Exhibit 10.3

FIRST STATE BANCORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN

WHEREAS, First State Bancorporation (“the Company”), a New Mexico corporation,
recognizes the valuable services performed by certain of its executive
employees, executive employees of related companies and its outside Directors,
and wishes to encourage these employees to continue their employment with their
respective employers and to encourage these Directors to continue to serve on
the Board of Directors of the Company; and

WHEREAS, the Company now wishes to set forth the terms and conditions upon which
compensation or stock awards of the executive employees and fees of the
Directors may be deferred or additional compensation may be paid to the
employees or Directors to the employees’ or Directors’ beneficiaries after an
employee’s termination without cause, retirement, disability, or death or a
Director’s cessation of service or death.

NOW, THEREFORE, the Company adopts this Plan.

ARTICLE 1.

DEFINITIONS

For purposes of this Plan, unless the context requires otherwise, the following
words and phrases shall have the meanings indicated below:

 

1.1 Account means the account established for each Employee pursuant to
Section 2.1.

 

1.2 Administrator means the Compensation Committee of First State
Bancorporation. The Administrator shall have the right to delegate certain
responsibilities under the Plan and to engage agents as it sees fit to provide
assistance with the Plan, including legal, accounting or other service
providers.

 

1.3 Beneficiary(ies) means (a) the person or persons, natural or otherwise, so
designated in writing by the Employee in a form provided for this purpose and
filed with the Administrator (and, in the event that more than one person is so
designated, benefits shall be allocated equally among such persons unless
another allocation method acceptable to the Administrator is specified in such
designation) or (b) the Employee’s estate in the event no such designation is
made or no person so designated survives the Employee.

 

1.4 Change in Control means the date on which one of the following shall have
occurred with respect to the Company, but not with respect to any other
Employer:

 

  (a)

A person [as that term is used in Section 13d of the Securities Exchange At of
1934, as amended (the “Exchange Act”) becomes the beneficial owner (as defined
in Rule 13d-3 under the Exchange

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Act) of shares of the Company having twenty-five percent (25%) or more of the
total number of votes that may be cast for the election of directors of the
Company without the prior approval of at least two-thirds of the members of the
Board unaffiliated with that person; or

 

  (b) Persons who constitute the directors of the Company at the beginning of a
24-month period cease to constitute at least two-thirds of all directors at any
time during the period, unless the election of any new of replacement directors
was approved by a vote of at least a majority of the members of the Board in
office immediately before the period and of the new and replacement directors so
approved;

 

  (c) The adoption of any plan or proposal to liquidate or dissolve the Company;
or

 

  (d) Any merger or consolidation of the Company unless thereafter (1) directors
of the Company immediately prior thereto continue to constitute at least
two-thirds of the directors of the surviving entity or transferee, or (2) the
Company’s securities continue to represent or are converted into securities that
represent more than eighty percent (80%) of the combined voting power of the
surviving entity or transferee.

The Administrator’s reasonable determination as to whether such an event has
occurred shall be final and conclusive. A Change in Control shall not occur with
respect to an Employee if, in advance of such event, the Employee agrees in
writing that such event shall not constitute a Change in Control.
Notwithstanding anything to the contrary in this Section 1.4, no rights under
this Plan shall accrue to the Employee because of a Change in Control if the
Employee or any group of which the Employee is a member, is the person whose
acquisition constitutes the Change in Control.

 

1.5 Code means the Internal Revenue Code of 1986, as amended at the particular
time applicable.

 

1.6 Compensation means the Employee’s wages, salaries, fees, for professional
services and other amounts received (whether or not an amount is paid in cash)
for personal services actually rendered in the course of employment with the
Employer to the extent the amounts are includable in gross income, including but
not limited to commissions, compensation for services on the basis of a
percentage of profits, bonuses, fringe benefits, reimbursements and expense
allowances, but not including those items excludable for the definition of
compensation under Treas. Reg. Section 1.415-2(d)(3). For Directors,
Compensation means the annual fees paid as compensation to the Director by the
Company for serving on its Board of Directors, including retainer fees and
meeting fees.

