<PAGE>   1
                                                                   EXHIBIT 10(p)




                        MAX & ERMA'S RESTAURANTS, INC.
                             1996 STOCK OPTION PLAN


        1. PURPOSE.  This plan (the "Plan") is intended as an incentive and to
encourage stock ownership by certain key employees, officers and directors of,
and consultants and advisers who render services to, Max & Erma's Restaurants,
Inc., a Delaware corporation (the "Company"), and any current or future
subsidiaries or parent of the Company by the granting of stock options (the
"Options") as provided herein.  By encouraging such stock ownership, the
Company seeks to attract, retain and motivate employees, officers, directors,
consultants and advisers of training, experience and ability.  The Options
granted under the Plan may be either incentive stock options ("ISOs") which
meet the requirements of section 422 of the Internal Revenue Code of 1986, as
amended from time to time hereafter (the "Code"), or options which do not meet
such requirements ("Non-Statutory Options").

        2. EFFECTIVE DATE.  The Plan will become effective on December 12, 1995
(the "Effective Date").

        3. ADMINISTRATION.

           (a) The Plan will be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") which consists
of not fewer than three members of the Board.  If any class of equity
securities of the Company is registered under section 12 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), all members of the Committee
will be "disinterested persons" as defined in Rule 16b-3(c)(2)(i) promulgated
under the 1934 Act (or any successor rule of like tenor and effect) and
"outside directors" as defined in section 162(m) of the Code and the
regulations promulgated thereunder and will not be eligible to receive any
options under this Plan except pursuant to paragraph 4(b) of the Plan.

           (b) Subject to the provisions of the Plan, the Committee is 
authorized to establish, amend and rescind such rules and regulations as it 
deems appropriate for its conduct and for the proper administration of
the Plan, to make all determinations under and interpretations of, and to take
such actions in connection with the Plan or the Options granted thereunder as
it deems necessary or advisable.  All actions taken by the Committee under the
Plan are final and binding on all persons.  No member of the Committee is
liable for any action taken or determination made relating to the Plan, except
for willful misconduct.


           (c) The Company will indemnify each member of the Committee against
costs, expenses and liabilities (other than amounts paid in settlements to
which the Company does not consent, which consent will not be unreasonably
withheld) reasonably incurred by such member in connection with any action to
which he or she may be a party by reason of service as a member of the
Committee, except in relation to matters as to which he or she is adjudged in
such action to be personally guilty of negligence or willful misconduct in the
performance of his or her duties.  The 

<PAGE>   2

foregoing right to indemnification is in addition to such other rights
as the Committee member may enjoy as a matter of law, by reason of insurance
coverage of any kind, or otherwise.

        4. ELIGIBILITY.

           (a) The Committee may grant Options and Tax Offset Payments, as 
defined in paragraph 10, to such key employees of (or, in the case of
Non-Statutory Options only, to directors who are not employees of and to
consultants and advisers who render services to) the Company or its
subsidiaries or parent as the Committee may select from time to time (the
"Optionees"); provided, however, that if any class of equity securities of the
Company is registered under section 12 of the 1934 Act, any member of the Board
who is not an employee of the Company may not receive any Option or Tax Offset
Payment under the Plan except pursuant to paragraph 4(b) of the Plan.  The
Committee may grant more than one Option to an individual under the Plan.

           (b) If any class of equity securities of the Company is registered
under section 12 of the 1934 Act, on October 15 of each year, each member of
the Board who is not an employee of the Company, including members of the
Committee, will automatically receive under this Plan a Non-Statutory Option to
purchase 3,000 shares of the Company's common stock, $.10 par value, at an
exercise price equal to 100% of the fair market value of the shares on the date
of grant.  Such Option will not be exercisable until a period of one year from
the date of grant and will terminate on the fifth anniversary of the date of
grant.  This paragraph 4(b) may not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended from time to time, or the rules thereunder.

           (c) No ISO may be granted to an individual who, at the time an ISO is
granted, is considered under section 422(b)(6) of the Code as owning stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of its parent or any subsidiary corporation;
provided, however, this restriction will not apply if at the time such ISO is
granted the option price per share of such ISO is at least 110% of the fair
market value of such share, and such ISO by its terms is not exercisable after
the expiration of five years from the date it is granted.  This paragraph 4(c)
has no application to Options granted under the Plan as Non-Statutory Options.

           (d) The aggregate fair market value (determined as of the date the 
ISO is granted) of shares with respect to which ISOs are exercisable for the 
first time by any Optionee during any calendar year under the Plan or any other
incentive stock option plan of the Company or a parent or subsidiary of the 
Company may not exceed $100,000.  This paragraph 4(d) has no application to 
Options granted under the Plan as Non-Statutory Options.


        5. STOCK SUBJECT TO PLAN.  The shares subject to Options under the Plan
are the shares of common stock, $.10 par value, of the Company (the "Shares"). 
The Shares issued pursuant to Options granted under the Plan may be authorized
and unissued Shares, Shares purchased on the open market or in a private
transaction, or Shares held as treasury stock.  The aggregate number of 



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Shares for which Options may be granted under the Plan may not exceed
400,000, subject to adjustment in accordance with the terms of paragraph 13 of
the Plan.  The maximum number of Shares for which Options may be granted under
the Plan during the term of the Plan to any one individual may not exceed
200,000 subject to adjustment in accordance with the terms of paragraph 13 of
the Plan.  The unpurchased Shares subject to terminated or expired Options may
again be offered under the Plan.  The Committee, in its sole discretion, may
permit the exercise of any Option as to full Shares or fractional Shares. 
Proceeds from the sale of Shares under Options will be general funds of the
Company.

        6. TERMS AND CONDITIONS OF OPTIONS.

           (a) At the time of grant, the Committee will determine whether the
Options granted will be ISOs or Non-Statutory Options.  All Options and Tax
Offset Payments granted will be authorized by the Committee and, within a
reasonable time after the date of grant, will be evidenced by stock option
agreements in writing ("Stock Option Agreements"), in the form attached hereto
as Exhibit A, or in such other form and containing such terms and conditions
not inconsistent with the provisions of this Plan as the Committee may
determine.  Any action under paragraph 13 may be reflected in an amendment to,
or restatement of, such Stock Option Agreements.

           (b) The Committee may grant Options and Tax Offset Payments having
terms and provisions which vary from those specified in the Plan if such
Options or Tax Offset Payments are granted in substitution for, or in
connection with the assumption of, existing options granted by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company is a party.

        7. PRICE.  The Committee will determine the option price per Share (the
"Option Price") of each Option granted under the Plan.  Notwithstanding the
foregoing, the Option Price of each ISO granted under the Plan may not be less
than the fair market value of a Share on the date of grant of such Option.  The
date of grant will be the date the Committee acts to grant the Option or such
later date as the Committee specifies and the fair market value will be
determined in accordance with paragraph 26(c) and without regard to any
restrictions other than a restriction which, by its terms, will never lapse.

        8. OPTION PERIOD.  The Committee will determine the period during which
each Option may be exercised (the "Option Period"); provided, however, any ISO
granted under the Plan will have an Option Period which does not exceed 10
years from the date of grant.

        9. NONTRANSFERABILITY OF OPTIONS.  An Option will not be transferable
by the Optionee otherwise than by will or the laws of descent and distribution
and may be exercised, during the lifetime of the Optionee, only by the Optionee
or by the Optionee's guardian or legal representative.





                                     -3-
<PAGE>   4
        10. TAX OFFSET PAYMENTS.  The Committee has the authority and
discretion under the Plan to make cash grants to Optionees to offset a portion
of the taxes which may become payable upon exercise of Non-Statutory Options or
on certain dispositions of Shares acquired under ISOs ("Tax Offset Payments"). 
In the case of Non-Statutory Options, such Tax Offset Payments will be in an
amount determined by multiplying a percentage established by the Committee by
the difference between the fair market value of a Share on the date of exercise
and the Option Price, and by the number of Shares as to which the Option is
being exercised.  If the Tax Offset Payment is being made on account of the
disposition of Shares acquired under an ISO, such Tax Offset Payments will be
in an amount determined by multiplying a percentage established by the
Committee by the difference between the fair market value of a Share on the
date of disposition, if less than the fair market value on the date of
exercise, and the Option Price, and by the number of Shares acquired under an
ISO of which an Optionee is disposing.  The percentage will be established,
from time to time, by the Committee at that rate which the Committee, in its
sole discretion, determines to be appropriate and in the best interest of the
Company to assist Optionees in the payment of taxes.  The Company has the right
to withhold and pay over to any governmental entities (federal, state or local)
all amounts under a Tax Offset Payment for payment of any income or other taxes
incurred on exercise.

        11. EXERCISE OF OPTIONS.

           (a) The Committee, in its sole discretion, will determine the 
terms and conditions of exercise and vesting percentages of Options
granted hereunder. Notwithstanding the foregoing or the terms and conditions of
any Stock Option Agreement to the contrary, (i) if the Optionee's employment is
terminated as a result of disability or death, his or her Options will be
exercisable to the extent and for the period specified in paragraph 12(b); (ii)
if the Optionee's employment is terminated other than as a result of disability
or death or for cause, his or her Options will be exercisable to the extent and
for the period specified in paragraph 12(a); (iii) if a merger or similar
reorganization or sale of substantially all of the Company's assets occurs, all
outstanding Options will be exercisable to the extent and for the period
specified in paragraph 13(b) or paragraph 13(c), whichever paragraph applies;
and (iv) if a change in control occurs, all outstanding Options will be
exercisable for the period specified in paragraph 13(d).

           (b) An Option may be exercised only upon delivery of a written notice
to the Committee, any member of the Committee, or any officer of the Company
designated by the Committee to accept such notices on its behalf, specifying
the number of Shares for which it is exercised.

           (c) Within five business days following the date of exercise of an
Option, the Optionee or other person exercising the Option will make full
payment of the Option Price in cash or, with the consent of the Committee, (i)
by tendering previously acquired Shares (valued at fair market value, as
determined by the Committee, as of such date of tender); (ii) with a full
recourse promissory note of the Optionee for the portion of the Option Price in
excess of the par value of Shares subject to the Option, under terms and
conditions determined by the Committee; (iii) any





                                     -4-
<PAGE>   5
combination of the foregoing; or (iv) if the Shares subject to the Option have
been registered under the Securities Act of 1933, as amended (the "1933 Act"),
and there is a regular public market for the Shares, by delivering to the
Company on the date of exercise of the Option written notice of exercise
together with:

                        (A)     written instructions to forward a copy of such
               notice of exercise to a broker or dealer, as defined in section
               3(a)(4) and 3(a)(5) of the 1934 Act ("Broker"), designated in
               such notice and to deliver to the specified account maintained
               with the Broker by the person exercising the Option a
               certificate for the Shares purchased upon the exercise of the
               Option, and

                        (B)     a copy of irrevocable instructions to the
               Broker to deliver promptly to the Company a sum equal to the
               purchase price of the Shares purchased upon exercise of the
               Option and any other sums required to be paid to the Company
               under paragraph 18 of the Plan.

               (d)      If Tax Offset Payments sufficient to allow for
withholding of taxes are not being made at the time of exercise of an Option,
the Optionee or other person exercising such Option will pay to the Company an
amount equal to the withholding amount required to be made less any amount
withheld by the Company under paragraph 18.

        12.     TERMINATION OF EMPLOYMENT.

               (a)      Upon termination of an Optionee's employment with the
Company, any parent or subsidiary of the Company, or any successor corporation
to either the Company or any parent or subsidiary of the Company, other than
(i) termination of employment by reason of death or disability, as defined in
paragraph 26(b), or (ii) termination of employment for cause, as defined in
paragraph 26(f), the Optionee will have 30 days after the date of termination
(but not later than the expiration date of the Stock Option Agreement) to
exercise all Options held by him or her to the extent the same were exercisable
on the date of termination; provided, however, if such termination is a result
of the Optionee's retirement with the consent of the Company and if the
Committee, in its sole discretion, so permits, such Option shall then be
exercisable to the extent of 100% of the Shares subject thereto.  The Committee
will determine in each case whether a termination of employment is a retirement
with the consent of the Company and, subject to applicable law, whether a leave
of absence is a termination of employment.  The Committee may cancel an Option
during the 30-day period after termination of employment referred to in this
paragraph if the Optionee engages in employment or activities contrary, in the
opinion of the Committee, to the best interests of the Company or any parent or
subsidiary of the Company.

               (b)      Upon termination of employment by reason of death or
disability, the Optionee's personal representative, or the person or persons to
whom his or her rights under the Options pass by will or the laws of descent or
distribution, will have one year after the date of such termination (but not
later than the expiration date of the Stock Option Agreement) to exercise all





                                     -5-
<PAGE>   6
Options held by Optionee to the extent the same were exercisable on the
date of termination; provided, however, the Committee, in its sole discretion,
may permit the exercise of all or any portion of any Option granted to such
Optionee not otherwise exercisable.

               (c)      Upon termination of employment for cause (as defined in
paragraph 26(f)), all Options held by such Optionee will terminate on the date
of termination.

       13.     REORGANIZATIONS.

               (a)      If a stock split, stock dividend, combination or
exchange of shares, exchange for other securities, reclassification,
reorganization, redesignation or other change in the Company's capitalization
occurs, the Committee will proportionately adjust or substitute the aggregate
number of Shares for which Options may be granted under this Plan, the number
of Shares subject to outstanding Options and the Option Price of the Shares
subject to outstanding Options to reflect the same.  The Committee will make
such other adjustments to the Options, the provisions of the Plan and the Stock
Option Agreements as may be appropriate and equitable, which adjustments may
provide for the elimination of fractional Shares.

               (b)      In the event of a change of the Company's common
stock, $.10 par value, resulting from a merger or similar reorganization as to
which the Company is the surviving corporation, or a merger or similar
reorganization involving only a change in the state of incorporation or an
internal reorganization not involving a change in control as defined in
paragraph 26(a), the number and kind of Shares which thereafter may be
purchased pursuant to an Option under the Plan and the number and kind of
Shares then subject to Options granted hereunder and the price per Share
thereof will be appropriately adjusted in such manner as the Board may deem
equitable to prevent dilution or enlargement of the rights available or granted
hereunder.

               (c)      Except as otherwise determined by the Board, a merger
or a similar reorganization which the Company does not survive (other than a
merger or similar reorganization involving only a change in the state of
incorporation or an internal reorganization not involving a change in control
as defined in paragraph 26(a)), or a sale of all or substantially all of the
assets of the Company, will cause every Option hereunder to terminate, to the
extent not then exercised, unless any surviving entity agrees to assume the
obligations hereunder on terms reasonably acceptable to the Board; provided,
however, that, in the case of such a merger or similar reorganization, or such
a sale of all or substantially all of the assets of the Company, if there is no
such assumption, the Board, in its sole discretion, may provide that some or
all of the unexercised portion of any one or more of the outstanding Options
will be immediately exercisable and vested as of such date prior to such
merger, similar reorganization or sale of assets as the Board determines.  If
the Board makes an Option fully exercisable under this paragraph 13(c), the
Board will notify the Optionee that the Option will be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.





                                     -6-
<PAGE>   7
               (d)      If a change in control (as defined in paragraph 26(a))
occurs, all outstanding Options granted under this Plan will become immediately
exercisable to the extent of 100% of the Shares subject thereto notwithstanding
any contrary waiting or vesting periods specified in this Plan or in any
applicable Stock Option Agreement.

       14.     SALE OF OPTION SHARES.  If any class of equity securities of the
Company is registered pursuant to section 12 of the 1934 Act, any Optionee or
other person exercising the Option who is subject to section 16 of the 1934 Act
by virtue of his or her relationship to the Company shall not sell or otherwise
dispose of the Shares subject to Option unless at least six months have elapsed
from the date of the grant of the Option.

       15.     RIGHTS AS SHAREHOLDER.  The Optionee has no rights as a
shareholder with respect to any Shares covered by an Option until the date of
issuance of a stock certificate to the Optionee for such Shares.

       16.     NO CONTRACT OF EMPLOYMENT.  Nothing in the Plan or in any Option
or Stock Option Agreement confers on any Optionee any right to continue in the
employment or service of the Company or any parent or subsidiary of the Company
or interfere with the right of the Company to terminate such Optionee's
employment or other services at any time.  The establishment of the Plan will
in no way, now or hereafter, reduce, enlarge or modify the employment
relationship between the Company or any parent or subsidiary of the Company and
the Optionee.  Options granted under the Plan will not be affected by any
change of duties or position as long as the Optionee continues to be employed
by the Company or any parent or subsidiary of the Company.

       17.     AGREEMENTS AND REPRESENTATIONS OF OPTIONEES.  As a condition to
the exercise of an Option, the Committee, in its sole determination, may
require the Optionee to represent in writing that the Shares being purchased
are being purchased only for investment and without any present intent at the
time of the acquisition of such Shares to sell or otherwise dispose of the
same.

       18.     WITHHOLDING TAXES.  The Company or any parent or subsidiary of
the Company has the right (a) to withhold from any salary, wages, or other
compensation for services payable by the Company or any parent or subsidiary of
the Company to or with respect to an Optionee, or to demand payment from the
Optionee or other person to whom the Company is delivering certificates for
Shares purchased upon exercise of an Option of, amounts sufficient to satisfy
any federal, state or local withholding tax liability attributable to such
Optionee's (or any beneficiary's or personal representative's) receipt or
disposition of Shares purchased under any Option or (b) to take any such other
action as it deems necessary to enable it to satisfy any such tax withholding
obligations.  The Committee, in its sole discretion, may permit an Optionee to
elect to have Shares that would be acquired upon exercise of Options (valued at
fair market value as of the date of exercise) withheld by the Company in
satisfaction of such Optionee's withholding tax liabilities.

       19.     EXCHANGES.  The Committee may permit the voluntary surrender of
all or a portion of any Option granted under the Plan to be conditioned upon
the granting to the Optionee of a new





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<PAGE>   8
Option for the same or a different number of Shares as the Option surrendered,
or may require such voluntary surrender as a condition precedent to a grant of
a new Option to such Optionee.  Subject to the provisions of the Plan, such new
Option will be exercisable at the then fair market value of the Shares, during
such period and on such other terms and conditions as are specified by the
Committee at the time the new Option is granted.  Upon surrender, the Options
surrendered will be cancelled, and the Shares previously subject to them will
be available for the grant of other Options.  The Committee also may grant Tax
Offset Payments to any Optionee surrendering such Option for a new Option.

       20.     COMPLIANCE WITH LAWS AND REGULATIONS.  The Plan, the grant and
exercise of Options thereunder, and the obligation of the Company to sell and
deliver the Shares under such Options, will be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required.  Options issued under this
Plan are not exercisable prior to (i) the date upon which the Company has
registered the Shares for which Options may be issued under the 1933 Act and
the completion of any registration or qualification of such Shares under state
law, or any ruling or regulation of any government body which the Company, in
its sole discretion, determines to be necessary or advisable in connection
therewith, or (ii) receipt by the Company of an opinion from counsel to the
Company stating that the exercise of such Options may be effected without
registering the Shares subject to such Options under the 1933 Act or under
state or other law.

       21.     ASSUMPTION.  The Plan may be assumed by the successors and
assigns of the Company.

       22.     EXPENSES.  The Company will bear all expenses and costs in 
connection with administration of the Plan.

       23.     AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN.  The Board
may terminate, amend or modify the Plan at any time without further action on
the part of the shareholders of the Company; provided, however, that (a) no
amendment to the Plan may cause the ISOs granted hereunder to fail to qualify
as incentive stock options under the Code; and (b) any amendment to the Plan
which requires the approval of the shareholders of the Company under the Code,
the regulations promulgated thereunder or the rules promulgated under section
16 of the 1934 Act will be subject to approval by the shareholders of the
Company in accordance with the Code, such regulations or such rules.  No
amendment, modification or termination of the Plan may adversely affect in any
manner any Option previously granted to an Optionee under the Plan without the
consent of the Optionee or the transferee of such Option.

       24.     TERM OF PLAN.  The Plan will become effective on the Effective
Date, subject to the approval of the Plan by the holders of a majority of the
shares of stock of the Company entitled to vote within twelve months of the
date of the Plan's adoption by the Board, and the exercise of all Options
granted prior to such approval will be subject to such approval.  The Plan will
terminate on the tenth anniversary of the Effective Date, or such earlier date
as may be determined by the





                                      -8-
<PAGE>   9
Board.  Termination of the Plan, however, will not affect the rights of
Optionees under Options previously granted to them, and all unexpired Options
will continue in force and operation after termination of the Plan except as
they may lapse or terminate by their own terms and conditions.

       25.     LIMITATION OF LIABILITY.  The liability of the Company under
this Plan or in connection with any exercise of an Option is limited to the
obligations expressly set forth in the Plan and in any Stock Option Agreements,
and no term or provision of this Plan or of any Stock Option Agreements will be
construed to impose any further or additional duties, obligations or costs on
the Company not expressly set forth in the Plan or the Stock Option Agreements.

       26.     DEFINITIONS.

               (a)      CHANGE IN CONTROL.  A "change in control" will be
deemed to have occurred if and when (i) a person, partnership, corporation,
trust or other entity ("Person") acquires or combines with the Company, or 50
percent or more of its assets or earning power, in one or more transactions,
and after such acquisition or combination, less than a majority of the
outstanding voting shares of the Person surviving such transaction (or the
ultimate parent of the surviving Person) is owned by the owners of the voting
shares of the Company outstanding immediately prior to such acquisition or
combination; or (ii) during any period of two consecutive years during the term
of this Plan, individuals who at the beginning of such period are members of
the Board ("Original Board Members") cease for any reason to constitute at
least a majority of the Board, unless the election of each Board member who was
not an Original Board Member has been approved in advance by Board members
representing at least two-thirds of the Board members then in office who were
Original Board Members.

               (b)      DISABILITY.  The term "disability" means a physical or
mental condition resulting from bodily injury, disease, or mental disorder
which renders the Optionee incapable of continuing the Optionee's usual and
customary employment or service with the Company or any parent or subsidiary of
the Company.

               (c)      FAIR MARKET VALUE.  If the Shares are publicly traded,
the term "fair market value" as used in this Plan means (i) the closing price
quoted in the Nasdaq National Market, if the Shares are so quoted, (ii) the
last quote reported by Nasdaq for small-cap issues, if the Shares are so
quoted, (iii) the mean between the bid and asked prices as reported by Nasdaq,
if the Shares are so quoted, or (iv) if the Shares are listed on a securities
exchange, the closing price at which the Shares are quoted on such exchange, in
each case at the close of the date immediately before the Option is granted or,
if there be no quotation or sale on that date, the next preceding date on which
the Shares were quoted or traded.  In all other cases, the fair market value
will be determined in accordance with procedures established in good faith by
the Committee and with respect to ISOs, conforming to regulations issued by the
Internal Revenue Service regarding incentive stock options.





                                     -9-
<PAGE>   10


               (d)      KEY EMPLOYEES.  The term "key employees" means those
executive, administrative, operational and managerial employees who are
determined by the Committee to be eligible for Options under the Plan.

               (e)      PARENT AND SUBSIDIARY.  The terms "subsidiary" and
"parent" as used in the Plan have the respective meanings set forth in sections
424(f) and (e) of the Code.

               (f)      TERMINATION FOR CAUSE.  The term "termination of
employment for cause" means termination of employment for (a) the commission of
an act of dishonesty, including but not limited to misappropriation of funds or
property of the Company; (b) the engagement in activities or conduct injurious
to the reputation of the Company; (c) the conviction or entry of a guilty or no
contest plea to a misdemeanor (involving an act of moral turpitude) or a
felony; (d) the violation of any of the terms and conditions of any written
agreement the Optionee may have with the Company or its parent or subsidiary
(following 30 days' written notice from the Company specifying the violation
and the employee's failure to cure such violation within such 30-day period) or
(e) any refusal to comply with the written directives, policies or regulations
established from time to time by the Board.





                                     -10-
                                      

<PAGE>   11



                                                  [ISO /or/ NSO] No. 96-
                                                                        ------
                                   EXHIBIT A


                         MAX & ERMA'S RESTAURANTS, INC.
                         [INCENTIVE /OR/ NONSTATUTORY]
                             STOCK OPTION AGREEMENT
                                   UNDER THE
                             1996 STOCK OPTION PLAN


       Max & Erma's Restaurants, Inc. (the "Company") hereby grants, effective
this ____ day of _____________________________________, 19___ (the "Effective
Date") to __________________________________ (the "Optionee") an option to
purchase _________ shares of its common stock, $.10 par value (the "Option
Shares"), at a price of ______________________Dollars ($__________) per share 
pursuant to the Company's 1996 Stock Option Plan (the "Plan"), subject to the 
following:

        1.     RELATIONSHIP TO THE PLAN.  This option is granted pursuant to
the Plan, and is in all respects subject to the terms, provisions and
definitions of the Plan and any amendments thereto.  The Optionee acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and conditions thereof.  The Optionee accepts this option subject to
all the terms and provisions of the Plan (including without limitation
provisions relating to nontransferability, exercise of the option, sale of the
option shares, termination of the option, adjustment of the number of shares
subject to the option, and the exercise price of the option).  The Optionee
further agrees that all decisions and interpretations made by the Compensation
Committee (the "Committee"), as established under the Plan, and as from time to
time constituted, are final, binding, and conclusive upon the Optionee and his
or her heirs.  This option [IS/IS NOT] an Incentive Stock Option under the
Plan.

        2.     TIME OF EXERCISE.  This option may be exercised, from time to
time, in full or in part, by the Optionee to the extent the option is vested
based upon the number of full years the Optionee is an employee of the Company
after the Effective Date (the "Vested Percentage") and remains exercisable
(subject to the provisions herein and the Plan) until it has been exercised as  
to all of the Option Shares or the _____ anniversary of the Effective Date,
whichever occurs first.  The Optionee is entitled to exercise this option to
the extent of the percentage of, and not to exceed in the aggregate, the
maximum number of the Option Shares, based upon the Vested Percentage, from
time to time, as determined in accordance with the following schedule:





                                     -A1-
<PAGE>   12


                   Years of Employment                  Total
                After the Effective Date          Vested Percentage
                ------------------------          -----------------








Notwithstanding the foregoing, this option may not be exercised unless (i) the
Option Shares are registered under the Securities Act of 1933, as amended, and
are registered or qualified under applicable state securities or "blue sky"
laws, or (ii) the Company has received an opinion of counsel to the Company to
the effect that the option may be exercised and Option Shares may be issued by
the Company pursuant thereto without such registration or qualification.  If
this option is not otherwise exercisable by reason of the foregoing sentence,
the Company will take reasonable steps to comply with applicable state and
federal securities laws in connection with such issuance.

        3.     METHODS OF EXERCISE.  This option is exercisable by delivery to
the Company of written notice of exercise which specifies the number of shares
to be purchased and the election of the method of payment therefor, which will
be one of the methods of payment specified in paragraph 11(c) of the Plan.  If
payment is otherwise than payment in full in cash, the method of payment is
subject to the consent of the Committee.  Upon receipt of payment for the
shares to be purchased pursuant to the option or, if applicable, the shares to
be delivered pursuant to the election of an alternative payment method, the
Company will deliver or cause to be delivered to the Optionee, to any other
person exercising this option, or to a broker or dealer if the method of
payment specified in clause (iii) of paragraph 11(c) of the Plan is elected, a
certificate or certificates for the number of shares with respect to which this
option is being exercised, registered in the name of the Optionee or other
person exercising the option, or if appropriate, in the name of such broker or
dealer; provided, however, that if any law or regulation or order of the
Securities and Exchange Commission or other body having jurisdiction over the
exercise of this option will require the Company or Optionee (or other person
exercising this option) to take any action in connection with the shares then
being purchased, the delivery of the certificate or certificates for such
shares may be delayed for the period necessary to take and complete such
action.

        4.     ACQUISITION FOR INVESTMENT.  This option is granted on the
condition that the acquisition of the Option Shares hereunder will be for the
account of the Optionee (or other person exercising this option) for investment
purposes and not with a view to resale or distribution, except that such
condition will be inoperative if the Option Shares are registered under the
Securities Act of 1933, as amended, or if in the opinion of counsel for the
Company such shares may be resold without registration.  At the time of any
exercise of the option, the Optionee (or other person exercising this option)
will execute such further agreements as the Company may require to implement
the foregoing condition and to acknowledge the Optionee's (or such other





                                     -A2-


<PAGE>   13
person's) familiarity with restrictions on the resale of the Option Shares
under applicable securities laws.

        5.     DISPOSITION OF SHARES.  The Optionee or any other person who may
exercise this option will notify the Company within seven (7) days of any sale
or other transfer of any Option Shares.  If any class of equity securities of
the Company is registered pursuant to section 12 of the Securities Exchange Act
of 1934, as amended, and the Optionee or any other person who may exercise this
option is subject to section 16 of that Act by virtue of such Optionee's or
person's relationship to the Company, the Optionee or other person exercising
this Option agrees not to sell or otherwise dispose of any Option Shares unless
at least six (6) months have elapsed from the Effective Date.

        6.     WITHHOLDING.  As a condition to the issuance of any of the Option
Shares under this option, Optionee or any person who may exercise this option
authorizes the Company to withhold in accordance with applicable law from any
salary, wages or other compensation for services payable by the Company to or
with respect to Optionee any and all taxes required to be withheld by the
Company under federal, state or local law as a result of such Optionee's or     
such person's receipt or disposition of Option Shares purchased under this
option. If, for any reason, the Company is unable to withhold all or any
portion of the amount required to be withheld, Optionee (or any person who may
exercise this option) agrees to pay to the Company upon exercise of this option
an amount equal to the withholding required to be made less the amount actually
withheld by the Company.

        7.     GENERAL.  This Agreement will be construed as a contract
under the laws of the State of Ohio without reference to Ohio's choice of law
rules.  It may be executed in several counterparts, all of which will
constitute one Agreement.  It will bind and, subject to the terms of the Plan,
benefit the parties and their respective successors, assigns, and legal
representatives.

       IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement as of the date first above written.

OPTIONEE:                                  MAX & ERMA'S RESTAURANTS, INC.

                                           By: 
-------------------------------                -------------------------------

                                           Its:
                                               -------------------------------




                                     -A3-