SM Energy Co 10-Q

ITEM 5. OTHER INFORMATION As previously announced, Javan D. Ottoson, the Chief Executive Officer of the Company, previously advised the Board of Directors of his intention to retire before the end of 2020. Mr. Ottoson has determined and notified the Board of Directors that he will retire at the close of business on November 2, 2020. There were no known disagreements between Mr. Ottoson and the Company that led to Mr. Ottoson’s decision to retire. Mr. Ottoson and the Company entered into a Non-Competition and Non-Solicitation Agreement on October 26, 2020 (the “Non-Competition Agreement”), pursuant to which, among other customary agreements, Mr. Ottoson covenants not to compete with the Company’s business and not to solicit the Company’s employees for a period of two years following his retirement from the Company. Subject to Mr. Ottoson’s continued compliance with such covenants, the Company will pay Mr. Ottoson an aggregate of $800,000 in two equal annual cash installments of $400,000 on the first and second anniversaries of his retirement from the Company. The foregoing description of the Non-Competition Agreement is qualified in its entirety by reference to the full text of the Non-Competition Agreement, a copy of which is attached hereto as Exhibit 10.7. Following Mr. Ottoson’s retirement as the Chief Executive Officer of the Company, he will continue to serve as a member of the Board of Directors until the Company’s annual meeting of stockholders in May 2021, and will receive prorated cash consideration of $105,000, reflecting the portion of the term during which he will serve as a non-employee director. In addition, Mr. Ottoson will remain eligible to receive a cash bonus under the Company’s Cash Bonus Plan, as amended and restated as of February 1, 2014 (“STIP”). If Mr. Ottoson is granted a cash bonus, such bonus will be prorated for the portion of the 2020 calendar year during which he served as the President and/or Chief Executive Officer of the Company. The cash bonus will be determined by the Compensation Committee, based on Mr. Ottoson’s individual performance and Company performance as measured against the pre-established metrics applicable to all employees under the STIP, and will be paid at the same time as cash bonuses are paid to all other Company employees. On October 26, 2020, the Board of Directors appointed Herbert S. Vogel to serve as Chief Executive Officer of the Company, effective upon Mr. Ottoson’s retirement. Mr. Vogel currently serves as the President and Chief Operating Officer of the Company. 49 In connection with his promotion, Mr. Vogel’s annual base salary will be increased to $750,000, which amount presently will be reduced by 20% to $600,000 in response to previously announced cost-reduction efforts related to the COVID-19 Pandemic and other macroeconomic events, and his annual cash bonus target under the STIP will be 120% of his base salary. For plan year 2020, (i) Mr. Vogel’s annual cash bonus under the STIP will be determined using the applicable target percentage for the portion of the year that he served in each of the roles he held during the fiscal year, subject, in each case, to individual performance and Company performance as measured against the pre-established metrics applicable to all employees, and (ii) the target value of his long-term incentive plan award under the Company’s Equity Incentive Compensation Plan will be $2.950 million, a reduced amount this year reflective of industry and macroeconomic conditions. The Board of Directors also approved on October 26, 2020, an increase in the number of authorized directors constituting the Board of Directors from nine members to ten members, and the appointment of Mr. Vogel as an employee director to fill the vacancy created by such increase, effective as of his appointment to the role of Chief Executive Officer, to serve until the Company’s annual meeting of stockholders in May 2021. 50 ITEM 6. EXHIBITS The following exhibits are filed or furnished with or incorporated by reference into this report: Exhibit Number Description 3.1 Restated Certificate of Incorporation of SM Energy Company, as amended through June 1, 2010 (filed as Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and incorporated herein by reference) 3.2 Amended and Restated By-Laws of SM Energy Company, effective as of February 21, 2017 (filed as Exhibit 3.2 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, and incorporated herein by reference) 4.1 Third Supplemental Indenture, dated as of April 29, 2020, to the Indenture, dated as of May 21, 2015, between the Company and U.S. Bank National Association, as trustee, as supplemented and amended by the Second Supplemental Indenture, dated as of August 12, 2016 governing the Company’s outstanding 1.50% Senior Convertible Notes due 2021 (filed as Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed on April 29, 2020, and incorporated herein by reference) 4.2 Indenture, dated as of June 17, 2020, between SM Energy Company and UMB Bank, N.A., as trustee, governing the Company’s outstanding 10.0% Senior Secured Notes due 2025 (filed as Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 4.3 Warrant Agreement dated as of June 17, 2020, among SM Energy Company, Computershare Inc. and Computershare Trust Company, N.A., collectively as warrant agent (filed as Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 10.1 Third Amendment to the Sixth Amended and Restated Credit Agreement, dated April 29, 2020, among SM Energy Company, Wells Fargo Bank, National Association, as Administrative Agent, and the institutions named therein as Lenders that are party thereto (filed as Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and incorporated herein by reference) 10.2 Fourth Amendment to the Sixth Amended and Restated Credit Agreement, dated as of May 5, 2020, by and among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and the institutions named therein as Lenders that are a party thereto (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 6, 2020, and incorporated herein by reference) 10.3 Intercreditor Agreement dated as of June 17, 2020 among SM Energy Company, Wells Fargo Bank, National Association, as priority lien agent, and UMB Bank, N.A., as second lien collateral trustee (filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 10.4 Second Lien Pledge and Security Agreement dated as of June 17, 2020 between SM Energy Company and UMB Bank, N.A., as collateral trustee (filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 10.5 Second Lien Security Agreement dated as of June 17, 2020 between SM Energy Company and UMB Bank, N.A., as collateral trustee (filed as Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 10.6 Collateral Trust Agreement dated as of June 17, 2020 among SM Energy Company, UMB Bank, N.A., as trustee, UMB Bank, N.A., as collateral trustee, and (by joinder) U.S. Bank National Association, as trustee under the 2021 Notes Indenture (filed as Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed on June 17, 2020, and incorporated herein by reference) 10.7* Non-Competition and Non-Solicitation Agreement dated October 26, 2020 between Javan D. Ottoson and SM Energy Company 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 32.1** Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 101.INS Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Schema Document 101.CAL* Inline XBRL Calculation Linkbase Document 101.LAB* Inline XBRL Label Linkbase Document 101.PRE* Inline XBRL Presentation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS) _____________________________________ * Filed with this report. ** Furnished with this report. 51 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SM ENERGY COMPANY October 30, 2020 By: /s/ JAVAN D. OTTOSON Javan D. Ottoson Chief Executive Officer (Principal Executive Officer) October 30, 2020 By: /s/ A. WADE PURSELL A. Wade Pursell Executive Vice President and Chief Financial Officer (Principal Financial Officer) October 30, 2020 By: /s/ PATRICK A. LYTLE Patrick A. Lytle Controller and Assistant Secretary (Principal Accounting Officer) 52