Document:

EX-10.1

 

Exhibit 10.1

RETIREMENT AGREEMENT

     THIS RETIREMENT AGREEMENT (hereinafter referred to as the “Agreement”) is made this 19th day
of September 2007, by and between Max & Erma’s Restaurants, Inc. (the “Company”) and Todd B. Barnum
(“Executive”). In consideration of payment to Executive by the Company in the amounts stated
below, the parties agree as follows:

RETIREMENT DATE

     Executive has, at the request of the Company’s Board of Directors, agreed to retire from
employment, and the parties confirm that Executive’s employment, including his service in all
offices, positions, titles and capacities he may hold with the Company and any of its affiliates,
is terminated effective as of 5:00 p.m. Columbus, Ohio time on September 19, 2007 (the “Retirement
Date”); provided, however, Executive will continue as a director and non-executive Chairman of the
Board of the Company. Executive acknowledges that the Board may replace Executive as Chairman of
the Board in the future at any time in accordance with the Company’s bylaws, as amended. Executive
understands that Executive shall not act, or hold himself out, as an employee or agent (unless in
the capacity as a consultant pursuant to Section 2 of this Agreement or as a director of the
Company) of the Company or of any of its affiliates following the Retirement Date. Executive is
not entitled to any payment, benefit, or benefit accrual, or to participation in any of the
Company’s employee benefit plans or programs, at any time after the Retirement Date, except as set
forth in this Agreement.

PAYMENTS AND BENEFITS

	 	1)	 	PAYMENTS THROUGH RETIREMENT DATE; AUTOMOBILE; BOARD FEES

     Executive will be paid Executive’s full base salary through the Retirement Date, less any and
all applicable deductions and withholdings, and will continue to participate in all of the Company
benefit plans through the Retirement Date. Executive may use Executive’s leased company automobile
(the “Automobile”) through September 19, 2009 (subject to Executive ensuring that appropriate
insurance coverage is in place and provided that Executive shall be responsible for all costs
associated with the use of the Automobile, including but not limited to, gas and oil, maintenance,
insurance and license costs) and may thereafter, at his election and sole expense, purchase or
assume the lease of that automobile from the leasing company. Executive shall be reimbursed for
any reasonable business expenses incurred through said Retirement Date. As a non-executive member
of the Board of Directors and thereafter, Executive will be entitled to normal board fees and S&P
privileges that are available to other non-executive members of the Board of Directors unless the
Board of Directors by action of a majority thereof determines to terminate such privileges.

	 	2)	 	CONSULTING; NON-COMPETITION; CONSIDERATION

     Executive is eligible to receive the amount of Three Hundred Thousand Dollars ($300,000.00),
in exchange for and subject to the releases and waivers made by him hereunder and Executive’s
compliance with his obligations pursuant to this Section 2 and the Non-Compete Addendum attached
hereto, which is incorporated herein and constitutes an integral part of this Agreement. The
Company shall make monthly payments of $12,500.00 (on payment dates reasonably agreed upon between
Executive and the Company) through September 19, 2009. Between the date hereof and September 19,
2009, Executive shall consult with the Company, at the Company’s reasonable request, with respect
to matters regarding which Executive became knowledgeable during his employment with the Company.
The required consultation may take the form of (without limitation) discussing relevant matters by
telephone, attending meetings or responding to written inquiries. The Company shall not require
more than 10 hours per month of Executive’s time pursuant to this Section 2 between the date hereof
and the first anniversary of that date, or more than five hours per month of Executive’s time
pursuant to this Section 2 between that first anniversary of the Retirement Date and September 19,
2009. The Company shall reimburse Executive for any reasonable expenses Executive incurs in
connection with discharging his consulting obligations under this Section 2. If Executive fails to
comply with his obligations pursuant to this Section 2 in any material respect, Executive shall
forfeit and reimburse to the Company all payments theretofore made pursuant to this Section 2 to
the extent the Executive is not otherwise entitled to such payments.

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	 	3)	 	EXECUTIVE CASH BONUS PROGRAM

     Executive and the Company agree that Executive will not receive any payments under the 2007
Executive Cash Bonus Program.

	 	4)	 	EQUITY AWARDS

     Executive and the Company confirm that (i) Executive’s separation of employment with the
Company constitutes a “retirement with the consent of the Company” within the meaning of the stock
option plans and award agreements pursuant to which Executive currently holds unexercised stock
options to purchase 90,300 shares of the Company’s common stock, (ii) this Agreement is not
intended to and does not modify or supersede any such plan or agreement, and (iii) Executive
remains entitled to exercise those options in accordance with, and subject to the restrictions and
limitations contained in, those plans and agreements which provide that Executive has until 30 days
after the Retirement Date to exercise such stock options.

	 	5)	 	HEALTHCARE COVERAGE

     Executive is entitled to elect to participate in the Company group health insurance plan on
the same terms as are available to other former Company employees generally (except as set forth in
the next sentence) and in accordance with the requirements and subject to the limitations of the
healthcare continuation coverage provisions of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, currently codified as Section 4980B of the Internal Revenue Code of 1986, as
amended (the “Code”), other than those provisions relating to the maximum required periods of
continuation coverage. The Company shall pay to Executive an amount equal to the premium cost
incurred by Executive in maintaining the applicable coverage for Executive and his dependents
(between the date hereof and the second anniversary of that date). The Company shall make monthly
payments (on payment dates reasonably agreed upon between Executive and the Company) through
September 2009, each in the amount of the premium cost incurred by Executive for that month of
coverage.

