Document:

pfsw-ex102_712.htm

Exhibit 10.2

 

PRIORITY FULFILLMENT SERVICES, INC.

 

 

Ms. Cynthia Almond

4716 Eva Place

Plano, TX 75093

 

Re:Separation Agreement and General Release

 

Dear Cindy:

 

This letter agreement (the “Agreement”) shall confirm that your employment with Priority Fulfillment Services, Inc., together with its parent organization, PFSweb, Inc. and the subsidiaries and affiliates of PFSweb, Inc. (collectively, the “Company”), has been terminated as of April 28, 2017 (the “Termination Date”).  This Agreement sets forth our mutual understanding as to the terms and conditions regarding the termination of your employment with the Company.

1.As of the Termination Date, you will not be required to perform any further services on behalf of the Company as an employee, and no further compensation will be paid by the Company to you or on your behalf, except as set forth in this Agreement.

2.(a)The Company shall pay you all unpaid wages, bonus compensation, and expense reimbursements.  All legally mandated withholdings shall be deducted from any wage or bonus payments.  The foregoing payment of unpaid wages, bonus compensation, and expense reimbursements will be made to you within six (6) calendar days of the Termination Date, irrespective of whether or not you execute this Agreement.

(b)Following the Termination Date, the Company shall continue payment of your base salary at your annual base rate of Three Hundred and Ten Thousand Dollars and 00/100 ($310,000.00) for a period of twenty-four (24) months (each a “Salary Continuation Payment” and, collectively, the “Salary Continuation Payments”).  The Salary Continuation Payments will be made in accordance with the Company’s normal payroll schedule.  In accordance with applicable law, the Company will deduct all statutory or required withholdings from the Salary Continuation Payments.

(c)All of your medical, dental and insurance benefits will continue for a period of twenty-four (24) months following the Termination Date, or such earlier time as you are eligible for medical benefits through new employment or a consulting agreement, under the same terms as immediately prior to the Termination Date.  The Company will continue to pay for the insurance premium payments (the “Insurance Premium Payments”) upon the same terms as in effect immediately prior to the Termination Date.  As of the last day of the twenty-fourth (24th) month following the Termination Date, all group medical, dental and/or prescription drug coverage benefits provided to you and/or your dependents under the Company’s group health plans will be terminated.  You and your dependents, if any, currently enrolled in the Company’s group health insurance plans will be entitled to continuation coverage under the Consolidated 

 

Omnibus Budget and Reconciliation Act (“COBRA”).  Notice of your right to elect continuation coverage pursuant to COBRA will be sent to you.

(d)For a period of twenty-four (24) months following the Termination Date you will continue to receive the following benefits: an auto allowance of $1,000 per month, reimbursement of auto-related expenses in accordance with Company policy, continued use of your cell phone (subject to Section 12(a) below), reimbursement for a $750,000 life insurance policy, coverage for $20,000 group life and AD&D policies, coverage for long-term disability. You will also receive a single lump sum payment of $5,000.00 in lieu of the corresponding Salary Continuation Payments employer match for your 401(k) plan.  If you become employed by another employer within twenty-four (24) months of the Termination Date and receive benefits through that employer, the Company will continue paying the Insurance Premium Payments and the benefits described in this Paragraph 2(d) only to the extent that your new employer does not provide you with similar or equivalent benefits.

(e)Upon the effective date of this Agreement, 1,250 Restricted Stock Units will vest in accordance with the terms of your March 2015 Restricted Stock Unit Agreement. 

(f)Following the Termination Date, all unvested Options, as defined in the PFSweb 2005 Employee Stock and Incentive Plan (the “Plan”), currently held by you shall vest and shall be exercisable for the original exercise period as set forth in the attached schedule.

3.(a)Following the Termination Date, and provided that you execute and do not revoke this Agreement pursuant to Paragraph 16(c) below, the Company shall issue to you 18,085 shares of PFSweb, Inc. common stock as a one-time “Other Stock Based Award” under the Plan (the “Severance Consideration”).

(b)You acknowledge that the Severance Consideration set forth above is more than that to which you are now or in the future may be entitled from the Company, and is being provided to you as consideration for your acceptance and execution of this Agreement and as a condition of your providing the Release set forth in Paragraphs 6 and 15 below. 

4.You acknowledge and agree that, except as set forth in Sections 2(e) and (f) above, all previously granted awards under the Plan, if any, are terminated and forfeited, and that the Change in Control Severance Agreement between you and PFSweb, Inc. dated January 17, 2001 (the “CIC Agreement”) is terminated, except that, effective upon the consummation of a “Change in Control” (as defined in the CIC Agreement) occurring after the date hereof, all then remaining unpaid Salary Continuation Payments shall be due and payable. 

5.Nothing contained in this Agreement is intended to waive your rights to receive unemployment insurance benefits from the Texas Workforce Commission.  If you are eligible, the Company will not oppose any application for such benefits filed by you.  Nothing contained in this Agreement constitutes a promise or guarantee that you will be eligible for unemployment insurance benefits; you acknowledge and agree that any such determination of eligibility shall be made solely by the Texas Workforce Commission.

