Exhibit 10.1
FORM OF INDEMNIFICATION AGREEMENT
MAX & ERMA’S RESTAURANTS, INC.
     THIS AGREEMENT is made this ___day of ___, 20___by and between Max & Erma’s
Restaurants, Inc., a Delaware corporation (the “Company”) and___, an individual
and a director and/or officer of the Company (the “Indemnitee”).
Recitals
     WHEREAS, Indemnitee is either a member of the Board of Directors or an
officer of the Company, or both, and in such capacity is performing a valuable
service for the Company;
     WHEREAS, the Company’s By-laws (the “By-laws”) provide for the
indemnification of the directors, officers, employees and agents of the Company
to the extent permitted by the Delaware General Corporation Law (the “Delaware
Statute”);
     WHEREAS, the Delaware Statute specifically provides that it is not
exclusive, and thereby contemplates that contracts may be entered into between
the Company and its directors, officers, agents and employees with respect to
indemnification of such persons;
     WHEREAS, the Company intends from time to time to apply for and, if
economically feasible, obtain directors and officers liability insurance (“D & O
Insurance”), which insurance is intended to supplement, and not replace, the
obligations of the Company pursuant to this Agreement; and
     WHEREAS, in order to induce Indemnitee to continue to serve as a member of
the Board of Directors of the Company or an officer, or both, the Company has
determined and agreed to enter into this contract with Indemnitee;
Agreement
     NOW, THEREFORE, in consideration of Indemnitee’s continued service with the
Company after the date hereof the parties agree as follows:
     1. D & O Insurance. The Company shall exercise its best efforts to obtain
and maintain a policy or policies of insurance with reputable insurance
companies providing the officers and directors of the Company with coverage for
losses from wrongful acts, with annual limits of coverage of not less than
$7 million per occurrence and $7 million in the aggregate, and to ensure the
Company’s performance of its indemnification obligations under this Agreement.
In all policies of directors’ and officers’ liability insurance, Indemnitee
shall be named as an insured in such a manner to provide Indemnitee the same
rights and benefits as are accorded to the most favorable insured of the
Company’s directors, if Indemnitee is a director; or of the

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Company’s officers, if Indemitee is not a director of the Company but is an
officer. Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such insurance if the Company reasonably determines that such
insurance is not readily available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient benefit
or if Indemnitee is covered by similar insurance maintained by a subsidiary or
parent of the Company. Among other considerations, the Company will weigh the
costs of obtaining such insurance coverage against the protection afforded by
such coverage.
     2. Indemnity.

  (a)   Subject only to the exclusions set forth in Section 3 hereof, the
Company hereby agrees to hold harmless and indemnify Indemnitee against any and
all expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee in connection with any
threatened, pending or completed action, suit or proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company) to which
Indemnitee is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that Indemnitee is, was or at any time becomes a
director, officer, employee or agent of the Company, or is or was serving or at
any time serves at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise to the fullest extent authorized and permitted by the provisions of
the Delaware Statute, or by any amendment thereof or other statutory provisions
authorizing or permitting such indemnification which is adopted after the date
hereof.     (b)   The Company agrees that if there is a Change in Control (as
defined in Section 2(c) hereof) of the Company, then, with respect to all
matters thereafter arising concerning the right of Indemnitee to payments of
expenses under this Agreement or any other agreement or under the Company’s
Certificate of Incorporation or By-laws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 2(d) hereof) shall be selected
by the Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld or delayed). Such counsel, among other things, shall
render its written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would be permitted to be indemnified under the Delaware
Statute or any federal statute, law, rule or regulation imposed on the parties
by a Delaware court, and the Company agrees to abide by such opinion. The
Company agrees to pay the reasonable fees and expenses of the Independent Legal
Counsel referred to above and to fully indemnify such counsel against any and
all expenses (including attorney’s fees and expenses), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
thereto.     (c)   For purposes of this Agreement, a “Change in Control” shall
be deemed to have occurred if and when, after the date hereof, (i) any “person”
(as that term is used