 

1.7 Director means a member of the Company’s Board of Directors who is not an
employee of the Company or an Employer.

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1.8 Disability Date means the date on which the Administrator makes a final
determination that the Employee is suffering from a physical or mental
incapacity as a result of which the Employee has been absent from the full-time
performance of the Employee’s duties with an Employer for period of six
(6) consecutive months, the Employer has given the Employee a notice of
termination of employment due to disability, and, within thirty (30) days after
such notice is given, the Employee shall not have returned to the full-time
performance of his or her duties. To the extent required by law and to the
extent the Administrator is ruling on a claim for benefits on account of a
disability, the Plan will follow, with respect to that claim, claims procedures
required by law for plans providing disability benefits.

 

1.9 Effective Date means February 15, 2002.

 

1.10 Employee means an individual employed by an Employer as a highly
compensated and/or management level employee and who is selected by the
Administrator in its sole discretion to participate in this Plan.

 

1.11 Employer means the Company, its successor and parent and any successor to
all or a major portion of the Company’s assets or business which assumes the
obligations of the Company, and each other related entity that may adopt this
Plan from time to time with the consent of the Company. For Directors, Employer
means the Company.

 

1.12 ERISA means the Employee Retirement Income Security Act of 1974, as amended
at the particular date applicable.

 

1.13 Fair Market Value means the closing price of a share of Stock as reported
by the National Market System or any national securities exchange which may then
be the primary trading market for the Stock on a particular date. In the event
that there are no Stock transactions on such date, the Fair Market Value shall
be determined as of the immediately preceding date on which there were Stock
transactions.

 

1.14 Hardship means an unforeseeable event that imposes an immediate and severe
financial burden upon a Participant and that is incapable of being ameliorated
through other resources available to the Participant, including insurance or
borrowing from commercial lenders. Such hardship may include payment of a
Participant’s medical expenses, eviction from his or her primary residence, or
other circumstances. The Administrator in its sole, absolute and unfettered
discretion in a reasonable and nondiscriminatory manner shall determine whether
or not an event constitutes a “hardship” under the Plan.

 

1.15 Participant means an Employee or Director.

 

1.16 Plan means the First State Bancorporation Executive Deferred Compensation
Plan as adopted herein and all amendments thereto.

 

1.17

Plan Year means the 12 consecutive month period ending each

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December 31, except the first Plan Year shall begin February 15, 2003 and end on
December 31, 2003.

 

1.18 Retirement Date means the first day of the first month which coincides
with, or immediately follows, the date on which the Employee reaches 65 years of
age or, if later, the date upon which the Employee actually retires.

 

1.19 Stock shall mean shares of common stock of First State Bancorporation.

 

1.20 Stock Award means all or any portion of an award based on Stock (which may
be in the form of incentive stock options, nonqualified stock options,
restricted stock, restricted stock units or other awards similar in nature)
granted to an Employee pursuant to the Company’s equity compensation plan in
existence as of the date of the initial grant of the award.

 

1.21 Stock Award Units means the amount of Stock Awards elected to be deferred
by an Employee as provided in Section 2.3(b)(2).

 

1.22 Termination Date means the first day of the first month that coincides
with, or immediately follows, the date on which the Employee terminates service
with his or her Employer (without being immediately employed by another
Employer) and has not forfeited benefits pursuant to Article 5. Termination Date
shall not include the date on which an Employee begins an approved leave of
absence from the Employer; provided that, failure to return from such leave of
absence on a timely basis shall result in a Termination Date of the date on
which the Employee was scheduled to return. For Directors, Termination Date mean
the date on which the Director resigns or is removed from service on the
Company’s Board of Directors for any reason, including death or disability.

 

1.23 Trust means the trust executed by and between the Company and such trustee
as may be chosen by the Administrator. The trust shall be a “rabbi trust”
established in accordance with Internal Revenue Service Revenue Procedure 94-52.

ARTICLE 2.

BENEFIT

 

2.1 Enrollment. As a condition of participation, each Participant shall
complete, execute and return to the Administrator within 30 days of the date of
selection, an election form, a beneficiary designation form, and any other
enrollment documentation that may be required by the Administrator from time to
time in its sole discretion. Participation in the Plan shall begin as of the
first day of the first payroll period following receipt by the Administrator of
such forms or as soon as practicable thereafter.

 

2.2

Participant Accounts. Each Participant shall have an Account established in his
or her name under the Plan to which his or her

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Employer shall credit an annual benefit as specified in Section 2.3. The
Administrator shall cause benefit statements reflecting the current amount in
the Participant’s Account to be distributed to the Employees on an annual basis.

