.
Actual results could differ from those estimates.

CASH AND EQUIVALENTS.
Cash equivalents consist of highly liquid investments with a maturity of three
months or less when purchased. The carrying amount approximates fair value of
these assets.

INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out ("LIFO") method for the principal components of
inventories, and by the first-in, first-out ("FIFO") method for the remainder
(see Note B).

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, including a provision for
capitalized interest. For financial reporting purposes, depreciation is
computed by the straight-line method over the estimated useful lives of the
assets. For income tax purposes, accelerated methods and statutory lives are
used to compute depreciation.

CAPITALIZED LEASE PROPERTY
Capitalized lease assets are amortized using the straight-line method over the
term of the lease or in accordance with practices established for similar owned
assets if ownership transfers to the Company at the end of the lease term.
Amoritization is included with depreciation expense.

EXCISE TAXES
Sales and cost of merchandise sold include state and federal excise taxes on
tobacco, gasoline and alcohol products on approximately $97 million, $91
million and $86 million in 1997, 1996 and 1995, respectively.

ADVERTISING COSTS
Advertising communication costs are expensed in the period incurred and
production costs are expensed the first time the advertising is distributed.
Advertising expenses in the amounts of $16.0 million, $16.6 milliuon, and $13.8
million were recorded for 1997, 1996 and 1995, respectively.

COSTS OF OPENING STORES
Non-capital expenditures associated with opening new stores are expensed as
incurred.

EARNINGS PER SHARE
Earnings per share are presented on a "primary" and "fully diluted" basis.
"Primary" shares are based on the weighted average number of shares of common
stock outstanding and the shares equivalent effect of dilutive stock options.
"Fully diluted" shares consider the dilutive effect of stock options and the
conversion of convertible debentures.

INCOME TAXES
Deferred tax assets and liabilities result from differences between financial
reporting and tax basis of assets and liabilities, measured using enacted tax
rates and laws expected to be in effect when the differences reverse.

ACCOUNTING CHANGES
Accounting for the Impairment of Long-Lived Assets
The Company adopted FAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," in the first quarter of
1997. The Statement establishes accounting standards for recognizing and
measuring impairment of long-lived assets, and requires reducing the carrying
amount of any impaired assets to fair value. Adoption of FAS 121 resulted in
a charge to earnings of $4.6 million, net of tax, primarily related to the
adjustment of building and equipment carrying costs and leases of eight
supermarkets and twelve convenience stores. The Company estimated fair value
based on its experience in the acquisition and disposal of similar assets. The
charge is reflected in income as follows: $2.6 million ($1.6 million net of
tax) in selling, general and administrative expenses, and $4.9 million ($3.0
million net of tax) in depreciation and amortization. The Company expects
prospective earnings to improve approximately $900,000 annually ($565,000 after
tax, or $.06 per fully diluted share) as a result of adopting FAS 121. Prior to
the adoption of FAS 121, the Company reviewed assets at the marketing area
level, while FAS 121 prescribes identifying the impairment of assets at the
lowest level where cash flows can be measured, and accordingly, upon adoption,
the Company evaluated possible impairment store-by-store.

26
<PAGE> 14
Measurement of expected future cash flows is highly subjective, and the
long-term effects of thirty-three competitive openings since May 1994 were not
immediately measurable, but required some passage of time before sales levels at
the affected stores could be determined. The Company continues to evaluate other
locations where the long-term effects of competitive openings have not been
fully determined.

Accounting for Stock Base Compensation
In October 1995, FAS 123 "Accounting for Stock Based Compensation" was issued.
The Statement prescribes accounting and reporting standards for all stock-based
compensation plans. FAS 123 allows companies to continue using existing methods
for recognizing the expense of those plans and provide pro forma disclosures
in the financial statements and earnings per share using the fair value method
prescribed in the statement

Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings per Share," which is required to be adopted for interim and
annual financial statements ending after December 15, 1997. At that time, the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect of
stock options will be excluded. The impact of FAS 128 on the calculation of
primary and fully diluted earnings per share for 1997 and 1996 is not expected
to be material.

ENVIRONMENTAL LIABILITIES
The Company recognizes environmental liabilities when environmental
assessments indicate remedial efforts are required and the costs can be
reasonably estimated. Estimates of liability are based on all currently known
facts, prior remediation experience, existing technology, and presently enacted
federal and state statutes, ordinances and regulations concerning the storage
and dispensing of petroleum products. These estimated liabilities are subject
to revision in future periods as actual costs and new information becomes
known. The liabilities are recorded in the balance sheet at their undiscounted
amounts, and do not consider any potential recovery the Company may receive
from either the Indiana Underground Storage Tank Excess Liability fund, which
reimburses owners and operators of underground storage tanks ("USTs") for a
portion of the costs incurred in connection with the remediation of soil and
groundwater contamination, or from third parties that may be responsible for
all or part of the contamination.

