Document:

1ST STATE BANCORP, INC.
                           MANAGEMENT RECOGNITION PLAN

                                    ARTICLE I
                            ESTABLISHMENT OF THE PLAN

     1.01 The Company hereby establishes this Plan upon the terms and conditions
hereinafter stated.

     1.02 Through acceptance of their appointment to the Committee,  each member
of the Committee hereby accepts his or her appointment  hereunder upon the terms
and conditions hereinafter stated.

                                   ARTICLE II
                               PURPOSE OF THE PLAN

     2.01  The  purpose  of the  Plan  is to  reward  and  retain  personnel  of
experience and ability in key positions of responsibility by providing Employees
and Directors of the Company,  the Bank, and their Affiliates with a proprietary
interest in the Company, and as compensation for their past contributions to the
Bank, and as an incentive to make such contributions in the future.

                                   ARTICLE III
                                   DEFINITIONS

     The  following  words and  phrases  when used in this Plan with an  initial
capital  letter,  shall have the  meanings  set forth  below  unless the context
clearly indicates otherwise.  Wherever appropriate,  the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.

     3.01  "Affiliate"  shall  mean  any  "parent  corporation"  or  "subsidiary
corporation"  of the  Company,  as such terms are defined in Section  424(e) and
(f), respectively, of the Internal Revenue Code of 1986, as amended.

     3.02 "Bank" means 1st State Bank.

     3.03 "Beneficiary"  means the person or persons designated by a Participant
to  receive  any  benefits   payable  under  the  Plan  in  the  event  of  such
Participant's  death.  Such person or persons  shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar  written  notice to the  Committee.  In the absence of a written
designation,  the Beneficiary  shall be the  Participant's  surviving spouse, if
any, or if none, his estate.

     3.04 "Board" means the Board of Directors of the Company.

     3.05 "Committee" means the Management  Recognition Plan Committee appointed
by the Board pursuant to Article IV hereof.

     3.06 "Common Stock" means shares of the common stock of the Company.

     3.07 "Company" means 1st State Bancorp, Inc.

     3.08  "Continuous  Service" shall mean the absence of any  interruption  or
termination  of  service  as an  Employee  or  Director  of  the  Company  or an
Affiliate. Continuous Service shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by the Company
in the case of transfers between payroll locations of the Company or between the
Company, an Affiliate or a successor, or in the case of a Director's performance
of services in an emeritus or advisory capacity.

     3.09 "Date of Conversion" means the date of the conversion of the Bank from
mutual to stock form.

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     3.10 "Director" means a member of the Board, and any member of the board of
directors of an Affiliate  whose members the Board has by resolution  designated
as being eligible for participation in this Plan.

     3.11 "Disability"  shall mean a physical or mental condition,  which in the
sole and absolute  discretion of the Committee,  is reasonably expected to be of
indefinite  duration and to substantially  prevent a Participant from fulfilling
his or her duties or responsibilities to the Company or an Affiliate.

     3.12  "Effective  Date"  means  the date on which  the Plan  first  becomes
effective, as determined under Section 8.07 hereof.

     3.13  "Employee"  means any person  who is  employed  by the  Company or an
Affiliate.

     3.14 "Non-Employee  Director" shall have the meaning provided in Rule 16b-3
of the General Rules and Regulations under the Securities  Exchange Act of 1934,
as amended.

     3.15 [reserved]

     3.16  "Participant"  means an Employee  or Director  who holds a Plan Share
Award.

     3.17 "Plan" means this 1st State Bancorp, Inc. Management Recognition Plan.

     3.18  "Plan  Shares"  means  shares of Common  Stock  which are  awarded or
issuable to a Participant pursuant to the Plan.

     3.19 "Plan Share  Award" means a right  granted  under this Plan to receive
Plan Shares.

     3.20 "Plan Share  Reserve"  means the shares of Common  Stock  reserved for
issuance pursuant to Sections 5.02 and 5.03.

