Exhibit 10.2

 

LOGO [g917935potbelly_logo.jpg] EXECUTIVE EMPLOYMENT CONTRACT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
as of May 1, 2015 (the “Effective Date”) by and between Potbelly Corporation, a
Delaware corporation (hereinafter referred to as “Company”), and John Morlock,
an individual (hereinafter referred to as “Executive”).

Statement of Purpose

WHEREAS, Executive is currently employed by Company and is party to an Executive
Employment Agreement dated as of July 25, 2013 (the “Prior Agreement”); and

WHEREAS, the Company desires to change Executive’s position to Senior Vice
President, Operations Growth and Executive desires to accept such employment on
the terms and conditions set forth below; and

WHEREAS, Company and Executive desire to definitively set forth their agreement
with respect to Executive’s employment in this Agreement which supersedes and
replaces the Prior Agreement; and

WHEREAS, Potbelly Illinois, Inc. and Potbelly Sandwich Works, LLC are direct or
indirect subsidiaries of the Company;

NOW, THEREFORE, in consideration of the Statement of Purpose, the terms and
provisions of this Contract and other good and valuable consideration, the
parties hereto mutually consent, covenant, represent, warrant, and agree as
follows:

1. Term, Employment and Duties.

(a) Term. The “Term” of this Agreement shall commence on the Effective Date and
shall terminate on the date the Executive’s employment with Company and its
affiliates terminates for any reason (“Termination Date”). Executive shall at
all times be an at-will employee and nothing in this Agreement shall constitute
or be evidence of any agreement or understanding, express or implied, that
Executive has a right to continue to be employed by Company for any period of
time or any specific rate of compensation.

(b) Title and Duties. Effective as of the Effective Date, Company hereby agrees
to continue to employ Executive, and Executive agrees to continue in the employ
of Company, as Company’s Senior Vice President, Operations Growth. Executive
shall also have the commensurate titles and positions with such subsidiaries of
affiliates of Company as determined by Company and shall serve in such positions
without additional compensation. Executive shall have the duties,
responsibilities and authority customary for his positions, and shall perform
such other duties consistent with such positions as may be assigned to
Executive, from time to time, by Company.

(c) Performance of Duties. Executive shall devote at least 30 hours per week
exclusively to the business, affairs, and interests of Company and its
affiliates, and shall use Executive’s best efforts and abilities to promote the
interests of Company and its affiliates and to perform the services contemplated
by this Agreement and agrees that he will perform his duties faithfully and
efficiently subject to the directions of the CEO. Without the prior approval of
the Company’s CEO or the executive to whom he reports, Executive shall not,
during the Term, directly or indirectly, render any other employment or
consulting activities or services, including as a director, to any other person,
firm, corporation, or other entity; provided, however, that, to the extent that
the following activities do not conflict with or detract from the performance by
Executive of Executive’s duties, Executive may act as a director of, and may
also engage in activities involving, charitable, educational, religious, and
similar types of organizations, and similar types of activities.

(d) Confidentiality, Non-Competition, Non-Interference and Intellectual
Property. Executive hereby acknowledges and confirms that the Executive
Confidentiality and Non-Compete Agreement signed by Executive and effective as
of the Effective Date is hereby incorporated into and forms a part of this
Agreement.

 

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EXECUTIVE EMPLOYMENT AGREEMENT

 

2. Termination of Employment.

(a) Termination Date. Executive’s Termination Date shall occur upon termination
by Company for any reason or no reason or by Executive for any reason or no
reason, including any of the following: (i) Executive’s death; (ii) Executive
being disabled by reason of physical and mental infirmity or both, thereby
rendering Executive unable to satisfactorily perform Executive’s duties under
this Agreement (a “Disability”), said Disability to be determined in good faith
by the CEO in consultation with no fewer than two (2) accredited physicians
selected by the CEO and reasonably approved by Executive in the event that
Disability is disputed; (iii) termination of Executive’s employment by Company
with or without Cause (as defined below) or (iv) Executive’s resignation.
Executive’s Termination Date shall be considered to be on account of a
“Qualifying Termination” if the Termination Date occurs due to termination by
Company without Cause.