 

2.3 Benefit. The Employer of the Participant shall contribute and each
Participant’s Account shall be credited with an amount equal to the sum of
(a) and (b), as follows:

 

  (A) Employer Contribution. The Employer may contribute an amount to each
Employee’s Account determined in the sole discretion of the Administrator. The
contribution may be different with respect to each Employee, and may, without
limitation, be calculated in accordance with certain pre-established performance
goals or with reference to the amount of the Employee’s contribution. The
contribution shall be made on a date at the beginning of each Plan Year in
respect of the immediately preceding Plan Year, or at such other time as the
Administrator may determine in its sole discretion. No Employer Contribution
shall be made on behalf of Directors.

 

  (B) Participant Contribution.

 

  (1)

Compensation Deferral Election. The Participant may elect, on the form provided
by the Administrator, to contribute a dollar amount or percentage of
Compensation that otherwise would be payable to the Participant by the Employer.
The minimum amount of Compensation that may be deferred under the Plan for any
Plan Year by an Employee is 5% of an Employee’s base pay or 5% of an Employee’s
bonus compensation. The maximum amount of Compensation that may be deferred
under the Plan for any Plan Year by an Employee is 50% of the Employee’s base
pay and 100% of the Employee’s bonus compensation. The maximum amount of
Compensation that may be deferred under the Plan for any Plan Year by a Director
is 100% of the Director’s Compensation. Any election to defer receipt of
Compensation by the Participant must be made before the beginning of the period
of service for which the compensation is payable. A Participant’s contribution
will be made on each date on which the Participant receives a check for
Compensation from the Employer. Notwithstanding the foregoing, not more
frequently than once per Plan Year, the Employee may revoke, in the form
provided by the Administrator, his or her deferral election with respect to
Compensation not yet

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earned by the Employee. Such revocation must be made before the Employee
performs the service for which the Compensation is payable and shall remain in
effect until the end of the Plan Year in which the revocation is made. Any
subsequent election to defer receipt of compensation shall not apply until the
calendar year following the calendar year in which the Employee made the
revocation.

 

  (2) Stock Award Units Deferral Election. To the extent permitted by the plan
or agreement under which the Stock Award was granted, an Employee with a vested
but unexercised stock option or restricted stock, restricted stock units, or
other Stock Awards retaining characteristics that prevent the application of the
constructive receipt rules of Code section 451 may elect to defer all or any
portion of the Stock Award to the Employee’s Account hereunder in the form of
Stock Award Units; provided, that such election to defer must occur at least six
(6) months prior to the date of such exercise or lapse of restrictions. Any such
election made by the Employee is irrevocable; however, in the event of an
Employee’s death prior to the exercise or lapse of restrictions, the deferral
election shall not become effective. A Stock Award Units Deferral election shall
not count toward the minimum or maximum Compensation Deferral election under
Section 2.3(b)(1). This Plan governs the deferral of the delivery and receipt of
Stock Award Units upon the exercise of options or on restricted stock units
only. The options and restricted Stock themselves, including any requirements as
to exercise, are governed by the terms of the plan under which they were
granted.

 

  (A)

Calculation of Units upon Exercise of Options under the Plan, Other Awards. An
Employee shall not hold Stock in his or her Account under the Plan. Immediately
upon transfer of a Stock Award in the form of Stock or upon exercise of a Stock
Award in the form of an option, the Stock Award shall be converted to Stock
Award Units. The number of Stock Award Units credited to an Employee’s Account
upon the exercise of the option previously transferred to the Plan shall equal
the difference between (1) the number of shares of Stock subject to the

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Employee’s option, and (2) the number of shares of Stock delivered by the
Employee in payment of the option exercise price, less any shares of Stock
withheld in accordance with the plan under which the option was granted to
satisfy FICA, Medicare or any other taxes due upon the exercise of such Stock
Option. The number of Stock Award Units credited to an Employee’s account upon
an Employee’s election to convert restricted stock to restricted stock units
shall equal the number of shares of Stock originally granted as restricted
stock.

 

  (B) Conversion of Stock Award Units. Stock Award Units shall remain in an
Employee’s Account until such time as the Employee becomes eligible to receive a
distribution of his or her Account. The number of shares of Stock that an
Employee will receive at the time of distribution shall be equal to the number
of Stock Award Units in the Employee’s Account as of the date the Employee
becomes eligible to receive a distribution of his or her Account.