6.(a)By executing this Agreement and in consideration of the terms set forth herein, you hereby release and forever discharge the Company and its present, former and future 

 

officers, owners, directors, stockholders, members, managers, employees, representatives, attorneys, agents, insurers and its corporate parents, divisions, affiliates, subsidiaries, predecessors, transferees, successors and assigns (hereinafter, the “Released Parties”) from any and all liability, actions, causes of action, proceedings, suits, debts, covenants, contracts, controversies, agreements, promises, damages, judgments, and demands of whatever nature, in law or in equity, direct or indirect, known or unknown, matured or not matured that you and/or your heirs, executors, legal representatives, administrators, or assigns ever had, now have or may have in the future, through the Termination Date, against the Released Parties or any of them, such as any claim, charge or cause of action for breach of contract, tort or harassment or discrimination (a “Claim” or “Claims”) under any federal, state or local law, rule, regulation or executive order, to the extent any such Claim may be released and discharged under applicable law, including but not limited to: (i) any and all Claims arising under Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Older Workers Benefit Protection Act, as amended; the Rehabilitation Act of 1973; the Americans with Disabilities Act, as amended; the Family and Medical Leave Act, as amended; the Employee Income Retirement Security Act of 1974; the Civil Rights Act of 1866; the Civil Rights Act of 1991; United States Executive Orders 11246 and 11375; Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act, as amended; the Consolidated Omnibus Budget Reconciliation Act, as amended; the Occupational Safety and Health Act, as amended; the Genetic Information Nondiscrimination Act of 2008; the Fair Labor Standards Act; the Immigration Reform and Control Act of 1986; and the Worker Adjustment and Retraining Notification Act of 1988; (ii) any and all Claims arising under any provisions of Texas law, including but not limited to Chapter 21 of the Texas Labor Code, the Texas Payday Act, the Texas Anti-Retaliation Act, and the Texas Whistleblower Act, and amendments to those laws, as well as any Claims under local statutes and ordinances that may be legally waived and released; and (iii) any other federal, state or local law, as all such laws as may be amended from time to time.  

(b)You further represent and warrant that as of the date of your execution of this Agreement, there are no complaints, charges or other matters filed by you or pending before any federal, state or local court or agency against the Released Parties (other than worker’s compensation claims filed by you, if any), and that in the future, you will not file or cause to be filed any action, complaint, charge or other matter with any federal, state or local court or agency against the Released Parties or any of them arising out of events occurring prior to your execution of this Agreement.  

(c)Nothing contained in this Release shall restrict your right to file a charge or participate in an investigation, hearing or proceeding before the Equal Employment Opportunity Commission or other administrative agency, except that you agree that you will not accept any further recovery, award and/or damages from the Company as a result of any such investigation.  This Release does not waive rights or claims that you may have which arise after the date this Agreement is executed. This Release does not waive your right to indemnification from the Company under the Company’s Bylaws nor under any D&O insurance policy now or hereafter maintained by or on behalf of the Company. This Release does not release the Company from any of its obligations set forth in this Agreement.

 

7.You hereby agree that you will not: (a) make any disparaging or negative comments or statements, including but not limited in any way to any posts, comments or statements published or uploaded to, appearing on, any social and/or professional media platform about any Released Party, or their business, services, reputation, officers, directors, members, managers, employees, financial status or operations; or (b) do anything that damages any Released Party in any business relationship, or denigrates any Released Party, or its services, reputation, officers, directors, members, managers, employees, financial status or operations. The Company similarly agrees not to make any disparaging or negative comments about you. The provisions of this Section, however, shall not prevent either party from enforcing the terms of this Agreement.

8.Without limitation of any other agreement signed by you:

(a)  You acknowledge the Company's exclusive ownership of all information useful in the business of the Company, its subsidiaries and its affiliates (including its dealings with suppliers, customers and other third parties, whether or not a legal "trade secret"), which at the time or times concerned is not generally known to persons engaged in businesses similar to those conducted by the Company, and which has been or is from time to time disclosed to, discovered by, or otherwise known by you as a consequence of her employment by the Company (including information conceived, discovered or developed by you during your employment with the Company) (collectively, "Confidential Information"). Confidential Information includes, but is not limited to, the following especially sensitive types of information: (i) the identity, purchase and payment patterns of, and special relations with, the Company's customers; (ii) the Company's business development and marketing plans; (iii) the identity, net prices and credit terms of, and special relations with, the Company's suppliers; and (iv) the Company's finances, except to the extent publicly disclosed.