	 	6)	 	RETIREMENT BENEFITS AND DEFERRED COMPENSATION

     Executive is entitled to receive all benefits accrued for his account or benefit as of the
Retirement Date under the Company’s 401(k) Savings Plan and Trust, Supplemental Deferred
Compensation Plan, the Split-Dollar Life Insurance Agreement between the Company and Executive, and
any other applicable Company qualified or non-qualified retirement or similar plan, as currently in
effect, in each case in accordance with, and subject to the restrictions and limitations contained
in, the applicable plan. The Company will not make any contribution to any such plan for or on
behalf of Executive after the Retirement Date except for the payment of a $40,000 installment
required in the first quarter of fiscal 2008. Executive is entitled to receive payment of amounts
deferred by him pursuant to the Company’s Supplemental Deferred Compensation Plan, as currently in
effect, in accordance with and subject to the restrictions and limitations contained in that plan.
Any amounts payable from the Supplemental Deferred Compensation Plan or the Split-Dollar Life
Insurance Agreement that are subject to Code Section 409A will be paid in accordance with the
applicable requirements thereof and the requirements of Code Section 409A—including the requirement
that payments to a specified employee made upon termination of employment not commence until the
date that is six months after the date of termination—as interpreted in good faith by the parties.

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	 	7)	 	RELEASE OF CLAIMS

     By signing this Agreement, and except as otherwise set forth below, Executive, on behalf of
himself, his spouse, children and any heirs, family members, executors, administrators, privies
and/or assigns (collectively, the “Executive Parties”) hereby forever releases, waives, and
discharges the Company, its parents, subsidiaries and affiliates, assigns, successors and
franchisees, and each of its and their past, present and future officers, directors, agents,
managers, supervisors, shareholders, employees, representatives, insurers, and attorneys (all of
whom are collectively referred to as the “Released Parties”) from any and all claims, damages,
lawsuits, injuries, liabilities, and causes of action that Executive has or may have, whether known
to Executive or not, whether contingent or liquidated, based on or arising from any event, fact,
conduct, condition, action, or inaction occurring or existing (in whole or in part) on or before
the time Executive signs this Agreement. This release includes but is in no way limited to claims
of race discrimination, racial harassment, retaliation, wrongful discharge, breach of implied
contract, negligent or intentional infliction of emotional distress, outrageous conduct, libel,
slander, defamation, and/or any claims concerning any emotional or physical injury.

	 	8)	 	RELEASE OF ALL EMPLOYMENT CLAIMS

     Without limiting the foregoing releases, Executive, on behalf of himself and the other
Executive Parties, understands and agrees that the release granted to the Released Parties by
signing this Agreement releases all of the Released Parties from any rights and claims that could
have been asserted under any city ordinance or state or federal law including, without limitation,
those based on or relating to discrimination or retaliation based on race, religion, sex, handicap,
disability, equal pay, age, national origin, creed, color, retaliation, and sexual harassment, and
includes claims under any applicable state, local or federal discrimination law, including without
limitation, Title VII of the 1964 Civil Rights Act, the Civil Rights Act of 1991, the Fair Labor
Standards Act, the Labor Management Relations Act, the Equal Pay Act, the Americans with
Disabilities Act, the Employee Retirement Income Security Act, Age Discrimination in Employment Act
of 1967 as amended by the Older Workers Benefit Protection Act, the Consolidated Omnibus Budget
Reconciliation Act, Workers’ Compensation Laws, Unemployment Compensation laws, 42 U.S.C. §§ 1981,
1983, 1985, and all laws, statutory or common, which are meant to protect workers in their
employment relationships and under which Executive may have rights and claims, whether known to
Executive or not, which may have arisen or which may hereafter arise, directly or indirectly, out
of Executive’s employment with the Company.

	 	9)	 	WAIVER OF ALL KNOWN AND UNKNOWN CLAIMS

     In making this Agreement, Executive, on behalf of himself and the other Executive Parties,
acknowledges that he may later discover facts different from or in addition to those now known or
believed to be true at this time. The releases contained in this Agreement are made
notwithstanding the existence of any such different or additional facts. Executive acknowledges
that he may hereafter discover claims or facts in addition to or different from those which he now
knows or believes to exist in connection with this Agreement. Those facts, if known or suspected
at the time of executing this Agreement, may have materially affected this Agreement.
Nevertheless, Executive waives any rights, claims or causes of action that might arise as a result
of such different or additional claims or facts.

	 	10)	 	EXCEPTIONS FROM RELEASE AND WAIVER

     Notwithstanding anything to the contrary in this Agreement, the releases and waivers by
Executive set forth in this Agreement do not apply to (i) any indemnification right or claim that
Executive may have with respect to matters arising out of his service as an officer or director of
the Company or of any of its affiliates under the Company’s officer and director liability
insurance policies, the Company’s certificate of incorporation, as amended, or bylaws, as amended,
applicable law, or any agreement to which Executive is a party, (ii) any right or claim that
Executive may have under this Agreement, (iii) any right, entitlement or privilege that arises
under any other agreement or instrument and that is expressly preserved by this Agreement, or (iv)
any vested rights that Executive may have under any of the Company’s retirement, deferred
compensation, or employee benefit plans or similar plans or agreements that are expressly preserved
by this Agreement.

