Document:

ruth-ex101_29.htm

 

Exhibit 10.1

 

EXECUTION VERSION

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of May 7, 2020, is by and among RUTH’S HOSPITALITY GROUP, INC., a Delaware corporation (the “Borrower”), the Guarantors party hereto, WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders under the Credit Agreement (as hereinafter defined) (in such capacity, the “Administrative Agent”), and the Lenders party hereto.  

 

W I T N E S E T H

 

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that certain Credit Agreement dated as of February 2, 2017 (as amended by that certain First Amendment to Credit Agreement dated as of September 18, 2019, as amended by that certain Second Amendment to Credit Agreement dated as of March 27, 2020 and as further amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement); 

 

WHEREAS, the Borrower has requested that the Lenders make certain other amendments to the Credit Agreement as set forth herein; and

 

WHEREAS, the Lenders have agreed to amend the Credit Agreement subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

 

ARTICLE I

AMENDMENT TO CREDIT AGREEMENT

 

As of the Third Amendment Effective Date (as hereinafter defined), the Credit Agreement is hereby amended in the following respects:

 

1.1Amendment to the definition of “Applicable Margin”.  The definition of “Applicable Margin” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following language at the end of the first paragraph therein:  

 

Notwithstanding the foregoing, from the Third Amendment Effective Date until the Calculation Date with respect to the Fiscal Quarter of the Borrower ending on or about March 28, 2021, the Applicable Margin shall be equal to (i) 2.75% with respect to LIBOR Rate Loans, (ii) 1.75% with respect to Base Rate Loans and (iii) 0.40% with respect to the Commitment Fee, and thereafter the Pricing Level shall be determined by reference to the Consolidated Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date.

 

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Further, if by September 27, 2020, the Borrower and the other Credit Parties have not received at least $20,000,000 in gross proceeds from Equity Issuances, then from Fiscal Quarter ending on September 27, 2020 until the Calculation Date with respect to the Fiscal Quarter of the Borrower ending on or about March 28, 2021, the Applicable Margin shall be equal to (i) 3.25% with respect to LIBOR Rate Loans, (ii) 2.25% with respect to Base Rate Loans and (iii) 0.40% with respect to the Commitment Fee, and thereafter the Pricing Level shall be determined by reference to the Consolidated Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date.

 

1.2Amendment to the definition of “Consolidated Leverage Ratio”.  The definition of “Consolidated Leverage Ratio” in Section 1.1 of the Credit Agreement is hereby amended by inserting the following new sentence at the end thereof:

 

Notwithstanding the foregoing, for purposes of calculating the Consolidated Leverage Ratio to determine compliance with Section 8.6(b) as of the end of the Fiscal Quarters ending on or about March 28, 2021, June 27, 2021 and September 26, 2021, Consolidated EBITDA included in clause (ii) above shall be calculated as (x) in the case of the Fiscal Quarter ending on or about March 28, 2021, actual Consolidated EBITDA for such Fiscal Quarter divided by 25%, (y) in the case of the Fiscal Quarter ending on or about June 27, 2021, actual Consolidated EBITDA for the period of two (2) consecutive Fiscal Quarters then ending divided by 50%, and (z) in the case of the Fiscal Quarter ending on or about September 26, 2021, actual Consolidated EBITDA for the period of three (3) consecutive Fiscal Quarters then ending divided by 75%.

 

1.3Amendment to the definition of “Permitted Acquisition”.  Clause (vi) of the definition of “Permitted Acquisition” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(vi)no later than two Business Days prior to the proposed closing date of such acquisition, the Borrower shall have delivered to Administrative Agent a Compliance Certificate for the most recently ended Fiscal Quarter preceding such acquisition for which financial statements are available demonstrating, in form and substance reasonably satisfactory to Administrative Agent, that the Consolidated Leverage Ratio is less than 2.75:1.00 on a Pro Forma Basis (as of the proposed closing date of such acquisition and after giving effect thereto and any Indebtedness incurred in connection therewith);

 

1.4Amendment to Section 1.1.  The following new definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order to read as follows:

 

“Consolidated Cash on Hand” means, as of any date of determination, the sum of the amount of cash and Cash Equivalents of the Credit Parties and their Subsidiaries on a Consolidated basis (it being understood that such amount shall exclude in any event any cash and Cash Equivalents identified as “restricted” on the balance sheet of the Borrower (other than cash or Cash Equivalents restricted in favor of the Administrative Agent) or otherwise subject to a security interest in favor of any other Person (other than security interests under the Loan Documents)).