(b)  The term "Proprietary Materials" shall mean all business records, documents, drawings, writings, software, programs and other tangible things which were or are created or received by or for the Company in furtherance of its business, including, but not limited to, those which contain Confidential Information.  For example, Proprietary Materials include the following especially sensitive types of materials: applications software, the data bases of Confidential Information maintained in connection with such software, and printouts generated from such data bases; market studies and strategic plans; customer, supplier and employee lists; contracts and correspondence with customers and suppliers; documents evidencing transactions with customers and suppliers; sales calls reports, appointment books, calendars, expense statements and the like, reflecting conversations with any company, customer or supplier; and purchasing, sales and policy manuals.  Proprietary Materials also include any such things that are created by you or with your assistance and all notes, memoranda and the like prepared using the Proprietary Materials and/or Confidential Information.

(c)   While some of the information contained in Proprietary Materials may have been known to you prior to your employment with the Company, or may now or in the future be in the public domain, you acknowledges that the compilation of that information contained in the Proprietary Materials has or will cost the Company a great effort and expense, and affords persons to whom Proprietary Materials are disclosed, including you, a competitive advantage over persons who do not know the information or have the compilation of the Proprietary 

 

Materials. You further acknowledge that Confidential Information and Proprietary Materials include commercially valuable trade secrets and become the Company's exclusive property when they are conceived, created or received. You agree that all discoveries, inventions and improvements, whether or not patentable, and which either (i) relate to or arise out of any part of the Company's business in which you participated, or (ii) incorporate or make use of Confidential Information or Proprietary Materials (all items referred to in this Section being sometimes collectively referred to herein as the "Intellectual Property") shall be deemed Confidential Information of the Company, and any writing or other tangible things describing, referring to, or containing Intellectual Property shall be deemed the Company's Proprietary Materials. At the request of the Company, at any time, you (or after your death, your personal representative) shall, at the expense of the Company, make, execute and deliver all papers, assignments, conveyances, installments or other documents, and perform or cause to be performed such other lawful acts, and give such testimony, as the Company deems necessary or desirable to protect the Company's ownership rights and Intellectual Property.

(d)  You shall, except as may be required by law, at all times during the two-year period following the Termination Date: (i)  comply with all of the Company's reasonable instructions (whether oral or written) for preserving the confidentiality of Confidential Information and Proprietary Materials; (ii) not use Confidential Information and Proprietary Materials for any purpose; (iii)  not disclose any Confidential Information or Proprietary Materials except as expressly authorized by the Company in writing; (iv)  not copy all or any part of Proprietary Materials; (v) not sell, give, loan or otherwise transfer any copy of all or any part of Proprietary Materials to any person who is not an employee of the Company; and (vi) not publish, lecture on or otherwise disclose to any person who is not an employee of the Company,  all or any part of Confidential Information or Proprietary Materials; and not use all or any part of any Confidential Information or Proprietary Materials for the benefit of any third party without the Company's written consent.

9.Promptly following the Termination Date, you shall promptly surrender to the Company the original and all copies of Proprietary Materials (including all notes, memoranda and the like concerning or derived therefrom), whether prepared by you or others, which are then in your possession or control.  Records of payments made by the Company to or for the benefit of you, your copy of this Agreement, your personal diaries, personal mementos, personal effects shall not be deemed Proprietary Materials for purposes of this Section, and other such things, lawfully possessed by you which relate solely to taxes payable by you, employee benefits due to you or the terms of your employment with the Company, shall also not be deemed Proprietary Materials for purposes of this Section.

10.Without limitation of any other agreement, and in order to protect the valid business interests of the Company, and in consideration of the Severance Consideration provided hereunder, You covenant and agree as follows:

(a)  During the two year period following the Termination Date (herein, the “Restricted Period”):

(i) You will not, whether directly or indirectly, and whether on your own behalf or as an employee, officer, director, consultant, advisor, agent, 

 

representative, shareholder, partner, independent contractor or in any capacity on behalf of any sole proprietorship, corporation, partnership, joint venture, person or other entity which in any way competes with the Company or its business, solicit or attempt to solicit any client or customer of the Company or any person or entity which at any time during the six months prior to the Termination Date was then a prospective client or customer of the Company;

 (ii) You will not attempt in any manner to persuade any of the customers of the Company to cease doing business or reduce the amount of business which any of such customers has done or may contemplate doing with the Company; 

(iii)  You will not, whether directly or indirectly, and whether on your own behalf or as an employee, officer, director, consultant, advisor, agent, representative, shareholder, partner, independent contractor or in any capacity on behalf of any sole proprietorship, corporation, partnership, joint venture, person or other entity, employ any person who at any time during the Restricted Period is or was an employee of the Company;

(iv) You will not, directly or indirectly, be employed by, provide consulting services to, or otherwise assist, participate or facilitate the business of, any of the companies or entities listed on Exhibit A attached hereto.  

(v)  For purposes of the foregoing, “directly or indirectly” means in your individual capacity for your own benefit or for the benefit of any other person, or as an employee, officer, director, agent, representative, consultant, advisor, shareholder, partner, member or other principal. 

