exhibit10_1.htm


    
      

      

    

    
 

     

     

    SEPARATION
      AGREEMENT

     

    THIS
      SEPARATION AGREEMENT (this “Separation
      Agreement”) by and between Thomas F. Shields (the
“Executive”) and Rex Energy
      Operating Corp., a
      Delaware corporation (the “Company”), is made and
      entered into as of December 17, 2007 (the “Effective
      Date”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      the Executive served as the President and Chief Operating Officer of the Company
      and its parent, Rex Energy Corporation (“Rex”), and
      currently serves as President of the Company and of Rex;

     

    WHEREAS,
      the Executive’s employment with the Company is subject to an Employment
      Agreement dated as of August 1, 2007 (the “Employment
      Agreement”);

     

    WHEREAS,
      the Executive desires to terminate his employment with the Company effective
      on
      May 30, 2008 (the “Date of Termination”);
      and

     

    WHEREAS,
      the Executive and the Company desire to set forth the parties agreements and
      understandings regarding Executive’s benefits upon the termination of
      Executive’s employment

     

    NOW,
      THEREFORE, in consideration of the premises and the respective
      covenants and agreements of the parties herein contained, the parties hereto
      agree as follows:

     

    1.  To
      the
      extent the terms of this Separation Agreement contradict the terms of the
      Employment Agreement, the terms of this Separation Agreement shall supersede
      the
      terms of the Employment Agreement.  Except as amended by this
      Separation Agreement, the Employment Agreement shall remain in full force and
      effect.  All references to “Agreement” contained in the Employment
      Agreement shall be deemed to be a reference to the Employee Agreement, as
      modified by this Separation Agreement.  Certain capitalized terms used
      herein that are not otherwise defined are defined in Employment Agreement,
      and
      the terms defined in this Separation Agreement shall be incorporated in the
      Employment Agreement.

     

    2.  Until
      the
      close of business on the Date of Termination, Executive shall continue to be
      employed as President of the Company and Rex, and the Executive’s Principal
      Place of Employment shall be the Company’s office in Canonsburg,
      Pennsylvania.  At the close of business on the Date of Termination,
      the Executive’s employment with the Company is hereby terminated.

     

    3.  Following
      Executive’s termination and satisfaction of the conditions herein, the Company
      shall pay or provide the Executive (and his dependents, if applicable) with
      the
      following separation benefits:

     

    (a)  the
      Accrued Obligation on the Company’s customary payroll date next following or
      coincident with the Date of Termination;

     

    (b)  if
      Executive requests a distribution of his benefits under the Company’s 401(k)
      plan at any time after the Date of Termination, distribution of such benefits
      within 30 days of such request;

     

    (c)  for
      a
      period of six (6) months following the Date of Termination (and under the same
      terms and conditions), the medical insurance benefit coverage as described
      in
      Section 9(e)(iv) of the Employment Agreement;

     

    (d)  an
      amount
      equal to one-half of his annual Base Salary for the 2008 fiscal year, which
      amount shall be payable (x) in a single lump sum payment on
      December 1, 2008 or (y) if as of the date of the Date of
      Termination the Executive is a not a “specified employee” (as defined
      in Section 409A(a)(2)(B)(i) of the Code and as determined by the
      Compensation Committee in its sole discretion) (a “Specified
      Employee”), in approximately equal installments for a period of six (6)
      months following the Date of Termination in accordance with the Company’s
      customary payroll practices; and

     

    (e)  an
      amount
      equal to the product of (1) the monthly basic life insurance premium
      applicable to the Executive’s basic life insurance coverage immediately prior to
      the Date of Termination and (2) six (6) in a single lump sum payment on
      (x) December 1, 2008 or (y) if as of the Date of
      Termination the Executive is not a Specified Employee, May 30,
      2008.

     

    All
      payments and benefits hereunder shall be subject to applicable withholding
      taxes.

     

    4.  In
      addition to the separation benefits set forth in Section 3 of this Agreement,
      the Executive shall also receive the Executive’s Annual Bonus for the 2007
      fiscal year payable in a single lump sum payment at a time and in a manner
      consistent with the Company’s customary practices, provided, that the
      amount of the payment provided in this section shall not be less than fifteen
      percent (15%) of Executive’s annual Base Salary for the 2007 fiscal
      year.

     

    5.  The
      restrictions under Section 10(b) of the Employment Agreement shall
      terminate on November 30, 2008 and the restrictions under and Section 10(c)
      of
      the Employment Agreement shall terminate on May 30, 2009.

     

    6.  Pursuant
      to Section 20 of the Employment Agreement and in consideration of the
      benefits provided herein, on the Date of Termination, Executive shall execute
      the Release in the form attached to the Employment Agreement as Exhibit
      A.

     

    7.  The
      Executive hereby resigns as a member of the Board of Directors of the Company,
      Rex and all subsidiaries of Rex effective as of the date of this
      Agreement.

     

    8.  The
      compensation and benefits payable to the Executive or his beneficiary under
      this
      Separation Agreement shall be in lieu of any other severance benefits to which
      the Executive may otherwise be entitled upon his termination of employment
      or
      resignation from the Board of Directors of the Company, Rex or its subsidiaries
      under the Employment Agreement or any other employment agreement or severance
      plan, program, policy or arrangement of the Company or Rex.

     

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

     

    10.  This
      Separation 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.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the date
      first above written.

     

    
      	
              REX
                ENERGY OPERATING CORP. (THE “COMPANY”)

            	 	
              THOMAS
                F. SHIELDS (“EXECUTIVE”)

            	 
	
              By:

            	
              /s/   Benjamin
                W. Hulburt

            	 	
              /s/   Thomas
                F. Shields

            	 
	 	
              Benjamin
                W. Hulburt, Chief Executive

            	 	 	 
	 	
              Officer