 

“Equity Issuance” means (a) any issuance by the Borrower or its Subsidiaries of shares of its Equity Interests to any Person that is not a Credit Party (including in connection with the exercise of options or warrants or the conversion of any debt securities to equity) and (b) any capital contribution from any Person that is not a Credit Party into any Credit Party or any Subsidiary thereof.  

 

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“Liquidity” means, as of any date of determination, an amount equal to the sum of (a) the aggregate borrowing availability under the Revolving Credit Facility as of such date plus (b) Consolidated Cash on Hand as of such date. 

 

“Minimum Scheduled Cash” means, for each month commencing May 2020 through and including December 2020 (such period, the “Measured Months”), (a) fifty percent (50%) of the Net Cash Proceeds of any Equity Issuances by the Borrower or any of its Subsidiaries effected during the Measured Months (excluding any amounts required to be used to make prepayments on the Loans pursuant to Section 2.4(f)) plus (b) the following amount applicable for each month:

 

		
	
May 2020
	
$34,000,000

	
June 2020
	
$29,000,000

	
July 2020
	
$21,000,000

	
August 2020
	
$19,000,000

	
September 2020
	
$15,000,000

	
October 2020
	
$13,000,000

	
November 2020
	
$13,000,000

	
December 2020
	
$14,000,000

 

Notwithstanding the foregoing, for each of the months of October 2020 and November 2020, to the extent that any Net Cash Proceeds of any Equity Issuances by the Borrower or any of its Subsidiaries are included in the calculation of Minimum Scheduled Cash for such month, the amounts for such month for the purposes of clause (b) herein shall be deemed to be $12,000,000 and $10,000,000, respectively.

 

“Net Cash Proceeds” means, with respect to any Equity Issuance by the Borrower or any of its Subsidiaries, the gross cash proceeds received by the Borrower or any of its Subsidiaries therefrom less all reasonable and customary out-of-pocket legal, underwriting and other fees and expenses incurred in connection therewith.

 

“Third Amendment Effective Date” means May 7, 2020.

 

1.5Amendment to Section 2.4.  Section 2.4 of the Credit Agreement is hereby amended by inserting the following new clause (f) at the end thereof:

 

(f)Equity Issuances.  From the period commencing on the Third Amendment Effective Date and ending on the date ending on date in which the Borrower demonstrates compliance with the financial covenants set forth in Section 8.6 for the Fiscal Quarter ending on or about March 28, 2021 as determined based on the Compliance Certificate provided by the Borrower pursuant to Section 7.1(iv) for such Fiscal Quarter, the Borrower shall make mandatory principal prepayments of the Loans and/or Cash Collateralize the L/C Obligations in the manner set forth herein in an amount equal to fifty percent (50%) of the aggregate Net Cash Proceeds from any Equity Issuances (other than the exercise price on stock options issued as part of employee compensation) in excess of $30,000,000 in the aggregate (together with any other Equity Issuances made during such period).  Any such prepayment shall be made within three (3) Business Days after the date of receipt of the Net Cash Proceeds of any such Equity Issuance and shall be applied first, to the principal amount of outstanding Swingline Loans, second to the principal amount of outstanding Revolving Credit Loans (with a permanent reduction to the Commitment in an amount corresponding to the prepayment referenced herein), and third, with respect to any Letters of Credit then outstanding, a payment of Cash Collateral into a Cash 

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Collateral account opened by the Administrative Agent, for the benefit of the Lenders, in an amount equal to such excess (such Cash Collateral to be applied in accordance with Section 9.2(b)).

 

1.6Amendment to Section 6.4.  Section 6.4 of the Credit Agreement is hereby amended by inserting the following proviso immediately prior to the final period therein:

 

; provided that, for purposes of this Section 6.4, only from the Third Amendment Effective Date until the earlier of (x) September 30, 2020 and (y) the lifting of social distancing restrictions by Governmental Authorities in jurisdictions where substantially all of the Credit Parties’ revenue is generated, the impacts of the existing coronavirus pandemic on the business, operations, properties, assets, liabilities or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole that have already occurred and were disclosed in writing to Lenders in the Bank Presentation Materials distributed on March 16, 2020 (which included the Borrower’s Consolidated Leverage Ratio Covenant projections, a Covenant Forecast and Working Forecast Model) shall be disregarded for purposes of determining whether a Material Adverse Effect has occurred.  