(b)You acknowledge that your position with the Company required the performance of services which are, and were, special, unique and extraordinary and such position placed her in a position of confidence and trust with the customers of the Company, and accordingly the restrictions contained in this Agreement   are reasonable and necessary in view of the nature of the Company’s businesses, in order to protect the legitimate interests of the Company, and that any violation thereof would result in irreparable injury to the Company.  Therefore, you agree that, in the event of a breach or threatened breach by you of the provisions of this Agreement, the Company shall be entitled to obtain from any court of competent jurisdiction, preliminary and permanent injunctive relief restraining you from any violation of the foregoing.

(c)You acknowledge that you have the ability to earn a livelihood notwithstanding compliance with this Agreement and that you have entered this Agreement with full understanding and acceptance of the terms hereof.  You further acknowledge that the restrictions imposed herein are fair and reasonable and are required for the protection of the Company and are given as an integral part of the provisions set forth in this Agreement.  You further acknowledge that the location of the Company’s customers and business extends beyond the geographic area of the Company’s principal office or state of incorporation and this Section  contains reasonable limitations as to time, geographical area and scope of activity, and such restrictions do not impose a greater restraint than is necessary to protect the goodwill or other 

 

business interests of the Company. If any of the covenants contained in this Agreement, or any part hereof, is hereinafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions.  If any of the covenants contained in this Agreement, or any part hereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or geographic area of such provision and, in its reduced form, said provision shall then be enforceable, it being the intent and agreement of the parties that each of the aforesaid covenants shall be deemed an independent covenant. The parties agree that in the event that the courts of any one or more of any state having jurisdiction shall hold the above covenants wholly unenforceable by reason of the breadth of scope or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the right of the Company to the relief provided above in the courts of any other states within the geographical scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each state being, for this purpose, severable into diverse and independent covenants.

11.The terms and conditions of this Agreement, and all communications, written or oral, made in connection herewith, are confidential and shall not be disclosed to any person or entity, other than to your attorney, accountant or financial advisor, or spouse, except in a proceeding to enforce the terms hereof.  In the event of a disclosure to your attorney, accountant or financial advisor, or spouse, you shall advise them that they may not make any subsequent disclosures of such information. If the Company determines that a copy of this Agreement is to be filed with the Securities and Exchange Commission (as to which you hereby consent), then the foregoing provisions regarding the confidentiality of this Agreement and its terms shall not apply. 

12.(a)You hereby agree that you will return and turn over to the Company all property belonging to the Company in your possession including, but not limited to, all Confidential Information and Proprietary Materials, as defined herein, including all documents and reproductions thereof in whatever form or medium the same was received in or maintained, as well as all keys, credit cards, computer equipment, remote access cards, security codes, and software or passwords of any sort.  You represent and warrant that you have not retained any copies or reproductions of any documents, materials or equipment belonging to the Company. You may retain your cell phone, but any Confidential Information or Proprietary Materials stored therein shall be subject to the terms hereof.

(b)Pursuant to the Defense of Trade Secrets Act, an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law.  An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such a filing is made under seal and does not disclose the trade secret, except pursuant to court order.

 

13.You hereby waive any and all claims for reinstatement or employment with the Company and any of its corporate parents, divisions, affiliates, subsidiaries, predecessors, transferees, successors and assigns.

14.In the event of a material breach of any of the terms of this Agreement, the Company may commence an action against you to enforce the terms of this Agreement in any court of competent jurisdiction within the State of Texas.  Moreover, if you breach this Agreement, you acknowledge and agree that the Company will cease providing the Severance Consideration and you shall be obligated to reimburse the Company for the Severance Consideration made to you or on your behalf by the Company pursuant to this Agreement.

15.You hereby acknowledge that: (a) this Agreement provides for the release of any claim that you may have had under the Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit Protection Act (the “ADEA”), along with the release of other claims that you may have as described in Paragraph 6 of this Agreement; and (b) the Company has provided to you information required by the ADEA as set forth in Attachment A annexed hereto and made a part hereof.  You acknowledge that you do not waive any such rights or claims that may arise after the date this Agreement is executed.

16.(a)You hereby acknowledge that: (i) the only consideration for signing this Agreement is as set forth herein; (ii) you have been advised that you have at least forty-five (45) calendar days to consider this Agreement (the “Consultation Period”); (iii) you have been advised of your right, or have been given sufficient opportunity, to consult advisors, legal and otherwise, of your own choosing; and (iv) you have signed this Agreement voluntarily and with a full understanding of its terms and conditions, which, once effective, may not be amended, supplemented, canceled or discharged except by a writing signed by you and the Company.

(b)You acknowledge that if you execute this Agreement at any time prior to the end of the Consultation Period, such early execution was a knowing and voluntary waiver of your right to consider the Agreement for at least forty-five calendar days, and was not induced by the Company through fraud, misrepresentation, threat to alter or withdraw the offer prior to the expiration of the Consultation Period, or by providing different terms to employees who sign the release prior to the expiration of the Consultation Period.  Rather, you acknowledge and agree that any early execution of this Agreement resulted from (i) your desire to expedite the processing of the consideration provided hereunder and (ii) your own belief that you had ample time to consider and understand this Agreement and review this Agreement with an attorney, during such shortened period.

