EXHIBIT 10.8


 


SM ENERGY COMPANY


 


NON-QUALIFIED UNFUNDED SUPPLEMENTAL RETIREMENT PLAN


 


As Amended as of July 30, 2010


 


As
approved by the Board of Directors, the following constitutes a non-qualified
supplemental retirement benefit plan for the employees of SM Energy Company
(the “Company”), as amended as of July 30, 2010.


 


WHEREAS:


 


A.            The Company
maintains a defined benefit retirement plan (the “DBP”) qualifying under
Internal Revenue Code Section 401(a) for the benefit of all eligible
employees designed to pay retirement and death (survivor annuity) benefits in
amounts as determined by the duly adopted and approved plan.


 


B.            The DBP complies in
all respects with the Employee Retirement Income Security Act of 1974 (“ERISA”),
as amended, which establishes limits on the level of benefits which may be
paid, by the DBP, including limits set forth in Section 415 of the
Internal Revenue Code.


 


C.            The Company wishes
to provide to its Employees the full amount of benefits that would be payable
under the benefit formula of such DBP but for the Section 415 limits, and
other reductions to the benefit formula necessitated from time to time by
changes to applicable law, recognizing that it cannot do so within the DBP
itself and therefore the Company adopts this non-qualified retirement benefit
plan (the “non-qualified plan”) to supplement the DBP.


 


THEREFORE,


 


In partial consideration of the employment relationship between the
Company and each of its employees, the Company agrees as follows:


 


1.             By this non-qualified plan, no
Employee shall gain any property rights in any assets of the Company.  Benefits payable hereunder shall be general,
unsecured liabilities of the Company, and shall be nonassignable and not
subject to anticipation by Employee or Employee’s beneficiary.


 

















 


2.             The benefits payable under this
non-qualified plan shall be computed in accordance with subparagraph (i) below
for employees hired by the Company after September 30, 1994, and in
accordance with subparagraph (ii) below for employees hired by the Company
before October 1, 1994.


 


(i)            The
benefits payable under the DBP to or for the benefit of any eligible employee
hired by the Company after September 30, 1994 (a) shall be calculated
without any limitation imposed by Section 415, as such Section from time
to time may be amended, and (b) such benefits then shall be reduced by the
benefits payable to such eligible employee under the DBP as limited by Section 415,
as such Section from time to time may be amended.


 


(ii)           The
benefits payable under the DBP to or for the benefit of any eligible employee
hired by the Company before October 1, 1994 (a) shall be calculated
under the benefit formula of the DBP in effect on December 31, 1988,
without any limitation imposed by Section 415, as such Section may
from time to time be amended, and (b) such benefits then shall be reduced
by the benefits payable to such eligible employee under the benefit formula of
the DBP in effect beginning January 1, 1989, after amendment of the DBP in
accordance with the requirements of the Tax Reform Act of 1986.


 


Notwithstanding
the foregoing, the benefits payable under this non-qualified plan shall be
reduced by the amount of benefits payable under that certain St. Mary Land &
Exploration Company Non-Qualified Supplemental Trust Agreement, dated December 23,
1986, as amended from time to time.


 


3.             The time and manner of payment of
benefits is as follows:


 


(i)            Benefits
under this non-qualified plan shall be payable upon the Employee’s separation
from service.  Notwithstanding the foregoing,
benefits under this non-qualified plan shall be payable upon the death or
disability (as defined below) of the Employee. 
For this purpose, the Employer shall make payment of the benefit
following the occurrence of the event for which payment is to be made at any
time during the calendar year in which the event occurs or by the fifteenth day
of the third month of the following year.


 


(ii)           Benefits
under this non-qualified plan shall be paid in the form of a lump-sum payment
in an amount actuarially equivalent to the accrued benefit provided in
Paragraph 2.