(b) Cause. The term “Cause” as used in this Agreement shall mean an act, action,
or series of acts or actions, or omission or series of omissions, by Executive
which constitute or result in: (i) intentional misrepresentation of material
information by Executive in Executive’s relations with Company; (ii) Executive’s
indictment (or its equivalent) for the commission of a crime by Executive that
constitutes a felony; (iii) commission of an act involving moral turpitude;
(iv) the material breach or material default by Executive of any of Executive’s
written agreements with Company or obligations under any material provision of
this Agreement or any written policy of Company (that remains unremedied within
thirty (30) days after notice to Executive); (v) the commission of fraud or
embezzlement on the part of Executive; (vi) failure to comply with any lawful
written direction of Company’s Board of Directors (the “Board”) (that, if
capable of cure without damage to Company, remains unremedied within thirty
(30) days after notice to Executive); or (vii) willful action taken for the
purpose of harming Company or any of its affiliates. For purposes of clause
(vii) of this Paragraph 2(b), no act or failure to act, on the part of
Executive, shall be considered “willful” unless it is done or omitted to be
done, by Executive in bad faith and without reasonable belief that Executive’s
action or omission was in the best interest of Company. An act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interest of Company.

3. Compensation and Benefits During Employment.

(a) Base Salary. Effective as of May 15, 2015 and continuing during the term of
Executive’s employment hereunder, Company shall pay to Executive a base salary
at an annual rate of $160,000.00 (the “Base Salary”). The Base Salary may be
increased from time to time at the recommendation of the CEO and approved by the
Compensation Committee of the Board (the “Compensation Committee”).

(b) Annual Bonus. Executive shall be eligible for a discretionary “Annual Bonus”
at the recommendation of the CEO and approved by the Compensation Committee.
Executive’s bonus shall be paid in a single lump sum cash payment not later than
June 15 following the conclusion of the calendar year in which such bonus is
earned, provided, however, that if the annual audit for such calendar year has
not been issued by Company’s outside auditors by said June 15, then payment
shall be made within thirty (30) days following the issuance of such audit, but
in no event shall payment be made later than the end of the calendar year
following the calendar year in which such bonus is earned.

(c) Time Off. During the Term, Executive shall be entitled to vacation
consistent with Company practice and policy for executive-level employees, but
not less than fifteen (15) days per year. In addition, Executive shall be
entitled to those paid holidays granted to Company employees while Executive is
employed.

(d) Executive Benefits/Perquisites. Executive shall be entitled to such other
benefits, including health insurance, dental, 401(k), and other benefits and
perquisites in such form and in such manner and at such times as Company shall
from time to time adopt and establish for its executive-level employees
generally. Executive shall be subject to eligibility and other requirements of
applicable benefit plans.

(e) Expenses. Company shall pay or reimburse Executive for all reasonable
business expenses actually incurred or paid by Executive during the Term in the
performance of Executive’s duties and responsibilities under this Agreement,
subject to and in accordance with applicable expense reimbursement policies as
in effect from time to time.

 

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(f) Equity Awards. If Executive resigns his employment on account of retirement
(which, solely for purposes of this Paragraph 3(f), shall mean a resignation by
Executive with or without good reason after Executive has attained at least age
57 and completed at least 10 years of service with the Company and if such
termination is not for any other reason), all vested stock options that were
vested and outstanding as of July 25, 2013 and that continue to be outstanding
on the Termination Date shall remain exercisable in accordance with the terms of
the stock option agreement evidencing such stock option for five (5) years after
the Termination Date (or, if less, the expiration date of such stock option).
Notwithstanding the preceding sentence, if, after the Termination Date,
Executive becomes employed on a full-time basis or provides consulting services
on a full-time basis for another employer or entity (as determined in the
reasonable judgment of the Board) (the “Reemployment Date”), then the options
shall remain exercisable in accordance with the terms of the stock option
agreement evidencing such stock option until the earlier of (i) ninety (90) days
following the Reemployment Date or (i) the expiration date of the stock option
term. All other stock options outstanding on Executive’s Termination Date shall
remain exercisable for ninety (90) days following the Termination Date or for
such longer or shorter period specified under the stock option agreement
evidencing such stock option but in no event after the expiration of the stock
option term. Executive shall provide written notice to the Company of any
post-Termination Date employment that could reasonably be expected to constitute
full-time employment for purposes of this Paragraph 3(f).