 

1.7Amendment to Section 7.1.  Section 7.1 of the Credit Agreement is hereby amended by inserting the following new clause (xvii) at the end thereof:

 

(xvii)Monthly Reports. As soon as practicable and in any event within ten (10) days after the end of each month (commencing with the month ended May 31, 2020), (x) a same store sales report in comparative form, the corresponding figures for the corresponding month of the previous Fiscal Year and (y) a calculation of Liquidity and demonstrating compliance with Section 8.6(c) as of the end of such month, in each case, in form and detail reasonably acceptable to the Administrative Agent.

 

1.8Amendment to Section 8.1.  Section 8.1(vi) of the Credit Agreement is hereby amended in its entirety to read as follows:

 

(vi)the Credit Parties and their Subsidiaries may become and remain liable with respect to other Indebtedness, including Indebtedness secured by Liens permitted by Section 8.2(a)(ii), in an aggregate principal amount, together with the aggregate principal amount of any Indebtedness outstanding pursuant to Section 8.1(iii), not to exceed $25,000,000 at any time outstanding; 

 

1.9Amendment to Section 8.3.  Section 8.3(vi) of the Credit Agreement is hereby amended in its entirety to read as follows:

 

(vi)the Credit Parties may make (a) Permitted Acquisitions and (b) acquisitions of Ruth’s Chris restaurant franchises and franchisees; provided that no Permitted Acquisitions or acquisitions of Ruth’s Chris restaurant franchises and franchisees may be made under this clause (vi) during the period commencing on the Third Amendment Effective Date and ending on date in which the Borrower demonstrates compliance with the financial covenants set forth in Section 8.6 for the Fiscal Quarter ending on or about March 28, 2021 as determined based on the Compliance Certificate provided by the Borrower pursuant to Section 7.1(iv) for such Fiscal Quarter.

 

1.10Amendment to Section 8.6(a).  Section 8.6(a) of the Credit Agreement is hereby amended in its entirety to read as follows:

 

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(a)Minimum Consolidated Fixed Charge Coverage Ratio.  The Borrower shall not permit, beginning with the Fiscal Quarter ending on or about March 28, 2021, the ratio of (i) Consolidated EBITDAR minus (a) taxes based on income of the Borrower and its Subsidiaries on a consolidated basis paid in Cash and (b) Consolidated Maintenance Capital Expenditures for any four Fiscal Quarter period to (ii) Consolidated Fixed Charges for any four Fiscal Quarter period (the “Consolidated Fixed Charge Coverage Ratio”) to be less than 1.25:1.00.  Notwithstanding the foregoing, (i) the covenant in this Section 8.6(a) shall not be tested as of the end of the Fiscal Quarters ending on or about June 28, 2020, September 27, 2020 and December 27, 2020 (but otherwise shall be deemed to be in effect with respect to each such Fiscal Quarter end for all provisions under this Agreement and the other Loan Documents that refer to compliance or pro forma compliance with Section 8.6), (ii) for the Fiscal Quarter ending on or about March 28, 2021, the Consolidated Fixed Charge Coverage Ratio shall be determined for only the single Fiscal Quarter of the Borrower then ended (rather than the period of four (4) consecutive Fiscal Quarters of the Borrower then ended), (iii) for the Fiscal Quarter ending on or about June 27, 2021, the Consolidated Fixed Charge Coverage Ratio shall be determined for only the period of the two (2) consecutive Fiscal Quarters of the Borrower then ended (rather than the period of four (4) consecutive Fiscal Quarters of the Borrower then ended) and (iv) for the Fiscal Quarter ending on or about September 26, 2021, the Consolidated Fixed Charge Coverage Ratio shall be determined for only the period of the three (3) consecutive Fiscal Quarters of the Borrower then ended (rather than the period of four (4) consecutive Fiscal Quarters of the Borrower then ended).

