Document:

Exhibit 10.1

 

FARMLAND PARTNERS INC.

SEPARATION AGREEMENT

 

SEPARATION AGREEMENT (this “Agreement”) dated as of the date last signed below, between Farmland Partners Inc., a Maryland corporation (the “Farmland”), and Farmland Partners Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership” and, together with Farmland, the “Company”), each with its principal place of business at 4600 S. Syracuse Street, Suite 1450, Denver, CO 80237, and Robert L. Cowan residing at the address on file with the Company (the “Employee”).

 

W  I  T  N  E  S  S  E  T  H

 

WHEREAS, Employee and the Company desire to enter into this Agreement to set forth the terms of Employee’s separation from the Company;

 

WHEREAS, Employee and the Company are parties to an employment agreement dated as of February 2, 2017 (the “Prior Agreement”) pursuant to which Employee’s employment term of one year expired on February 2, 2018;

 

WHEREAS, the Employee desires to transition from his role as President and full-time employee to pursue other interests outside the U.S.;

 

WHEREAS, the Company and the Employee desire that upon the Effective Date, Employee will serve as an advisor to the Company pursuant to the terms set forth herein;  and

 

WHEREAS, the Company and the Employee desire that, effective as of the Effective Date, except as expressly set forth herein, this Agreement supersedes and replaces in its entirety the Prior Agreement and, as of such date, the Prior Agreement shall be of no further force or effect;

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.             EFFECTIVE DATE OF RESIGNATION.   You hereby resign as President of the Company, effective as of May 31, 2018 (the “Effective Date”) allowing the Company to benefit from a transition during which you will continue to work full-time and receive your current salary.

 

2.             ACCRUED BENEFITS.  Except as provided herein, following the Effective Date, the Company will have no further obligations to you other than the following:

 

(i)            any unpaid base salary through the Effective Date;

 

(ii)           any accrued but unused vacation time in accordance with Company policy; and

 

 

(iii)          reimbursement for any unreimbursed business expenses incurred through the termination date (collectively, Sections 2(i) through 2(iii) hereof shall be hereafter referred to as the “Accrued Benefits”).

 

3.             Your final paycheck will be delivered on May 31, 2018.  This check will include any Accrued Benefits.

 

4.             ADVISORY ROLE.  Upon the Effective Date, notwithstanding the termination of your services to the Company, you agree to serve as an advisor to the Company for one (1) year from the Effective Date.  Your role as an advisor shall entail telephonic consultation from time to time and may occasionally require a face-to-face meeting.  However, the Company shall provide ten (10) days prior notice before any such face-to-face meeting.  In consideration for these services your restricted shares of the Company’s common stock granted pursuant to the Restricted Stock Agreement dated February 2, 2017 (the “Award Agreement”) shall continue to vest pursuant to the vesting schedule set forth in the Award Agreement and the Company’s Second Amended and Restated 2014 Equity Incentive Plan.

 

5.             RELEASE.  Any and benefits or additional rights provided pursuant to this Agreement beyond the Accrued Benefits shall only be provided and/or payable if the Employee delivers to the Company and does not revoke a general release of claims in favor of the Company attached as Exhibit A hereto. Such release shall be executed and delivered (and no longer subject to revocation) within thirty (30) days following the execution of this Agreement.

 

6.             RESTRICTIVE COVENANTS.

 

(a)           CONFIDENTIALITY.  Employee shall comply with the confidentiality obligations set forth in Section 10(a) of the Prior Agreement which shall survive termination of such agreement.

 

(b)           NONCOMPETITION.  The Employee agrees to the covenants set forth in Exhibit B hereto.

 

(c)           NONSOLICITATION; NONINTERFERENCE.

 

(i)             For a period of two (2) years after the Effective Date, the Employee agrees that the Employee shall not, except in the furtherance of the Employee’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A), solicit, aid or induce any customer of the Company or any of its affiliates to purchase goods or services then sold by the Company or any of its affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer., (B) solicit, aid or induce any employee, representative or agent of the Company or any of its  affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its

 

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affiliates and any of their respective vendors, joint venturers, licensors or tenants.  An employee, representative or agent shall be deemed covered by this Section 6(c)(i) while so employed or retained and for a period of six (6) months thereafter.

 

(ii)                Notwithstanding the foregoing, the provisions of this Section 6(c) shall not be violated by (A) general advertising or solicitation not specifically targeted at Company-related persons or entities, (B) the Employee serving as a reference, upon request, for any employee of the Company or any of its affiliates so long as such reference is not for an entity that is employing or retaining the Employee, or (C) actions taken by any person or entity with which the Employee is associated if the Employee is not personally involved in any manner in the matter and has not identified such Company-related person or entity for soliciting or hiring.

 

(d)           NONDISPARAGMENT.  The Employee agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products.  The Company hereby agrees that its directors and executive officers will not, directly or indirectly, make or solicit or encourage others to make or solicit any negative comments or otherwise disparaging remarks concerning the Employee. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

(e)           RETURN OF COMPANY PROPERTY.  On the Effective Date, the Employee shall return all property belonging to the Company or its affiliates (including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, or documents and property belonging to the Company).  The Employee may retain the Employee’s rolodex and similar address books provided that such items only include contact information.

 

(f)            REASONABLENESS OF COVENANTS.  In signing this Agreement, the Employee gives the Company assurance that the Employee has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 6 hereof.  The Employee agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Employee from obtaining other suitable employment during the period in which the Employee is bound by the restraints.  The Employee acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Employee has sufficient assets and skills to provide a livelihood while such covenants remain in force.  The Employee further covenants that the Employee will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 6.  It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Employee’s

 

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obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 6.

 

(g)           REFORMATION.  If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 6 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(h)           TOLLING.  In the event of any violation of the provisions of this Section 6, the Employee acknowledges and agrees that the post-termination restrictions contained in this Section 6 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(i)            COOPERATION.   Upon the receipt of reasonable notice from the Company (including outside counsel), the Employee agrees that while employed by the Company and after the Effective Date, the Employee will respond and provide information with regard to matters in which the Employee has knowledge as a result of the Employee’s employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its affiliates, and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of the Employee’s employment with the Company.

 

7.             EQUITABLE RELIEF AND OTHER REMEDIES.  The Employee acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 6 hereof would be inadequate and, in recognition of this fact, the Employee agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages.  In the event of a violation by the Employee of Section 6 hereof, any consideration provided to the Employee pursuant to this Agreement or otherwise shall immediately cease and Employee shall forfeit any unvested restricted stock described in Section 4.

 

8.             NO ASSIGNMENTS.  This Agreement is personal to each of the parties hereto.  Except as provided in this Section 8 hereof, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto.  The Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company, provided that the Company shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets,

 

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which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise.

 

9.             NOTICE.  For purposes 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 (a) on the date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile or electronic mail, (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
 
    	
If   to the Employee:
    
	
 
    	
 
    
	
 
    	
At   the address (or to the facsimile number) shown
    
	
 
    	
in   the books and records of the Company.
    
	
 
    	
 
    
	
 
    	
If   to the Company:
    
	
 
    	
4600   S. Syracuse Street, Suite 1450
    
	
 
    	
Denver,   CO 80237
    
	
 
    	
 
    
	
 
    	
Attention:   General Counsel
    

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

10.          SECTION HEADINGS; INCONSISTENCY.  The section 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.  In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.

 

11.          SEVERABILITY.  The provisions of this Agreement shall be deemed severable.  The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by applicable law.

 

12.          COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

13.          GOVERNING LAW.  This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Colorado (without regard to its choice of law provisions).  The parties acknowledge and agree that in connection with any dispute hereunder, each party shall

 

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pay all of its own costs and expenses, including, without limitation, its own legal fees and expenses.

 

14.          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 Employee and such officer or director as may be designated by the Board.  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.  This Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes any and all prior agreements or understandings between the Employee and the Company with respect to the subject matter hereof including, without limitation, the Prior Agreement, which shall be of no further force or effect as of the Effective Date except as expressly provided herein.  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.

 

15.          REPRESENTATIONS.  The Employee represents and warrants to the Company that (a) the Employee has the legal right to enter into this Agreement and to perform all of the obligations on the Employee’s part to be performed hereunder in accordance with its terms, and (b) the Employee is not a party to any agreement or understanding, written or oral, and is not subject to any restriction, which, in either case, could prevent the Employee from entering into this Agreement or performing all of the Employee’s duties and obligations hereunder. In addition, the Employee acknowledges that the Employee is aware of Section 304 (Forfeiture of Certain Bonuses and Profits) of the Sarbanes-Oxley Act of 2002 and the right of the Company to be reimbursed for certain payments to the Employee in compliance therewith.

 

16.          TAX MATTERS.

 

(a)           WITHHOLDING.  The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. In no event whatsoever shall the Company (or its officers, directors, employees, agents, advisors or representatives) be liable for any additional tax, interest or penalty that may be imposed on the Employee by Code Section 409A or damages for failing to comply with Code Section 409A.