Current environmental laws and regulations require the removal or abandonment of
USTs at 20 village Pantry locations prior to December 1998. Earlier removal or
abandonment is required in the event any UST fails any leak detection test,
which the Company performs at least annually. All USTs at these locations
passed the most recent leak detection tests in calendar 1996, which results were
consistent with data from the Company's established petroleum product inventory
control program.

The Company is aware of the existence of petroleum contamination at twenty-one
Village Pantry locations and has commenced remediation at each of these sites.
The cost of remediation varies significantly depending on the extent, source and
location of the contamination, geological and hydrological conditions and other
factors. The cost to remove or abandon the remaining USTs and to remediate known
contamination at those locations has been estimated at approximately $849,000.
The Company has charged this amount to earnings.

The Company currently estimates the maximum aggregate cost remaining to be
incurred in connection with compliance with existing environmental laws and
regulations applicable to owners and operators of USTs will not exceed
approximately $1.1 million through December 1998.

RECLASSIFICATIONS
Certain items in the 1996 and 1995 consolidated financial statements
were reclassified to conform with the presentation used in 1997.

NOTE B -- INVENTORIES
Inventories valued by the LIFO method represented approximately 76% and
78% of consolidated inventories at March 29, 1997 and March 30, 1996,
respectively. Current inventory cost exceeded the carrying amount of LIFO
inventories by $17.6 million at March 29, 1997, and $18.2 million at March 30,
1996.

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
NOTE C -- DEBT ARRANGEMENTS
Long-term debt consisted of the following:
Notes payable to insurance companies:
8.54% Senior Notes, unsecured ............ $ 35,000 $ 35,000
8.13% Senior Notes, unsecured ............ 10,909 12,273
9.48% Senior Notes, unsecured ............ 17,500 20,000
10.05% notes ............................. 18,897 19,603
9.05% notes .............................. 19,630 20,313
7% convertible subordinated debentures ..... 19,909 20,000
Economic development bond .................. 1,979 2,107
6.4% (average rate) mortgage notes,
due in installments through 1999 ......... 2,873 3,394
Revolving credit agreements ................ 20,000 2,220
Other ...................................... 809 1,119
Less current maturities .................... (6,242) (6,175)
-------- --------
$141,264 $129,854
======== ========
</TABLE>

The 8.54% notes are payable in installments of $3.5 million due each December 31
from 1998 to 2007.

The 8.13% notes are payable in installments of $1.4 million due each December 31
through 2004.

The 9.48% notes are payable in installments of $2.5 million due each June 30
through 2003.

The 10.05% notes are payable in monthly installments (principal and interest)
of $220,000 through 2009.

<PAGE> 15

The 9.05% notes are payable in quarterly installments (principal and interest)
of $625,000 through 2011. In 2000, the Company or lender may initiate an
interest rate renegotiation or require retirement of the notes.

The 7% convertible subordinated debentures mature February 15, 2003. They are
convertible, at the holder's option at any time, into Class B Common Stock at a
conversion price of $15.50 per share. They are redeemable, at the Company's
option, at declining prices which started at 103.5% of the principal amount in
1996. The debentures are subordinate to all present and future senior
indebtedness.

The economic development bond bears interest at 8.25%, and is due in monthly
installments of $25,000 (principal and interest) through 2006.

Land and buildings with a net carrying amount of approximately $45 million are
pledged as collateral to the 10.05% notes, the 9.05% notes, the economic
development bond and the mortgage notes.

The Company guarantees a $1.5 million portion of two mortgages for a 25% owned,
unconsolidated subsidiary.

As of March 29, 1997 and March 30, 1996, the carrying amounts of long-term debt,
including current maturities, were $147.5 million and $136.0 million,
respectively. The estimated fair value, determined using a discounted cash flow
method and estimated current incremental borrowing rates for similar types of
borrowings, exceeds the carrying amount by $4.3 million, as of March 29, 1997,
and $7.8 million as of March 30, 1996.