1.11Amendment to Section 8.6(b).  Section 8.6(b) of the Credit Agreement is hereby amended in its entirety to read as follows:

 

(b)Maximum Consolidated Leverage Ratio.  As of the last day of any Fiscal Quarter ending during the periods specified below, beginning with the Fiscal Quarter ending on or about March 28, 2021, the Borrower shall not permit the Consolidated Leverage Ratio to be greater than the corresponding ratio set forth below:

 

		
	
Period
	
Maximum Ratio

	
The last day of the first Fiscal Quarter of the 2021 Fiscal Year
	
5.00 to 1.00

	
The last day of the second Fiscal Quarter of the 2021 Fiscal Year
	
4.50 to 1.00

	
The last day of the third Fiscal Quarter of the 2021 Fiscal Year
	
4.00 to 1.00

	
The last day of the fourth Fiscal Quarter of the 2021 Fiscal Year and thereafter
	
3.00 to 1.00

 

Notwithstanding the foregoing, the covenant in this Section 8.6(b) shall not be tested as of the end of the Fiscal Quarters ending on or about June 28, 2020, September 27, 2020 and December 27, 2020 (but otherwise shall be deemed to be in effect with respect to each such Fiscal Quarter end for all provisions under this Agreement and the other Loan Documents that refer to compliance or pro forma compliance with Section 8.6).

 

1.12Amendment to Section 8.6.  Section 8.6 of the Credit Agreement is hereby amended by inserting the following new clause (c) at the end thereof:

 

(c)Minimum Liquidity.  As of the last day of any month ending during the period commencing May 1, 2020 and ending December 31, 2020, permit Liquidity to be less than the Minimum Scheduled Cash. 

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ARTICLE II

LIMITED WAIVER

 

2.1 Limited Waiver.  Effective as of the Third Amendment Effective Date, and subject to the terms and conditions set forth herein and in reliance upon the representations and warranties set forth herein, each Lender hereby waives compliance by the Borrower with Section 8.6 of the Credit Agreement, solely for the Fiscal Quarters ending June 28, 2020, September 27, 2020 and December 27, 2020 (and for this purpose such waiver shall be interpreted as if the Borrower was not required to comply with Section 8.6 of the Credit Agreement for the Fiscal Quarters ending June 28, 2020, September 27, 2020 and December 27, 2020).  The foregoing waiver is a one-time waiver and applies only to the specified circumstances and does not modify or otherwise affect the Credit Parties’ obligations to comply with such provisions of the Credit Agreement or any other provision of the Loan Documents in any other instance.  The foregoing limited waiver shall not be deemed or otherwise construed to constitute a waiver of any other provision or to prejudice any right, power or remedy which the Administrative Agent or any Lender may not have or may have in the future under or in connection with the Credit Agreement or any other Loan Document, all of which rights, powers and remedies are hereby expressly reserved by the Administrative Agent and the Lenders.  The agreements and consents set forth in this Section 2.1 are limited to the extent specifically set forth above and not other terms, covenants or provisions of the Credit Agreement or the other Loan Documents are intended to be affected hereby.

 

 

ARTICLE III

CONDITIONS

 

3.1Closing Conditions.  This Amendment shall be deemed effective as of the date set forth above (the “Third Amendment Effective Date”) upon satisfaction of the following conditions (in form and substance reasonably acceptable to the Administrative Agent):

 

(a)Executed Amendment.  The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties, the Administrative Agent and the Lenders.

 

(b)Amendment Fees.  The Administrative Agent shall have received, for the account of each Lender, an amendment fee in an amount equal to 15 basis points on the aggregate amount the Commitment of such Lender as of the Third Amendment Effective Date.

 

(c)Other Fees and Out of Pocket Costs.  The Borrower shall have paid any and all reasonable out-of-pocket costs incurred by the Administrative Agent (including the fees and expenses Moore & Van Allen PLLC as legal counsel to the Administrative Agent), and all other fees and other amounts payable to the Administrative Agent, in each case in connection with the negotiation, preparation, execution and delivery of this Amendment.

 

 

ARTICLE IV
MISCELLANEOUS

 

4.1Amended Terms.  On and after the date hereof, all references to the Credit Agreement in each of the Loan Documents shall hereafter mean the Credit Agreement as amended by this Amendment.  

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Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

 

4.2Representations and Warranties of the Credit Parties.  Each of the Credit Parties represents and warrants as follows:

 

(a)Each Credit Party has all requisite power and authority and has taken all necessary corporate and other action, to authorize the execution, delivery and performance of this Amendment in accordance with its terms.  

 

(b)This Amendment has been duly executed and delivered by the duly authorized officers of each Credit Party that is a party hereto and constitutes the legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(c)No consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Amendment.

 

(d)After giving effect to this Amendment, the representations and warranties set forth in the Loan Documents are true and correct in all material respects as of the date hereof (except for (i) those which expressly relate to an earlier date and (ii) those that are qualified by materiality or reference to Material Adverse Effect, which are true and correct in all respects). 

 

(e)After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

 

(f)The Security Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Administrative Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Security Documents and prior to all Liens other than Permitted Encumbrances.