4. Payments and Benefits on Termination of Employment.

(a) Termination for any Reason. If Executive’s Termination Date occurs for any
reason, Company shall pay or provide to Executive (i) Executive’s Base Salary
for the period ending on the Termination Date; (ii) Executive’s earned but
unpaid Annual Bonus for any bonus year ending prior to the bonus year during
which the Termination Date occurs; (iii) reimbursement of Executive’s incurred
but unreimbursed business expenses for periods prior to Executive’s Termination
Date; and (iv) any other payments or benefits to be provided to Executive by
Company pursuant to any employee benefit plans or arrangements of Company or
required by applicable law, to the extent such amounts are due from Company.
Executive will be entitled to any other benefits in accordance with the terms of
the applicable benefit plan or program. Unless Executive resigns his employment
on account of retirement as set forth in Paragraph 3(f) above, all stock options
outstanding on Executive’s Termination Date shall remain exercisable for ninety
(90) days following the Termination Date or for such longer or shorter period
specified under the stock option agreement evidencing such stock option but in
no event after the expiration of the stock option term.

(b) Qualifying Termination. If Executive’s Termination Date occurs prior to
December 31, 2015 by reason of a Qualifying Termination and if the Release
Requirements (as defined Paragraph 4(d)) are satisfied as of the sixtieth
(60th) day following the Termination Date (which sixtieth (60th) day shall be
referred to as the “Payment Date”), then, in addition to the payments and
benefits to which Executive is entitled under Paragraph 4(a), Executive will be
entitled to the following payments and benefits:

(i) Company shall pay Executive a cash severance payment in a gross amount equal
to six (6) months of Executive’s Base Salary (determined as of the Termination
Date) (the “Severance Payment”). Any Severance Payment to which Executive is
entitled under this Paragraph 4(b)(i) will commence on the first regular payroll
date after the Payment Date and shall continue to be paid in substantially equal
payroll by payroll period installments for a period of six (6) months
thereafter.

(ii) If Executive is entitled to and elects continuation coverage under
Company’s group health plans pursuant to “COBRA” (“COBRA Coverage”), Company
shall continue to pay on behalf of Executive and his eligible dependents the
same level of employer contribution that is provided by Company for
corresponding coverage for similarly-situated active employees for the lesser of
(1) six (6) months following Executive’s Termination Date or (2) the date on
which COBRA Coverage terminates by its terms (the “Post-Termination Coverage
Benefit”). Company shall have no obligations under this Paragraph 4(b)(ii) if
the Post-Termination Coverage Benefit would subject Company or any of its
affiliates to tax penalties or materially increase the cost to Company and its
affiliates of providing group

 

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medical coverage to employees generally. For the period commencing on
Executive’s Termination Date and ending on the Payment Date, the COBRA Coverage
shall be provided at Executive’s expense and, if the Release Requirements are
satisfied on the Payment Date, Executive shall be entitled to a lump sum payment
in an amount equal to the Post-Termination Coverage Benefit that would have been
provided to Executive for the period beginning on the Termination Date and
ending on the Payment Date, which lump sum payment shall be made on the Payment
Date or the next scheduled payroll date.

(iii) Company shall pay Executive a cash payment equal to 5/12 of the amount of
the Annual Bonus that Executive would have received for the bonus year in which
the Termination Date occurs had his Termination Date not occurred, based on
actual Company performance, payable at the same time as the annual bonus is paid
to similarly-situated active named executive officer employees in accordance
with the terms of the applicable bonus plan of Company.

If the Release Requirements are not satisfied on the Payment Date, Executive
shall not be entitled to any payments or benefits under this Paragraph 4(b).

(c) Company Property. Upon Executive’s Termination Date, Executive will promptly
return to Company all the documents and/or property of or relating to Company or
any of its affiliates within Executive’s possession or control.

(d) Release Requirements. For purposes of this Agreement, the “Release
Requirements” shall be satisfied as of any date if, as of such date, Executive
(or, for purposes of Paragraph 4(e), the legal representative of Executive’s
estate) has signed a form of general release and waiver satisfactory to Company
and Executive if prior to death (the “Release”) and the Release has become
effective in accordance with applicable law (including that the Release has not
revoked and the revocation period applicable under applicable law has expired).

(e) Termination by Reason of Death or Disability. If Executive’s Termination
Date occurs by reason of death or Disability and the Release Requirements are
satisfied (which, in the case of death shall be satisfied by the legal
representative of Executive’s estate), then, in addition to the payments and
benefits to which Executive is entitled under Paragraph 4(a), Company shall pay
to Executive or the legal representative of his estate, as applicable, a cash
payment equal to the amount of the Annual Bonus that Executive would have
received for the bonus year in which the Termination Date occurs had his
Termination Date not occurred, based on actual Company performance and pro-rated
for the portion of the bonus year completed prior to the Termination Date,
payable at the same time as the annual bonus is paid to similarly-situated
active executive employees in accordance with the terms of the applicable bonus
plan of Company.