(c)You acknowledge that this Agreement shall not be effective for a period of seven (7) days following your signing it and that you may revoke this Agreement for any reason during such seven (7) day period (the “Revocation Period”).  Notice of your revocation of this Agreement must be received by the Company no later than 5:00 p.m. on the seventh (7th) day following the execution of this Agreement.  

(d)You may not sign or return a signed copy of this Agreement prior to the close of business on the Termination Date.  You must return a signed copy of this Agreement after the close of business on the Termination Date and before forty-five (45) 

 

calendar days from the Termination Date has elapsed, or this Agreement and the offer of severance set forth in Paragraph 3 above shall be deemed withdrawn, and this Agreement shall be of no force and effect.   None of the Severance Consideration described in this Agreement will be paid or provided by the Company until after you return a signed copy of this Agreement and after the expiration of the Revocation Period.

17.You hereby represent and agree that you have not heretofore assigned or transferred, or purported to have assigned or transferred, to any person whomsoever, any Claim or portion thereof or interest therein.  You further agree to indemnify, defend and hold harmless each and all of the Released Parties against any and all Claims based on, arising out of, or in connection with any such transfer or assignment, or purported transfer or assignment, of any Claims or any portion thereof or interest therein. 

18.This Agreement shall not constitute nor be construed as an admission by either party or any misconduct or violation of any federal, state or local law, rule or regulation, or any contractual obligation or Company procedure.  Accordingly, this Agreement shall not be admissible in any proceeding except one to enforce the terms of this Agreement.

19.This Agreement constitutes the complete understanding between you and the Company and fully supersedes any prior understandings or agreements, whether written or oral, between you and the Company regarding the subject matter hereof. This Agreement supersedes and replaces your Executive Severance Agreement dated June 1, 2016.

20.If any provision of this Agreement is subsequently declared by any court or agency of competent jurisdiction to be illegal, void or unenforceable, as written, the remaining provisions of this Agreement shall nevertheless remain in full force and effect.  This Agreement shall be construed and governed for all purposes in accordance with the laws and public policy of the State of Texas without regard to principles of conflict of laws.

21.No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by you and by a duly authorized officer of the Company.  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.  Failure by you or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right you or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. 

22.Each payment hereunder shall constitute a separate payment for purposes of Section 409A of the Internal Revenue Code of 1986, as amended and the Treasury regulations promulgated thereunder (“Section 409A”). The parties agree that it is the intent of the parties to comply with the applicable provisions of Section 409A, and this Agreement may be amended, as reasonably requested by either party, as may be necessary to fully comply with said Section 409A in order to preserve the payments and benefits provided hereunder without additional cost to either party.  Without in any way limiting the generality of the foregoing, the parties intend (a) the payments hereunder to be exempt from Section 409A to the maximum extent permitted under 

 

the short-term deferral rule of Treasury Regulation Section 1.409A-1(b)(4) and/or the separation pay exemption under Treasury Regulation Section 1.409A-1(b)(9)(iii) and (b) the benefits provided hereunder to be exempt from 409A under Treasury Regulation Section 1.409A-1(b)(9)(v)(B) or 1.409A-1(a)(5) (relating to certain welfare benefits).  Notwithstanding the foregoing, the Company does not make any representations, warranties or guarantees about the tax treatment of any payments or continuation of benefits hereunder, under Section 409A or otherwise.

[next page is signature page]

 

 

Exhibit 10.2

 

Please confirm that this letter accurately sets forth our agreement by signing below and returning two (2) originals to me.

 

Sincerely yours,

Priority Fulfillment Services, Inc.

 

 

By: 

       Tom Madden, Executive Vice President

        

 

 

I acknowledge that I have carefully read this Agreement and understand all of its terms including the full and final Release of Claims as set forth above.  I further acknowledge that I have voluntarily entered into this Agreement, that I have not relied upon any representation or statement, written or oral, not set forth in this Agreement, and that I have had this Agreement reviewed by my attorney, or have been given the opportunity by the Company to do so.

 

AGREED TO, ACCEPTED

AND CONFIRMED BY:

 

___________________________

MS. CYNTHIA ALMOND

Dated: May ___, 2017

 

 

 

 

 

 

 

 

 

 

 

 

THIS IS A LEGAL AGREEMENT AND GENERAL RELEASE NOT TO SUE. 

THIS SEPARATION AGREEMENT AND RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

READ CAREFULLY BEFORE SIGNING.