<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
The fair value of each obligation is:
Notes payable to insurance companies:
8.54% Senior Notes, unsecured ............ $ 37,461 $ 37,896
8.13% Senior Notes, unsecured ............ 10,979 12,527
9.48% Senior Notes, unsecured ............ 18,543 21,531
10.05% notes ............................. 20,636 21,932
9.05% notes .............................. 20,227 21,422
7% convertible subordinated debentures ..... 18,137 19,730
Economic development bond .................. 2,240 2,239
6.4% (average rate) mortgage notes,
due in installments through 1999 ......... 2,873 3,400
Revolving credit agreements ................ 20,000 2,220
Other ...................................... 734 980
Less current maturities .................... (6,242) (6,175)
-------- --------
$145,588 $137,702
======== ========
</TABLE>

Several of the loan agreements require maintenance of minimum working capital
and limit cash dividends, repurchases of common stock, future indebtedness,
lease obligations, investments, and disposition of assets. Under the most
restrictive covenant, retained earnings available for payment of dividends was
approximately $19 million at March 29, 1997.

The Company's revolving credit agreements permit borrowings up to $40 million.
On August 1 of each year, either the Company or the banks may elect not to renew
the arrangements, in which event revolving credit borrowings would convert to
term loans payable in twenty quarterly installments, on the following July 31.
Interest is based on various money market rates selected by the Company at the
time of borrowing. The Company pays a commitment fee of 1/4% on unused amounts.

The Company has commitments from various banks for short-term borrowings of up
to $20 million at rates at or below the prime rates of the committed banks, of
which $11 million, at an average rate of 6.2%, was utilized at March 29, 1997.
This compares to $15 million at an average rate of 5.8%, utilized at March 30,
1996.

Aggregate principal payments of long-term debt outstanding at March 29, 1997 for
the succeeding five years and thereafter are:

<TABLE>

<S> <C>
1998 ........... $ 6,242
1999 ........... 9,927
2000 ........... 10,013
2001 ........... 9,997
2002 ........... 10,215
Thereafter ..... 101,112
</TABLE>

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Interest expense consisted of:
Long-term debt .................. $ 12,141 $12,016 $12,059
Capital lease obligations ....... 641 991 1,214
Other ........................... 248 80 19
-------- ------- -------
Total interest expense .......... $ 13,030 $13,087 $13,292
======== ======= =======
Interest capitalized ............ $ 528 $ 714 $ 555
======== ======= =======
Cash payments for interest ...... $ 13,511 $13,632 $13,690
======== ======= =======
</TABLE>

The senior note agreements preclude the Company from becoming obligated, as a
lessee, under any operating lease having an original term greater than three
years, unless at the time the lease is entered into, consolidated income
available for fixed charges, as defined by the agreement, exceeds 150% of the
current four year average of fixed charges in three of the four most recently
completed years. As of March 29, 1997, two of the four most recently completed
years had consolidated income available for fixed charges in excess of 150% of
fixed charges. Accordingly, the Company will not be able to enter into any lease
with a term of more than three years in 1998.

NOTE D -- LEASES
Of the Company's 270 retail stores, 113 are commercial lease agreements
providing for initial terms generally from 15 to 20 years with options to
extend the initial terms up to an additional 20 years.

<PAGE> 16

In addition, one supermarket is leased under an equity lease arrangement
where ownership transfers to the Company at lease expiration. The net carrying
amount at March 29, 1997, included in capitalized lease property, was $627,000.
The Company also leases a portion of its transportation and store equipment for
periods of from three to eight years plus renewal and purchase options.

Capitalized lease property consisted of store facilities having a net
carrying cost of $3.1 million at March 29, 1997, and $3.8 million at March 30,
1996.

Future minimum lease payments for capital and operating leases with terms
in excess of one year, and the present value of capital lease obligations, at
March 29, 1997, were as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1998........................................................ $1,181 $16,887
1999........................................................ 1,141 15,390
2000........................................................ 1,264 14,272
2001........................................................ 639 10,617
2002........................................................ 621 8,189
Later years................................................. 2,899 21,315
------ -------
7,745 $86,670
=======
Less:
Estimated executory costs................................. 60
Amounts representing interest............................. 2,665
------
Present value of net minimum lease payments................. $5,020
======
</TABLE>

Minimum annual lease payments will be reduced by $5.7 million from future
sublease rentals due over the term of the subleases.

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Rental expense consisted of:
Minimum rentals........................................... $21,719 $22,017 $19,991
Contingent rentals........................................ 151 147 139
Sublease rental income.................................... (1,715) (2,217) (2,023)
------- ------- -------
$20,155 $19,947 $18,107
======= ======= =======
</TABLE>

NOTE E -- RETIREMENT PLANS

Historically, the Company has operated a qualified defined benefit plan
covering the majority of its non-union employees and an unfunded supplemental
retirement plan that covers eligible corporate officers, as designated by the
Board of Directors. The benefit formula, under the qualified plan, is based upon
years of service and the highest consecutive four years of earnings during the
last ten years worked. The benefits under both plans are similar; however, the
supplemental plan takes into consideration compensation in excess of amounts
that can be recognized under the qualified plan.

