Execution Copy

Exhibit 10.1

SEPARATION AGREEMENT AND COMPLETE RELEASE

This Separation Agreement and Complete Release this (“Agreement”) is made this
9th day of June 2011, by Daniel J. Churay (“Executive”) and Rex Energy
Corporation and Rex Energy Operating Corp. (collectively, the “Company”).
Reference is made to the Employment Agreement dated November 1, 2010 and
effective as December 1, 2010 (the “Employment Agreement”), between Executive
and the Company.

In consideration of the mutual agreements described below, the payments to
Executive and other good and valuable consideration, the receipt and sufficiency
of which the parties acknowledge, Executive and the Company agree as follows:

 

1. Separation.

The Company has terminated Executive’s employment without Cause (as defined in
the Employment Agreement) effective as of June 3, 2011 (the “Date of
Termination”); Executive acknowledges the termination and agrees that the
Company has given proper notice pursuant to the Employment Agreement. Executive
shall receive the compensation and benefits that Executive received immediately
prior to the Date of Termination through the Date of Termination. This includes
reimbursement of any yet unreimbursed commuting expenses that Executive has
incurred prior to the Date of Termination in anticipation of moving Executive’s
residence to the Principal Place of Employment (as defined in the Employment
Agreement) and any payments for tax gross ups at the federal income tax rate of
35%, the Pennsylvania state income rate of 3.07% and the Kansas state income tax
rate of 6.45%, including and crediting of one state’s taxes against another and
local income taxes, if any.

 

2. Payments.

 

  A. The Company shall pay the Executive severance pay equal to $15,769.23 on a
biweekly basis beginning on the Date of Termination and continuing through
December 3, 2012, unless terminated earlier in accordance with this Section 2.A.
The Company will make these separation payments on the Company’s regular pay
cycle commencing on the first business day following the end of the six month
period following the Date of Termination (the “Commencement Date”). The
installments for the first six months (the period between the Date of
Termination and the Commencement Date), will be made in one lump sum on the
Commencement Date. Notwithstanding the foregoing in this Section 2.A, if the
Executive is an employee or independent contractor of a subsequent employer
after June 3, 2012, the separation payments shall immediately cease as of the
later of June 3, 2012 or the date after June 3, 2012 on which the Executive
begins providing services to a subsequent employer, and the Executive shall have
no right to continued separation payments pursuant to this Section 2.A
thereafter. The Executive agrees to notify the Company that he is providing
services to a subsequent employer immediately upon commencement of such
services. For purposes of this Agreement, the period during which the Executive
receives severance pay pursuant to this Section 2.A shall be referred to as the
“Separation Pay Period.”

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  B. The Company shall pay the Executive a lump sum cash payment equal to the
Executive’s annual cash bonus for 2011, prorated based on actual service in
2011. For this purpose, the annual bonus shall be calculated as the annual cash
bonus that the Executive would have received had the Executive remained employed
through the end of 2011, based on the Company’s achievement of the applicable
performance goals, and multiplied by a fraction, the numerator of which is the
number of days in 2011 before the Date of Termination and the denominator of
which is 365. The bonus payment shall be paid when bonuses are paid to other
executives participating in the Annual Incentive Plan and shall be calculated as
if Executive achieved 100% of Executive’s personal objectives. The Company and
Executive acknowledge that Executive’s annual bonus target percentage is 55% of
$410,000 for the purposes of calculating this payment. Pursuant to
Section 4(b)(ii) of the Employment Agreement, the Company shall continue to pay
Executive on a monthly basis for the remainder of 2011 his guaranteed bonus,
which shall be credited against the ultimate bonus paid pursuant to this
Section 2.B.

 

  C. Executive will receive no further wages, bonuses or other similar payments
from the Company, other than salary and perquisites through the Date of
Termination and those other items that this Agreement provides.