5. Mitigation and Set-Off. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise. Company shall not be entitled to set off against the amounts
payable to Executive under this Agreement any amounts earned by Executive in
other employment after termination of his employment with Company or any amounts
which might have been earned by Executive in other employment had he sought such
other employment; provided, however that Company shall be entitled to set off
against the amounts payable to Executive under this Agreement any amounts owed
to Company by Executive.

6. Reimbursements. To the extent that any reimbursements under this Agreement
are taxable to Executive, such reimbursements shall be paid to Executive only if
(a) to the extent not specified herein, the expenses are incurred and
reimbursable pursuant to a reimbursement plan that provides an objectively
determinable nondiscretionary definition of the expenses that are eligible for
reimbursement and (b) the expenses are incurred during the Term. With respect to
any expenses that are reimbursable pursuant to the preceding sentence, the
amount of the expenses that are eligible for reimbursement during one calendar
year may not affect the amount of reimbursements to be provided in any
subsequent calendar year, the reimbursement of an eligible expense shall be made
no later than the last day of the calendar year following the calendar year in
which the expense was incurred, and the right to reimbursement of the expenses
shall not be subject to liquidation or exchange for any other benefit.

 

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EXECUTIVE EMPLOYMENT AGREEMENT

 

7. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, or sent by facsimile
or prepaid overnight courier to the parties at the addresses set forth below (or
such other addresses as shall be specified by the parties by like notice).
Communications that are to be delivered by the U.S. mail or by overnight service
are to be delivered to the addresses set forth below:

to Company:

Potbelly Corporation

222 Merchandise Mart Plaza Suite 2300

Chicago, Illinois 60654

Attention: General Counsel

or to Executive, to Executive’s home address as reflected in Company’s records.

Each party, by notice furnished to the other party, may modify the applicable
delivery address, except that notice of change of address shall be effective
only upon receipt.

8. Non-Waiver. No waiver by either party or any breach by the other party of any
provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any such or other provision of this Agreement.

9. Governing Law and Choice of Forum. The construction, validity, and
enforceability of this Agreement shall be governed by the laws of the State of
Illinois, as that law applies to contracts made, and to be wholly performed, in
the State of Illinois.

10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Company, Executive, and Executive’s personal representatives,
beneficiaries, heirs, and successors. Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Company would be required to perform it if no such succession has
taken place.

11. Severability. If any provision of this Agreement or any part thereof be held
invalid or unenforceable, the same shall not affect or impair any other
provision of this Agreement or any part thereof, and the invalidity or
unenforceability of any provision of this Agreement shall not have any effect on
or otherwise impair or limit the other obligations of Company or Executive.

12. Counterparts. This Agreement may be executed in duplicate counterparts, each
of which shall be deemed an original hereof.

13. Disputes. Except as set forth in this Paragraph 13, any dispute, claim or
difference arising between Company and Executive (each a “Party,” and jointly,
the “Parties”), including any dispute, claim or difference arising out of this
Agreement, will be settled exclusively by binding arbitration in accordance with
the rules of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”). The
arbitration will be held Chicago, Illinois unless the Parties mutually agree
otherwise. Nothing contained in this Paragraph 13 will be construed to limit or
preclude a Party from bringing any action in any court of competent jurisdiction
for injunctive or other provisional relief to compel another party to comply
with its obligations under this Agreement or any other agreement between or
among the Parties during the pendency of the arbitration proceedings. Each Party
shall bear its own costs and fees of the arbitration, and the fees and expenses
of the arbitrator will be borne equally by the Parties, provided, however, if
the arbitrator determines that any Party has acted in bad faith, the arbitrator
shall have the discretion to require any one or more of the Parties to bear all
or any portion of fees and expenses of the Parties and/or the fees and expenses
of the arbitrator; provided, further that, with respect to claims that, but for
this mandatory arbitration clause, could be brought against Company under any
applicable federal or state labor or employment law (“Employment Law”), the
arbitrator shall be granted and shall be required to exercise all discretion
belonging to a court of competent jurisdiction under such Employment Law to
decide the dispute,

 