On December 31, 1996, the Company froze benefit accruals under its
qualified defined benefit plan and announced the creation of a new discretionary
profit-sharing plan. As a result of freezing the pension plan, the Company
recorded a pretax net pension curtailment loss of $2.4 million in the first
quarter of 1997, in addition to the $1.8 million net pension expense reported
for 1997.

The Company's funding policy with regard to the qualified defined benefit
plan is consistent with federal laws and regulations. The Company contributed
$2.2 million and $1.9 million to the qualified defined benefit plan in 1997 and
1996, respectively. Plan assets consist principally of listed stocks, corporate
and government notes and bonds, and 92,675 shares each of Class A and Class B
Common Stock of the Company. At March 29, 1997, the Company's Common Stock in
the qualified defined benefit plan had a market value of $2.4 million. The
supplemental plan is unfunded. The actuarial present value of the projected
benefit obligation under the supplemental plan was $4.9 million and $3.5
million at March 29, 1997 and March 30, 1996, respectively.

The funded status of the plans and amounts recognized in the consolidated
balance sheets were as follows:

<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Actuarial present value of obligations:
Vested benefits........................................... $38,962 $ 35,357
Nonvested benefits........................................ 2,083 3,508
------- --------
Accumulated benefit obligation.............................. 41,045 38,865
Effect of projected salary increases........................ 2,016 7,832
------- --------
Projected benefit obligation................................ 43,061 46,697
Plan assets at fair value................................... 38,649 34,570
------- --------
Funded status..................................... (4,412) (12,127)
Unrecognized net loss (gain) from past experience different
from that assumed......................................... (637) 12,614
Unrecognized net obligation (asset) at adoption............. 89 (1,938)
Unrecognized prior service (benefit) cost................... 1,238 (518)
Additional minimum liability................................ -- (2,007)
------- --------
Accrued pension cost...................................... $(3,722) $ (3,976)
======= ========
</TABLE>

The components of net pension expense included:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Service cost of benefits earned............................. $1,510 $1,784 $ 1,921
Interest on projected benefit obligation.................... 3,267 3,154 2,867
Actual return on plan assets................................ (3,590) (5,161) (1,436)
Net amortization and deferral............................... 606 2,703 (1,026)
------ ------ -------
Net pension expense......................................... $1,793 $2,480 $ 2,326
====== ====== =======
</TABLE>

The following actuarial assumptions were used to compute net pension
expense and funded status of the plans:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- -----
<S> <C> <C> <C>
Discount rate............................................... 8.00% 7.65% 8.30%
Rate of increase in compensation............................ 3.50 3.50 3.50
Expected long-term rate of return on assets................. 9.00 9.00 10.00
</TABLE>

The 0.35% change in discount rate decreased the projected benefit
obligation at March 29, 1997 by approximately $4.0 million.

29
<PAGE> 17

The Company participates in a multi-employer plan that provides defined
benefits to its union employees. Company expense for this plan (in thousands)
amounted to $671, $648, and $583 in 1997, 1996 and 1995, respectively.

The Company provides two defined contribution savings plans. These plans
allow 401(k) contributions covering employees who work a minimum of 1,000 hours
per year, are age 21 or older and elect to participate. The plans provide
additional financial security during retirement by offering employees an
incentive to make tax advantaged contributions to a savings plan. Company
expense for these plans (in millions) was $1.3, $1.3, and $1.1 in 1997, 1996 and
1995, respectively.

NOTE F -- POSTRETIREMENT HEALTH BENEFITS

The Company provides certain postretirement health care benefits for its
non-union retirees and their eligible spouses. The plans are contributory with
retiree contributions adjusted annually and certain other cost sharing features,
such as deductibles and coinsurance. Eligibility for these benefits is generally
limited to retirees, who are at least age 55 and less than age 65, with ten or
more years of vested service. Optional spousal coverage continues for the lesser
of five years after retirement or until the spouse reaches age 65. Benefits
generally cease after reaching age 65, at which time the retiree or spouse is
generally eligible for Medicare.