 

[SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date last signed below.

 

	
 
    	
FARMLAND PARTNERS INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul A. Pittman
    
	
 
    	
Name:
    	
Paul A. Pittman
    
	
 
    	
Title:
    	
Executive Chairman and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
Date: April 10, 2018
    
	
 
    	
 
    
	
 
    	
FARMLAND PARTNERS OPERATING   PARTNERSHIP, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
Farmland Partners OP GP,   LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Farmland Partners Inc.,   its sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Paul A. Pittman
    
	
 
    	
 
    	
Name:
    	
Paul A. Pittman
    
	
 
    	
 
    	
Title:
    	
Executive Chairman and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
Date: April 10, 2018
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
/s/ Robert L. Cowan
    
	
 
    	
Robert L. Cowan
    
	
 
    	
 
    
	
 
    	
Date: April 10, 2018
    
					

 

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EXHIBIT A

 

GENERAL RELEASE

 

I, Robert L. Cowan, in consideration of and subject to the performance by Farmland Partners Inc., a Maryland corporation (“Farmland”), and Farmland Partners Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership” and, together with the Farmland and its subsidiaries, the “Company”), of its obligations under the Employment Agreement dated as of February 2, 2017 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and its respective affiliates and all present, former and future managers, directors, officers, employees, attorneys, advisors, successors and assigns of the Company and its affiliates and direct or indirect owners (collectively, the “Released Parties”) to the extent provided below (this “General Release”).  The Released Parties are intended to be third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder.  Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

 

1.             I understand that any payments or benefits paid or granted to me under Section 4 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled.  I understand and agree that I will not receive certain of the payments and benefits specified in Section 4 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter.  Such payments and benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.

 

2.             Except as provided in paragraphs 4 and 5 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under: the Prior Agreement, Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights 

 

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law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or  tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

 

3.             I represent that I have made no assignment or transfer of any right, claim, demand, cause of action or other matters covered by paragraph 2 above.

 

4.             I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

 

5.             I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever in respect of any Claims, including, without limitation, reinstatement, back pay, front pay, and any form of injunctive relief.  Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.  Additionally, I am not waiving (i) any right to the Accrued Benefits or any severance benefits to which I am entitled under the Agreement, (ii) any claim relating to directors’ and officers’ liability insurance coverage or any right of indemnification under the Company’s organizational documents or otherwise, or (iii) my rights as an equity or security holder in the Company or its affiliates.

 

6.             In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.  I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement.  I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law.  I further agree that I am not aware of any pending claim of the type described in paragraph 2 above as of the execution of this General Release.

 

 

7.             I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

 

8.             I agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees.

 

9.             I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone.

 

10.          Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any inquiry about this General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or any governmental entity.

 

11.          I hereby acknowledge that Sections 4-16 of the Agreement shall survive my execution of this General Release.

 

12.          I represent that I am not aware of any claim by me other than the claims that are released by this General Release.  I acknowledge that I may hereafter discover claims or facts in addition to or different than those which I now know or believe to exist with respect to the subject matter of the release set forth in paragraph 2 above and which, if known or suspected at the time of entering into this General Release, may have materially affected this General Release and my decision to enter into it.

 

13.          Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

 

14.          Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

1.                                      I HAVE READ IT CAREFULLY;

 

 

2.                                      I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

3.                                      I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

4.                                      I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

5.                                      I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

 

6.                                      I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

7.                                      I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

8.                                      I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

	
SIGNED:
    	
 
    	
 
    	
DATED:
    	
 
    

 

 

EXHIBIT B

 

1.              Non-Compete.  Employee acknowledges and agrees that (a) the Employee has had access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company or any of its affiliates, and (b) the Company and its affiliates have substantial relationships with their tenants, potential sellers and real estate brokers and the Employee has had access to these parties. Accordingly, Employee acknowledges and agrees that for one (1) year from the Effective Date, the Employee agrees that the Employee will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, engaged in the business of owning and leasing agricultural real estate or in any other material business in which the Company or any of its affiliates is engaged on the Effective Date or in which they have planned, on or prior to such date, to be engaged in on or after such date, in any locale of any country in which the Company conducts business or after such date, in any locale of any country in which the Company conducts business, with the exception of de minimis contacts in any such locale of any such country outside the United States.

 

2.              Exceptions.  Notwithstanding the foregoing, nothing herein shall prohibit the Employee from:

 

a.              being employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or rendering services to Murray Wise Associates, LLC and/or PSP Investments (“MWA/PSP”) provided any work performed by Employee is solely related to agricultural real estate investments outside the United States.  In the event MWA/PSP engages in agricultural real estate investment activity within the United States, Employee agrees Employee shall be prohibited from: (i) engaging in any discussions with or the transfer of documents to or from anyone employed by or representing MWA/PSP or any current or potential partner, vendor, seller, buyer or broker; and (ii) accessing any files of MWA/PSP related to United States agricultural real estate.  Employee shall ensure that MWA/PSP educates all members of the company, contractors, agents and any other person or  entity involved in transactions in the United States at MWA/PSP as to the separation of the Employee from such matter.

 

b.              being a passive owner of not more than one percent (1%) of a company engaged in a business in the U.S. that is in competition with the Company or any of its affiliates, so long as the Employee has no active participation in the business of such corporation

 

c.               being a passive owner of not more than twenty percent (20%) of a company engaged in a business outside of the U.S. that is in competition with the Company or any of its affiliates, so long as the Employee has no active participation in the business of such corporation, or

 

 

d.              owning, managing, operating, controlling, or being employed by any firm, corporation or other entity in the same capacity in which the Employee was engaged immediately prior to the Termination of the Employee’s employment hereunder, as long as (a) the Board has been apprised of the identity of, and the Employee’s role with, such firm, corporation or other entity and (b) the Board has previously approved the Employee’s role with such firm, corporation or other entity, in the case of both (a) and (b), prior to the Employee’s termination of employment.  In addition, the provisions of this Exhibit B shall not be violated by the Employee commencing employment with a subsidiary, division or unit of any entity that engages in a business in competition with the Company or any of its affiliates so long as the Employee and such subsidiary, division or unit does not engage in a business in competition with the Company or any of its affiliates.

 

3.              Right of First Offer.  For a period of one (1) year from the Effective Date, in the event Employee is contacted by a seller or broker with respect to any agricultural real estate for sale in the U.S., or otherwise obtains knowledge thereof, Employee shall make the Company aware via email of the opportunity in writing and Company shall have ten (10) days to respond to Employee in writing.  If Company declines or fails to respond within ten (10) days, Employee shall be entitled to present such offer to third parties, including MWA/PSP.EX-10.1

 Exhibit 10.1 

SETTLEMENT AGREEMENT 

This SETTLEMENT AGREEMENT (this “Agreement”) is made and entered into as of April 12, 2018, by and among Potbelly
Corporation, a Delaware corporation (the “Company”), on the one hand, and Privet Fund LP, a Delaware limited partnership (“Privet Fund”), Privet Fund Management LLC, a Delaware limited liability company
(“Privet Fund Management”), Ryan Levenson, solely in his capacity as a Principal and Portfolio Manager of Privet Fund Management LLC and Ben Rosenzweig, solely in his capacity as a Partner of Privet Fund Management LLC (the
“Privet Designee” and collectively with Privet Fund, Privet Fund Management and Ryan Levenson, “Privet”), on the other hand. The Company and Privet are each herein referred to as a “party” and
collectively, the “parties.” 
 WHEREAS, on November 16, 2017, Privet filed a Schedule 13D (the “Schedule
13D”) with the SEC disclosing beneficial ownership of 1,294,112 shares, or approximately 5.2%, of the issued and outstanding common stock of the Company, par value $0.01 per share (the “Common Stock”); 

WHEREAS, on February 7, 2018, Privet submitted notice (the “Nomination Notice”) of its intent to nominate four
candidates for election to the Board of Directors of the Company (the “Board”) at the Company’s 2018 Annual Meeting; and 

WHEREAS, the Company and Privet have determined for the good of stockholders to come to an agreement with respect to the composition of the
Board and certain other matters, as provided in this Agreement. 
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 

1. Board Composition and Related Matters. 

(a) Effective upon the execution of this Agreement and simultaneous with the Company’s completion of its obligations under Sections 1(b)
and 1(e), Privet withdraws the Nomination Notice. 
 (b) Effective upon the execution of this Agreement, the Board increases the size of the
Board from nine to ten directors and appoints the Privet Designee to, and seats the Privet Designee on, the Board. 
 (c) Simultaneously
with the execution of this Agreement, the Privet Designee is executing and delivering to the Company a resignation letter in the form attached hereto as Exhibit A (the “Resignation Letter”). 