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	 	11)	 	THE COMPANY RELEASE OF CLAIMS

     By signing this Agreement, and except as otherwise set forth below, the Company, on behalf of
itself and the other Released Parties, hereby forever releases, waives, and discharges Executive
and the other Executive Parties from any and all claims, damages, lawsuits, injuries, liabilities,
and causes of action that the Company has or may have, whether known to the Company or not, whether
contingent or liquidated, based on or arising from any event, fact, conduct, condition, action, or
inaction occurring or existing (in whole or in part) on or before the time the Company signs this
Agreement, except that, notwithstanding anything to the contrary in this Agreement, the releases
and waivers by the Company set forth in this Agreement do not apply to (i) any right or claim that
the Company may have under the Company’s officer and director liability insurance policies, the
Company’s certificate of incorporation, as amended, or bylaws, as amended, applicable law, or any
agreement to which the Company is a party, in connection with any assertion by Executive of any
right to or claim for indemnity, (ii) any right or claim that the Company may have under this
Agreement, (iii) any right, entitlement or privilege that arises under any other agreement or
instrument and that is expressly preserved by this Agreement, (iv) any right or cause of action
pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder, (v) any right or claim that the Company may have against Executive arising
from or in connection with the assertion or undertaking of any claim, investigation or proceeding
by any regulatory or other governmental agency or entity or any third party, or (vi) any right or
claim that the Company may have against the Executive arising from any misappropriation of assets
or wrongful act of Executive that has heretofore not been disclosed to or discovered by the
Company.

	 	12)	 	NO ADMISSION OF WRONGDOING BY THE COMPANY OR ANY OF THE RELEASED PARTIES

     Executive understands that neither this Agreement nor any action taken under it is or should
be construed as an admission by any of the Released Parties that they have violated any local,
state or federal law, statutory or common. The Released Parties specifically disclaim any
liability to or wrongful acts against Executive or any other person.

	 	13)	 	SEVERANCE AGREEMENT IN EVENT OF CHANGE IN CONTROL

     Executive and the Company agree that the Severance Agreement in Event of Change in Control
between Executive and the Company, dated January 10, 2000, has terminated, effective on the
Retirement Date, in accordance with its terms.

	 	14)	 	CONFIDENTIALITY OF THIS RELEASE AND SETTLEMENT AGREEMENT

     Executive acknowledges that the Company will be obligated to make disclosure regarding this
Agreement under the United States federal securities laws. Executive agrees and acknowledges that
prior to such disclosure by the Company, the terms and provisions of this Agreement, including the
amount paid to Executive, shall be and have been kept in utter, absolute, and strictest confidence,
and that Executive has not released and shall never reveal that information prior to such
disclosure by the Company to any individual or entity except that Executive may prior to such
disclosure by the Company provide information about this Agreement as follows: (i) as required by
any governmental agency or by process of law, (ii) to an attorney who is assisting Executive in
negotiating this Agreement, (iii) to a professional accountant or tax consultant with whom
Executive has a confidential relationship, and (iv) to immediate family members, which only
includes a spouse, parents and siblings residing with Executive, subject, in each case, to that
entity or individual being informed of this confidentiality obligation and agreeing to keep such
information confidential. Executive shall limit any disclosure by him regarding this Agreement to
the terms and provisions of this Agreement.

	 	15)	 	NONDISPARAGEMENT

     The Company shall, in all public communications authorized through its normal approval
channels, and shall cause its directors and officers at or above the executive vice president level
(during their time of service with the Company) to, refrain from making derogatory or disparaging
remarks about Executive, and Executive

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	shall refrain from making derogatory or disparaging remarks about the Company and its directors and
officers, in each case whether with respect to employment, business or financial matters or
otherwise.

	 	16)	 	NO FILING OF CLAIMS

     Executive represents and agrees that Executive has not filed, and will not file at any time
hereafter, any complaint, charge, lawsuit or other legal or administrative action against the
Company relative to Executive’s employment with the Company or separation from service with the
Company. Executive, however, maintains the right to file any action for the sole purpose of
enforcing rights under this Agreement, or other rights based solely on events arising after
entering into this Agreement.

	 	17)	 	TAXATION

     Executive understands and agrees that some of the amounts set forth herein are subject to tax
withholdings and FICA. Executive agrees that none of the Released Parties or their representatives
or agents have made any other representations or promises about the tax implications of the sums
Executive is to receive in connection with the settlement memorialized in this Agreement. The
Company shall consult with Executive in determining the proper tax jurisdiction of any payments to
be made hereunder and as to whether any withholding is required and will cooperate with Executive
with respect to claims of or against taxing authorities regarding the amount of any required
withholding.

	 	18)	 	RIGHT TO CONSULT WITH ATTORNEY AND VOLUNTARY SIGNING

     Executive acknowledges that Executive has consulted with an attorney or was cautioned and
encouraged to consult with an attorney before signing this Agreement, that Executive has read this
Agreement carefully, that Executive understands each of its provisions, and that Executive has
signed it voluntarily. Executive further acknowledges that the Company has taken no action
interfering with any right which Executive has to file any charge, suit, claim or other process
with any federal, state, or local judicial or administrative agency or body regarding Executive’s
employment or retirement or any right to contact or seek the guidance or intervention of any such
agency.