 

  D. Executive and the Company agree that that the only outstanding Company
options that the Company has granted to Executive in his capacity as an
executive are as follows:

 

Grant Date

  

Number of Shares

    

Vesting Date

  

Strike Price

12/1/10

     36,574       18,287 shares on
12/1/11    $12.30 per share       18,287 shares on
12/1/12   

Except as otherwise provided herein, the option set forth in the chart above
(the “Executive Option”) shall continue to be governed by the applicable
Nonqualified Stock Option Agreement and the 2007 Long-Term Incentive Plan. The
Executive Option shall continue to vest under the Nonqualified Stock Option
Agreement to the extent not already vested until the last day of the Separation
Pay Period, which shall be deemed to be the last day of employment solely for
the purpose of the Executive Option. On the last day of the Separation Pay
Period, Executive shall be deemed “terminated” and have 90 days from the end of
the Separation Pay Period in accordance with the Nonqualified Stock Option
Agreement to exercise any unexercised Executive Option before it terminates in
accordance with the Nonqualified Stock Option Agreement.

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  E. Executive and the Company agree that the only outstanding Company options
that the Company has granted to Executive in his capacity as a non-executive
director are as follows:

 

Grant Date

  

Number of Shares

    

Vesting Date

  

Strike Price

11/7/07

     25,000       All vested as of

11/7/10

   $9.50 per share

5/7/09

     15,347       5,115 shares as of

5/7/10

 

5,116 shares as of

5/7/11

 

5,116 shares as of

5/7/12

   $5.04 per share

6/24/10

     7,387       2,462 as of

6/24/11

 

2,462 as of

6/24/12

 

2,463 as of

6/24/13

   $10.42 per share

The options set forth in the immediately preceding chart (the “Director
Options”) shall continue to be governed by their respective Nonqualified Stock
Option Agreements and the 2007 Long-Term Incentive Plan. The Director Options
shall cease to vest as of June 3, 2011 and the vested Director Options will be
exercisable for the 90-day period following June 3, 2011. The Company
acknowledges that no federal or state income tax withholding is required for the
Director Options.

 

  F. Executive and the Company agree that the only outstanding Company
restricted stock that the Company has granted to Executive pursuant to
Restricted Stock Award Agreements are as follows:

 

Grant Date

  

Number of Shares

    

Vesting Date

12/1/10

     91,852       45,926 shares on

12/31/11

 

45,926 shares on

12/31/12

12/16/10

     75,692       75,692 shares on

12/31/13

Except as otherwise provided herein, these shares of restricted stock shall be
governed by the applicable Restricted Stock Award Agreement and the 2007 Long-

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Term Incentive Plan. The performance period for the restricted stock granted to
the Executive on December 1, 2010 ends on December 31, 2012. These shares of
restricted stock shall continue to time vest under the Restricted Stock Award
Agreement to the extent not already vested until the last day of the Separation
Pay Period so that the restricted stock granted to the Executive on December 1,
2010 shall vest as of December 31, 2012 as to 50% of the shares of restricted
stock that are calculated based on attainment of the applicable performance
goals as of December 31, 2012. Executive acknowledges that the restrictions
applicable to the restricted stock may not be lifted until the performance
vesting is determined and the forfeiture provisions are calculated, in each
case, in accordance with the applicable Restricted Stock Award Agreement.

 

  G. Other than the options described in Sections 2.D and 2.E, and the
restricted stock described in Section 2.F, Executive acknowledges that Executive
does not have any other rights to Company equity or long-term incentive payments
that the Company has granted or may in the future grant to Executive.

 

  H. Executive understands that the Company will deduct federal and state
withholding taxes and other deductions the Company is required by law to make
(or which Executive has otherwise authorized) from payments (including cash and
equity, other than upon exercise of the Director Options) to Executive pursuant
to this Agreement.

 

3. Benefits.

 

  A. Medical, Dental, Vision Benefits

During the 18-month period following the Date of Termination, the Company shall
arrange to provide the Executive and his dependents medical, dental, health,
vision and hospital insurance benefits substantially similar to those provided
to the Executive and his dependents immediately prior to the Date of
Termination, as such benefit plans may be modified by the Company from time to
time for similarly situated active executives (at no greater cost to the
Executive than such cost to the Executive in effect immediately prior to the
Date of Termination, or, if greater, the cost to similarly situated active
executives of the Company under the applicable group health plans of the
Company), provided that the Executive timely elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and
pays the COBRA premiums for the full cost of the continued coverage. The
Executive shall be responsible for paying the full COBRA cost of such coverage
directly to the Company’s COBRA administrator, and the Company shall reimburse
the Executive monthly for the amount equal to the Executive’s monthly COBRA
cost, less the Executive portion of the premium that the Executive would have
paid had the Executive continued employment with the Company; provided that
reimbursement of the COBRA cost shall be discontinued prior to December 3, 2012
if the Executive elects to discontinue COBRA coverage, if the Executive fails to
pay the applicable COBRA costs or in accordance with Section 3.C below. The
COBRA reimbursement payments shall be paid monthly in accordance with the
Company’s regular pay cycle on the first payroll date of each calendar month,
beginning on the 60th day following the Date of Termination. The