 

(g)Except as specifically provided in this Amendment, the Obligations of the Credit Parties are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

 

4.3Reaffirmation of Obligations.  Each Credit Party hereby ratifies the Credit Agreement and each other Loan Document to which it is a party and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement and each other Loan Document to which it is a party applicable to it and (b) that it is responsible for the observance and full performance of its respective obligations under the Loan Documents.

 

4.4Release.  The Borrower and each of the other Credit Parties hereby releases and forever discharges the Administrative Agent, each Lender, the Issuing Lender, the Swingline Lender and their respective predecessors, successors, assigns, attorneys and Related Parties (each and every of the foregoing, a “Lender Party”) from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, in each case to the extent arising in connection with any of the Loan Documents through the date hereof, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether 

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absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any Credit Party may have or claim to have against any Lender Party.

 

4.5Loan Document.  This Amendment shall constitute a Loan Document under the terms of the Credit Agreement.

 

4.6Expenses.  The Borrower agrees to pay all reasonable costs and expenses of Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation the reasonable fees and expenses of the Administrative Agent’s legal counsel.

 

4.7Entirety.  This Amendment and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

 

4.8Counterparts; Telecopy.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of this Amendment.

 

4.9GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

4.10Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.

 

4.11Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.  The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 11.5 and 11.6 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

 

 

[Signature pages to follow]

 

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IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed on the date first above written.

 

BORROWER:RUTH’S HOSPITALITY GROUP, INC.

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

GUARANTORS:RCSH OPERATIONS, INC.

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

RCSH OPERATIONS, LLC

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

RUTH’S CHRIS STEAK HOUSE BOSTON, LLC

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

RUTH’S CHRIS STEAK HOUSE FRANCHISE, LLC

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

RCSH MANAGEMENT, INC.

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

RHGI GIFTCO, INC.

By: /s/ Alice G. Givens
Name: Alice G. Givens
Title:  SVP, General Counsel

 

 

 

 

 

 

 

AGENT AND LENDERS:WELLS FARGO BANK, NATIONAL

ASSOCIATION, as Administrative Agent,

Swingline Lender, Issuing Lender and Lender

 

 

By: /s/ Maureen Malphus

Name:  Maureen Malphus

Title:  Vice President

 

 

 

 

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TD BANK, N.A.,

as Lender

 

 

By:  /s/ Sterling Harrell

Name:  Sterling Harrell

Title:  Director

 

 

 

 

 

 

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JPMORGAN CHASE BANK, N.A.,

as Lender

 

 

By: /s/ Erica Babycos

Name:  Erica Babycos

Title: Authorized Officer

 

CHAR1\1726089v4Exhibit

RESIGNATION AND RELEASE AGREEMENT
THIS RESIGNATION AND RELEASE AGREEMENT (“Agreement”) is entered into by and between HomeStreet, Inc. and HomeStreet Bank and any of their affiliates or subsidiary organizations and their respective successors and assigns (collectively, the “Employer” or  “HomeStreet”) and Mark R. Ruh (“Ruh” or “Executive”) (collectively, the “Parties”) as of February 27, 2020 in consideration of the mutual undertakings set forth herein.
WHEREAS, Executive has elected to resign from his position as Chief Financial Officer and the Parties desire that Executive complete an orderly transition of his duties, and except as otherwise set forth in this Agreement, terminate Ruh’s employment agreement dated September 11, 2017 (“Employment Agreement”) and Executive desires to obtain the separation benefits provided herein to which he is not otherwise entitled.
NOW, THEREFORE, Employer and Executive do hereby agree as follows:
1.Resignation.  Ruh resigns as Chief Financial Officer (“CFO”) of HomeStreet effective June 5, 2020.  HomeStreet at its sole option may elect to extend Ruh’s employment beyond June 5 to as late as September 11, 2020.  If HomeStreet elects to extend Ruh’s employment, Ruh may give two weeks’ prior written notice of unavailability, without penalty or loss of entitlement to other severance benefits described herein.  If HomeStreet hires a new CFO prior to June 5, 2020, Ruh agrees to relinquish the CFO title and to work in a professional manner to transition the role to such new CFO through the Separation Date.  The final date of Ruh’s employment shall be referred to as the “Separation Date.”  Ruh’s resignation shall be considered a Resignation Without Good Reason, as the term is defined in Ruh’s Employment Agreement.  The Employment Agreement shall expire on the Separation Date, except any post-employment restrictive covenants in the Confidentiality and Nonsolicitation Agreement and other provisions that, by their terms, are intended to extend beyond the termination of the employment relationship.  
2.Pay and Benefits.  HomeStreet will pay Ruh his regular salary and benefits, subject to current applicable withholdings, through the Separation Date. Executive’s health care benefits shall cease at the close of business on the last day of the month of the Separation Date.  Relocation assistance and travel reimbursement benefits shall be paid to Ruh under his existing Relocation Assistance Agreement up to the Separation Date but will not exceed the remaining balance of such benefits, consistent with HomeStreet’s general practices.  Reasonable business expenses shall continue to be reimbursed under the Employment Agreement and regular HomeStreet practices.
3.Bonus.  HomeStreet will pay Ruh his Incentive Bonus for 2019, calculated as 87.97 % of 22.5% of his annual salary of $321,300 (corporate component) plus 100% of 22.5% of his annual salary $321,300 (individual component).  The total bonus will be $135,888.00, less lawful deductions and withholdings.  The Bonus will be paid at the same time other HomeStreet executives receive their bonuses for 2019. 
4.Vacation.  With the next regularly scheduled pay date after the Separation Date, HomeStreet will pay Ruh the value of his accrued but unused vacation.    