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whether such discretion relates to the provision of discovery, the award of any
remedies or penalties, or otherwise and provided further that Company may be
required to pay filing or administrative fees in the event that requiring
Executive to pay such fees would render this Paragraph 13 unenforceable under
applicable law. As to claims not relating to Employment Laws, the arbitrator
shall have the authority to award any remedy or relief that a Court of the State
of Illinois could order or grant. The decision and award of the arbitrator shall
be in writing and copies thereof shall be delivered to each Party. The decision
and award of the arbitrator shall be binding on all Parties. In rendering such
decision and award, the arbitrator shall not add to, subtract from or otherwise
modify the provisions of this Agreement. Either Party to the arbitration may
seek to have the award of the arbitrator entered in any court having
jurisdiction thereof. All aspects of the arbitration shall be considered
confidential and shall not be disseminated by any Party with the exception of
the ability and opportunity to prosecute its claim or assert its defense to any
such claim. The arbitrator shall, upon request of either Party, issue all
prescriptive orders as may be required to enforce and maintain this covenant of
confidentiality during the course of the arbitration and after the conclusion of
same so that the result and underlying data, information, materials and other
evidence are forever withheld from public dissemination with the exception of
its subpoena by a court of competent jurisdiction in an unrelated proceeding
brought by a third party.

14. Assignment and Survival. This Agreement is personal to Executive and shall
not be assignable by Executive. This Agreement may be assigned by Company only
to a successor-in interest to all or substantially all of the business
operations of Company or any of its affiliates. The rights and obligations of
the parties to this Agreement shall survive its termination or expiration of
this Agreement to the extent that any performance is required under this
Agreement after the termination or expiration of the Agreement.

15. No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be used against any person.

16. Indemnification. If Executive (or his heirs, executors or administrators) is
made a party or is threatened to be made a party to, or is involved in, any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that Executive
is or was a director or officer of Company or is or was serving at the request
of Company as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, Executive (and his heirs, executors or
administrators) shall be indemnified and held harmless by Company to the fullest
extent permitted by Delaware Law. To the fullest extent authorized by Delaware
Law, the right to indemnification conferred in this Paragraph 16 shall also
include the right to be paid by Company the expenses incurred in connection with
any such proceeding in advance of its final disposition upon delivery to Company
of an undertaking by or on behalf of Executive to repay such amount if it shall
ultimately be determined that Executive is not entitled to be indemnified.
Company’s obligations under this Paragraph 16 shall survive the termination or
expiration of this Agreement for any reason.

17. Withholding. All payments and benefits under this Agreement are subject to
withholding of all applicable taxes.

18. Special Section 409A Rules. It is intended that this Agreement will comply
with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
to the extent applicable, and this Agreement shall be interpreted and construed
on a basis consistent with such intent. Notwithstanding any other provision of
this Agreement to the contrary, if any payment or benefit hereunder is subject
to section 409A of the Code, and if such payment or benefit is to be paid or
provided on account of Executive’s Termination Date (or other separation from
service or termination of employment):

(a) and if Executive is a specified employee (within the meaning of section
409A(a)(2)(B) of the Code) and if any such payment or benefit is required to be
made or provided prior to the earlier of (i) the first (1st) day of the seventh
(7th) month following Executive’s separation from service or (ii) the date of
Executive’s death (the “Section 409A Payment Date”), such payment or benefit
shall be delayed until the Section 409A Payment Date; and

 

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(b) the determination as to whether Executive has had a termination of
employment (or separation from service) shall be made in accordance with the
provisions of section 409A of the Code and the guidance issued thereunder
without application of any alternative levels of reductions of bona fide
services permitted thereunder.

For purposes of section 409A of the Code, any installment payment or benefit
under this Agreement shall be treated as a separate payment. If this Paragraph
18 applies to any payment or benefit hereunder, any such payments or benefits
that would otherwise have been paid or provided to Executive between Executive’s
Termination Date and the Section 409A Payment Date, shall be paid in a lump sum
on the Section 409A Payment Date.

19. Entire Agreement. This Agreement, together with Executive Confidentiality
and Non-Compete Agreement in effect on the Effective Date, constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes and cancels all prior or contemporaneous oral or written
agreements and understandings between them with respect to the subject matter
hereof, except as otherwise specifically stated in this Agreement, including the
Prior Agreement; provided, however, that nothing in this Agreement shall
supersede the provisions of the Stock Terms Agreement which was included as
Exhibit C to the Prior Agreement. This Agreement may not be changed or modified
orally but only by an instrument in writing signed by the parties hereto, which
instrument states that it is an amendment to this Agreement.

[signature page follows]

 

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EXECUTIVE EMPLOYMENT AGREEMENT

 

IN WITNESS WHEREOF, intending to be legally bound, Company and Executive have
executed this agreement as of the date set forth below.

 

Dated as of May 1, 2015

POTBELLY CORPORATION

/s/ Aylwin Lewis

By: Aylwin Lewis Its: President and Chief Executive Officer EXECUTIVE:

/s/ John Morlock

John Morlock

 

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