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first payment will include any missed COBRA reimbursements between the Date of
Termination and the date of the first payment. The Executive understands and
agrees that for purposes of determining any remaining period of the Executive’s
COBRA continuation coverage after the end of the 18-month period following the
Date of Termination, the Executive’s “qualifying event” shall be deemed to have
occurred on the Date of Termination.

 

  B. On the Commencement Date, the Company shall pay the Executive $279.00,
which represents the product of the monthly basic life insurance premium
applicable to the Executive’s basic life insurance coverage immediately prior to
the Date of Termination, multiplied by 18. The Executive may, at his option,
convert his basic life insurance coverage to an individual policy after the Date
of Termination by completing the forms required by the Company for this purpose.

 

  C. Subject to the Executive’s group health plan coverage continuation rights
under COBRA, the benefits described in Sections 3.A and 3.B shall be reduced to
the extent benefits of the same type are received by or made available to the
Executive during such period, and reimbursements under Section 3.A shall cease
if the Executive becomes eligible to receive benefits of the same type as
described in Section 3.A. The Executive shall have the obligation to notify the
Company that he is entitled to or receiving such benefits. The Company agrees
that the Executive is not required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant to
this Section 3. Further, except as provided pursuant to Sections 2.A or 3.A
above, the amount of any payment or benefit provided for in this Agreement shall
not be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, or by offset against any
amount claimed to be owed by the Executive to the Company.

 

  D. All Other Benefits

Other benefits to which Executive was covered prior to the Date of Termination
(including pension, 401(k) and perquisite benefits) will be discontinued
pursuant to eligibility requirements under the specific plan document for that
benefit. Benefits that have COBRA continuation or conversion privileges will be
provided to Executive for continuation at his cost pursuant to plan covenants.
In all cases, the official plan document shall govern over any other verbal or
written statement in regards to COBRA, continuation or conversion privileges.

 

  E. Vacation Pay

Within 30 days following the Date of Termination, the Company will pay Executive
$22,077.44, which represents Executive’s accrued but unused vacation pay as of
the Date of Termination.

 

  F. Holiday Pay

Eligibility for holiday pay will cease on the Date of Termination.

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  G. The Executive and the Company agree that the timing and manner of payments
under the Agreement are intended to be either exempt from Section 409A of the
Internal Revenue Code of 1986, as amended, and applicable Treasury authorities
(“Section 409A”) pursuant to an exception under Section 409A, or comply with the
provisions of Section 409A. Accordingly, such payments should not be subject to
additional taxation or interests applicable under Section 409A and shall be
reported and administered as exempt from or compliant with Section 409A.
Executive agrees that he is solely responsible for any taxes imposed on him with
respect to the payments and benefits to be provided to Executive under this
Agreement.

 

4. Resignation as a Director.

In accordance with Section 6 of the Employment Agreement, Executive hereby
resigns any office that Executive may have held as an officer or director of Rex
Energy Corporation or any of its subsidiaries, effective as of the Date of
Termination.

 

5. Complete Release

In consideration of the separation pay and benefits continuation set forth in
Sections 1-3 of this Agreement as well as the other benefits that this Agreement
provides, Executive (on Executive’s own behalf and on behalf of Executive’s
heirs and other legal representatives and assigns) releases the Company, its
subsidiaries and affiliates, and the employees, officers, directors,
representatives, attorneys and agents of any of them, and their respective
successors, predecessors and assigns, from all legally waivable claims, charges,
costs, attorney fees or demands Executive may have based on Executive’s
employment with the Company or the cessation of that employment. This includes a
release of any rights or claims Executive may have under the following (as each
may be amended through the date of this Agreement):

 

  A. the Age Discrimination in Employment Act of 1967, as amended, and the Older
Workers Benefit Protection Act, which (among other things) prohibit age
discrimination in employment;