The amounts recognized in the consolidated balance sheet for the Company's
contributory defined benefit postretirement plans were as follows:

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Accumulated participants benefit obligation:
Current retirees............................................ $ 534 $ 548
Fully eligible active plan participants..................... 915 787
Other active plan participants.............................. 810 919
------ ------
Total benefit obligation.................................... 2,259 2,254
Unrecognized gain........................................... 1,144 986
------ ------
Accrued postretirement benefit cost......................... $3,403 $3,240
====== ======
Net postretirement benefit expense includes:
Service cost of benefits earned during the year............. $ 215 $ 185
Interest cost on projected benefit obligation............... 161 167
Net amortization and deferral............................... (73) (68)
------ ------
$ 303 $ 284
====== ======
</TABLE>

For measurement purposes, the weighted average discount rate used in
determining the accumulated postretirement benefit obligation and related
expense was 8.00% and 7.65% for 1997 and 1996, respectively. The Company's
assumed healthcare cost trend rate is 11% for 1998, decreasing gradually to 6%
by 2012, and thereafter. If these trend rates increased by one percentage point
each year, the accumulated postretirement benefit obligation and expense would
have increased by approximately 9%.

NOTE G -- INCOME TAXES

The following are components of deferred tax assets and liabilities:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Compensation and benefit accruals......................... $ 3,406 $ 3,856
Self insurance reserves..................................... 2,593 2,156
Investment in partnerships.................................. 863 614
Provision for doubtful accounts............................. 332 362
Contribution carryforward................................... 471 209
EPA remediation reserves.................................... 314 284
Other....................................................... 777 165
-------- --------
Total deferred tax assets......................... 8,756 7,646
Deferred tax liabilities:
Property and equipment, including leased property........... (12,330) (14,034)
Prepaid employee benefits................................... (254) (544)
Inventory................................................... (3,023) (1,065)
Other....................................................... (363) (193)
-------- --------
Total deferred tax liabilities.................... (15,970) (15,836)
-------- --------
Net deferred tax liability.................................. $ (7,214) $ (8,190)
======== ========
</TABLE>

Income tax expense (credit) consisted of the following:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Current -- Federal.......................................... $ 526 $4,209 $4,023
State............................................ 445 887 964
Deferred -- Federal......................................... (849) 158 (725)
State........................................... (127) (3) (45)
------ ------ ------
$ (5) $5,251 $4,217
====== ====== ======
Cash Payments............................................... $1,807 $5,428 $5,947
====== ====== ======
</TABLE>

A reconciliation of income tax expense (credit) is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
----- ------ ------
<S> <C> <C> <C>
Federal statutory tax rate.................................. $ (96) $4,999 $4,477
State and local, net of federal tax benefit................. 206 575 597
New jobs and other tax credits.............................. (37) (125) (366)
Contributions............................................... (274) (304) (501)
Non deductible expenditures................................. 114 81 25
Other....................................................... 82 25 (15)
----- ------ ------
Total income tax expense (credit)................. $ (5) $5,251 $4,217
===== ====== ======
</TABLE>

NOTE H -- SHAREHOLDERS' EQUITY AND EMPLOYEE STOCK PLANS

COMMON STOCK

Class A Common Stock has one vote per share; Class B Common Stock is
non-voting except with respect to certain matters affecting the rights and
preferences of that class. Each class is entitled to equal per share dividends
and consideration in any merger, consolidation or liquidation of the Company. A
person who, subsequent to May 15, 1991, acquires 10% or more of outstanding
Class A Common Stock without acquiring a like percentage of Class B Common Stock
must make a public tender offer to acquire additional Class B Common Stock.
Failure to do so results in suspension of the voting rights of the Class A
Common Stock held by such person.

30
<PAGE> 18

STOCK OPTION PLANS AND SHARES RESERVED

The 1991 Employee Stock Incentive Plan (as amended in May 1995) reserves
750,000 shares of common stock, in any combination of Class A and Class B, for
the grant of stock options, stock appreciation rights, restricted stock,
deferred stock, stock purchase rights and/or other stock-based awards. Grants
made under this plan represent non-qualified options. Substantially all grants
were at market value at date of grant. They become exercisable pro-rata over a
four year period beginning one year from date of grant and expire 10 years from
date of grant.

Grants made prior to 1992 were under the 1987 Stock Option Plan at prices equal
to 85% of market value at date of grant. They are exercisable pro-rata over a
four year period and expire 10 years from date of grant. The 1987 plan
authorized 375,000 shares for grants of options; no further grants may be made
under the 1987 Plan.