(d) The Company shall (i) include the Privet Designee in its proxy statement and proxy card for the 2018 Annual Meeting as a director
candidate of the Board, (ii) recommend to the stockholders of the Company the election of the Privet Designee to the Board at the 2018 Annual Meeting and (iii) solicit proxies in favor of the election of the Privet Designee to the Board at
the 2018 Annual Meeting in a manner no less rigorous and favorable than the manner in which the Company supports its other nominees (collectively, the “Election Support Efforts”). 

 (e) For any Annual Meeting subsequent to the 2018 Annual Meeting, as long as the Privet Designee
is on the Board, the Company shall irrevocably notify Privet in writing (the “Renomination Notice”) no less than forty-five (45) calendar days before the last day of the advance notice window pursuant to the Company’s
Amended and Restated Bylaws if the Privet Designee will be nominated by the Company for election as a director at such Stockholder Meeting and, if the Privet Designee consents in writing to such nomination within five (15) calendar days of
receipt of such Renomination Notice and is to be so nominated, shall provide full Election Support Efforts for the election of the Privet Designee at such Stockholder Meeting. Notwithstanding anything to the contrary contained herein, to the extent
the Company nominates the Privet Designee for election as a director at the 2019 Annual Meeting, as indicated in the Renomination Notice, and the Privet Designee consents in writing to such nomination, then, with immediate effect and for the
remainder of the term of this Agreement, (i) the Ownership Minimum under Section 1(h) hereof shall be reduced to 3% of the Company’s then-outstanding shares of Common Stock, (ii) the Ownership Cap under Section 3(a) hereof
shall be increased to 14.9% of the then-outstanding shares of Common Stock, and (iii) the Terminable Date under Section 11(a) hereof shall be extended to the date that is 30 days prior to the notice deadline under the Bylaws for the
nomination of director candidates for election to the Board at the 2020 Annual Meeting. 
 (f) Effective immediately upon the execution of
this Agreement, the Board appoints and seats the Privet Designee to the Compensation Committee of the Board. The Privet Designee or any Replacement Designee (as defined below) shall be entitled to continuously serve on the Compensation Committee of
the Board until the Termination Date. In addition, upon the reasonable request of the Privet Designee, the Board shall consult with the Privet Designee regarding the appointment of the Privet Designee to one or more other committees of the Board,
with the understanding that the intent of the Parties is that the Privet Designee or any Replacement Designee shall be considered for membership on committees of the Board in the same manner as other members of the Board, subject to
Section 1(g) hereof. The Privet Designee shall have the same right as other members of the Board to be invited to attend meetings of committees of the Board of which the Privet Designee is not a member, and to receive the same information as
other directors. The Privet Designee or any Replacement Designee, as applicable, shall receive prior written notice of any proposal to form a new committee and shall be considered for appointment to any new committee on the same basis as the other
Board members, taking into consideration applicable skill sets and the number of committees on which the all directors, including the Privet Designee or any Replacement Designee, already serve. 

(g) Privet agrees that the Board or any committee thereof, in the exercise of its fiduciary duties, may recuse the Privet Designee from any
portion of a Board or committee meeting to the extent the Board or any such committee is deliberating and/or taking action (including, but not limited to, the formation of a special committee of the Board, subject to the Privet Designee’s right
to prior notice of the formation of such special committee) with respect to (i) this Agreement, including the interpretation and enforcement thereof, (ii) any demands made by Privet or its Affiliates with respect to the Company,
(iii) the Privet Designee’s breach of this Agreement or failure to comply with the Company’s charter, bylaws or policies that are applicable to all directors or (iii) any proposed transaction between the Company and Privet or its
Affiliates. 

  
 2 

 
For the avoidance of doubt, consistent with his fiduciary duties as a director of the Company, the Privet Designee shall consider in good faith, to the same extent as any other director of the
Company, recusal from any Board or committee meeting in the event there is any other actual or potential conflict of interest between Privet or the Privet Designee, on the one hand, and the Company, on the other hand. 

(h) Subject to Section 1(d) above, if at any time Privet ceases to beneficially own at least 4% of the then-outstanding shares of Common
Stock (subject to adjustment for stock splits, reclassifications, combinations and similar adjustments, the “Ownership Minimum”) solely because of divestitures of such stock by Privet, (i) the rights of Privet and obligations
of the Company pursuant to this Section 1 shall terminate immediately, (ii) the Privet Designee shall immediately tender his resignation pursuant to the Resignation Letter (it being understood that the Board shall have the right to decline
to accept such resignation) and (iii) the right of any Privet Designee to indemnification from the Company and its insurance coverage shall continue unchanged as it relates to the time period prior to such resignation. 

(i) Until the Termination Date, in the event that the Privet Designee ceases to be a director of the Company, Privet shall be entitled to
designate, subject to the approval (not to be unreasonably withheld, conditioned or delayed) of the Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) in accordance with this paragraph, a
candidate for replacement of the Privet Designee (such replacement, a “Replacement Designee”). Any Replacement Designee shall qualify as an “independent director” under applicable rules of the SEC, the NASDAQ rules and
applicable governance policies of the Company. The Nominating Committee shall, in good faith and consistent with its fiduciary duties, approve or deny any candidate for Replacement Designee within ten Business Days after the Board has completed a
background investigation with respect to such candidate; provided that the commencement of such background investigations shall not be unreasonably delayed. Any such replacement candidate shall deliver to the Nominating Committee a completed
standard director questionnaire (in the form to be provided by the Company) and a duly executed irrevocable letter of resignation as director in the form of the Resignation Letter. Within five Business Days following the Nominating Committee’s
approval of a Replacement Designee, which approval shall not be unreasonably withheld, conditioned or delayed, the Board shall appoint such Replacement Designee to the Board. In the event the Nominating Committee declines to approve a candidate for
the Replacement Designee, Privet may propose one or more additional candidates for the Replacement Designee, subject to the above criteria and time periods, until a Replacement Designee is appointed. 

(j) While the Privet Designee or any Replacement Designee serves as a director of the Board, the Privet Designee or any Replacement Designee,
as the case may be, shall receive compensation (including equity based compensation, if any) for Board and committee meetings attended, an annual retainer and benefits (including expense reimbursements) on the same basis as all other non-employee directors of the Company. 
 2. Voting Commitment. Until the Termination Date,
Privet shall, or shall cause its Representatives to, appear in person or by proxy at each Stockholder Meeting and to vote all shares of Common Stock beneficially owned by it and over which it has voting power in accordance with the Board’s
recommendations as such recommendations of the Board are set forth 

  
 3 

 
in the applicable definitive proxy statement filed in respect thereof with respect to (i) the election, removal and/or replacement of directors (a “Director Proposal”) and
(ii) any other proposal submitted to the stockholders at a Stockholder Meeting (except for those related to Extraordinary Transactions), in each case as such recommendation of the Board is set forth in the applicable definitive proxy statement
filed in respect thereof; provided, however, that in the event both Institutional Shareholder Services, Inc. (“ISS”) and Glass Lewis & Co., LLC (“Glass Lewis”) make a recommendation that differs from
the recommendation of the Board with respect to any proposal submitted to the stockholders at any Stockholder Meeting (other than Director Proposals), Privet would be permitted to vote all or some shares of Common Stock beneficially owned by it and
over which it has voting power at such Stockholder Meeting in accordance with the ISS and Glass Lewis recommendation. 
 3. Standstill.
Prior to the Termination Date, except as otherwise provided in this Agreement (including Section 11(a)(i)), without the prior consent of the Board, Privet shall not, and shall instruct its Affiliates not to, directly or indirectly (in each
case, except as permitted by this Agreement): 
 (a) (i) subject to Section 1(e), acquire, offer to acquire, agree to acquire or acquire
rights to acquire (except by way of stock dividends or other distributions or offerings made available to holders of voting securities of the Company generally on a pro rata basis including, for the avoidance of doubt, exercise of any subscription
rights granted to Privet), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through swap or hedging transactions or otherwise, any voting securities of
the Company or any voting rights decoupled from the underlying voting securities which would result in the ownership or control of, or other beneficial ownership interest in, 10.0% or more than of
the then-outstanding shares of the Common Stock in the aggregate (the “Ownership Cap”); provided, however, that the Board may increase the Ownership Cap by an affirmative vote of a majority of the Board; or
(ii) sell its shares of Common Stock other than in open market sale transactions where the identity of the purchaser is not known;  

(b) (i) other than pursuant to Section 1(i) of this Agreement, nominate, give notice of an intent to nominate or recommend for nomination
a person for election at any Stockholder Meeting at which the Company’s directors are to be elected; (ii) knowingly initiate, encourage or participate in any solicitation of proxies in respect of any election contest or removal contest
with respect to the Company’s directors; (iii) submit any stockholder proposal for consideration at, or bring any other business before, any Stockholder Meeting; (iv) knowingly initiate, encourage or participate in any solicitation of
proxies in respect of any stockholder proposal for consideration at, or other business brought before, any Stockholder Meeting; or (v) knowingly initiate, encourage or participate in any “withhold” or similar campaign with respect to
any Stockholder Meeting; 
 (c) form, join or in any way knowingly participate in any group or agreement of any kind with respect to any
voting securities of the Company in connection with any election or removal contest with respect to the Company’s directors or any stockholder proposal or other business brought before any Stockholder Meeting (other than with Privet or one or
more of its Affiliates and Associates that agree to be bound by the terms and conditions of this Agreement); 