 

Exhibit 10.2rexx-ex101_293.htm

Exhibit 10.1

Execution Version

Twelfth Amendment

To

 

Amended and Restated Credit Agreement

Among

 

Rex Energy Corporation,

as Borrower,

The Guarantors,

Royal Bank of Canada,

as Administrative Agent,

KeyBank National Association,

as Syndication Agent,

SunTrust Bank,

as Documentation Agent,

RBC Capital Markets,

KeyBank National Association,

and

SunTrust Bank,

as Joint Lead Arrangers and Joint Bookrunners,

and

The Lenders Signatory Hereto

Dated as of January 11, 2017

 

 

Twelfth Amendment to Amended and Restated Credit Agreement

This Twelfth Amendment to Amended and Restated Credit Agreement (this “Twelfth Amendment”) dated as of January 11, 2017 is among Rex Energy Corporation, a corporation formed under the laws of the State of Delaware (the “Borrower”); each of the undersigned guarantors (the “Guarantors”, and together with the Borrower, the “Obligors”); Royal Bank of Canada, as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”); and the Lenders signatory hereto.

Recitals

A.The Borrower, the Administrative Agent and the Lenders are parties to that certain Amended and Restated Credit Agreement dated as of March 27, 2013 (as amended by the First Amendment to Amended and Restated Credit Agreement dated as of January 14, 2014, the Second Amendment to Amended and Restated Credit Agreement dated as of March 26, 2014, the Third Amendment to Amended and Restated Credit Agreement dated as of July 11, 2014, the Fourth Amendment to Amended and Restated Credit Agreement dated as of August 15, 2014, the Fifth Amendment to Amended and Restated Credit Agreement dated as of September 12, 2014, the Sixth Amendment to Amended and Restated Credit Agreement dated as of December 16, 2014, the Seventh Amendment to Amended and Restated Credit Agreement dated as of March 27, 2015, the Eighth Amendment to Amended and Restated Credit Agreement dated as of September 4, 2015, the Ninth Amendment to Amended and Restated Credit Agreement dated as of February 3, 2016, the Tenth Amendment to Amended and Restated Credit Agreement dated as of March 14, 2016, and the Eleventh Amendment to Amended and Restated Credit Agreement dated as of July 1, 2016, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

B.The Borrower and Guarantors are parties to that certain Amended and Restated Guaranty and Collateral Agreement dated as of March 27, 2013 made by each of the Grantors (as defined therein) in favor of the Administrative Agent (such agreement, as may be from time to time be amended, amended and restated, supplemented or otherwise modified, the “Guaranty”).

C.The Borrower, the Administrative Agent and the Lenders have agreed to amend certain provisions of the Credit Agreement as more fully set forth herein.

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

Section 1.Defined Terms.  Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Twelfth Amendment, shall have the meaning ascribed such term in the Credit Agreement.  Unless otherwise indicated, all section and article references in this Twelfth Amendment refer to sections or articles of the Credit Agreement.  In addition, the following capitalized terms used in this Twelfth Amendment shall have the following meanings:

Page 1

LEGAL_US_W # 88108163

“Warrior South Disposition” means the sale of the Oil and Gas Properties and other Properties disposed of by R.E. Gas Development, LLC pursuant to the Warrior South Disposition Documents.

“Warrior South Disposition Documents” means (a) that certain Purchase and Sale Agreement, dated January 3, 2017, by and among R.E. Gas Development, LLC, MFC Drilling, Inc., ABARTA Oil & Gas Co., Inc. and Antero Resources Corporation  and (b) all bills of sale, assignments, agreements, instruments and documents executed and delivered in connection therewith.

Section 2.Amendments to Credit Agreement.  

2.1The following definitions are hereby added to Section 1.02 where alphabetically appropriate to read as follows:

“Twelfth Amendment Effective Date” has the meaning ascribed to such term in the Twelfth Amendment.

“Twelfth Amendment” means that certain Twelfth Amendment to Amended and Restated Credit Agreement, dated as of January 11, 2017, among the Borrower, the Guarantors, the Administrative Agent and the Lenders party thereto.

2.2The definition of “LC Commitment” in Section 1.02 is hereby amended and restated in its entirety to read as follows:

“LC Commitment” means the greater of (i) forty million dollars ($40,000,000) and (ii) (a) fifty million dollars ($50,000,000) minus (b) an amount equal to the portion of the face amount of all Surety LCs reduced or terminated on or after the Twelfth Amendment Effective Date in excess of $10,000,000 in the aggregate.  Each reduction of the LC Commitment resulting from the reduction or termination of Surety LCs shall (x) automatically occur on the date of the reduction or termination of such Surety LC and (y) be permanent.  As used herein, “Surety LCs” means Letters of Credit issued as credit support for surety bonds issued to secure obligations under firm transportation contracts.

Section 3.Conditions Precedent.  This Twelfth Amendment shall become effective on the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02) (the “Twelfth Amendment Effective Date”):

3.1Twelfth Amendment.  The Administrative Agent shall have received multiple counterparts as requested of this Twelfth Amendment from the Borrower, each other Obligor, the Required Lenders and the Issuing Bank. 

3.2No Default.  No Default or Event of Default shall be continuing as of the Twelfth Amendment Effective Date.

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3.3Payment of Outstanding Invoices.  Payment by the Borrower to the Administrative Agent of all fees and other amounts due and payable on or prior to the Twelfth Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower (including, but not limited to the reasonable fees of Paul Hastings LLP). 