At the 1992 Annual Meeting, shareholders approved the 1992 Stock Option Plan
for Outside Directors under which 50,000 shares of Class B Common Stock were
reserved for the grant of stock options and restricted stock to non-employee
directors. Options were granted at fair market value at date of grant. The
options become exercisable and restrictions lapse in equal installments, on the
date of each of the two Annual Meetings following the date of grant and expire
10 years from date of grant. Additionally, 3,500 shares of restricted stock
have been issued.

A summary of the Company's stock option activity follows (price is weighted
average exercise price; options are in thousands):

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
----------------- -----------------
PRICE OPTIONS PRICE OPTIONS
------ ------- ------ -------
<S> <C> <C> <C> <C>
Outstanding at April 2, 1994.................... $12.73 168 $13.13 344
Granted....................................... -- -- 9.51 133
Forfeited..................................... 13.38 (5) 12.64 (19)
--- ---
Outstanding at April 1, 1995.................... 12.71 163 12.10 458
Granted....................................... 13.50 355 12.25 5
--- ---
Outstanding at March 30, 1996................... 13.26 518 12.10 463
Granted....................................... 13.50 10 10.50 4
Exercised..................................... -- -- 9.50 (2)
Forfeited..................................... 12.86 (33) 12.73 (53)
--- ---
Outstanding at March 29, 1997................... $13.28 495 $12.01 412
=== ===
</TABLE>

Related stock option information is as follows (options are in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Exercisable at the end of the year
Class A shares......................................... 227 163 163
Class B shares......................................... 345 361 287
Weighted average exercise price
Class A shares......................................... $13.03 $12.71 $12.71
Class B shares......................................... 12.47 12.79 13.07
Weighted average fair value of options granted during the
year
Class A shares......................................... $13.50 $13.50 $ --
Class B shares......................................... 10.50 12.25 9.51
</TABLE>

At March 29, 1997, the range of option exercise prices for Class A shares was
$10.63 to $13.81 and for Class B shares was $9.50 to $15.50, and the
weighted-average remaining contractual life of those options for Class A and
Class B shares was 6.8 years and 4.7 years, respectively.

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FAS 123, "Accounting for
Stock-Based Compensation," requires use of option valuation models that were
not developed for use in valuing employee stock options. Under APB 25, because
the exercise price of the Company's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

Pro forma information regarding net income and earnings per share is required
by FAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value of these options was estimated using a Black-Scholes option pricing model
with the following assumptions for 1997; a risk-free interest rate of 6.8%;
dividend yield of 3.3%, a volatility factor of the expected market price of the
Company's common stock of .26; and a weighted-average expected life of the
option of nine years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions, including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair market estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

Had compensation cost for the Company's stock option grants been determined
based on the fair market value consistent with the method of FAS 123, the
Company's net earnings would have been reduced by $201,000 and $79,000 for 1997
and 1996, respectively. Both primary and fully diluted earnings per share would
have been reduced $.02 in 1997 and $.01 in 1996.

The Company presently holds notes receivable totaling $322,000 from four
employees of the Company. The notes arose when the Company loaned the employees
money to exercise stock options under an expired 1980 plan. The notes bear
interest at 6% per annum, are due on May 28, 1998, and are collateralized by
the shares. The amount of the receivable is shown on the balance sheet as a
reduction of equity.

31
<PAGE> 19

As of March 29, 1997, a total of 1,290,323 shares of Class B Common Stock is
reserved for conversion of debentures, 135,300 shares in any combination of
Class A and Class B are reserved for future awards under the 1991 Plan, and
28,500 shares of Class B are reserved under the Stock Option Plan for Outside
Directors.

CHANGES IN SHARES OUTSTANDING

Changes in shares issued and treasury shares during the three years ended March
29, 1997, were as follows:

<TABLE>
<CAPTION>
CLASS A CLASS B
--------- ---------
<S> <C> <C>
Issued shares:
Balance at April 1, 1995, March 30, 1996 and March 29,
1997................................................... 4,695,253 5,265,158
Treasury shares:
Balance at April 2, 1994.................................. 762,655 755,754
Acquisition of shares.................................. 54,875 70,550
Issuance of shares --
Crystal Catering acquisition......................... -- (97,810)
--------- ---------
Balance at April 1, 1995.................................. 817,530 728,494
Acquisition of shares.................................. 27,025 35,225
Issuance of shares --
Martz & Associates acquisition....................... -- (43,416)
--------- ---------
Balance at March 30, 1996................................. 844,555 720,303
Acquisition of shares.................................. 107 2,283
Stock options exercised................................ -- (1,500)
Restricted stock grant................................. -- (500)
--------- ---------
Balance at March 29, 1997................................... 844,662 720,586
--------- ---------
Net outstanding at March 29, 1997........................... 3,850,591 4,544,572
========= =========
</TABLE>