	 	19)	 	ATTORNEYS’ FEES AND COSTS

     If a dispute arises concerning this Agreement, or the performance of any party pursuant to the
terms of this Agreement, the prevailing party may be entitled to recover, without affecting any
other remedy to which that party may be entitled, all of its reasonable costs and reasonable
attorneys’ fees incurred in connection with that dispute, regardless of whether a lawsuit is filed
or prosecuted to conclusion.

	 	20)	 	USE OF HEADINGS; ENTIRE AGREEMENT; MODIFICATIONS

     The headings in this Agreement have been inserted for convenience of reference only and do not
in any way restrict or modify any of its terms or provisions. This Agreement sets forth the entire
agreement between the parties hereto, and there are no inducements or representations, other than
those contained in this Agreement, upon which the parties are relying in executing this Agreement.
This Agreement fully supersedes any and all prior agreements or understandings between the parties
hereto pertaining to the subject matter itself, except as and to the extent otherwise provided
herein. This Agreement may not be modified or altered except by a written instrument duly executed
by both parties.

	 	21)	 	GOVERNING LAW

     This Agreement will be governed by the laws of the State of Ohio. Any court action commenced
to enforce this Agreement must be brought in the State or Federal Courts of Ohio.

	 	22)	 	INVALIDITY OF ANY PROVISION AFFECTS ONLY THAT PROVISION

     All provisions of this Agreement are severable and this Agreement shall be interpreted and
enforced as if

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all completely invalid or unenforceable provisions were not contained therein, and Executive and
the Company agree that this Agreement shall be enforced to the fullest extent permissible under the
laws and public policies applied in the jurisdiction in which enforcement is sought. If any
provision of this Agreement is invalid or unenforceable, that invalidity or unenforceability will
not affect any of the other terms and conditions contained in this Agreement.

	 	23)	 	ASSIGNMENT

     This Agreement may be freely assigned by the Company, for any purpose, with or without notice,
shall inure to the benefit of any successors or assigns of the Company, and shall be binding upon
the heirs, executors, and administrators of Executive.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

[SIGNATURE PAGE FOLLOWS.]

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     IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 19th day of
September  , 2007.

	 	 	 	 	 	 	 	 	 
	MAX AND ERMA’S RESTAURANTS, INC.	 	 	 	EXECUTIVE: TODD B. BARNUM	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert A. Lindeman
	 	 	 	/s/ Todd B. Barnum	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	Print Name:

	 	Robert A. Lindeman
 

	 	 	 	 	 	 
	 
	Title:

	 	President and Chief Executive Officer
 

	 	 	 	 	 	 
	 
	Date:

	 	September 19, 2007
	 	 	 	Date: September 19, 2007	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	WITNESS	 	 
	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	/s/ Connie Minton 

	 	 
	 

	 	 	 	 	 	Print Name:  Connie Minton 
	 
	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	Date: September 19, 2007	 	 

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NON-COMPETE ADDENDUM TO RETIREMENT AGREEMENT

     This Non-Compete Addendum (“Addendum”) between Executive and the Company is an attachment to
the Retirement Agreement (“Agreement”) between Executive and the Company and is effective as of the
effective date of the Agreement. This Addendum is an integral part of the Agreement and is
incorporated therein by reference. Capitalized terms not defined herein have the meanings set
forth in the Agreement.

     1. In addition to any confidentiality obligation contained in the Agreement, Executive
acknowledges and agrees that in the course of Executive’s employment with the Company, Executive
received and otherwise had access to trade secrets and other information that is confidential
and/or proprietary to the Company or its affiliates and subsidiaries (collectively the “Company”),
including, but not limited to, information relating to strategic and other business plans,
strategies processes and policies, records, recipes, menus, pricing, techniques, consumer
requirements, consumer preferences, finances, operations, marketing, franchises, and business
techniques and methods, organizational structures, opinions and judgments of executives (including
Executive) respecting strategic and other business plans, strategies, processes and policies and
other confidential information, which information is highly valuable, special and unique to the
Company, is maintained as confidential by the Company, is not available to the Company’s
competition and/or the general public, and the disclosure of which would cause the Company serious
competitive harm and loss of profits and goodwill (hereinafter “Confidential Information”).
Executive agrees that he shall not, at any time, directly or indirectly, use, disclose, in whole or
in part, to third parties, or otherwise misappropriate the Company Confidential Information either
while employed by the Company or at any time thereafter, except with the express written consent of
the Company or unless compelled by subpoena or court order, in which case Executive will give the
Company reasonable advance notice of the information required to be provided under such court order
or subpoena. All files, records, documents, information, data and similar items relating to the
business of the Company, whether prepared by Executive or otherwise coming into Executive’s
possession, shall remain the property of the Company and shall not be removed from the premises of
the Company without the prior written consent of the Company and in any event shall be promptly
delivered to the Company on the date of execution of the Agreement, or as otherwise agreed to by
the Company.

     2. A portion of the payments provided for in the Agreement constitute consideration to which
Executive is not or may not be otherwise entitled, and constitute good and fair consideration for
the covenants contained herein.