Resignation and Release Agreement

5.Equity Interests.  On the Effective Date of this Agreement, provided Executive has signed this Agreement and professionally performed his duties as described in Paragraph 6, 1361 Restricted Stock Units originally granted to Executive on September 11, 2017 that would vest on September 11, 2020, will immediately become vested.  Executive shall be responsible for the tax liability associated with the vesting of the equity interest.  All other Restricted Stock Units, Performance Share Units, options and other equity interests that are unvested will be forfeited as of the Separation Date.  Ruh shall retain all rights under the applicable equity grants or plans. 
6.Performance Until Separation Date.  Ruh shall fully perform his assigned duties in a competent and professional manner through the Separation Date under the continued direction of the Chief Executive Officer.  Ruh shall assist in the transition of his duties as requested and adhere to all of his confidentiality and other obligations under all applicable corporate policies.  Ruh shall be in the headquarters office in person on Monday mornings through close of business Thursday and on Friday as required for important leadership duties or meetings.  Time off (e.g., vacation time or sick time) will be requested in advance where possible and in accordance with current Company policy. In the event that Ruh intentionally breaches his obligations under this paragraph, and does not cure the breach within ten days of HomeStreet giving notice of such breach, HomeStreet may elect to immediately terminate his employment, and Ruh shall forfeit the severance pay described in paragraph 7, the acceleration of equity interests described in Paragraph 5 and the medical insurance payment described in Paragraph 9.
7.Severance Pay.  Within fourteen days after the Effective Date of this Agreement, HomeStreet shall provide Ruh severance pay equal to six months of his base salary or $160,650.00, less lawfully required deductions and withholdings.  The severance pay shall be paid in a lump sum and shall be conditioned upon: (a) Ruh’s execution of this Agreement; and (b) Ruh’s professional and competent performance of his duties through the Separation Date as described in Paragraph 6.  
8.Restrictive Covenants.  Any post-employment restrictions related to solicitation of employees or customers as stated in the Confidentiality and Nonsolicitation Agreement that Ruh executed upon employment shall remain in effect.  By executing this Agreement, Ruh reaffirms his obligations thereunder.
9.Medical Insurance/COBRA.  After the Separation Date, Executive shall have the right to purchase group medical continuation coverage pursuant to his rights under the COBRA statute and regulations.  Provided Ruh has executed this Agreement and completed his obligations under Paragraph 6, HomeStreet will provide Ruh a lump sum of $8,830.90 representing six (6) months’ of the employer contribution for his current health care benefits. 
10.Legal Fees.  HomeStreet shall reimburse Ruh for up to $3,500 in legal fees to review this Agreement, upon presentation of documentation from Ruh’s counsel describing the expenses incurred.
11.Release.  In exchange for the severance and other benefits described above, Executive, on behalf of himself and his marital community, irrevocably and unconditionally waives, releases, and forever discharges, HomeStreet and all of its parent, affiliated or subsidiary organizations, any employer-sponsored employee benefit plans and each of their respective directors, officers, agents, trustees, employees, employee-spouses, successors and assigns, from any and all claims or damages (including attorney’s fees and costs actually incurred), whether known 

Resignation and Release Agreement — 2

or unknown, which have arisen up through the date of this Agreement, including those related in any way to his employment by HomeStreet or the facts and circumstances leading up to signing of this Agreement, except that Executive does not waive his rights under medical, dental, life, AD&D, and disability insurance plans in which he and his dependents are enrolled.  In particular, Executive understands and agrees that this release includes, without limitation, all matters arising under any federal, state, or local law, including civil rights laws and regulations prohibiting employment discrimination on the basis of race, color, religion, age, sex, national origin, ancestry, disability, medical condition, veteran status, marital status and sexual orientation, or any other characteristic protected by federal, state or local law including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Older Workers Benefit Protection Act of 1990, as amended, the Americans with Disabilities Act, the Rehabilitation Act, the Occupational Safety and Health Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act of 1974, as amended (except as to vested retirement benefits, medical, dental, life, AD&D, and disability benefits, if any), the Worker Adjustment and Retraining Notification Act, the Washington Law Against Discrimination, RCW 49.60, The Washington Wage Rebate Act, RCW 49.52, the Washington Unpaid Wages Act, RCW 49.48, federal and state wage and hour laws, or any common law, public policy, contract (whether oral or written, express or implied) or tort law, the Sarbanes-Oxley Act, the Dodd Frank Wall Street Reform and Consumer Protection Act or any other federal, state or local law, regulation, ordinance or rule having any bearing whatsoever. 
12.Limitation of Release.  Executive understands that nothing contained in this Agreement limits his ability to file a charge or complaint with the Department of Justice, Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”).  Executive further understands that this Agreement does not limit his ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be commenced by any Government Agency including providing documents or other information without notice to HomeStreet.  This Agreement does not limit the Executive’s right to receive an award for information provided to any Government Agencies.  Executive recognizes that in connection with any such activity, he must inform such Government Agency that the Executive is not permitted to reveal to any third-party, including any governmental, law enforcement or regulatory authority, information Executive learned during his employment with HomeStreet that is protected from disclosure by any applicable privilege, including the attorney-client privilege, attorney work product doctrine and/or other applicable legal privileges.  HomeStreet does not waive any applicable privileges or the right to continue to protect its privileged attorney-client information, attorney work product, and other privileged information.  Executive recognizes that his ability to disclose information may be limited by applicable law, and HomeStreet does not consent to disclosures that would violate applicable law.  Such laws may include, without limitation, laws and regulations restricting disclosure of confidential supervisory information (any information or materials relating to the examination or supervision of HomeStreet by applicable bank regulatory agencies, materials responding to or referencing non-public information relating to such examinations or supervision and correspondence to or from applicable banking regulators) or disclosures subject to the Bank Secrecy 

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Act, including information that would reveal the existence or contemplated filing of a suspicious activity report.
13.Knowing and Voluntary Release.  Executive understands the significance and consequences of this Agreement, and acknowledges that it is voluntary and has not been given as a result of any coercion.  He acknowledges that he was given at least twenty-one (21) days after receipt of this document during which to consider this Agreement and that he has been encouraged to consult with, and in fact has been represented by  an attorney prior to signing it, and that he signs it only after careful consideration and analysis.  If Executive signs this Agreement before expiration of this 21-day period, he waives any remaining time to consider it.
14.Revocation Period.  Executive understands and acknowledges that he has seven (7) days after signing this Agreement to revoke it.  This Agreement will not be effective until the eighth day after it is signed by both Parties or the Separation Date, whichever occurs later (“Effective Date”).  
15.Matters Raised to HomeStreet.  Subject to the exceptions described in paragraph 12 expressly permitting disclosures to Government Agencies, Executive acknowledges that as an employee of HomeStreet the Executive has had an obligation to advise HomeStreet completely and candidly of all facts of which Executive is aware that constitute or may constitute violations of HomeStreet’s ethical standards, code of conduct or legal or regulatory obligations.  Executive represents and warrants that he is not aware of any such facts or the Executive has previously advised HomeStreet about any such facts.  Executive agrees to advise HomeStreet in the future of all such facts that come to Executive’s attention. 
16.No Admission of Liability.  This Agreement shall not be considered as evidence of any violation of any statute or law, or any wrongdoing or liability on the part of HomeStreet or its agents or employees.
17.No Modification.  This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein.  This Agreement may not be modified except in writing signed by Executive and by the Chief Executive Officer of HomeStreet or its otherwise duly authorized representative.
18.References.  Any reference requests regarding Executive’s performance shall be directed to Human Resources, who shall only confirm Executive’s dates of employment, job title and duties, consistent with Employer’s standard policy.
19.Press Release.  HomeStreet and Ruh will mutually agree on proposed language of public disclosure in a press release announcing Ruh’s resignation. The press release shall include the following quote from Ruh:  “I want to thank the HomeStreet board of directors and Mark Mason for the opportunity to serve the Company as CFO over the last three years. I also want to thank the great team I’ve had the opportunity to lead during my tenure - together we have played a major role in the substantial transition of HomeStreet from a thrift into a leading West Coast commercial bank.”
20.Return of Property.  No later than the Separation Date, Executive agrees to return to Employer all HomeStreet-owned property in his possession, specifically including all keys and card keys to company buildings or property; all company-owned equipment; and all company documents and papers, including all passwords, trade secrets and confidential company information.   

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21.Non Disparagement.  Executive agrees that he will not make any disparaging or derogatory remarks that in any way cast the business operations or conduct of Employer and its past or present directors, officers, employees, representatives, or agents in an unfavorable light.  Nothing in this provision limits Executive from disclosing information to Government Agencies as described in paragraph 8.
22.Trade Secrets and Confidential Information.
a.Executive acknowledges that Employer’s business and future success depends on the preservation of the trade secrets and other confidential information of Employer, its employees or directors and its suppliers and customers.  Such trade secrets and other confidential information includes, without limitation, existing and to-be-developed or acquired products, plans, or ideas; market surveys; the identities of past, present, or potential customers; business and financial information; pricing methods or data; terms of contracts with present or past customers; proposals or bids; marketing plans; personnel information; procedural and technical manuals; formulas, processes, methodologies, and practices proprietary to Employer or its customers; and any other categories of items or information of Employer or its customers which are not generally known to the public at large (the “Secrets”).  Executive agrees to protect and to preserve as confidential all of the Secrets at any time known to Executive or in Executive’s possession or control (whether wholly or partially developed by Executive or provided to Executive, and whether embodied in a tangible medium or merely remembered).  
b.Executive will neither use nor allow any other person to use any of the Secrets in any way, except for the benefit of Employer and as directed by Employer’s Board of Directors or duly authorized representative.  All material containing or disclosing any portion of the Secrets will be and remain the property of Employer. 
c.Nothing in this Section limits or prohibits Executive from disclosing information to Government Agencies as described in paragraph 8.
23.Governing Law and Venue.  This Agreement will be interpreted in accordance with the laws of the State of Washington, without reference to its choice of law rules. The venue for the resolution of any disputes arising out of or in connection with this Agreement shall be King County in the State of Washington.
24.Breach and Enforcement.  Any claim arising out of or in connection with this Agreement will be subject to binding arbitration in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association.  The parties will select an arbitrator from the panel of arbitrators then working for Judicial Dispute Resolution, or any other mutually acceptable arbitrator.  If the parties are unable to agree on an arbitrator, then Judicial Dispute Resolution will appoint one of their panel members to adjudicate the matter.  The substantially prevailing party will be entitled to reasonable attorneys’ fees and costs incurred; provided, however, that in the event of a proceeding challenging the validity of this Agreement under the Age Discrimination in Employment Act, the parties’ entitlement to attorneys’ fees and costs with respect to such challenge shall be determined in accordance with applicable federal law.
25.Severability.  It is understood and agreed that if any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions will nevertheless continue to be valid and enforceable.

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26.Complete Agreement.  This Agreement represents and contains the entire understanding between the parties in connection with the subject matter of this Agreement, including but not limited to matters relating to Ruh’s employment.  It is expressly acknowledged and recognized by the parties that there are no oral or written collateral agreements, understandings, or representations between the parties other than as contained in this Agreement, and any such prior agreements are specifically and expressly terminated.
27.Reliance.  Executive represents and acknowledges that in executing this Agreement, he does not rely and has not relied upon any representation or statement, not set forth herein, made by Employer or by any of Employer’s agents, representatives, or attorneys with regard to the subject matter, basis, or effect of this Agreement or otherwise.
PLEASE READ CAREFULLY.  YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING.  THIS IS A VOLUNTARY SEVERANCE AND RELEASE AGREEMENT THAT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
EXECUTIVE
	
		
	/s/ Mark R. Ruh
	2/27/2020

	Mark R. Ruh
	Date

EMPLOYER
	
		
	/s/ Mark K. Mason
	2/27/2020

	By: Mark. K Mason
Its: Chief Executive Officer
	Date

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