 


2

















 


(iii)          With
respect to an Employee who is a “Specified Employee” as defined in Section 409A
of the Internal Revenue Code and the regulations issued thereunder (referred to
herein as “Section 409A”), any benefit accrued after December 31,
2004 that becomes payable by reason of such Employee’s separation from service
as defined in Section 409A shall be paid no earlier than the first day
after the expiration of six months following the date of such Employee’s
separation from service.  If, by reason
of this provision, payment of the Specified Employee’s benefit is delayed
beyond the fifteenth day of the third month of the year following the year in
which the Specified Employee separated from service, simple interest shall be
added to the amount of the benefit from such fifteenth day of the third month
until payment is made based on the short-term applicable federal rate in effect
on the date of separation from service. 
The amount of compensation deferred after December 31, 2004 shall
be determined in accordance with Section 409A, and unless otherwise
provided by Section 409A, shall be the total benefit under this
non-qualified plan minus the benefit under this non-qualified plan deferred
before January 1, 2005.  The benefit
deferred before January 1, 2005 under this non-qualified plan is the
present value, as of December 31, 2004, of the amount to which the
Specified Employee would be entitled under this non-qualified plan if the
Specified Employee voluntarily terminated service without cause on December 31,
2004, and received a payment of all of the benefits to which such Specified
Employee would be entitled, as a lump sum, on that date.  The Company may attach to this non-qualified
plan a schedule setting forth the amount of benefit deferred before January 1,
2005.


 


(iv)          For
purposes of this provision, an Employee is considered to be disabled if the
Employee meets either of the following requirements:


 


(a)    The Employee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months.


 


(b)   
The Employee is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering other employees of the Company.


 


3

















 


In any case, an Employee will be considered disabled if determined to
be disabled by the Social Security Administration.


 


4.             For purposes of this non-qualified
plan, the beneficiary designated by an Employee shall be the same as is
designated for the DBP by the Employer, or in the absence of such designation,
by the terms of the DBP.


 


5.             Nothing contained in this
non-qualified plan and no action taken pursuant to the provisions of this
non-qualified plan shall create or be construed to create a trust of any kind,
or a fiduciary relationship between the Company and the Employee, his designated
beneficiary or any other person.  Any
funds utilized or to be utilized to provide benefits under the provisions of
this non-qualified plan shall until distribution continue for all purposes to
be a part of the general funds of the Company and no person other than the
Company shall by virtue of the provisions of this non-qualified plan have any
interest in such funds.  To the extent
that any person acquires a right to receive payments from the Company under
this non-qualified plan, such right shall be no greater than the right of any
unsecured general creditor of the Company.


 


6.             Notwithstanding anything herein
contained to the contrary, no payment of any then unpaid retirement or survivor
benefit shall be made and all rights under the non-qualified plan of the
Employee, his designated beneficiary, executors or administrators, or any other
person, to receive payments thereof shall be forfeited if either or both of the
following events shall occur:


 


(i)            The
Employee shall engage in any activity or conduct which in the opinion of the
Board of Directors of the Company is inimical to the best interests of the
Company.


 


(ii)           After
the Employee ceases to be employed by the Company he shall fail or refuse to
provide advice and counsel to the Company when reasonably requested to do so.


 


7.             If the Board of Directors of the
Company shall find that any person to whom any payment is payable under this
non-qualified plan is unable to care for his affairs because of illness or
accident, or is a minor, any payment due (unless a prior claim therefor shall
have been made by a duly appointed guardian, or other legal representative) may
be paid to the spouse, a child, a parent, or a brother or sister, or to any
person deemed by the Board of Directors to have incurred expense for such
person otherwise entitled to payment, in such 


 


4

















 


manner and proportions as
the Board may determine.  Any such
payment shall be a complete discharge of the liabilities of the Company under
this non-qualified plan.


 


8.             Nothing contained herein shall be
construed as conferring upon the Employee the right to continue in the employ
of the Company as an executive or in any other capacity.


 


9.             Benefits payable under this
non-qualified plan shall not be deemed salary or other compensation to the
Employee for the purpose of computing benefits to which he may be entitled
under any pension plan or other arrangement of the Company for the benefit of
its employees.


 


10.           The Board of Directors of the Company
shall have full power and authority to interpret, construe, amend, terminate
and administer this non-qualified plan (except that any amendment or
termination shall not diminish the actuarial value of the vested accrued
benefit as of the date of the amendment or termination) and the Board’s
interpretations and construction thereof, and actions thereunder, or the amount
or recipient of the payment to be made therefrom, shall be binding and
conclusive on all persons for all purposes. 
No member of the Board shall be liable to any person for any action
taken or omitted in connection with the interpretation and administration of
this non-qualified plan unless attributable to his own willful misconduct or
lack of good faith.


 


11.           This non-qualified plan shall be
construed in accordance with and governed by the laws of the State of Colorado.


 


12.           Notwithstanding any other provision
of this non-qualified plan, any reference herein to “eligible employee,” “Employee”
or “Employees” shall mean an employee who is in that select group of management
employees of the Company identified by the title at least as senior in Company
management hierarchy as that of “Vice President.”


 


13.           Claims for benefits shall be governed by the following
provisions:


 


(i)            Any
claim for benefits under the plan shall be made in writing to the plan
administrator.  If a claim is denied, the
plan administrator shall so notify the Employee within ninety (90) days after
receipt of the claim.  The notice of
denial shall state (a) the specific reason for the denial of the claim: (b) specific
references to the pertinent plan provisions upon which the denial is based, (c) a
description of any additional material or information necessary to 


 


5

















 


perfect
the claim together with an explanation of why such material or information is
necessary, and (d) an explanation of the claims review procedure.


 


(ii)           Within
sixty (60) days after the Employee’s receipt of notice of denial of a claim,
the Employee may (a) file a request with the plan administrator that it
conduct a full and fair review of the denial of the claim, (b) review
pertinent documents, and (c) submit questions and comments to the
administrator in writing.


 


(iii)          The
decision by the plan administrator with respect to the review must be given
within sixty (60) days after receipt of the request, unless special
circumstances require an extension.  In
no event shall the decision be delayed beyond 120 days after receipt of the
request for review.  The decision shall
be written in a manner calculated to be understood by the Employee and shall
contain specific reasons for the decision and a specific reference to the plan
provisions upon which the decision is based.


 


14.           If the Company makes a good faith
determination that any compensation or benefits provided under this plan is
likely to be subject to the additional tax imposed by Section 409A, the
Company shall, in consultation with the Employee, use its commercially
reasonable efforts to modify this non-qualified plan to reduce the risk that
such additional tax will apply, in a manner designed to preserve the material
economic benefits intended to be provided to the Employee under this
non-qualified plan.  There remains
uncertainty regarding the interpretation of Section 409A.  Employees, by acceptance of any benefits
under this non-qualified plan, agree that the Company may rely on existing Section 409A
guidance as it, in good faith, determines to be appropriate in implementing the
foregoing and each Employee shall be solely responsible for the payment of any
tax liability arising under Section 409A that may result from any
compensation or benefits received pursuant to this non-qualified plan.  Nothing in this Section shall otherwise
affect the allocation of tax liabilities between the Company and a
participating Employee that otherwise arise under applicable law.


 


6

















 


IN
WITNESS WHEREOF, the Company has caused this Non-Qualified Unfunded
Supplemental Retirement Plan, as amended, to be executed by its duly authorized
officers, effective as of July 30, 2010.


 


 


	
   

  	
  SM
  ENERGY COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  ANTHONY J. BEST

  
	
   

  	
   

  	
  Anthony
  J. Best

  
	
   

  	
   

  	
  Chief
  Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  C. MARK BRANNUM

  
	
   

  	
   

  	
  C.
  Mark Brannum

  
	
   

  	
   

  	
  Secretary

  



 


7