     3. Executive acknowledges and agrees that the Confidential Information Executive acquired
regarding the Company will enable Executive to injure the Company if Executive should compete with
the Company. Therefore, Executive agrees that, from the effective date of the Agreement through
September 19, 2009, and thereafter for as long as Executive is a director of the Company, Executive
shall not, directly or indirectly, on his own behalf or on behalf of any third party, as an
employee, officer, director, partner, employee, consultant, or in any other capacity, invest (other
than investments in publicly traded companies which constitute not more than 1% of the voting
securities of any such company) or engage in any business in whatever form that is competitive with
the business of the Company. This restriction includes, without limitation, any business engaged
in the business of owning, operating or franchising American casual restaurants that serve alcohol.
This restriction shall not prohibit Executive from accepting employment or otherwise becoming
associated with a Company franchisee, but only in connection with activities associated with the
operation of a Company franchise or activities that otherwise are not encompassed by the
restrictions of this paragraph, subject to any confidentiality obligations contained herein. The
geographical boundary for the restrictions contained herein shall be the United States.

     4. Executive agrees that, from the effective date of the Agreement through September 19, 2009,
and thereafter for as long as Executive is a director of the Company, he shall not, directly or
indirectly, on his own behalf or on behalf of any third party, solicit, contact, hire, or otherwise
encourage any individual then employed with the Company or who was employed by the Company within
the one (1) year immediately preceding any such solicitation, contact, hiring or encouragement, to
leave his or her employment with the Company and or accept employment with any other employer or
enterprise, nor shall Executive in any manner assist any third party in any such activity.
Executive acknowledges that any attempt on the part of Executive to induce others to leave the
Company’ employ, or any effort by Executive to interfere with the Company

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relationships with their other employees, would be harmful and damaging to the Company.

     5. Executive agrees that, from the effective date of the Agreement through September 19, 2009,
or for as long as Executive is a director of the Company, he shall not, directly or indirectly, on
his own behalf or on behalf of any third party, solicit or otherwise engage in any conduct that has
the purpose or effect of interfering with any business relationship or potential business
relationship of the Company, including without limitation suppliers, franchisees, or investors, nor
shall Executive in any manner assist any third party in any such activity.

     6. Executive acknowledges and agrees that the covenants contained herein, specifically
including without limitation the duration and geographical boundaries of the non-competition
provisions, are reasonable and necessary to protect the goodwill, trade secrets, and other
legitimate business interests of the Company and to protect the Company from unfair competition.
Executive further acknowledges and agrees that enforcement of the covenants contained herein will
cause Executive no undue hardship.

     7. Executive acknowledges and agrees that any breach or threatened breach of these covenants
will cause the Company immediate and irreparable harm, for which injunctive relief would be
necessary and appropriate. Executive therefore agrees that the Company shall be entitled, without
bond, to the entry of temporary and permanent injunctions, orders of specific performance, and
other equitable relief issued by any court of competent jurisdiction, enforcing the covenants
contained herein, without limiting any additional remedies to which the Company may be entitled.
If a bond is required by statute, rule, court order, or otherwise, Executive agrees that such bond
shall be in the sum of $100.00. Further, Executive agrees that, if a temporary injunction or
restraining order is dissolved, Executive’s only remedy under this Agreement would be its
dissolution and to any payment determined to be owed to him under Section 2 of the Retirement
Agreement.

     IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 19th day of
September  , 2007.

	 	 	 	 	 	 	 	 	 
	MAX AND ERMA’S RESTAURANTS, INC.	 	 	 	EXECUTIVE: TODD B. BARNUM	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert A. Lindeman
 

	 	 	 	/s/ Todd B. Barnum
 

	 	 
	 
	Print Name:

	 	Robert A. Lindeman
 

	 	 	 	 	 	 
	 
	Title:

	 	President and Chief Executive Officer
 

	 	 	 	 	 	 
	 
	Date:

	 	September 19, 2007
	 	 	 	Date: September 19, 2007	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	WITNESS	 	 
	 
	 
	 	 	 	 	 	/s/ Connie Minton 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 

	 	 	 	 	 	Print Name:  Connie Minton
	 
	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	Date: September 19, 2007	 	 

- 9 -EX-10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

MAX & ERMA’S RESTAURANTS, INC. AND ROBERT A. LINDEMAN

     This EMPLOYMENT AGREEMENT (the “Agreement”) is entered effective this 19th day of September,
2007 (the “Effective Date”), between MAX & ERMA’S RESTAURANTS, INC., a Delaware corporation (the
“Company”) and ROBERT A. LINDEMAN (the “Executive”).

     WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”)
has approved and authorized the entry into this Agreement with the Executive; and

     WHEREAS, the parties desire to enter into this Agreement setting forth the terms and
conditions for the employment relationship of the Executive with the Company.

     NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements herein
contained and intending to be legally bound hereby, the Company and the Executive hereby agree as
follows:

     1. Employment. The Executive shall be employed as the President and Chief Executive
Officer of the Company from September 19, 2007 (the “Commencement Date”), until the third
anniversary of this Agreement, unless such employment is terminated earlier in accordance with this
Agreement; provided, however, commencing on the third anniversary of this Agreement, the term of
this Agreement shall be extended for a period of two (2) years (the “Initial Renewal Term”) and, on
the second anniversary of the Initial Renewal Term, the term of this Agreement shall be extended
for a consecutive period of five (5) years, unless either party gives written notice to the other,
at least 60 days prior to the end of the initial term or at least 60 days prior to the end of the
Initial Renewal Term. The Executive shall have such duties and responsibilities customarily
incident to such position or as may be designated to him by the Board of Directors of the Company
(the “Board”) from time to time. The Executive shall be generally responsible for overseeing the
operations of the Company and meeting the reasonable performance standards and objectives as set by
the Board of Directors. Executive shall devote substantially all of his time, attention and
energies to the business and affairs of the Company.