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      in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) on the date hereof), including any “group” as such
term is used in Section 13(d)(3) of the Exchange Act on the date hereof, shall
acquire (or disclose the previous acquisition of) beneficial ownership (as that
term is defined in Section 13(d) of the Exchange Act and the rules thereunder on
the date hereof) of shares of the outstanding stock of any class or classes of
the Company which results in such person or group possessing more than 50% of
the total voting power of the Company’s outstanding voting securities ordinarily
having the right to vote for the election of directors of the Company; or
(ii) as the result of, or in connection with, any tender or exchange offer,
merger or other business combination, or contested election, or any combination
of the foregoing transactions (a “Transaction”), the owners of the voting shares
of the Company outstanding immediately prior to such Transaction own less than a
majority of the voting shares of the Company after the Transaction; or
(iii) during any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the Board
of Directors of the Company (or who take office following the approval of a
majority of the directors then in office who were directors at the beginning of
the period) cease for any reason to constitute at least one-half thereof, unless
the election of each director who was not a director at the beginning of such
period has been approved in advance by directors of the Company representing at
least one-half of the directors then in office who were directors at the
beginning of the period; or (iv) the sale, exchange, transfer, or other
disposition of all or substantially all of the assets of the Company (a “Sale
Transaction”).             Notwithstanding the foregoing, a “Change in Control”
shall not be deemed to have occurred for purposes of this Agreement (a) if the
Indemnitee, alone or as part of any “group” as such term is used in
Section 13(d)(3) of the Exchange Act on the date hereof, shall acquire (or
disclose the previous acquisition thereof) beneficial ownership (as that term is
defined in Section 13(d) on the Exchange Act and the rules thereunder on the
date hereof) of shares of the outstanding stock of any class or classes of the
Company that results in the Indemnitee or the Indemnitee as part of any “group”
possessing more than 50% of the total voting power of the Company’s outstanding
voting securities ordinarily having the right to vote for the election of
directors of the Company; (b) upon the occurrence of any Transaction, Sale
Transaction, consolidation, or reorganization involving the Company and the
Indemnitee, alone or with other officers of the Company, or any entity in which
the Indemnitee (alone or with other officers) has, directly or indirectly, any
equity or ownership interest, except where such entity is a publicly traded
company and the Indemnitee does not own more than a 1% interest in such entity
prior to the Transaction, Sale Transaction, consolidation, or reorganization;
(c) in a transaction otherwise commonly referred to as a “management leveraged
buyout”; or (d) in an acquisition of stock of the Company by employee benefit
plans sponsored by the Company.

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  (d)   For purposes of this Agreement, “Independent Legal Counsel” shall mean
an attorney or firm of attorneys, selected in accordance with the provisions of
Section 2(b) hereof, who shall not have otherwise performed services for the
Company or Indemnitees within the last three years (other than with respect to
matters concerning the rights of Indemnitees under this Agreement, or of other
indemnitees under similar indemnity agreements).

     3. Limitations on Indemnity. No indemnity pursuant to Section 2 hereof
shall be paid by the Company:

  (a)   except to the extent the aggregate losses to be indemnified hereunder
exceed the amount of such losses for which the Indemnitee is indemnified
pursuant to any D & O Insurance purchased and maintained by the Company;     (b)
  in respect to remuneration paid to Indemnitee if it shall be determined by a
final judgment or other final adjudication that such remuneration was in
violation of law;     (c)   on account of any suit in which judgment is rendered
against an Indemnitee for an accounting of profits made from the purchase or
sale by Indemnitee of securities of the Company pursuant to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;     (d)   on
account of Indemnitee’s act or omission being finally adjudged to have been not
in good faith or involving intentional misconduct or a knowing violation of law;
    (e)   if a final decision by a Court having jurisdiction in the matter shall
determine that such indemnification is not lawful; or     (f)   in connection
with any action, suit, or proceeding or any alternative dispute resolution
mechanism initiated by Indemnitee against the Company or any director or officer
of the Company unless (i) the Company has joined in or the Board has consented
to the initiation of such action, suit or proceeding or any alternative dispute
resolution mechanism; or (ii) the action, suit or proceeding or any alternative
dispute resolution mechanism is one to enforce Indemitee’s rights under this
Agreement.

     4. Continuation of Indemnity. All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee is a director,
officer, employee or agent of the Company (or is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or

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investigative, by reason of the fact that Indemnitee was a director of the
Company or serving in any other capacity referred to herein.
     5. Notification and Defense of Claim. Promptly after receipt by Indemnitee
of notice of the commencement of any action, suit or proceeding, Indemnitee
will, if a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; but the omission so
to notify the Company will not relieve it from any liability which it may have
to Indemnitee otherwise than under this Agreement. With respect to any such
action, suit or proceeding as to which Indemnitee notifies the Company of the
commencement thereof:

  (a)   The Company will be entitled to participate therein at its own expense.
    (b)   Except as otherwise provided below, to the extent that it may wish,
the Company jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel selected by the Company and
reasonably satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election so to assume the defense thereof, the Company will
not be liable to Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof other
than reasonable costs of investigation or as otherwise provided below.
Indemnitee shall have the right to employ its counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice from
the Company of its assumption of the defense thereof shall be at the expense of
Indemnitee unless (i) the employment of counsel by Indemnitee has been
authorized by the Company, (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of the defense of such action, or (iii) the Company shall not in fact
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be at the expense of the Company.
The Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which Indemnitee
shall have made the conclusion provided for in (ii) above and notified the
Company of such decision in writing specifying the reasons therefor.     (c)  
The Company shall not be liable to indemnify Indemnitee under this Agreement for
any amounts paid in settlement of any action or claim effected without its
written consent. The Company shall not settle in any manner which would impose
any penalty or limitation on Indemnitee without Indemnitee’s written consent.
Neither the Company nor Indemnitee will unreasonably withhold their consent to
any proposed settlement.

     6. Repayment of Expenses. Indemnitee agrees that Indemnitee will reimburse
the Company for all reasonable expenses paid by the Company in defending any
civil or criminal action, suit or proceeding against Indemnitee in the event and
only to the extent that it shall be ultimately determined that Indemnitee is not
entitled to be indemnified by the Company for such

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expenses under the provisions of the Delaware Statute, the By-laws, this
Agreement or otherwise.
     7. Enforcement.

  (a)   The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on the Company hereby in order to
induce Indemnitee to continue as a director or an officer of the Company, or
both, and acknowledges that Indemnitee is relying upon this Agreement in
continuing in such capacity.     (b)   In the event Indemnitee is required to
bring any action to enforce rights or to collect moneys due under this Agreement
and is successful in such action, Company shall reimburse Indemnitee for all of
Indemnitee’s reasonable fees and expenses in bringing and pursuing such action.

     8. Separability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid or unenforceable for any reason, such
invalidity or unenforceability shall not affect the validity or enforceability
of the other provisions hereof.
     9. Subrogation. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all rights of recovery of
Indemnitee, who shall execute all papers reasonably required and shall do
everything that may be reasonably necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
     10. No Duplication of Payments. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, By-law, or otherwise) of the amounts otherwise indemnifiable
hereunder.
     11. Governing Law; Binding Effect; Amendment and Termination; Final
Agreement.

  (a)   This Agreement shall be interpreted and enforced in accordance with the
laws of the State of Delaware.     (b)   This Agreement shall be binding upon
Indemnitee and upon the Company, its successors and assigns, and shall inure to
the benefit of Indemnitee, his heirs, personal representatives and assigns and
to the benefit of the Company, its successors and assigns.     (c)   No
amendment, modification, termination or cancellation of this Agreement shall be
effective unless in writing signed by both parties hereto.

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  (d)   This Agreement constitutes the complete agreement between the parties
with respect to the subject matter hereof and supersedes and replaces any
existing oral or written agreement or understanding between you and the Company
relating to the same subject matter.

     In Witness Whereof, the parties hereto have executed this Agreement on and
as of the day and year first above written.

     
 
  The Company:    
 
  Max & Erma Restaurants, Inc.   
 
  By: _______________
Its: _______________   
 
  The Indemnitee:   
 
  _______________

   

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