     3.21  "Trust"  and  "Trust  Agreement"  mean that  agreement  entered  into
pursuant to the terms hereof  between the Company and the  Trustee,  and "Trust"
means the trust created thereunder.

     3.22  "Trustee"  means  that  person(s)  or entity  appointed  by the Board
pursuant to the Trust  Agreement  to hold legal title to the Plan assets for the
purposes set forth herein.

     3.23 "Year of Service" shall mean a full twelve-month period, measured from
the date of a Plan Share Award and each annual  anniversary of that date, during
which a Participant's Continuous Service has not terminated for any reason.

                                   ARTICLE IV
                           ADMINISTRATION OF THE PLAN

     4.01 ROLE AND POWERS OF THE COMMITTEE.  The Plan shall be administered  and
interpreted by the  Committee,  which shall consist of not less than two members
of the Board who are  Non-Employee  Directors.  In the  absence at any time of a
duly appointed Committee, the Plan shall be administered by those members of the
Board who are  Non-Employee  Directors,  and by the Board if there are less than
two Non-Employee Directors.

     The  Committee  shall  have all of the powers  allocated  to it in this and
other Sections of the Plan.  Except as limited by the express  provisions of the
Plan or by resolutions  adopted by the Board,  the Committee shall have sole and
complete  authority  and  discretion  (i) to  make  Plan  Share  Awards  to such
Employees as the Committee may select, (ii) to determine the form and content of
Plan Share Awards to be issued under the Plan, (iii) to interpret the Plan, (iv)
to prescribe,  amend and rescind rules and regulations relating to the Plan, and
(v) to make other  determinations  necessary or advisable for the administration
of the Plan.  The  Committee  shall have and may

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exercise  such other power and  authority as may be delegated to it by the Board
from time to time.  Subject to Section 4.02, the interpretation and construction
by the  Committee  of any  provisions  of the  Plan or of any Plan  Share  Award
granted hereunder shall be final and binding. The Committee shall act by vote or
written  consent of a majority of its members,  and shall report its actions and
decisions with respect to the Plan to the Board at appropriate  times, but in no
event less than one time per calendar  year.  The Committee may recommend to the
Board one or more persons or entity to act as Trustee(s) in accordance  with the
provisions of this Plan and the Trust.

     4.02 ROLE OF THE BOARD.  The members of the Committee shall be appointed or
approved by, and will serve at the pleasure of, the Board.  The Board may in its
discretion  from time to time  remove  members  from,  or add  members  to,  the
Committee.  The Board shall have all of the powers  allocated  to it in this and
other  Sections of the Plan,  may take any action  under or with  respect to the
Plan which the Committee is authorized to take,  and may reverse or override any
action  taken or decision  made by the  Committee  under or with  respect to the
Plan,  provided,  however,  that the Board may not revoke  any Plan Share  Award
already made or impair a  participant's  vested rights under a Plan Share Award.
Further,  with respect to all actions  taken by the Board in regard to the Plan,
such  action  shall be taken by a majority of the Board where such a majority of
the directors acting in the matter are Non-Employee Directors.

     4.03  LIMITATION ON  LIABILITY.  No member of the Board or the Committee or
the  Trustee(s)  shall be liable for any  determination  made in good faith with
respect to the Plan or any Plan Shares or Plan Share Awards granted under it. If
a  member  of the  Board  or the  Committee  or any  Trustee  is a  party  or is
threatened to be made a party to any  threatened,  pending or completed  action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason  of  anything  done or not  done by him in such  capacity  under  or with
respect to the Plan, the Company shall  indemnify  such member against  expenses
(including  attorneys'  fees),  judgments,  fines and amounts paid in settlement
actually and reasonably  incurred by him or her in connection  with such action,
suit or  proceeding  if he or she acted in good  faith and in a manner he or she
reasonably  believed  to be in  the  best  interests  of  the  Company  and  its
Affiliates  and,  with  respect to any  criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.