SHAREHOLDER RIGHTS PLAN

Under the 1989 Shareholder Rights Plan, preferred stock purchase rights
("Rights") were distributed as a dividend at the rate of one Right for each
common share held. Each Right entitles a shareholder to buy one one-hundredth
of a share of Series A Junior Participating Cumulative Preferred Stock of the
Company at an exercise price of $65. The Rights will be exercisable only if a
person or group acquires beneficial ownership of 20% or more of either class of
the Company's common stock or commences a tender or exchange offer upon
consummation of which such person or group would beneficially own 20% or more
of either class of the Company's common stock. If any person becomes the
beneficial owner of 20% or more of either class of the Company's common stock,
or if a 20% or more shareholder engages in certain self-dealing transactions or
a merger transaction with the Company in which the Company is the surviving
corporation and its common shares are not changed or converted, then each Right
not owned by such person or related parties will entitle its holder to
purchase, at the Right's then-current exercise price, shares of common stock
(or, in certain circumstances as determined by the Board, cash, property or
other securities of the Company) having a value of twice the Right's exercise
price. In addition, if the Company is involved in a merger or other business
combination transaction with another person in which its common stock is
changed or converted, or sells 50% or more of its assets or earning power to
another person, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, common shares of such other person having a value
of twice the Right's exercise price. The Company will generally be entitled to
redeem the rights at $.01 per Right, at any time until the 15th day following
public announcement that a 20% position has been acquired. The Rights expire on
July 31, 1999.

NOTE I -- ACQUISITIONS

On January 1, 1995, the Company purchased the assets of the Crystal Catering
and affiliated companies, the largest caterer in Indianapolis. The purchase
price of $4.8 million included; (i) $2.4 million cash, (ii) a $1.4 million note
payable to Crystal, and (iii) issuance of 97,810 shares of Class B Common
Stock, valued at $1.0 million. An additional $900,000 adjustment is contingent
on the cumulative performance of Crystal Food Services in achieving specified
profitability levels for 1996, 1997 and 1998. In the event the contingent
payment is earned, it will be treated as a purchase price adjustment and
recorded when earned. Goodwill, resulting from this acquisition in the amount
of $4.0 million, is being amortized using the straight-line method over a
twenty year life.

On May 1, 1995, the Company purchased the assets of Martz & Associates Food
Services, Inc., an Indianapolis vending and cafeteria management services firm.
The purchase price included $1.0 million cash and 43,416 shares of Class B
Common Stock; valued at $456,000. Goodwill, resulting from this acquisition in
the amount of $568,000, is being amortized using the straight-line method over
a twenty year life.

<PAGE> 20

SHAREHOLDER INFORMATION

STOCK LISTING

At March 29, 1997, there were 3,318 record holders of Class A Common Stock and
3,817 record holders of Class B Common Stock (a composite total of 4,102
holders of Marsh common stock).

Both classes of common stock trade on the NASDAQ National Market System under
the symbols MARSA (Class A Common Stock) and MARSB (Class B Common Stock). As
of March 29, 1997, the following firms acted as market makers:

A.G. Edwards & Sons, Inc.
Everen Securities
Goldman, Sachs & Co.
Herzog, Heine, Geduld, Inc.
J.J.B. Hilliard, W.L. Lyons, Inc.
Mayer & Schweitzer, Inc.
McDonald & Co. Securities, Inc.
NatCity Investments, Inc.

SHAREHOLDER INVESTMENT PLAN

The plan provides shareholders a means by which to acquire shares of common
stock through regular dividend reinvestment and voluntary cash payments. For
details, contact: Plan Administrator, National City Bank, Corporate Trust
Department, 1900 E. Ninth Street, Cleveland, OH 44114-3484; telephone (800)
622- 6757.

FORM 10-K AND FINANCIAL INFORMATION

Shareholders, members of the financial community, and news media desiring
further information or copies of the annual report on Form 10-K to the
Securities and Exchange Commission should contact: Douglas Dougherty, Chief
Financial Officer, Marsh Supermarkets, Inc., 9800 Crosspoint Boulevard,
Indianapolis, IN 46256-3350; telephone (317) 594-2628.

Financial releases may be accessed in the following ways, 24 hours a day, 7
days a week:

1) Via the Internet World Wide Web. Connect to http://www.cfonews.com

2) Direct dial by modem. Dial (718) 279-3590 (8N1) and follow the prompts. When
asked for the company name or ticker symbol, type MARSH or MARS

ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders will be held at 10:00 A.M., Tuesday, August
5, 1997, at the Company's principal executive offices at 9800 Crosspoint
Boulevard, Indianapolis, Indiana.