 

  B. the Civil Rights Acts of 1866 or 1871, Title VII of the Civil Rights Act of
1964 and the Civil Rights Act of 1991, which (among other things) prohibit
discrimination in employment based on race, color, national origin, religion or
sex;

 

  C. the Americans with Disabilities Act, which (among other things) prohibits
discrimination in employment against qualified disabled individuals;

 

  D. the Equal Pay Act, which (among other things) prohibits paying men and
woman unequal pay for equal work;

 

  E. the Pregnancy Discrimination Act,

 

  F. the Family and Medical Leave Act,

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  G. the Employee Retirement Income Security Act,

 

  H. the National Labor Relations Act,

 

  I. the Labor Management Relations Act,

 

  J. the Sarbanes-Oxley Act of 2002,

 

  K. the Pennsylvania Wage Payment and Collection Law,

 

  L. the Pennsylvania Human Relations Act, or

 

  M. any other federal, state or local laws, rules or regulations prohibiting
employment discrimination or regulating human or civil rights.

This also includes a release by Executive of any claims for wrongful discharge
or any tort, contract or common law claims, including claims for past or future
loss of pay or benefits, expenses, damages for pain and suffering, mental
anguish or emotional distress damages, liquidated damages, punitive damages,
compensatory damages, attorney’s fees, interest, court costs, physical or mental
injury, damage to reputation, and any other injury, loss, damage or expense or
any other legal or equitable remedy of any kind whatsoever. This release covers
both claims that Executive knows about and those he may not know about. This
Agreement does not affect Executive’s ability to file a charge with or
participate in any investigation or proceeding by the Equal Employment
Opportunity Commission, although Executive agrees and understands that he will
not receive any personal relief from any such charge.

Executive waives any right he may have under any dispute resolution process of
the Company to arbitrate the claims that Executive has released by entering into
this Agreement. This release does not include, however, a release of the
following:

 

  (1) Executive’s right, if any, to vested pension or retirement savings plan
benefits under the Company’s standard programs, plans and policies;

 

  (2) Claims Executive may have against Company or its insurers for
indemnification under corporate charters or by-laws, director and officer
insurance, or other similar protection afforded Company officers or directors to
provide them with protection from claims third parties may make.

 

  (3) Claims Executive may have against Company for failing to comply with any
provision of this Agreement.

 

6. No Future Lawsuits.

Executive promises never to file a lawsuit asserting any claims that are
released in Section 6. If Executive or anyone else on Executive’s behalf files a
lawsuit asserting any of these claims, Executive waives his right to receive any
monetary award or

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reinstatement as an employee of the Company. Executive agrees that this
Agreement is a complete and total bar to his reemployment or to recovery of any
money from the Company resulting from any lawsuit, charge or complaint raising
any claims that are released in Section 6. Executive understands that he is not
waiving the right to test the knowing and voluntary nature of this release
agreement in court.

 

7. Non-Admission of Liability.

The Company makes this Agreement to avoid the cost of defending against any
possible lawsuit. By making this Agreement, the Company does not admit that it
has done anything wrong.

 

8. Non-Release of Future ADEA Claims.

This Agreement does not waive or release any rights or claims that Executive may
have under the Age Discrimination in Employment Act or any other laws or
statutes that arise after the date Executive signs this Agreement.

 

9. Period for Review and Consideration of Agreement; Executive’s Right to Revoke
Agreement.

Executive understands that Executive has up to 21 days to review and consider
this Agreement. If Executive should elect to sign this Agreement in less than 21
days, Executive expressly waives Executive’s right to the full 21-day period to
review and consider this Agreement. Executive further understands that Executive
may revoke the Agreement at any time during the seven-day period following
Executive’s signing of the Agreement. Executive further understands that, if
Executive fails to sign the Agreement or revokes the Agreement, Company shall
have no obligation to provide separation pay and benefit payments set forth in
Sections 2-3 of this Agreement, as well as the other benefits described in this
Agreement, to Executive. Revocation shall be in writing and shall be effective
upon timely receipt by:

Rex Energy Corporation

Attention: General Counsel

476 Rolling Ridge Drive, Suite 300

State College, Pennsylvania 16802

 

10. Consultation with Attorney.

Executive acknowledges that Company has afforded Executive an opportunity to
engage and consult with legal counsel of Executive’s choosing in connection with
the negotiation and entering into of this Agreement, and that he has, in fact,
consulted with legal counsel prior to entering into this Agreement. The Company
agrees to reimburse Executive up to $7,500 in connection with such a
consultation.