  
 4 

 (d) deposit any voting securities of the Company in any voting trust or subject any Company
voting securities to any arrangement or agreement with respect to the voting thereof (other than any such voting trust, arrangement or agreement solely among Privet and its Affiliates and otherwise in accordance with this Agreement); 

(e) seek publicly, alone or in concert with others, to amend any provision of the Company’s charter or bylaws; 

(f) demand an inspection of the Company’s books and records; 

(g) engage or continue to engage or use any private investigations firm or other person to investigate any of the Company’s directors,
officers or employees or any of the Company’s Representatives; 
 (h) effect or seek to effect, offer or propose to effect, cause or
participate in, or in any way assist or facilitate any other person to effect or seek, offer or propose (other than directly to the Board provided that such proposal does not require Privet to amend its Schedule 13D) to effect or participate
in, any (i) material acquisition of any assets or businesses of the Company or any of its subsidiaries; (ii) tender offer or exchange offer, merger, acquisition, share exchange or other business combination involving any of the voting
securities or any of the material assets or businesses of the Company or any of its subsidiaries; or (iii) recapitalization, restructuring, liquidation, dissolution or other material transaction with respect to the Company or any of its
subsidiaries or any material portion of its or their businesses; 
 (i) enter into any negotiations, agreements or understandings with any
Third Party with respect to the foregoing, or advise, assist, encourage or seek to persuade any Third Party to take any action with respect to any of the foregoing, or otherwise take or cause any action inconsistent with any of the foregoing; 

(j) publicly make or in any way advance publicly any request or proposal that the Company or the Board amend, modify or waive any provision of
this Agreement; or 
 (k) take any action challenging the validity or enforceability of this Section 3 or this Agreement unless the
Company is challenging the validity or enforceability of this Agreement. 
 Nothing in this Section 3 shall be deemed to
(i) prohibit Privet or its Affiliates from communicating privately with the Company’s directors, officers, shareholders and Representatives so long as such private communications would not be reasonably determined, after consultation with
outside counsel, to trigger public disclosure obligations for any party or would not circumvent any of Privet’s obligations under Sections 3(a) through 3(k) hereof, (ii) impose any restriction on a Privet Designee discharging her or his
fiduciary duties as a director of the Company or (iii) prohibit Privet from making any disclosure required by rule, law, regulation or legal process or as requested by regulatory or judicial authority provided that (A) any such
disclosures by Privet or its Affiliates complies with all existing confidentiality obligations of Privet and the Privet Designee with respect to the Company and (B) this clause (iii) would not be used to circumvent Privet’s
obligations under Sections 3(a) through 3(k) hereof. 

  
 5 

 4. Mutual Non-Disparagement. Prior to the
Termination Date, no party shall permit any of its Representatives to, without the written consent of the other party, make any public statement that constitutes or would reasonably be expected to constitute an ad hominem attack on or otherwise
disparages any other party, any other party’s current and former directors of the Company in their capacity as such (including any director who was serving immediately prior to this Agreement), officers or employees (including with respect to
such persons’ service at the other party), any other party’s subsidiaries, or any other party’s subsidiaries’ business or any of its or its subsidiaries’ current directors, officers or employees, including the business and
current or former directors, officers and employees of such other party’s controlled Affiliates, as applicable. The restrictions in this Section 4 shall not (i) apply (A) in any compelled testimony or production of information,
whether by legal process, subpoena or as part of a response to a request for information from any governmental or regulatory authority with jurisdiction over the party from whom information is sought, in each case, to the extent required, or
(B) to any disclosure required by applicable law, rules or regulations; or (ii) prohibit any person from reporting what it reasonably believes, after consultation with outside counsel, to be violations of federal law or regulation to any
governmental authority pursuant to Section 21F of the Exchange Act or Rule 21F promulgated thereunder. 
 5. No Litigation. Prior
to the Termination Date, each party hereto hereby covenants and agrees that it shall not, and shall not permit any of its Representatives to, directly or indirectly, alone or in concert with others, encourage, pursue or assist any other person to
threaten or initiate, any lawsuit, claim or proceeding before any court (each, a “Legal Proceeding”) against any other party or any of its Representatives, except for (i) any Legal Proceeding initiated primarily to remedy a
breach of or to enforce this Agreement, (ii) counterclaims with respect to any proceeding initiated by, or on behalf of one party or its Affiliates against the other party or its Affiliates and (iii) the exercise of statutory appraisal
rights; provided, however, that the foregoing shall not prevent any party hereto or any of its Representatives from responding to oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative
demands or similar processes (each, a “Legal Requirement”) in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, on behalf of or at the direct or indirect suggestion of such party or any of its
Representatives; provided, further, that in the event any party hereto or any of its Representatives receives such Legal Requirement, such party shall give prompt written notice of such Legal Requirement to such other party (except
where such notice would be legally prohibited or not practicable). Each of the parties hereto represents and warrants that neither it nor any assignee has filed any lawsuit against any other party. 

6. Public Statements; SEC Filings. 

(a) No later than two Business Days following the date of this Agreement, the Company shall issue a press release (the “Press
Release”) announcing this Agreement, substantially in the form attached hereto as Exhibit B. Prior to the issuance of the Press Release, neither the Company nor Privet shall issue any press release or public announcement regarding
this Agreement or take any action that would require public disclosure thereof without the prior written consent of the other party. 

  
 6 

 (b) No later than two Business Days following the date of this Agreement, the Company shall file
with the SEC a Current Report on Form 8-K reporting its entry into this Agreement, disclosing applicable items to conform to its obligations hereunder and appending this Agreement as an exhibit thereto (the
“Form 8-K”). The Form 8-K shall be consistent with the terms of this Agreement and the Press Release. The Company shall provide Privet and its
Representatives with a reasonable opportunity to review and comment on the Form 8-K prior to the filing with the SEC and consider in good faith any comments of Privet and its Representatives. 

(c) No later than two Business Days following the date of this Agreement, Privet shall file with the SEC an amendment to its Schedule 13D in
compliance with Section 13 of the Exchange Act reporting its entry into this Agreement, disclosing applicable items to conform to its obligations hereunder and appending this Agreement as an exhibit thereto (the
“Schedule 13D Amendment”). The Schedule 13D shall be consistent with the terms of this Agreement and the Press Release. Privet shall provide the Company and its Representatives with a reasonable opportunity to
review the Schedule 13D Amendment prior to it being filed with the SEC and consider in good faith any comments of the Company and its Representatives. 

7. Confidentiality. 
 (a)
For so long as the Privet Designee is serving as a director on the Board, he may provide confidential information of the Company which the Privet Designee learns in his capacity as a director of the Company, including discussions or matters
considered in meetings of the Board or Board committees (collectively and individually, “Confidential Information”), to Privet and its Representatives. Privet is executing a confidentiality agreement with the Company in the form
attached hereto as Exhibit C (a “Confidentiality Agreement”), which shall govern Privet and the Privet’s Designee’s obligations with respect to Confidential Information. 

(b) For the avoidance of doubt, the obligations under this Section 7 shall be in addition to, and not in lieu of, the Privet
Designee’s confidentiality obligations under Delaware law and the charter, bylaws and applicable corporate governance policies of the Company, the current versions of which have been delivered to the Privet Designee before the execution of this
Agreement. 
 8. Compliance with Securities Laws. Privet acknowledges that it understands its obligations under the U.S. securities
laws. Subject to compliance with such laws, Privet and its Representatives shall in any event be free to trade or engage in such transactions during periods when the members of the Board are permitted to do so, and the Company will notify Privet
reasonably in advance when such “open window” director trading periods begin and end. The Company acknowledges that none of the provisions hereto shall in any way limit Privet’s or its Representatives’ activities in their
respective ordinary course of businesses if such activities will not violate applicable securities laws or the obligations specifically agreed to under this Agreement. In addition, nothing contained in this Agreement shall restrict the ability of
Privet or its Representatives from purchasing, selling or otherwise trading securities of the Company pursuant to any Rule 10b5-1 trading plan adopted prior to the execution of this Agreement. 

9. Affiliates and Associates. Each party hereto shall instruct its controlled Affiliates and Associates to comply with the terms of this
Agreement and shall be responsible for any breach of this Agreement by any such controlled Affiliate or Associate. A breach of this Agreement by a controlled Affiliate or Associate of a party, if such controlled Affiliate or Associate is not a party
to this Agreement, shall be deemed to occur if such controlled Affiliate or Associate engages in conduct that would constitute a breach of this Agreement if such controlled Affiliate or Associate was a party to the same extent as a party to this
Agreement. 

  
 7 

 10. Representations and Warranties. 

(a) Privet represents and that it is sui juris and of full capacity. Privet represents and warrants that it has full power and
authority to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and that this Agreement has been duly and validly executed and delivered by it, constitutes a valid and
binding obligation and agreement of it and is enforceable against it in accordance with its terms. Privet represents that the execution of this Agreement, the consummation of any of the transactions contemplated hereby, and the fulfillment of the
terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result in a breach or violation of the organizational documents of it as currently in effect, the execution, delivery and performance of this Agreement by it
does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to it or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time
or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation of, any organizational document,
agreement, contract, commitment, understanding or arrangement to which it is a party or by which it is bound. Privet warrants and covenants that in the event it proposes a Replacement Designee pursuant to Section 1(i), such Replacement Designee
will be an Independent Director. Privet represents and warrants that, as of the date of this Agreement, it beneficially owns an aggregate of 1,294,112 shares of Common Stock, has voting authority over such shares, and owns no Synthetic Equity
Interests or any Short Interests in the Company. 
 (b) The Company hereby represents and warrants that it has the power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby, and that this Agreement has been duly and validly authorized, executed and delivered by the Company, constitutes a
valid and binding obligation and agreement of the Company and is enforceable against the Company in accordance with its terms. The Company represents that the execution of this Agreement, the consummation of any of the transactions contemplated
hereby, and the fulfillment of the terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result in a breach or violation of the organizational documents of the Company as currently in effect, the execution,
delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) any law, rule, regulation, order, judgment or decree applicable to the Company or (ii) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under, or give any right of termination, amendment,
acceleration or cancellation of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound. The Company represents and warrants that as of the date of this
Agreement it has not directly or indirectly, including through its Representatives, alleged against Privet or its Associates any purported violations of federal law or regulation to any governmental authority pursuant to Section 21F of the
Exchange Act or Rule 21F promulgated thereunder. The Company warrants and covenants that it will not engage or continue to engage or use any private investigations firm or other person to investigate any of Privet’s principals, officers or
employees or any of Privet’s Representatives. 

  
 8 

 11. Termination. 

(a) Subject to Section 1(e), any party shall have the right to terminate this Agreement as to such party upon delivery to the other party
of advance written notice of such termination at least five Business Days prior to the date of such termination (the effective date of termination, with respect to any party or all parties hereto, the “Termination Date”);
provided, however, that no party shall be permitted to terminate this Agreement until the date that is 30 days prior to the notice deadline under the Bylaws for the nomination of director candidates for election to the Board at the 2019
Annual Meeting (the “Terminable Date”); provided, further, that no party shall be permitted to terminate this Agreement in any time period between the notice deadline under the Bylaws for the nomination of director candidates
for election to the Board at any Annual Meeting and the conclusion of such Annual Meeting. Notwithstanding anything to the contrary in this Agreement: 

(i) the obligations of Privet pursuant to Sections 1, 2, 3, 4 and 5 shall terminate in the event that the Company
materially breaches its obligations to Privet pursuant to Sections 1, 4 or 5, or the representations and warranties in Section 10(b) of this Agreement and such breach (if capable of being cured) has not been cured within 10 days following
written notice of such breach from Privet, or, if impossible to cure within 10 days, the Company has not taken substantive action to correct within 10 days following written notice of such breach from Privet; provided, however, that
the obligations of Privet pursuant to Section 5 shall terminate immediately in the event that the Company materially breaches its obligations to Privet under Section 5; and 

(ii) the obligations of the Company to Privet pursuant to Sections 1, 4 and 5 shall terminate in the event that
(A) Privet materially breaches its obligations in Sections 1, 2, 3, 4, 5, 7 or 8 or the representations and warranties in Section 10(a), or (B) the Privet Designee materially breaches this Agreement or the Company’s charter,
bylaws or policies that are applicable to all directors, and such breach (if capable of being cured) has not been cured within 10 days following written notice of such breach, or, if impossible to cure within 10 days, Privet has not taken
substantive action to correct within 10 days following written notice of such breach from the Company; provided, however, that the obligations of the Company to Privet pursuant to Section 5 shall terminate immediately in the event
that Privet materially breaches its obligations under Section 5. 
 (b) If this Agreement is terminated in accordance with this
Section 11, this Agreement shall forthwith become null and void as between the terminating party and all other parties hereto, but no termination shall relieve any party hereto from liability for any breach of this Agreement prior to such
termination.
 12. Expenses. The Company shall reimburse Privet within five (5) Business Days of the execution of this
Agreement for its reasonable, documented out-of-pocket fees and expenses (including legal expenses) incurred in connection with the negotiation and execution of this
Agreement, provided that such reimbursement shall not exceed $115,000 in the aggregate. 

  
 9 

 13. Notices. All notices, demands and other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered by hand, with written confirmation of receipt; (b) upon sending if sent by facsimile to the facsimile
numbers below, with electronic confirmation of sending, (c) upon sending if sent by electronic mail to the electronic mail addresses below, with confirmation of receipt from the receiving party by electronic mail; (d) one day after being
sent by a nationally recognized overnight carrier to the addresses set forth below; or (e) when actually delivered if sent by any other method that results in delivery, with written confirmation of receipt: 

 

			
	If to the Company:	  	with mandatory copies (which shall not constitute notice) to:
		
	 Potbelly Corporation
 111 N. Canal Street, Suite
850
 Chicago, Illinois 60606
 Attention: Matt Revord

Email: matt.revord@potbelly.com
	  	 Sidley Austin LLP
 787 Seventh Avenue, 23rd
Floor
 New York, NY 10019
 Attention: Kai H. Liekefett

Fax: (212) 839-5599

Email: kliekefett@sidley.com

		
	If to Privet:	  	with mandatory copies (which shall not constitute notice) to:
		
	 Privet Fund LP
79 West Paces Ferry Road NW
Suite 200B
Atlanta, Georgia 30305

Attention: Ryan Levenson
 Email: ryanl@privetfund.com
	  	 Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue, 18th Floor
New York, NY 10176
Attention: Christopher P.
Davis
Fax: (212) 986-8866
Email: cdavis@kkwc.com

 14. Governing Law; Jurisdiction; Jury Waiver. This Agreement, and any disputes arising out of or related
to this Agreement (whether for breach of contract, tortious conduct or otherwise), shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its conflict of laws principles. The parties
hereto agree that exclusive jurisdiction and venue for any Legal Proceeding arising out of or related to this Agreement shall exclusively lie in the Court of Chancery of the State of Delaware or, if such Court does not have subject matter
jurisdiction, the Superior Court of the State of Delaware or, if jurisdiction is vested exclusively in the Federal courts of the United States, the Federal courts of the United States sitting in the State of Delaware, and any appellate court from
any such state or Federal court. Each party hereto waives any objection it may now or hereafter have to the laying of venue of any such Legal Proceeding, and irrevocably submits to personal jurisdiction in any such court in any such Legal Proceeding
and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any court that any such Legal Proceeding brought in any such court has been brought in any inconvenient forum. Each party hereto consents to accept service
of process in any such Legal Proceeding by service of a copy thereof upon either its registered agent in the State of Delaware or the Secretary of State of the State of Delaware, with a copy delivered to it by certified or registered

  
 10 

 
mail, postage prepaid, return receipt requested, addressed to it at the address set forth in Section 13. Nothing contained herein shall be deemed to affect the right of any party hereto to
serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT. 

15. Specific Performance. The parties to this Agreement acknowledge and agree that the other party would be irreparably injured by an
actual breach of this Agreement by the other party or its Representatives and that monetary remedies may be inadequate to protect either party against any actual or threatened breach or continuation of any breach of this Agreement. Without prejudice
to any other rights and remedies otherwise available to the parties under this Agreement, each party shall be entitled to equitable relief by way of injunction or otherwise and specific performance of the provisions hereof upon satisfying the
requirements to obtain such relief without the necessity of posting a bond or other security, if the other party or any of its Representatives breach or threaten to breach any provision of this Agreement. Such remedy shall not be deemed to be the
exclusive remedy for a breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the non-breaching party. 

16. Certain Definitions and Interpretations. As used in this Agreement: (a) the terms “Affiliate” and
“Associate” (and any plurals thereof) have the meanings ascribed to such terms under Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include all persons or entities that at
any time prior to the Termination Date become Affiliates or Associates of any applicable person or entity referred to in this Agreement; provided, however, that the term “Associate” shall refer only to Associates controlled by the
Company or Privet, as applicable; provided, further, that, for purposes of this Agreement, Privet shall not be an Affiliate or Associate of the Company and the Company shall not be an Affiliate or Associate of Privet; (b) the
term “Annual Meeting” means each annual meeting of stockholders of the Company and any adjournment, postponement, reschedulings or continuations thereof; (c) the terms “beneficial ownership,”
“group,” “person,” “proxy” and “solicitation” (and any plurals thereof) have the meanings ascribed to such terms under the Exchange Act and the rules and regulations promulgated
thereunder; (d) the term “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or obligated to be closed by applicable law; (e) the term
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (f) the term “Extraordinary Transaction” means any equity tender offer, equity
exchange offer, merger, acquisition, business combination, or other transaction with a third party that, in each case, (i) would result in a change of control of the Company, liquidation, dissolution or other extraordinary transaction involving
a majority of its equity securities or a majority of its assets, and (ii) is submitted for a vote of the Company’s stockholders; (g) the term “Independent Director” means an individual that (i) qualifies as an
“independent director” under applicable rules of the SEC, the NASDAQ rules and applicable governance policies of the Company and (ii) is not an employee, principal, Affiliate or Associate of Privet or any of its Affiliates or
Associates; (h) the term “Representatives” means (i) a person’s Affiliates and Associates and (ii) its and their respective directors, officers, employees, partners, members, managers, consultants, legal or other
advisors, agents and other representatives acting in a capacity on behalf of, in concert with or at the direction of such person or its Affiliates or Associates; (i) the term “SEC” means the U.S. Securities and Exchange
Commission; (j) the term “Short Interests” means any agreement, 

  
 11 

 
arrangement, understanding or relationship, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in,
directly or indirectly, by such person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the Company’s equity securities by, manage the risk of share
price changes for, or increase or decrease the voting power of, such person with respect to the shares of any class or series of the Company’s equity securities, or that provides, directly or indirectly, the opportunity to profit from any
decrease in the price or value of the shares of any class or series of the Company’s equity securities; (k) the term “Stockholder Meeting” means each annual or special meeting of stockholders of the Company, or any action
by written consent of the Company’s stockholders in lieu thereof, and any adjournment, postponement, reschedulings or continuations thereof; (l) the term “Synthetic Equity Interests” means any derivative, swap or other
transaction or series of transactions engaged in, directly or indirectly, by such person, the purpose or effect of which is to give such person economic risk similar to ownership of equity securities of any class or series of the Company, including
due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the Company’s equity securities, or which derivative, swap or
other transactions provide the opportunity to profit from any increase in the price or value of shares of any class or series of the Company’s equity securities, without regard to whether (i) the derivative, swap or other transactions
convey any voting rights in such equity securities to such person; (ii) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such equity securities; or (iii) such person may
have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions; and (m) the term “Third Party” refers to any person that is not a party hereto, a member of the
Board, a director or officer of the Company, or legal counsel to any party. In this Agreement, unless a clear contrary intention appears, (i) the word “including” (in its various forms) means “including, without limitation;”
(ii) the words “hereunder,” “hereof,” “hereto” and words of similar import are references in this Agreement as a whole and not to any particular provision of this Agreement; (iii) the word “or” is not
exclusive; (iv) references to “Sections” in this Agreement are references to Sections of this Agreement unless otherwise indicated; and (v) whenever the context requires, the masculine gender shall include the feminine and neuter
genders. 
 17. Miscellaneous. 

(a) This Agreement, including all exhibits hereto, with the exception of the Confidentiality Agreement, contains the entire agreement between
the parties and supersedes all other prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. 

(b) This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other persons. 

(c) This Agreement shall not be assignable by operation of law or otherwise by a party hereto without the consent of the other parties hereto.
Any purported assignment without such consent is void. Subject to the foregoing sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the permitted successors and assigns of each party hereto.

  
 12 

 (d) Neither the failure nor any delay by a party hereto in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder. 

(e) If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the
intention of the parties hereto that the parties hereto would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable. In addition, the
parties hereto agree to use their reasonable best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid, void or unenforceable by a court of competent jurisdiction.

 (f) Any amendment or modification of the terms and conditions set forth herein or any waiver of such terms and conditions must be agreed
to in a writing signed by each party hereto. 
 (g) This Agreement may be executed in one or more textually identical counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same agreement. Signatures to this Agreement transmitted by facsimile transmission, by electronic mail in “portable document format”
(“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the paper document bearing the original signature. 

(h) Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have
preceded the execution of this Agreement, and that it has executed this Agreement with the advice of such counsel. Each party hereto and its counsel cooperated and participated in the drafting and preparation of this Agreement, and any and all
drafts relating thereto exchanged among the parties will be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that
would require interpretation of any ambiguities in this Agreement against any party hereto that drafted or prepared it is of no application and is hereby expressly waived by each of the parties, and any controversy over interpretations of this
Agreement will be decided without regard to events of drafting or preparation. 
 (i) The headings set forth in this Agreement are for
convenience of reference purposes only and will not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision of this Agreement 

[Signature Pages Follow] 

  
 13 

 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or caused the same to
be executed by its duly authorized representative, as of the date first above written. 
  

			
	THE COMPANY:
	
	POTBELLY CORPORATION

 
			
		
	By:	 	/s/ Alan Johnson

 
			
	Name:	 	Alan Johnson
	Title:	 	Chief Executive Officer

 SIGNATURE PAGE TO SETTLEMENT
AGREEMENT 

 
			
	PRIVET:
	
	PRIVET FUND LP

 
			
		
	By:	 	/s/ Ryan Levenson

 
			
	Name:	 	Ryan Levenson
	Title:	 	Sole Manager

  

			
	PRIVET FUND MANAGEMENT LLC

 
			
		
	By:	 	/s/ Ryan Levenson

 
			
	Name:	 	Ryan Levenson
	Title:	 	Sole Manager

  

			
	RYAN LEVENSON
	
	 /s/ Ryan Levenson

	
	BEN ROSENZWEIG
	
	 /s/ Ben Rosenzweig

 Exhibit A 

Form of Resignation Letter 

 [•], 2018 

Board of Directors 
 Potbelly Corporation 

111 N. Canal Street, Suite 850 
 Chicago, Illinois 60606 

Re: Resignation 
 Ladies and Gentlemen: 

This irrevocable resignation is delivered pursuant to that certain Settlement Agreement (the “Agreement”), dated as of
April 12, 2018, by and among Potbelly Corporation, a Delaware corporation (the “Company”), Privet Fund LP, a Delaware limited partnership (“Privet Fund”), Privet Fund Management LLC, a Delaware limited
liability company (“Privet Fund Management”), Ryan Levenson and Ben Rosenzweig (the “Privet Designee” and, together with Privet Fund, Privet Fund Management and Ryan Levenson, “Privet”). Capitalized
terms used herein but not defined shall have the meaning set forth in the Agreement. 
 I hereby irrevocably offer to resign from my
position as a director of the Board and from any and all committees of the Board on which I serve, effective immediately upon (i) such time as Privet’s beneficial ownership in the Company falls below the Ownership Minimum solely because of
divestitures of such stock by Privet; (ii) a material breach of the Settlement Agreement by Privet or the Privet Designee that terminates the Company’s obligations to Privet pursuant to Section 11(a)(ii) of the Settlement Agreement;
or (iii) the Termination Date. 
 Very truly yours, 
  

 

 Exhibit B 

Form of Press Release 

 POTBELLY APPOINTS BEN ROSENZWEIG TO BOARD OF DIRECTORS 

Reaches Settlement Agreement with Privet Fund Management LLC 

CHICAGO, April [X], 2018 (GLOBE NEWSWIRE) — Potbelly Corporation (NASDAQ:PBPB) today announced that it has expanded its Board of Directors (the
“Board”) and appointed Ben Rosenzweig to the Board, effective immediately, and entered into a settlement agreement (the “Agreement”) with Privet Fund Management LLC and certain of its affiliates (“Privet”).
Mr. Rosenzweig is a Partner of Privet Fund Management LLC. Pursuant to the Agreement, the Company will nominate Mr. Rosenzweig for election to the Board at its 2018 Annual Meeting of Shareholders (the “Annual Meeting”). 

“On behalf of the Board, I welcome Ben to Potbelly,” said Pete Bassi, Chairman of the Board. “We are pleased to have reached this Agreement
with Privet and look forward to working together constructively to create value for all Potbelly shareholders.” 
 Pursuant to the Agreement, among
other things, Privet Fund LP has withdrawn its notice of intention to nominate four candidates for election to Potbelly’s Board and has agreed to vote in favor of all of the Board’s director nominees for election at the 2018 Annual
Meeting. 
 “Potbelly is a well-known and respected brand and we see the opportunity for meaningful value creation at the Company,” said
Mr. Rosenzweig. “I look forward to working with the Potbelly Board and management team as we pursue our common goal of enhancing shareholder value.” 

The Agreement will be included as an exhibit to the Company’s current report on Form 8-K which will be filed with the Securities and Exchange Commission
(“SEC”). Further details regarding the 2018 Annual Meeting will be included in the Company’s definitive proxy materials, which will be filed with the SEC and mailed to all Potbelly shareholders. 

Potbelly is represented by Sidley Austin LLP and Mayer Brown LLP. Privet is represented by Kleinberg, Kaplan, Wolff & Cohen, P.C. 

About Ben Rosenzweig 
 Mr. Benjamin L.
Rosenzweig is a Partner at Privet Fund Management, LLC. Mr. Rosenzweig joined Privet Fund Management LLC in September 2008. He served as an Investment Banking Analyst in the corporate finance group at Alvarez & Marsal, LLC from June
2007 to May 2008, where he completed multiple distressed mergers and acquisitions, restructurings, capital formation transactions and similar financial advisory engagements across several industries. He has been an Independent Director of Cicero
Inc., a provider of desktop activity intelligence, since February 23, 2017; Hardinge Inc., a designer, manufacturer and distributor of machine tools, since October 14, 2015; PFSweb, Inc., a global commerce service provider, since May 2013;
and StarTek, Inc., a customer engagement business process outsourcer, since May 11, 2011. He served as a Director of RELM Wireless Corporation, a manufacturer of wireless communications equipment, from September 11, 2013 to
September 27, 2015. Mr. Rosenzweig graduated Magna Cum Laude from Emory University with a Bachelor of Business Administration in Finance and a second major in Economics. 

About Potbelly 
 Potbelly Corporation is a
neighborhood sandwich concept offering toasty warm sandwiches, signature salads and other fresh menu items served by engaging people in an environment that reflects the Potbelly brand. Our Vision is for our customers to feel that we are their
“Neighborhood Sandwich Shop” and to tell others about their great experience. Our Mission is to make people really happy and to improve every day. Our Passion is to be “The Best Place for Lunch.” The Company owns and operates
over 400 shops in the United States and our franchisees operate over 50 shops domestically, in the Middle East, the United Kingdom, Canada and India. For more information, please visit our website at www.potbelly.com. 

 

 Important Additional Information 

Potbelly Corporation (the “Company”), its directors and certain of its executive officers are participants in the solicitation of proxies from the
Company’s stockholders in connection with matters to be considered at the Company’s upcoming Annual Meeting of Stockholders of the Company (the “Annual Meeting”). The Company intends to file a proxy statement and proxy card with
the U.S. Securities and Exchange Commission (the “SEC”) in connection with such solicitation of proxies from the Company’s stockholders. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT, PROXY CARD
AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Exhibit 99.2 to the Current Report on Form 8-K to be filed with the SEC on April [X], 2018
(“Exhibit 99.2”) will contain information regarding the direct and indirect interests, by security holdings or otherwise of the Company’s directors and executive officers in the Company’s securities. In the event that holdings of
the Company’s securities change from the amounts printed in such Exhibit 99.2, such changes will be set forth in SEC filings on Forms 3, 4, and 5, which can be found through the Company’s website www.potbelly.com in the
“Investors” section or through the SEC’s website at www.sec.gov. Information can also be found in the Company’s other SEC filings, including the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017. Updated information regarding the identities of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Company’s proxy statement and other materials to
be filed with the SEC in connection with the Annual Meeting. Stockholders will be able to obtain any proxy statement, proxy card, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC at no charge
at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the Company’s website in the “Investors” section of the Company’s website at www.potbelly.com. 

 Exhibit C 

Form of Confidentiality Agreement 

 Potbelly Corporation 

111 N. Canal Street, Suite 850 

Chicago, IL 60606 
 [•], 20[•] 

[•] 
 Re:     Confidentiality
Agreement 
 Ladies and Gentlemen: 

This letter agreement shall become effective upon the appointment of Ben Rosenzweig (the “Privet Designee”) to the Board of
Directors (the “Board”) of Potbelly Corporation, a Delaware corporation (the “Company”), pursuant to the Settlement Agreement, dated as of April 12, 2018 (the “Settlement Agreement”), by and
among the Company, Privet Fund LP, a Delaware limited partnership (“Privet Fund”), Privet Fund Management LLC, a Delaware limited liability company (“Privet Management”), and Ryan Levenson, solely in his capacity as
a Principal and Portfolio Manager of Privet Fund Management LLC (“Mr. Levenson”), and Ben Rosenzweig, solely in his capacity as a Partner of Privet Fund Management LLC
(“Mr. Rosenzweig”, and collectively with Privet Fund, Privet Management and Mr. Levenson, the “Privet Parties” and each, a “Privet Party”). Capitalized terms used and not
otherwise defined herein have the meanings given to such terms in the Settlement Agreement. 
  

	1.	Upon the terms of, and subject to the conditions in, this letter agreement, the Privet Parties and their Representatives may receive certain Confidential Information (as defined herein) about the Company and its
Affiliates from the Privet Designee or his Replacement Designee, solely in his capacity as a Director of the Company (in either case, the “Privet Director”) that is confidential and proprietary, the disclosure of which could harm
the Company and its Affiliates. The Privet Director and the Privet Parties understand and agree that the Privet Director, when acting in his capacity as a Director of the Company shall be subject in all cases to the fiduciary duties to the Company
and its stockholders imposed by Delaware law. Notwithstanding the foregoing, it is understood and agreed that the Privet Director shall not disclose to the Privet Parties or their Representatives (a) any confidential or proprietary information
of any third party in the possession of the Company or any of its Affiliates that the Company or any of its Affiliates is prohibited from disclosing pursuant to a contractual or other legal obligation or duty of confidentiality that is identified as
such to the Privet Director by or on advice of legal counsel or the Company; and (b) any legal advice or information that is identified to the Privet Director as protected by the Company’s or any of its Affiliates’ attorney-client
privilege or attorney work-product privilege (both with respect to internal or external legal counsel), to the extent such information as identified in (a) and (b) is included in the Confidential Information. 

	2.	As a condition to the Privet Parties or any of their Representatives being furnished with confidential information that the Privet Director learned solely in his capacity as a Director of the Company, the Privet Parties
agree to treat, and to instruct their Representatives to treat, any information, whether written or oral, that is furnished to the Privet Parties or their Representatives by or on behalf of the Privet Director, the Company or its Representatives and
so identified, as confidential (herein collectively referred to as the “Confidential Information”) in accordance with the provisions of this letter agreement, and to take or abstain from taking, and to instruct their Representatives
to take or abstain from taking, certain other actions as set forth herein. The term “Confidential Information” includes, without limitation, all notes, analyses, data or other documents or materials furnished to the Privet Parties or their
Representatives or prepared by the Privet Parties or their Representatives to the extent such materials reflect or are based upon, the Confidential Information. The term “Confidential Information” does not include information that
(a) was within the Privet Parties’ or any of their Representatives’ possession prior to the date of the Prior NDA; (b) is or becomes available to the Privet Parties or their Representatives from a source other than the Company or
its Representatives, provided that such information was not known by the Privet Parties or their Representatives to be subject to any legal, contractual or fiduciary obligation of confidentiality owed to the Company or an Affiliate thereof;
(c) is or becomes generally available to the public other than as a result of a disclosure by the Privet Parties or their Representatives in violation of this letter agreement; or (d) has been or is independently developed by the Privet
Parties or their Representatives without the use of the Confidential Information or in violation of the terms of this letter agreement. 

  

	3.	The Privet Parties hereby agree that they shall keep the Confidential Information confidential and shall use the Confidential Information solely for the purpose of monitoring and evaluating the Privet Parties’
investment in the Company; provided, however, that the Privet Parties may disclose the Confidential Information (a) to any of their Representatives who need to know such information for the purpose of monitoring and evaluating
their investment in the Company or (b) as the Company may otherwise consent in writing. Any such Representative shall (i) be informed by the Privet Parties of the confidential nature of the Confidential Information, (ii) be subject to
a contractual, legal or fiduciary obligation to keep the Confidential Information strictly confidential and (iii) make aware of the terms of this letter agreement. The Privet Parties agree to be responsible for any breaches of any of the
provisions of this letter agreement by any of their Representatives as if they were a party hereto (it being understood that such responsibility shall be in addition to and not by way of limitation of any right or remedy the Company may have against
the Privet Parties’ Representatives with respect to such breach). Notwithstanding the foregoing, nothing in this letter agreement shall restrict the Privet Director’s ability to seek the advice of his own counsel with respect to any aspect
or query concerning his service as a Director of the Company. 

  

	4.	The Privet Parties hereby acknowledge that they are aware (and the Privet Parties shall also advise each of their Representatives that is provided Confidential Information) of their obligations under securities law and
that the Confidential Information may contain material, non-public information concerning the Company. The Privet Parties further acknowledge the Privet Parties’ obligations and those of their
Representatives (as applicable) under Section 8 of the Settlement Agreement. 