     2. Salary. The Company shall pay the Executive a salary at an annual rate of $300,000
less applicable deductions (the “Base Salary”), and such Base Salary may be increased at such times
and in such amounts as determined by the Committee. The Base Salary shall be payable by the
Company to the Executive in installments at such times as the Company customarily pays its other
employees. Participation in deferred compensation, mandatory or discretionary bonus, retirement,
stock option and other employee benefit plans and in fringe benefits shall not reduce the Base
Salary.

 

 

     3. Bonus. Executive shall be entitled to participate in the Company’s executive cash
bonus program pursuant to which Executive will be eligible to receive a cash bonus, in an amount
determined by the Committee, which bonus may be based on such performance criteria as the Committee
may in its discretion determinate from time to time. Except as otherwise provided in paragraph 9
herein, if this Agreement is terminated prior to the payment date of any bonus provided for in this
paragraph, no bonus payment shall be made following the termination date of the Agreement unless
otherwise agreed by the Company.

     4. Participation in Retirement, Welfare and Other Benefit Plans and Programs.
Executive shall be entitled to participate in all employee retirement and welfare benefit plans and
programs, including health insurance, dental insurance, group life and long-term disability and
401(k) plan, made available to the Company’s senior level executives as a group, as such retirement
and welfare plans may be in effect from time to time and subject to the eligibility of such plans.

     5. Automobile. The Company shall provide the Executive an automobile allowance in
accordance with the Company’s automobile allowance or reimbursement policy as approved from time to
time by the Board of Directors and payable in accordance with the Company’s policy.

     6. Vacation. The Executive shall be entitled to paid vacation in accordance with the
Company’s vacation policy as approved from time to time by the Board of Directors, in addition to
holidays and other paid time off (excluding vacation) provided to similarly situated executive
officers of the Company.

     7. Business Expenses. During such time as the Executive is rendering services
hereunder, the Executive shall be entitled to incur and be reimbursed by the Company for all
reasonable business expenses, including but not limited to mobile telephone charges. The Company
agrees that it will reimburse the Executive for all such expenses upon the presentation by the
Executive, on a monthly basis, of an itemized account of such expenditures setting forth the date,
the purposes for which incurred, and the amounts thereof, together with such receipts showing
payments in conformity with the Company’s established policies. Reimbursement for approved expenses
shall be made within a reasonable period not to exceed 30 days after the approval of Executive’s
itemized account.

     8. Indemnity. The Company shall to the extent permitted by law, indemnify and hold the
Executive harmless from costs, expense (including reasonable attorneys fees) or liability arising
out of or relating to any acts or decisions made by the Executive in the course of his employment
to the same extent the Company indemnifies and holds harmless other officers and directors of the
Company in accordance with the Company’s established policies. The Company agrees to continuously
maintain Directors and Officers Liability Insurance with reasonable limits of coverage and to
include the Executive within said coverage.

     9. Termination. This Agreement shall terminate on the third anniversary date of the
Commencement Date, unless renewed pursuant to paragraph 1 above or sooner pursuant to any of the
following:

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          9.1 Death. This Agreement shall terminate upon the Executive’s death. The Company
shall pay the Executive’s estate (i) on the date it would have been payable to Executive any unpaid
Base Salary earned prior to the date of Executive’s death, (ii) within 30 days of the conclusion of
the quarter following Executive’s death, any unpaid Bonus prorated to the date of Executive’s
death, and (iii) any unpaid reimbursements due Executive for expenses incurred by the Executive
prior to Executive’s death, upon receipt from the Executive’s personal representative of receipts
therefore. Any options that have not vested as of the date of Executive’s death shall terminate on
the date of Executive’s death.

          9.2 Disability. If, as a result of the Executive’s incapacity due to physical or
mental illness, he shall have been absent from the full time performance of substantially all of
his material duties with the Company for 90 consecutive days or 180 days total within any 12-month
period, his employment may be terminated by the Company for “Disability.” Termination shall occur
30 days after a notice of a written termination is delivered to Executive by the Company (the
“Effective Date of Termination”). The Company shall pay the Executive (i) on the date it would have
been payable to Executive, any unpaid Base Salary earned prior to the date of Executive’s Effective
Date of Termination, (ii) within 30 days of the end of the quarter following Executive’s Effective
Date of Termination, any unpaid Bonus prorated to the Executive’s last day of actual employment,
(iii) any unpaid reimbursements due Executive for expenses incurred by the Executive prior to
Executive’s Effective Date of Termination, pursuant to paragraph 7, and (iv) if Executive is not
covered by any other comprehensive insurance, the Company will pay Executive an amount equivalent
to Executive’s COBRA payments up to 18 months following the Effective Date of Termination or the
maximum term allowable by then applicable law for coverage of Executive and his eligible
dependents. Any options that have not vested as of the Executive’s Effective Date of Termination
shall terminate on the date of Executive’s Effective Date of Termination.

          9.3 Cause. This Agreement may be terminated by the Company at any time for “Cause” by
the delivery to Executive of a written notice of termination stating the date of termination and
the basis upon which this Agreement is being terminated. As used in this Agreement, the term
“Cause” shall include:

               (i) failure, neglect or refusal to perform or observe any or all of Executive’s material
obligations (“Breach”) under this Agreement which Breach remains uncured after written notice from
the Company to the Executive and an opportunity to correct such performance within a reasonable
period of time as determined by the Company, of at least 15 days after notice from the Company
regarding the Breach;

               (ii) conviction of Executive of any felony or other crime involving dishonesty or moral
turpitude;

               (iii) fraudulent conduct by the Executive or any act of dishonesty in connection with the
Company’s business; or

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               (iv) unauthorized or unfair competition with the Company or any of its affiliates, including
the unauthorized use or disclosure of trade secrets, confidential or proprietary business
information or the substantial breach of any material covenants.