 

11. Restrictive Covenants and Harmful Statements.

Executive and the Company acknowledge and agree that Section 9 of the Employment
Agreement shall remain in full force and effect following Executive’s
termination of employment according to the terms of Section 9, including the
expiration or termination provisions thereof, and that the terms thereof are
hereby specifically incorporated herein and made part hereof. Executive and the
Company agree that during the Restricted

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Period (as defined in the Employment Agreement), Executive may work as an
attorney at a law firm representing other oil and gas companies or oilfield
service firms or work as an attorney for an oilfield services firm that is not
in the business of exploration or production of oil or gas, provided in each
case that such representation is not directly adverse to the Company’s
interests.

 

12. Binding Effect.

This Agreement is binding on the representatives, heirs, successors and assigns
of Executive and the Company.

 

13. Severability.

The provisions of this Agreement are severable, that is, if any part of it is
found to be invalid or unenforceable, the other parts will remain valid and
enforceable and shall be construed to the greatest extent possible to be
enforceable as written.

 

14. Return of Company Property.

Executive has returned or will immediately return to the Company all Company
information and related reports, files, memoranda and records, computer disks or
other storage media, physical or personal property which Executive was provided
during his employment, including credit cards, card key passes, door and file
keys, computers, cellular phone, pagers or leased vehicle. Executive has
returned or will immediately return to the Company all items set forth in the
immediately preceding sentence that Executive received or prepared or helped
prepare in connection with his employment, and Executive has not retained or
will not retain any copies, duplicates, reproductions or excerpts thereof.

 

23. Executive’s Death

If Executive dies prior to receipt of the payments or benefits that this
Agreement provides, Executive’s estate shall be entitled to receive any
remaining payments or benefits to the extent that Sections 2-3 provide (and
subject to the other terms and conditions of this Agreement), unless and to the
extent Executive’s current or future beneficiary designation forms for those
benefit plans that utilize such forms otherwise provide.

 

24. Interpretation & Construction.

The headings of this Agreement are for convenience only and shall not affect the
interpretation or construction of this Agreement. When used in this Agreement,
unless the context expressly requires the contrary, references to the singular
shall include the plural, and vice versa; references to the masculine shall
include the feminine and neuter, and vice versa; references to “Sections” shall
mean the sections and subsections of this Agreement; references to “including”
mean “including, without limitation”; and references to the “parties” mean the
Company and Executive and to a “party” mean either one of them.

 

25. Summaries.

If there is any inconsistency between this Agreement and any summary of this
Agreement, such as a summary provided in a document to Executive, the terms and
conditions of this Agreement shall control and the summary shall not be used to
interpret or construe this Agreement.

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26. Governing Law.

The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania without regard
to its conflicts of law principles.

 

27. Counterparts.

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

 

28. Entire Agreement.

This is the entire Agreement between Executive and the Company and supersedes
all prior understandings, whether oral or written, between the Company and
Executive, other than any confidentiality, trade secret or non-competition
agreements with Executive (including, without limitation, Section 9 of the
Employment Agreement). Except with respect to Sections 9 and 10 of the
Employment Agreement, the Employment Agreement shall terminate as of the Date of
Termination. The Company has made no promises to Executive other than those in
this Agreement.

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EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS
VOLUNTARILY ENTERING INTO THIS AGREEMENT.

PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.

 

               Agreed:      ATTEST:       Rex Energy Corporation   

/s/ AMY CZEKAJ

     

/s/ THOMAS C. STABLEY

   Name:    AMY CZEKAJ       Name: Thomas C. Stabley    Title:    Administrative
Assistant      

Title: Executive Vice President and

Chief Financial Officer

                              Agreed:      ATTEST:       Rex Energy Operating
Corp.   

/s/ AMY CZEKAJ

     

/s/ THOMAS C. STABLEY

   Name:    AMY CZEKAJ       Name: Thomas C. Stabley    Title:    Administrative
Assistant       Title: Vice President and Treasurer             Daniel J. Churay
           

/s/ DANIEL J. CHURAY