 

  (C) No Rights as Shareholder. An Employee who has elected to defer a Stock
Award into the Plan shall have no rights as a shareholder of the Company with
respect to the Stock Award Units in his or her Account.

 

  (D) Dividend Equivalent Allocation. As of each dividend payment date with
respect to shares of Stock, the Administrator shall credit each Employee’s
Account with an amount equivalent to the dividends paid by the Company on the
number of shares of Stock equal to the number of Stock Award Units in the
Participant’s Account. Such dividend equivalent amounts credited to a
Participant’s Account shall be “reinvested” in additional Stock Award Units at a
price equal to the Fair Market Value of such Stock as of the dividend payment
date.

 

  (E)

Adjustments. In the event that the Administrator determines that any dividend or
other distribution with respect to shares of Stock (whether in the form of cash,
stock, securities of a subsidiary of the Company,

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other securities or other property), any recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Stock or other securities of the Company,
issuance of warrants or other rights to purchase Stock or other securities of
the Company, or any other similar corporate transaction or event affects the
Stock such that an adjustment to the Employee’s allocations to their Accounts is
appropriate to prevent reduction or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Administrator
may, in its sole discretion and in a manner it deems equitable, adjust the Stock
Units allocated to Employee Accounts.

 

2.14 Investment of Account. To the extent the Participant’s Account is held in
the Trust, the Participant shall have the right, consistent with the terms of
the Trust, to invest the amounts deferred into his or her Account as a
Compensation Deferral among the investment vehicles selected by the
Administrator in its sole discretion, which may include, without limitation,
variable life insurance products and mutual funds. Any losses incurred or gains
realized by the Participant shall be subtracted from or added to the amount in
the Participant’s Account on a regular frequency as determined by the
Administrator. A Participant may choose to reallocate the amounts in his or her
Account among the investment alternatives on a regular frequency as determined
solely by the Administrator. A Participant’s Stock Award Units may not be
invested.

 

2.15 Obligation Limited to Account. The Employer shall have no additional
obligation to the Participant under this Plan beyond the amounts credited to the
Participant’s Account in accordance with this Article 2.

ARTICLE 3.

VESTING OF BENEFITS

 

3.1 Vesting. All amounts contributed to a Participant’s Account pursuant to
Section 2.3 (b) of the Plan shall be immediately vested. All amounts contributed
to an Employee’s Account pursuant to Section 2.3(a) of the Plan shall be vested
in accordance with the following schedule, subject to the forfeiture provisions
of Article 5:

 

Completed Years of Employment

   Vested
Percentage  

0

   0  

1

   33 %

2

   67 %

3

   100 %

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Such vesting schedule shall also apply to investment gains and earnings, if any,
earned on the Employee’s Account pursuant to Section 2.4. “Years of Employment”
shall mean 12 consecutive month periods measured from the later of: (a) the
Effective Date of the Plan; or (b) the date of the Employee’s initial employment
with the Employer. There shall be no vesting credit for past employment.

 

3.2 Subject to Trust. The Employer’s obligation to the Participants is an
unfunded, unsecured promise to pay compensation in the future, including,
without limitation, all amounts held in the form of Stock Award Units. No
Participant or Beneficiary shall acquire any property interest in his or her
Account or any other assets of the Employer, their rights being limited to
receiving from the Employer deferred payments as set forth in this Plan and the
underlying Trust. All amounts contributed to the Trust with respect to the
Participants shall be held in accordance with the terms of the Trust. All
amounts credited to a Trust account shall be subject to the claims of the
general creditors of the Employer. Nothing contained in the Plan shall
constitute a guaranty by any person that the assets of an Employer will be
sufficient to pay any benefit hereunder.

 

3.3 Acceleration of Vesting. In the event of (a) a Change in Control, or (b) an
Employee’s Death, Disability Date or Retirement Date, all unvested amounts shall
become immediately vested.

ARTICLE 4.