3.4Warrior South Disposition Documents.  The Administrative Agent shall have received (or concurrently with the Twelfth Amendment Effective Date shall receive) a certificate from a Responsible Officer certifying (i) that attached to such certificate are true, accurate and complete copies of the material Warrior South Disposition Documents, (ii) that concurrently with the Twelfth Amendment Effective Date, the Borrower and its Subsidiaries are consummating the Warrior South Disposition, substantially in accordance with the terms of the Warrior South Disposition Documents (without giving effect to any amendment, modification or supplement thereto not otherwise consented to by the Administrative Agent) and (iii) as to the net cash proceeds received by the Borrower and its Subsidiaries for the Oil and Gas Properties and other Properties disposed of by the Borrower and its Subsidiaries pursuant to the Warrior South Disposition Documents after giving effect to all adjustments as of the Twelfth Amendment Effective Date contemplated by the Warrior South Disposition Documents.

3.5Prepayment.  The Administrative Agent shall have received (or concurrently with the Twelfth Amendment Effective Date shall receive), a voluntary prepayment of the Loans in an aggregate amount equal to the lesser of (a) 100% of the net cash proceeds received by the Borrower and its Subsidiaries as consideration for the Warrior South Disposition and (b) the amount necessary such that after giving effect to such prepayment, Cash Liquidity does not exceed $15,000,000.

The Administrative Agent is hereby authorized and directed to declare this Twelfth Amendment to be effective and to declare the occurrence of the Twelfth Amendment Effective Date when it has received documents confirming compliance with the conditions set forth in this Section 3 or the waiver of such conditions in accordance with Section 12.02 of the Credit Agreement.  Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.  For purposes of determining compliance with the conditions specified in this Section 3, each Lender that has signed this Twelfth Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender, unless the Administrative Agent shall have received written notice from such Lender prior to the Twelfth Amendment Effective Date specifying its objection thereto.

Section 4.Limited Waiver.  

4.1The Borrower has informed the Administrative Agent and the Lenders that the Warrior South Disposition will result in an automatic reduction of the Borrowing Base pursuant to Section 9.12(d) (the “Asset Disposition BB Reduction Requirement”).  The Borrower has requested that the Lenders waive, and the Lenders do hereby waive, the Asset Disposition BB Reduction Requirement that would occur solely as a result of the Warrior South Disposition; provided that, it is a condition to the foregoing waiver that the Warrior South Disposition is consummated on or before the next Redetermination Date; provided further that, for the avoidance 

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LEGAL_US_W # 88108163

of doubt, the foregoing waiver is only given for the Asset Disposition BB Reduction Requirement, and this waiver shall in no event be construed to waive any other reductions to the Borrowing Base made in accordance with the terms and conditions of the Credit Agreement that are based on dispositions of any other Property or the Liquidation of any Swap Agreements (it being understood and agreed that a disposition of any other Property or the Liquidation of any Swap Agreements regulated by Section 2.07(f) or a disposition of Property regulated by Section 9.12(d) in each case on or prior to the next Scheduled Redetermination Date will result in a reduction of the Borrowing Base pursuant to Section 2.07(f) or Section 9.12(d), as the case may be, unless, in each case, the requirements of such sections are otherwise waived in a separate written agreement in accordance with Section 12.02).

4.2Except as expressly waived herein, all covenants, obligations and agreements of the Obligors contained in the Credit Agreement and the other Loan Documents shall remain in full force and effect in accordance with their terms.  Without limitation of the foregoing, the foregoing waivers are hereby granted to the extent and only to the extent specifically stated herein and for no other purpose and shall not be deemed to (a) be a consent or agreement to, or waiver or modification of, or amendment to, any other term or condition of the Credit Agreement, any other Loan Document or any of the documents referred to therein, (b) except as expressly set forth herein, prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement, any other Loan Document or any of the documents referred to therein, or (c) constitute any course of dealing or other basis for altering any obligation of any Obligor or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument.  Granting the waivers set forth herein does not and should not be construed to be an assurance or promise that consents or waivers will be granted in the future, whether for the matters herein stated or on other unrelated matters.

Section 5.Representations and Warranties; Etc.  Each Obligor hereby affirms:  (a) that as of the date of execution and delivery of this Twelfth Amendment, after giving effect to the terms of this Twelfth Amendment, all of the representations and warranties made by it contained in each Loan Document to which it is a party are true and correct in all material respects as though made on and as of the Twelfth Amendment Effective Date (unless made as of a specific earlier date, in which case, was true and correct in all material respects as of such date); and (b) that after giving effect to this Twelfth Amendment and to the transactions contemplated hereby, no Default exists or will exist under any Loan Document to which it is a party.

Section 6.Miscellaneous.

6.1Confirmation.  The provisions of the Credit Agreement (as amended by this Twelfth Amendment) shall remain in full force and effect in accordance with its terms following the effectiveness of this Twelfth Amendment.