<PAGE> 1

EXHIBIT 21

MARSH SUPERMARKETS, INC. AND SUBSIDIARIES

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
State of Name under which Business
Name as Specified Incorporation Done if Different from
in Charter or Organization Name Specified in Charter
---------- --------------- -------------------------
<S> <C> <C>

Marsh Drugs, Inc. Indiana

Marsh Village Pantries, Inc. Indiana Village Pantry

Mundy Realty, Inc. Indiana

Mar Properties, Inc. Indiana

Marlease, Inc. Indiana

Marsh International, Inc. Indiana

Maraines Greenery, Inc. Indiana Floral Fashions

Limited Holdings, Inc. Indiana

Convenience Store
Distributing Company Ohio CSDC

Marsh P.Q., Inc. Indiana

S.C.T., Inc. Indiana

North Marion Development Corp. Indiana

C. E. Publishing, Inc. Indiana

Contract Transport, Inc. Indiana

Crystal Food Services, LLC Indiana Crystal Food Services

LoBill Foods, LLC Indiana LoBill

Contract Transport, LLC Indiana

Marsh Supermarkets, LLC Indiana Marsh

Village Pantry, LLC Indiana Village Pantry

Marsh Drugs, LLC Indiana Marsh Drugs

Trademark Holdings, Inc. Delaware

Marsh Clearing House, LLC Indiana
</TABLE>

<PAGE> 1

EXHIBIT 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Marsh Supermarkets, Inc. of our report dated May 15, 1997 included in the
1997 Annual Report to Shareholders of Marsh Supermarkets, Inc.

We also consent to the incorporation by reference in Registration Statement
Number 2-74859 on Form S-8 of the 1980 Marsh Stock Plan dated December 2, 1981,
Registration Statement Number 33-33427 on Form S-8 of the Marsh Supermarkets,
Inc. 1987 Stock Option Plan, dated February 12, 1990, Registration Statement
Number 33-43817 on Form S-8 of the Marsh Employees' Monthly Stock Investment
Plan - 1977, dated November 7, 1991, Registration Statement Number 33-56630 on
Form S-8 of the 1991 Employee Stock Incentive Plan, dated December 31, 1992,
Registration Statement Number 33-56624 on Form S-8 of the 1992 Stock Option Plan
for Outside Directors, dated December 31, 1992 and Registration Statement Number
33-56626 on Form S-8 of the Marsh Supermarkets, Inc. 401(k) Plan, dated December
31, 1992, of our report dated May 15, 1997, with respect to the consolidated
financial statements incorporated herein by reference in this Annual Report
(Form 10-K) of Marsh Supermarkets, Inc.

Ernst & Young LLP
June 27, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-K FOR THE PERIOD ENDED MARCH 29, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> MAR-29-1997
<CASH> 12,529
<SECURITIES> 0
<RECEIVABLES> 25,634
<ALLOWANCES> 848
<INVENTORY> 88,262
<CURRENT-ASSETS> 133,378
<PP&E> 355,540
<DEPRECIATION> 122,859
<TOTAL-ASSETS> 395,631
<CURRENT-LIABILITIES> 114,124
<BONDS> 145,429
0
0
<COMMON> 8,395<F1>
<OTHER-SE> 98,152
<TOTAL-LIABILITY-AND-EQUITY> 395,631
<SALES> 1,451,730
<TOTAL-REVENUES> 1,451,730
<CGS> 1,096,586
<TOTAL-COSTS> 1,415,220<F2>
<OTHER-EXPENSES> 23,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,030
<INCOME-PRETAX> (249)
<INCOME-TAX> (5)
<INCOME-CONTINUING> (244)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (244)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)<F3>
<FN>
<F1>NUMBER OF CLASS A AND CLASS B SHARES OUTSTANDING
<F2>INCLUDES (i) $1,096,586 OF COST OF GOODS SOLD (ITEM 5-03(b)2(a) OF
REGULATION S-X) AND
(ii) $318,634 OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
(ITEM 5-03(b)4 OF REGULATION S-X).
<F3>MULTIPLIER IS 1 FOR PER SHARE DATA. ADJUSTED TO EXCLUDE THE EFFECTS OF
ANTIDILUTIVE STOCK OPTIONS AND CONVERTIBLE SUBORDINATED DEBENTURES.
</FN>

</TABLE>