PAYMENT OF BENEFIT

 

4.1 Employee’s Retirement or Disability. Upon the earlier of an Employee’s
Retirement Date or Disability Date, the Employee shall be entitled to receive a
distribution equal to the Employee’s vested Account balance under the Plan as of
the date of such Retirement Date or Disability Date. Such distribution shall be
paid in a single lump sum, or, upon the Employee’s election, in substantially
equal annual installments over a period of years, the number of years to be
determined solely by the Administrator from time to time in the normal course of
administering the plan (but not to exceed ten years); provided, that such
election is made prior to the date on which the Employee becomes entitled to a
distribution. Payment shall be made (or shall begin) on the first day of the
month following the date on which the Account becomes payable, or as soon as
administratively practicable thereafter. Each subsequent payment (if applicable)
shall be made on the anniversary of the first distribution date. Notwithstanding
the foregoing, if the Employee’s Account does not exceed $10,000 (or such other
de minimis amount as the Administrator determine in a reasonable and
nondiscriminatory manner and calculating the Stock Award Units at then Fair
Market Value) on the date on which the Employee becomes entitled to a
distribution of his or her Account, the Administrator may elect to pay the value
of the Account to the Employee in a single lump sum distribution.

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4.2 Participant’s Termination or Death. Upon the earlier of a Participant’s
Termination Date or death, the Participant’s vested accrued benefit in his or
her Account under the Plan shall be distributed to the Participant or, in the
event of death, to the Participant’s Beneficiary in a single lump sum as soon as
practicable following the Termination Date or date of death.

 

4.3 Change in Control. Upon the occurrence of a Change in Control, a Participant
shall be entitled to receive a distribution equal to the Participant’s vested
Account balance under the Plan (after application of Section 3.3). Such
distribution shall be paid in a single lump sum, or, upon the Participant’s
election, in substantially equal annual installments over a period of three
years; provided, that such election is made prior to the date on which the
Employee becomes entitled to a distribution. Payment shall be made (or shall
begin) on the first day of the month following the date on which the Change in
Control occurs, or as soon as administratively practicable thereafter. Each
subsequent payment (if applicable) shall be made on the anniversary of the first
distribution date. Unless otherwise provided in an Employee’s current employment
agreement with an Employer, if payment of a Participant’s vested account balance
will, when combined with other payments to the Participant under other plans or
agreements, create an excise tax liability to a Participant pursuant to Code
section 280G, then the amount of the distribution from this Plan may be reduced
by the Employer at the written direction of the Participant to prevent any
imposition of such excise tax; provided that, the amount distributed to the
Participant less any such reduction shall fully satisfy the Employer’s
obligation to the Participant under this Plan.

 

4.4 General In Service Distributions. An Employee may elect to receive a
distribution of his or her Account balance while still employed with the
Employer solely under the following conditions:

 

  (A) Hardship. With approval of the Administrator, an Employee may elect to
receive a lump sum distribution from his or her Account in the amount necessary
to eliminate a Hardship, including any amount needed to pay taxes to net the
amount of the Hardship.

 

  (B) Accelerated Distribution. An Employee may elect to receive a distribution
of his or her total vested Account balance at any time; provided, however, that
commencement of a distribution under this Section 4.4(b) shall require the
Employee to forfeit 10% of the Employee’s total vested Account balance prior to
such distribution. No partial distributions shall be allowed.

An Employee who receives a distribution pursuant to either subsection (a) or
(b) of this Section 4.4 shall be prohibited from participating in the Plan for
(1) the remainder of the Plan Year in which the distribution is made, and
(2) the entire Plan Year following the Plan Year in which the distribution is
made.

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4.5 Form of Payment. The portion of a Participant’s Account attributable to
Employer and Compensation Deferral amounts under Section 2.3(a) and 2.3(b)(1)
shall be payable solely in the form of cash. The portion of an Employee’s
Account attributable to an Employee’s Stock Award Units under Section 2.3(b)(2)
shall be payable solely in the form of Stock. If an installment distribution is
in effect, the portion of the Employee’s Account attributable to Stock Award
Units shall continue to be credited with dividend equivalents under
Section 2.3(b)(2)(C) until fully paid.

 

4.6 Constructive Receipt. If and only to the extent this Plan is determined to
provide the Employee benefits that are deemed to be “constructively received” by
the Employee under the Code, as amended, the Employee’s vested accrued benefit
in his or her Account shall be distributed to the Employee as of the date such
constructive receipt is deemed to have occurred.

 

4.7 Withholding. All amounts payable to the Employee or the Employee’s
Beneficiary shall be made subject to all applicable federal and state
withholding requirements.

ARTICLE 5.