  
 2 

	5.	Notwithstanding anything to the contrary provided in this letter agreement, in the event the Privet Parties or any of their Representatives receive a request or are required by deposition, interrogatory, request for
documents, subpoena, court order, similar judicial process, civil investigative demand or similar process or pursuant to a formal request from a regulatory examiner (any such requested or required disclosure, an “External Demand”)
or are otherwise required pursuant to applicable law, regulation or the rules of any governmental, national securities exchange or other regulatory authority to disclose all or any part of the Confidential Information, the Privet Parties agree, and
agree to instruct their Representatives, to the extent permitted by applicable law, (a) to promptly notify the Company of the existence, terms and circumstances surrounding such External Demand or other requirement and (b) to provide
commercially reasonable cooperation to the Company, at the Company’s sole expense, in seeking a protective order or other appropriate remedy to the extent available under the circumstances. In the event that such protective order or other
remedy is not obtained or not available or that the Company waives compliance with the provisions hereof, the Privet Parties or their Representatives, as the case may be, may disclose only that portion of the Confidential Information which the
Privet Parties or their Representatives reasonably believe, upon consultation with outside legal counsel, is legally required to be disclosed, and the Privet Parties or their Representatives shall inform the recipient of such Confidential
Information of the existence of this letter agreement and the confidential nature of such Confidential Information. For the avoidance of doubt, it is understood and agreed that there shall be no “applicable law,” “regulation” or
“rule” requiring the Privet Parties or their Representatives to disclose any Confidential Information solely by virtue of the fact that, absent such disclosure, the Privet Parties or their Representatives would be prohibited from
purchasing, selling or engaging in derivative or other voluntary transactions with respect to the securities of the Company. 

  

	6.	Immediately following the termination of this letter agreement in accordance with its terms, the Privet Parties and their Representatives shall promptly destroy the Confidential Information and any copies thereof and
confirm in writing to the Company that all such material has been destroyed in compliance with this letter agreement; provided, however, that the Privet Parties and their Representatives shall be permitted to retain Confidential
Information to the extent necessary to comply with applicable law, professional standards or the Privet Parties or their Representatives’ document retention policies of general application, or to the extent disclosed pursuant to an External
Demand. To the extent any Confidential Information is retained pursuant to the proviso in the preceding sentence, the Privet Parties and their Representatives shall continue to be bound by the obligations contained herein with respect to such
Confidential Information retained by the Privet Parties or their Representatives for such period of time as prescribed by this letter agreement. 

  

	7.	During the term of this Agreement and continuing for a period of 18 months following the termination of this Agreement, the Privet Parties and their Representatives shall not, without the prior written approval of the
Board, directly or indirectly, for the Privet Parties or on behalf of, or in conjunction with, any other person or entity of any nature, solicit, canvass, approach, or induce any employee or contractor of the Company to terminate his, her or its
employment or engagement with the Company or any of its Affiliates or Associates, other than by means of a general advertisement that is not directed at any particular employee or contractor of the Company. 

  
 3 

	8.	The parties to this letter agreement acknowledge and agree that the other party would be irreparably injured by an actual breach of this Agreement by the other party or its Representatives and that monetary remedies
would be inadequate to protect either party against any actual or threatened breach or continuation of any breach of this Agreement. Without prejudice to any other rights and remedies otherwise available to the parties under this Agreement, each
party shall be entitled to equitable relief by way of injunction or otherwise and specific performance of the provisions hereof upon satisfying the requirements to obtain such relief without the necessity of posting a bond or other security, if the
other party or any of its Representatives breach or threaten to breach any provision of this Agreement. Such remedy shall not be deemed to be the exclusive remedy for a breach of this Agreement but shall be in addition to all other remedies
available at law or equity to the non-breaching party. 

  

	9.	The Privet Parties agree that (a) none of the Company or its Representatives shall have any liability to the Privet Parties or any of their Representatives resulting from the selection, use or content of the
Confidential Information by the Privet Parties or their Representatives and (b) none of the Company or its Representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any Confidential
Information. This letter agreement shall not create any obligation on the part of the Company or its Representatives to provide the Privet Parties or their Representatives with any Confidential Information, nor shall it entitle the Privet Parties or
their Representatives (other than the Privet Director in his or her capacity as a director of the Company and pursuant to the terms of the Settlement Agreement) to participate in any meeting of the Board or any committee thereof. This letter
agreement shall not prohibit the Privet Director from sharing Confidential Information with the Privet Parties or their Representatives subject to the terms herein. All Confidential Information shall remain the property of the Company and its
Affiliates. Neither the Privet Parties nor any of their Representatives shall by virtue of any disclosure of and/or the Privet Parties’ or their use of any Confidential Information acquire any rights with respect thereto; all such rights shall
remain exclusively with the Company and its Affiliates. The Privet Parties and their Representatives shall not initiate contact with any officer or employee of the Company concerning Confidential Information other than as permitted by the terms of
the Settlement Agreement, unless otherwise approved in writing by the Company; provided, however, the restrictions set forth in this sentence shall not apply to the Privet Director, acting in his or her capacity as such, or any other
officer or employee of the Company who is also serving as a director; provided, further, the restrictions set forth in this sentence shall not apply to communications or contacts between Ben Rosenzweig and the Company’s Chief Legal
Officer pursuant to Section 10 below or relating to notices required or permitted under the Settlement Agreement. 

  

	10.	 From time to time prior to the termination of this letter agreement, Ben Rosenzweig shall be entitled to request,
by written notice to the Company’s Chief Legal Officer, that the Company confirm whether or not members of the Board are then permitted to purchase or sell securities of the Company pursuant to the Company’s insider trading policy, in
which 

  
 4 

	 	
case the Company will promptly inform Ben Rosenzweig whether or not such members are then so permitted to purchase or sell such securities pursuant to the Company’s insider trading policy.
The Company hereby agrees that it shall promptly inform the Privet Director of the commencement of any “black-out” periods and permitted trading periods under the Company’s insider trading
policy. 

  

	11.	No failure or delay by any party or any of its Representatives in exercising any right, power or privilege under this letter agreement shall operate as a waiver thereof, and no modification hereof shall be effective,
unless in writing and signed by the parties hereto. 

  

	12.	The illegality, invalidity or unenforceability of any provision hereof under the laws of any jurisdiction shall not affect its legality, validity or enforceability under the laws of any other jurisdiction, nor the
legality, validity or enforceability of any other provision hereof. 

  

	13.	This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the choice of law principles of such state that may direct application of laws of another
jurisdiction. Each party hereto hereby irrevocably and unconditionally consents to the exclusive institution and resolution of any action, suit or proceeding of any kind or nature with respect to or arising out of this Agreement brought by any party
hereto in the United States District Court for the District of Delaware or, if there is no federal subject matter jurisdiction, in the Delaware Court of Chancery. Each party hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement in such court, and further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum. The parties agree that a final judgment in any such dispute shall be conclusive and may be enforced in other jurisdictions by suits on the judgment or in any other manner provided by law.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT. 

  

	14.	This letter agreement and the Settlement Agreement (including the exhibits thereto) constitute the only agreement between the parties hereto with respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or written, including without limitation, that certain Settlement Discussions Confidentiality Agreement by and among Privet Fund LP and the Company, dated as of March 24,
2018 (the “Prior NDA”). For the avoidance of doubt, nothing in this letter agreement supplements, modifies or amends the “Standstill Restrictions”, the entirety of which are contained in Section 3 of the Settlement
Agreement. This letter agreement may be amended only by an agreement in writing executed by the parties hereto. 

  

	15.	This letter agreement may be executed in separate counterparts (including by fax, .jpeg, .gif, .bmp and .pdf), each of which when so executed shall be an original, but all such counterparts shall together constitute one
and the same instrument. 

  
 5 

	16.	Except as otherwise set forth herein, this letter agreement and the obligations and restrictions hereunder shall terminate 12 months from the date on which the Privet Director ceases to be a director of the Company;
provided however, that any liability for breach of this letter agreement prior to such termination shall survive such termination. 

  

	17.	Each party to this letter agreement acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this letter agreement, and that it has executed this
letter agreement with the advice of such counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this letter agreement and the documents referred to herein, and any and all drafts relating thereto exchanged
among the parties hereto shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation
of any ambiguities in this letter agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this agreement shall be decided
without regards to events of drafting or preparation. 

 [Signature Pages Follow] 

  
 6 

 
			
	Very truly yours,
	
	POTBELLY CORPORATION
		
	By:	 	 
	Name:	 	Alan Johnson
	Title:	 	Chief Executive Officer

 SIGNATURE PAGE TO CONFIDENTIALITY AGREEMENT 

			
	ACCEPTED AND AGREED TO BY:
	
	PRIVET FUND LP

			
		
	By:	 	 

			
	Name:	 	
	Title:	 	

  

			
	PRIVET FUND MANAGEMENT LLC

			
		
	By:	 	 

			
	Name:	 	
	Title:	 	

 SIGNATURE PAGE TO CONFIDENTIALITY AGREEMENT

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