          In the event of termination for Cause, Executive will be entitled to such Base Salary and
benefits as have accrued under this Agreement through the date of termination, but will not be
entitled to any other salary, benefits, bonuses or other compensation after such date.

          9.4 Without Cause. This Agreement may also be terminated by Company at any time
without Cause by the delivery to Executive of a written notice of termination not less than 30 days
prior to the date of termination. Upon such termination, Executive will be paid such Base Salary,
vacation, prorated bonus and other benefits as have been earned under this Agreement through the
date of termination (including, without limitation, the Company will pay Executive’s COBRA payments
for the earlier of the maximum term allowable by then applicable law or the date Executive becomes
covered under a different health plan, for coverage of Executive and his eligible dependents). So
long as Executive reasonably cooperates in the transition of Executive’s duties, as determined in
the Company’s sole but reasonable discretion, Executive will be paid an amount equivalent to his
monthly Base Salary, on a monthly basis, for the remaining term of the Agreement, or six (6)
months, whichever is shorter. Executive will receive the foregoing payment regardless of any
mitigation. However, Executive acknowledges that he has a duty to mitigate and seek other
employment. If there are more than six (6) months remaining on the term of the Agreement, and
Executive is unable to secure comparable employment during the six (6) months following
termination, the Company will continue paying Executive’s Base Salary, on a monthly basis, for an
additional six (6) months or until Executive secures comparable employment, whichever is shorter.
Failure to make reasonable efforts to mitigate will justify cessation of the payment of the Base
Salary under this paragraph. Any options that have not vested as of the date of Executive’s
termination, shall fully vest as of the date of Executive’s termination. Except as provided in this
paragraph, Executive will not be entitled to any other salary, benefits, bonuses or other
compensation after such termination.

          9.5 By Executive. Executive may terminate this Agreement upon 30 days written notice
to the Company. The Company shall pay the Executive (i) on the date it would have been payable to
Executive, any unpaid Base Salary earned prior to the date of Executive’s termination, and (ii) any
unpaid reimbursements due Executive for expenses incurred by the Executive prior to the date of
Executive’s termination, pursuant to paragraphs 5 and 7. Any options that have not vested as of the
date of Executive’s termination shall terminate on the date of Executive’s termination.

          9.6 Expiration of Term. If the parties do not execute a new written agreement, upon
expiration of the term of the Agreement, the employment of Executive shall continue on the same
terms and conditions (including the then applicable compensation as provided in paragraphs 2
through 7) as provided in this Agreement. The parties acknowledge and agree that any such
employment following the term shall be terminable “at will” for any reason, with or without cause,
pursuant to applicable Ohio law.

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     10. Assignment.

     10.1 No Assignment by Executive. This Agreement may not be assigned by Executive.

     10.2 Assignment by Company. This Agreement may be assigned by the Company provided
that the Company shall 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 to expressly assume and agree to perform under this Agreement in the same manner and to the
same extent that the Company would be required to perform as if no such succession had taken place.

     11. Confidential Information.

     11.1 Confidential Information. During the term of this Agreement and thereafter, the
Executive shall not, except as may be required to perform his duties hereunder or as required by
applicable law or court order, disclose to others for use, whether directly or indirectly, any
Confidential Information regarding the Company. “Confidential Information” shall mean information
about the Company, its subsidiaries and affiliates, and their respective clients and customers that
is not available to the general public and that was learned by the Executive in the course of his
employment by the Company, including, without limitation, any data, formulae, recipes, methods,
information, proprietary knowledge, trade secrets and client and customer lists and all papers,
resumes, records and other documents containing such Confidential Information. The Executive
acknowledges that such Confidential Information is specialized, unique in nature and of great value
to the Company, and that such information gives the Company a competitive advantage. Upon the
termination of his employment, the Executive will promptly deliver to the Company all documents,
maintained in any format, including electronic or print, (and all copies thereof) in his possession
containing any Confidential Information.

     11.2 Noncompetition. Except as otherwise provided herein, the Executive agrees that
during the term of this Agreement he will not, directly or indirectly, without the prior written
consent of the Company, provide consulting services with or without pay, or own, manage, operate,
join, control, participate in, or be connected as a stockholder, partner, or otherwise with any
business, individual, partner, firm, corporation, or other entity which is then in competition with
the Company or any present affiliate of the Company; provided, however, that the “beneficial
ownership” by the Executive, either individually or as a member of a “group,” as such terms are
used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934
(“Exchange Act”), of not more than 1% of the voting stock of any corporation shall not be a
violation of this Agreement.

     11.3 Right to Company Materials. The Executive agrees that all styles, designs,
recipes, lists, materials, books, files, reports, correspondence, records, and other documents
(“Company Material”) used, prepared, or made available to the Executive, shall be and shall remain
the property of the Company. Upon the termination of his employment and/or the expiration of this
Agreement, all Company Materials shall be returned immediately to the Company, and Executive shall
not make or retain any copies thereof.