FORFEITURE OF BENEFIT

Notwithstanding any other provision of the Plan, in the event that an Employee’s
employment with the Employer is terminated for cause as determined in the sole
discretion of the Administrator, the Employee shall forfeit any benefit payment
otherwise payable to the Employee under Section 2.3(a) of the Plan. For the
purpose of the Plan, “cause” shall be: (1) the definition of “cause” used in the
Employee’s current employment agreement with the Employer; or, (2) if the
Participant has not entered into an employment agreement with the Employer, as
determined in the sole and absolute discretion of the Administrator:
(a) repeated refusal to obey written directions of the Board of Directors or a
superior officer (so long as such directions do not involve illegal or immoral
acts); (b) substance abuse that is materially injurious to the Employer;
(c) fraud or dishonesty that is materially injurious to the Employer; (d) breach
of any material obligation of nondisclosure or confidentiality owed to the
Employer; (e) commission of a criminal offense involving money or other property
of the Employer (excluding any traffic violations or similar violations); or
(f) commission of a criminal offense that constitutes a felony or a misdemeanor
involving moral turpitude, recklessness or fraud in the jurisdiction in which
the offense is committed. A Participant who agrees to resign from his or her
affiliation with the Employer in lieu of being terminated for Cause may be
deemed to have been terminated for cause for purposes of the Plan.

ARTICLE 6.

AMENDMENT OR TERMINATION OF PLAN

The Company reserves the right to amend or terminate this Plan at any time and
from time to time for any reason by action of the Board of Directors of

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the Company; provided, that no amendment shall affect an Employee’s right to
receive benefits under Section 2.3(b) upon termination of the Plan. The
Administrator shall have the right to amend this Plan at any time and from time
to time if such amendment is necessary to comply with ERISA or if, in the
judgment of the Administrator, such amendment will not result in any material
increase in the benefits provided under or the cost of maintaining the Plan. Any
such amendment may be made retroactively effective to the extent permitted by
applicable law. No Employer other than the Company shall have the right to amend
or terminate this Plan.

ARTICLE 7.

CLAIMS PROCEDURES

 

7.1 Denial of Benefits. The following claims procedures are generally applicable
to claims filed under the Plan. To the extent required by law and to the extent
the Administrator is ruling on a claim for benefits on account of a disability,
the Plan will follow, with respect to that claim, claims procedures required by
law for plans providing disability benefits.

 

  (A) Filing a Claim. All claims shall be filed in writing by the Participant,
Beneficiary or the authorized representative of the claimant (the “claimant”) by
completing the procedures that the Administrator requires. The procedures shall
be reasonable and may include the completion of forms and the submission of
documents and additional information. For purposes of this Section, a request
for a withdrawal under Section 4.4 shall be considered a claim.

 

  (B) Review of Claim. The Administrator shall review all materials and shall
decide whether to approve or deny the claim. If a claim is denied in whole or in
part, the Administrator shall provide written notice of denial to the claimant
within a reasonable period of time no later than 90 days after the Administrator
receives the claims, unless special circumstances require an extension of time
for processing the claim. If an extension is required, the Administrator shall
notify the claimant in writing before the end of the 90-day period and indicate
the special circumstances requiring an extension of time and the date by which
the Administrator expects to render a decision on the claim. The extension shall
not exceed an additional 90 days. The notice of denial shall be written in a
manner calculated to be understood by the claimant and shall include the
following:

 

  (1) the specific reason(s) for the adverse determination;

 

  (2) specific references to pertinent Plan provisions on which the adverse
determination is based;

 

  (3)

a description of any additional material or information necessary for the
claimant to perfect

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his claim and the reason why such material or information is necessary; and

 

  (4) a description of the Plan’s review procedures and time limits applicable
to such procedures, including a statement of the claimant’s right to bring a
civil action under ERISA Section 502(a) following an adverse determination on
review.

 

  (C) Appeal Process. If the claimant wishes a review of the denied claim, the
claimant shall be provided, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other information relevant to the
claimant’s claim for benefits. The claimant may submit to the Administrator in
writing any issues, documents, records, comments or other information he may
have regarding his claim for benefits under the Plan. Such request for an appeal
must be made by the claimant in writing within 60 days after receipt of notice
that his claim has been denied by the Administrator.

A document, record or other information shall be considered “relevant” to a
claim if such document, record or other information (i) was relied upon in
making the benefit determination, (ii) was submitted, considered or generated in
the course of making the benefit determination, without regard to whether such
document, record or other information was relied upon in making the benefit
determination, or (iii) demonstrates compliance with the administrative
processes and safeguards required pursuant to ensure and to verify that benefit
claim determinations are made in accordance with the Plan and that, where
appropriate, the Plan provisions have been applied consistently with respect to
similarly situated claimants.