6.2Ratification and Affirmation of the Obligors.  Each Obligor hereby expressly (a) acknowledges the terms of this Twelfth Amendment; (b) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party, and agrees that each Loan Document to which it is a party remains in full force and effect, as amended hereby; and (c) agrees that from and after the Twelfth 

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Amendment Effective Date each reference to the Credit Agreement in the Guaranty and the other Loan Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Twelfth Amendment.

6.3Loan Document.  This Twelfth Amendment is a “Loan Document” as defined and described in the Credit Agreement and all of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto.

6.4Severability.  Any provision of this Twelfth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

6.5Successors and Assigns.  This Twelfth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6.6Counterparts. This Twelfth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of a signature page of this Twelfth Amendment by telecopy, facsimile or email transmission shall be effective as delivery of a manually executed counterpart of this Twelfth Amendment.

6.7No Oral Agreement. This written Twelfth Amendment, the Credit Agreement and the other Loan Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.

6.8Governing Law.  This Twelfth Amendment (including, but not limited to, the validity and enforceability hereof) shall be governed by, and construed in accordance with, the laws of the State of Texas.

[Signatures Begin on Next Page]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Twelfth Amendment to be duly executed effective as of the Twelfth Amendment Effective Date.

	
BORROWER:
	
 
	
REX ENERGY CORPORATION

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Thomas Rajan
	
 

	
 
	
 
	
Name:
	
Thomas Rajan
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
GUARANTORS:
	
 
	
REX ENERGY OPERATING CORP.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Thomas Rajan
	
 

	
 
	
 
	
Name:
	
Thomas Rajan
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
REX ENERGY I, LLC

	
 
	
 
	
PENNTEX RESOURCES ILLINOIS, INC.

	
 
	
 
	
REX ENERGY IV, LLC

	
 
	
 
	
R.E. GAS DEVELOPMENT, LLC

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Thomas Rajan
	
 

	
 
	
 
	
Name:
	
Thomas Rajan
	
 

	
 
	
 
	
Title:
	
Chief Financial Officer
	
 

Rex Twelfth Amendment

Signature Page

	
ADMINISTRATIVE
	
 
	
ROYAL BANK OF CANADA,

	
AGENT, ISSUING
	
 
	
as Administrative Agent

	
BANK AND LENDER:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Ann Hurley
	
 

	
 
	
 
	
Name:
	
Anne Hurley
	
 

	
 
	
 
	
Title:
	
Manager
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
ROYAL BANK OF CANADA,

	
 
	
 
	
as Issuing Bank and as Lender

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Evans Swan, Jr.
	
 

	
 
	
 
	
Name:
	
Evans Swan, Jr.
	
 

	
 
	
 
	
Title:
	
Authorized Signatory
	
 

Rex Twelfth Amendment

Signature Page

	
SYNDICATION AGENT
	
KEYBANK NATIONAL ASSOCIATION

	
AND LENDER:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/John Dravenstott
	
 

	
 
	
 
	
Name:
	
John Dravenstott
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

Rex Twelfth Amendment

Signature Page

	
DOCUMENTATION AGENT
	
SUNTRUST BANK

	
AND LENDER:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/William S. Krueger
	
 

	
 
	
 
	
Name:
	
William S. Krueger
	
 

	
 
	
 
	
Title:
	
First Vice President
	
 

Rex Twelfth Amendment

Signature Page

 

	
LENDERS:
	
 
	
BMO HARRIS FINANCING, INC.

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Kinsley McWhinnie
	
 

	
 
	
 
	
Name:
	
Kinsley McWhinnie
	
 

	
 
	
 
	
Title:
	
Associate, Corporate & U.S. Commercial SAMU

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
WELLS FARGO BANK, NATIONAL ASSOCIATION

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
Name:
	
 
	
 

	
 
	
 
	
Title:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
MUFG UNION BANK, N.A.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
Name:
	
 
	
 

	
 
	
 
	
Title:
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
CAPITAL ONE, NATIONAL ASSOCIATION

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Stephen Hartman
	
 

	
 
	
 
	
Name:
	
Stephen Hartman
	
 

	
 
	
 
	
Title:
	
Assistant Vice President
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
M&T BANK

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/James B. Hallock
	
 

	
 
	
 
	
Name:
	
James B. Hallock
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

	
 
	
 
	
 
	
 
	
 

Rex Twelfth Amendment

Signature Page

 

	
 
	
 
	
 
	
 

	
 
	
 
	
U.S. BANK NATIONAL ASSOCIATION

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Nicholas V. Ocepek
	
 

	
 
	
 
	
Name:
	
Nicholas V. Ocepek
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
THE HUNTINGTON NATIONAL BANK

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
 
	
 
	
Name:
	
 
	
 

	
 
	
 
	
Title:
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
CIT BANK N.A.

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
/s/Zachary Holly
	
 

	
 
	
 
	
Name:
	
Zachary Holly
	
 

	
 
	
 
	
Title:
	
Vice President
	
 

 

Rex Twelfth Amendment

Signature Page

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