5

 

     11.4 Anti-solicitation. The Executive understands and agrees that in the course of
employment with the Company, the Executive will obtain access to and/or acquire Company trade
secrets, including Confidential Information, which are solely the property of the Company.
Therefore, to protect such trade secrets, the Executive promises and agrees that during the term of
this Agreement, and for a period of two years thereafter, he will not influence or attempt to
influence employees, customers, franchisees, landlords, or suppliers of the Company or any of its
present or future subsidiaries or affiliates, either directly or indirectly, to divert their
employment or business to or with any individual, partnership, firm, corporation or other entity
then in competition with the business of the Company, or any subsidiary or affiliate of the
Company.

     11.5 Injunctive Relief. It is further expressly agreed that the breach of this
paragraph would result in immediate irreparable injury which would constitute grounds for
injunctive relief in a tribunal of appropriate jurisdiction, and the parties further consent and
stipulate to the entry of appropriate provisional injunctive relief in any appropriate tribunal
having jurisdiction over the parties.

     12. Notice. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or when mailed by United States certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth below, or to such other addresses
as either party may have furnished to the other in writing in accordance herewith, exception that
notice of a change of address shall be effective only upon actual receipt:

	 	 	 	 	 
	 

	 	Company:
	 	Max & Erma’s Restaurants, Inc.
	 

	 	 	 	4849 Evanswood Drive
	 

	 	 	 	Columbus, Ohio 43229
	 

	 	Attention:
	 	Chairman of the Board
	 
	 	 	 	 
	 

	 	Executive:
	 	Robert A. Lindeman
	 

	 	 	 	8462 Grennan Woods Drive
	 

	 	 	 	Powell, OH 43085

     13. Amendments or Additions. No amendment or additions to this Agreement shall be
binding unless in writing and signed by both parties hereto.

     14. Paragraph Headings. The paragraph headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the interpretation of
this Agreement.

     15. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.

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     16. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original, but both of which together will constitute one and the same
instrument.

     17. Arbitration. Except as provided herein, any controversy or claim arising out of
or relating in any way to this Agreement or the breach thereof, or Executive’s employment and any
statutory claims including all claims of employment discrimination shall be subject to private and
confidential arbitration in the City of Columbus, Ohio in accordance with the laws of the State of
Ohio. This provision will not apply provisional remedies as in connection with claims under
paragraph 12, or as otherwise provided herein.

     (a) The arbitration shall be conducted in a procedurally fair manner by a mutually agreed upon
neutral arbitrator selected in accordance with the National Rules for the Resolution of Employment
Disputes (“Rules”) of the American Arbitration Association or if none can be mutually agreed upon,
then by one arbitrator appointed pursuant to the Rules;

     (b) The arbitration shall be conducted confidentially in accordance with the Rules;

     (c) The arbitration fees shall be paid by the Company;

     (d) Each party shall have the right to conduct discovery including (3) three depositions,
requests for production of documents and such other discovery as permitted under the Rules or
ordered by the arbitrator;

     (e) The statute of limitations or any cause of action shall be that prescribed by law;

     (f) The arbitrator shall have the authority to award any damages authorized by law for the
claims presented including punitive damages and shall have the authority to award reasonable
attorneys fees to the prevailing party;

     (g) The decision of the arbitrator shall be final and binding on all parties and shall be the
exclusive remedy of the parties; and

The award shall be in writing in accordance with the Rules, and shall be subject to judicial
enforcement in accordance with Ohio law.

     18. Code Section 409A. Notwithstanding any provision of this Agreement to the
contrary, if the Company determines that you are a “specified employee” as defined in Section 409A
of the Code or any guidance promulgated thereunder (“Code Section 409A”) and reasonably believes
that payments under this Agreement are subject to Code Section 409A’s six-month delay rule, you
shall not be entitled to any payments upon the termination of your employment until the earlier of
(i) the date which is six months after the termination of your employment, or (ii) the date of your
death. Additionally, if the Company reasonably believes that any provision of this Agreement would
cause you to incur any additional tax or interest under Code Section 409A, the Company shall, after
consulting with you and receiving your

7

 

approval (which shall not be unreasonably withheld), reform such provision, to the extent
possible, so as to not cause you to incur any such additional tax or interest.

     19. Termination of Severance Agreement in Event of Change in Control. Executive and
the Company agree that this Agreement supersedes, terminates and replaces the Severance Agreement
in Event of Change in Control between Executive and the Company, dated May 29, 2006 (the “Severance
Agreement”) and that Executive and the Company have no obligations to each other under such
Severance Agreement.

     20. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Committee. 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 or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Ohio without regard to its conflicts of law
principles. All references to sections of the Exchange Act shall be deemed also to refer to any
successor provisions to such sections. Notwithstanding anything in this Agreement to the contrary,
upon and following Executive’s death, this Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors, heirs, distributees,
devisees and legatees, as the case may be, with respect to the payments due by the Company as set
forth in paragraph 10.1 of this Agreement.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

[SIGNATURE PAGE FOLLOWS.]

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     IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement on the date first
indicated above.

	 	 	 	 	 	 	 
	 	 	MAX & ERMA’S RESTAURANTS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd B. Barnum
 

	 	 
	 

	 	 	 	Chairman of the Board	 	 
	 

	 	 	 	 

(Printed Name and Title)
	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE: ROBERT A. LINDEMAN	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Robert A. Lindeman	 	 
	 	 	 	 	 

9

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