 

  (D) Review of Appeal. The Administrator shall make its decision on review
solely on the basis of the written record, including documents and written
materials submitted by the claimant. The Administrator shall make a decision on
the review within a reasonable period of time, not later than 60 days after the
Administrator receives the claimant’s written request for review unless special
circumstances require additional time for review of the claim. If an extension
is required, the Administrator shall notify the claimant in writing before the
end of the 60-day period and indicate the special circumstances requiring an
extension of time and the date by which the Administrator expects to render a
decision on the claim. The extension shall not exceed an additional 60 days. The
decision on review will be written in a manner calculated to be understood by
the claimant. If the claim is denied, the written notice shall include the
following:

 

  (1)

the specific reason(s) for the adverse

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determination;

 

  (2) specific references to pertinent Plan provisions on which the adverse
determination is based;

 

  (3) a statement that the claimant shall be entitled, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits (as “relevant” is
defined in this section); and

 

  (4) a statement of the claimant’s right to bring a civil action under ERISA
Section 502(a).

The Administrator shall have full discretion and power to decide all claims and
reviews of denied claims, respectively, including determining eligibility,
status and the rights of all individuals under the Plan and construing any and
all terms of the Plan. Following the approval of a claim for benefits, the
Administrator shall have the authority to construe and administer the Plan in a
manner that is consistent with the payment of benefits in accordance with the
approved claim.

Notwithstanding anything herein to the contrary, any notification from the
Administrator to the claimant under this Section may be made electronically,
provided that such notification complies with Department of Labor Regulation
Sections 2520.104b-1(c)(1)(i), (iii), and (iv).

 

7.2 Exhaustion of Remedies; Limitation of Actions. In the event of any dispute
over benefits under this Plan, all remedies available to the disputing
individual under this article must be exhausted before legal recourse of any
type is sought. No legal action at law or in equity may be filed against the
Plan, the Employer, the Company or the Administrator relating to any dispute
over benefits under this Plan more than one year after the Administrator has
made a final decision under the claims review process described in this Article
7.

ARTICLE 8.

MISCELLANEOUS

 

8.1 Effect Upon Employment or Service. Nothing contained herein shall be
construed to be a contract of employment for any term of years, and this Plan
shall not confer upon an Employee the right to continue in the employ of the
Employer nor the right of a Director to continue to serve on the Board of
Directors.

 

8.2

Non-Assignability. A Participant may not voluntarily or involuntarily
anticipate, assign, or alienate (either at law or in equity) any benefit under

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the Plan. Furthermore, a benefit under the Plan shall not be subject to
attachment, garnishment, levy, execution, or other legal or equitable process.

 

8.3 Participation in Other Plans. Nothing in this Plan shall affect any right
that a Participant may otherwise have to participate in any retirement plan or
agreement that the Employer has adopted or may adopt hereafter.

 

8.4 Governing Law. To the extent not preempted by federal law, this Plan shall
be construed in accordance with, and shall be governed by, the laws of the State
of New Mexico.

 

8.5 Entire Understanding. This instrument contains the entire understanding
between the Employer and the Participants relating to the Plan, and supersedes
any prior agreement between the parties, whether written or oral. This Plan and
any provision of the Plan may be waived, modified, amended, changed, discharged
or terminated only in writing signed by the Employer and the Participants.

 

8.6 Provisions Severable. To the extent that any one or more of the provisions
of the Plan shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired.

 

8.7 Status under ERISA and the Code. This Plan is intended to be an unfunded
plan for the benefit of a select group of management or highly compensated
employees (a “top hat” plan) within the meaning of the ERISA, only to the extent
that ERISA may be deemed to apply, and shall be interpreted and administered to
the extent possible in a manner consistent with that intent.

 

8.8 Indemnification. The Company agrees to indemnify and defend to the fullest
extent permitted by law all persons who are, were, or may serve as Administrator
against any liabilities, damages, costs and expenses (including attorney’s fees
and amounts paid in settlement of any claim approved by the Company) occasioned
by their occupying or having occupied an administrative position in connection
with the Plan, except when due to their willful misconduct or recklessness.

In witness whereof, the Company has executed this Plan on the date written
below.

 

FIRST STATE BANCORPORATION

  By:  

 

  Title:  

 

  Date: