FIRST STATE BANCORPORATION DEFERRED COMPENSATION PLAN

1.1

Account means the account established for each Employee pursuant to Section 2.2 .

1.2

Administrator means the compensation committee of the board of directors of the Company. 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

Base Compensation means the Participant’s regular wages, salaries, fees, for professional services and other amounts received in the course of regular payroll practices (whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer for payroll periods beginning on or after the first day of the Plan Year to the extent the amounts are includable in gross income, including but not limited to commissions, 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) and including non-performance based bonuses.

1.4

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.

1.5

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)

any one person, or more than one person acting as a “group,” acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company. However, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company (or to cause a change in the effective control of the Company (within the meaning of paragraph (g)(5)(vi) of Prop. Treas. Reg. § 1.409A-3). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Section 1.4(a).

(b)

Any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company;

(c)

A majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors prior to the date of the appointment or election;

(d)

Any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

1.6

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

1.7

Disability Date means the date on which the earlier of the following occurs:

(a)

The Participant is determined to be disabled under the terms of the long term disability policy then in place with the Employer; or

(b)

The Participant is determined to be totally disabled by the Social Security Administration.

1.8

Effective Date means December 1, 2005.

1.9

Employee means an individual who is employed by an Employer as a highly compensated and/or management level employee whom the Employer reasonably anticipates will earn at least $200,000 in total compensation per Plan Year.

1.10

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 of the Company, including, without limitation, First State Bank of New Mexico.

1.11

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

1.12

Participant means an Employee selected by the Administrator in its sole discretion to participate in this Plan who has completed and returned the Plan enrollment forms pursuant to Section 2.1 .

1.13

Performance-Based Compensation means the Participant’s compensation, the payment of which or the amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria and that is calculated based upon a performance period of at least 12 months, such as bonuses or amounts based on profit-sharing criteria.

1.14

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

1.15

Plan Year means the 12 consecutive month period ending each December 31.

1.16

Retirement Date means the first day of the first month which coincides with, or immediately follows the earlier of (a) the date on which the Participant reaches 60 years of age with ten years of continuous service with the Employer, or (b) the date on which the Participant reaches age 65 with five years of continuous service with the Employer; or, if later, the date on which the Participant actually retires.

1.17

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 on the earlier of (1) six months following the date on which the approved leave began; or (2) the date on which the Employee was scheduled to return.

1.18

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.

1.19

Unforeseeable Emergency means a severe financial hardship of a Participant or a Beneficiary resulting from:

(a)

an illness or accident of the Participant or Beneficiary, or his or her spouse or dependent (as defined in section 152(a)), including the need to pay for medical expenses such as non-refundable deductibles and the costs of prescription drug medication;

(b)

loss of the Participant or Beneficiary’s property due to casualty, including the need to rebuild a home following damage to a home not otherwise covered by insurance (for example, not as a result of a natural disaster);

(c)

imminent foreclosure of or eviction from the Participant’s or Beneficiary’s primary residence;

(d)

funeral expenses of a spouse or a dependent; or

(e)

other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary.

2.1

Enrollment . As a condition of participation, each Participant shall complete, execute and return to the Administrator within 30 days of the initial date of eligibility, 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 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 each Participant 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 Participant’s Account determined in the sole discretion of the Employer. The contribution may be different with respect to each Participant, and may, without limitation, be calculated in accordance with certain pre-established performance goals or with reference to the amount of the Partici