                                    ARTICLE V
                        CONTRIBUTIONS; PLAN SHARE RESERVE

     5.01  AMOUNT AND TIMING OF  CONTRIBUTIONS.  The Board shall  determine  the
amounts  (or the method of  computing  the  amounts)  to be  contributed  by the
Company to the Trust,  provided that the Bank may also make contributions to the
Trust. Such amounts shall be paid to the Trustee at the time of contribution. No
contributions to the Trust by Employees shall be permitted.

     5.02 RESERVATION OF PLAN SHARES; INVESTMENT OF TRUST ASSETS. Shares will be
reserved to permit Plan Share Awards  regarding up to 4% of the number of Shares
issued on the Date of Conversion. Shares issued with regard to Plan Share Awards
may be newly issued by the Company, treasury Shares or Shares held in the Trust.
The  Trustee  shall  invest  Trust  assets  only in  accordance  with the  Trust
Agreement.

     5.03  EFFECT OF  ALLOCATIONS,  RETURNS  AND  FORFEITURES  UPON  PLAN  SHARE
RESERVES.  Upon the allocation of Plan Share Awards under Section 6.02, the Plan
Share Reserve shall be reduced by the number of Shares  subject to the Awards so
allocated.  Any Shares subject or  attributable  to an Award that are not earned
because of a  forfeiture  by the  Participant  pursuant to Section 7.01 shall be
added to the Plan Share Reserve.

                                   ARTICLE VI
                            ELIGIBILITY; ALLOCATIONS

     6.01 ELIGIBILITY.  Except as otherwise provided in Section 6.04 hereof, the
Committee  shall make Plan Share  Awards only to  Employees  and  Directors.  In
selecting  those  Employees  and  Directors  to whom Plan Share  Awards  will be
granted and the number of shares  covered by such Awards,  the  Committee  shall
consider the position, duties and responsibilities of the eligible Employees and
Directors,  the value of their services to the Company and its  Affiliates,  and
any other factors the Committee  may deem  relevant.  Plan Share Awards shall be
granted at the discretion of the Committee.

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     6.02  ALLOCATIONS.   The  Committee  will  determine  which  Employees  and
Directors  will be granted  discretionary  Plan Share Awards,  and the number of
Shares  covered by each Plan Share  Award,  provided  that in no event shall any
Awards be made that will violate the  governing  instruments  of the Bank or its
Affiliates or any applicable  federal or state law or  regulation.  In the event
Plan Shares are forfeited  for any reason or  additional  shares of Common Stock
are purchased by the Trustee,  the Committee  may, from time to time,  determine
which of the  Participants  referenced  in  Section  6.01  above will be granted
additional  Plan Share Awards to be awarded from the  forfeited or acquired Plan
Shares.

     6.03 FORM OF ALLOCATION.  As promptly as practicable  after a determination
is made  pursuant  to Section  6.02 that a Plan Share  Award is to be made,  the
Committee shall notify the Participant in writing of the grant of the Award, the
number of Plan  Shares  covered by the Award,  and the terms upon which the Plan
Shares  subject to the Award may be earned.  The date on which the  Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards.  The  Committee  shall  maintain  records as to all grants of Plan Share
Awards under the Plan.

     6.04 ALLOCATIONS NOT REQUIRED.  Notwithstanding anything to the contrary in
Sections  6.01 and  6.02,  no  Employee  or  Director  shall  have any  right or
entitlement  to receive a Plan Share Award  hereunder,  such Awards being at the
total  discretion  of the  Committee,  nor shall any Employees or Directors as a
group have such a right.  The Committee may, with the approval of the Board (or,
if so directed by the Board)  return all Common Stock in the Plan Share  Reserve
to the Company at any time, and cease issuing Plan Share Awards.

                                   ARTICLE VII
             EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

     7.01 EARNING PLAN SHARES; FORFEITURES.

          (a) GENERAL RULES. Except as otherwise provided by the Committee, Plan
Shares subject to a Plan Share Award shall be earned and become  non-forfeitable
by a Participant as follows:

         Years of Continuous Service                   Percentage of
after the Date of Grant of Plan Shares               Plan Shares Vested
-------------------------------------------          ------------------
Immediate; upon receipt of Plan Share Award               33 1/3%
                  1 year                                  66 2/3%
                  2 years                                    100%

          (b) EXCEPTION FOR TERMINATIONS DUE TO DEATH, DISABILITY, RETIREMENT OR
CHANGE IN CONTROL. Notwithstanding the general rule contained in Section 7.01(a)
above, all Plan Shares subject to a Plan Share Award held by a Participant whose
service with the Company or an  Affiliate  terminates  due to the  Participant's
death or Disability shall be deemed earned as of the  Participant's  last day of
service with the Company or an  Affiliate  and shall be  distributed  as soon as
practicable  thereafter.  Vesting  upon  retirement  will be as  provided by the
Committee  in an  Agreement.  Vesting will  accelerate  to 100% upon a change in
control. For this purpose, "change in control" shall mean (1) acquisition of the
ownership,  holding  or power to vote more than 25% of the  voting  stock of the
Bank or the  Company,  (2)  acquisition  of the  control  of the  election  of a
majority of the Bank or the Company's directors, (3) the exercise of controlling
influence  over the  management  or  policies  of the Bank or the Company by any
person or by persons acting as a "group" (within the meaning of Section 13(d) of
the  Securities  Exchange  Act  of  1934),  or  (4)  during  any  period  of two
consecutive  years,  individuals who at the beginning of such period  constitute
the Board of  Directors  of the Bank or the Company  (the"Company  Board")  (the
"Continuing  Directors")  cease for any reason to constitute at least two-thirds
thereof,  provided that any individual whose election or nomination for election
as a member of the Company  Board was approved by a vote of at least  two-thirds
of the  Continuing  Directors  then in office  shall be  considered a Continuing
Director.  The term "person" means an individual  other than the Employee,  or a
corporation,  partnership,  trust, association,  joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

     7.02 ACCRUAL OF DIVIDENDS.  Whenever Plan Shares become vested and are paid
to a  Participant  or  Beneficiary  under  Section  7.03,  such  Participant  or
Beneficiary  shall also be entitled to receive,  with respect to each Plan Share
paid,  an  amount  equal to any cash  dividends  (including  special  large  and
nonrecurring dividends,

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including  one that has the  effect  of a return  of  capital  to the  Company's
stockholders)  and a number  of  shares  of  Common  Stock  equal  to any  stock
dividends, declared and paid with respect to a share of Common Stock between the
date the relevant Plan Share Award was initially granted to such Participant and
the date the Plan Shares are being distributed.  There shall also be distributed
an appropriate amount of net earnings,  if any, of the Trust with respect to any
cash dividends so paid out.

     7.03 DISTRIBUTION OF PLAN SHARES.

          (a)  TIMING OF  DISTRIBUTIONS:  GENERAL  RULE.  Except as  provided in
subsections (c), and (d) below, the Company or the Trustee, as applicable, shall
distribute Plan Shares and  accumulated  cash from dividends and interest to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.

          (b) FORM OF DISTRIBUTION.  The Company or the Trustee,  as applicable,
shall distribute all Plan Shares,  together with any shares  representing  stock
dividends, in the form of Common Stock. One share of Common Stock shall be given
for each Plan Share earned.  Payments  representing cash dividends (and earnings
thereon) shall be made in cash.

          (c)  WITHHOLDING.  The Company or the Trustee,  as  applicable,  shall
withhold from any cash payment made under this Plan sufficient  amounts to cover
any applicable  withholding and employment taxes, and if the amount of such cash
payment  is not  sufficient,  the  Company  or the  Trustee  shall  require  the
Participant  or  Beneficiary  to pay to the  Company  the amount  required to be
withheld as a condition of  delivering  the Plan Shares.  The Trustee  shall pay
over to the Company or Affiliate which employs or employed such  Participant any
such amount withheld from or paid by the Participant or Beneficiary.

          (d)   TIMING:   EXCEPTION   FOR  10%   SHAREHOLDERS.   Notwithstanding
Subsections  (a) and (b) above,  no Plan Shares may be distributed  prior to the
date  which is three (3) years  from the Date of  Conversion  to the  extent the
Participant  or  Beneficiary,  as the case may be,  would after  receipt of such
Shares own in excess of ten percent (10%) of the issued and  outstanding  shares
of Common Stock unless such action is approved in advance by a majority  vote of
non-employee  Directors of the Board. To the extent this limitation  would delay
the date on which a Participant  receives Plan Shares, the Participant may elect
to receive  from the Trust,  in lieu of such Plan  Shares,  the cash  equivalent
thereof.  Any Plan  Shares  remaining  undistributed  solely  by  reason  of the
operation of this  Subsection (d) shall be distributed to the Participant or his
Beneficiary on the date which is three years from the Date of Conversion.

          (e) REGULATORY EXCEPTIONS.  No Plan Shares shall be distributed unless
and until all of the  requirements  of all applicable  law and regulation  shall
have been fully complied with,  including the receipt of approval of the Plan by
the  stockholders  of the  Company by such vote,  if any,  as may be required by
applicable law and regulations.

     7.04 VOTING OF PLAN  SHARES.  All shares of Common  Stock held by the Trust
(whether or not subject to a Plan Share  Award) shall be voted by the Trustee in
the same  proportion as the trustee of the Company's  Employee  Stock  Ownership
Plan votes  Common  Stock  held in the trust  associated  therewith,  and in the
absence of any such voting, shall be voted in the manner directed by the Board.

     7.05 DEFERRAL ELECTIONS BY PARTICIPANTS.

          (a)  ELECTIONS TO DEFER. At any time on or before December 31st of the
year prior to the next date on which a Participant is scheduled to become vested
in his or her Plan Share Award, a Participant  who is a member of a select group
of  management  or highly  compensated  employees  (within  the  meaning  of the
Employees'  Retirement  Income Security Act of 1974), may irrevocably  elect, on
the form  attached  hereto as Exhibit "A" (the  "Election  Form"),  to defer the
receipt  of all or a  percentage  of the Plan  Shares  and/or  cash  that  would
otherwise be  transferred  to the  Participant  upon the future  vesting of such
award (the "Deferred Shares").

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          (b) RECORDKEEPING; HOLDING OF DEFERRED SHARES. The MRP Committee shall
establish and maintain an individual account in the name of each Participant who
files  an  Election  Form  for  the  purpose  of  tracking   deferred   earnings
attributable to cash dividends paid on Deferred Shares (the "Cash Account").  On
the last day of each fiscal year of the Company,  the Committee  shall credit to
the Participant's  Cash Account earnings on the balance of the Cash Account at a
rate equal to the dividend-adjusted  total return on Common Stock, as determined
from time to time by the MRP Committee in its sole discretion. The Trustee shall
hold each Participant's Deferred Shares and Deferred Earnings in the Trust until
distribution is required pursuant to the election set forth in the Participant's
Election Form.

          (c)  DISTRIBUTIONS OF DEFERRED SHARES.  The Trustee shall distribute a
Participant's  Deferred  Shares and  Deferred  Earnings in  accordance  with the
Participant's  Election Form. All  distributions  made by the Company and/or the
Trustees  pursuant to elections  made  hereunder  shall be subject to applicable
federal,  state, and local tax withholding and to such other deductions as shall
at the time of such  payment  be  required  under any  income  tax or other law,
whether  of the United  States or any other  jurisdiction,  and,  in the case of
payments to a beneficiary,  the delivery to the Committee and/or Trustees of all
necessary waivers, qualifications and other documentation.  Within 90 days after
receiving  notice of a  Participant's  death,  the Trustee shall  distribute any
balance of the  Participant's  Deferred  Shares  and  Deferred  Earnings  to the
Participant's   designated  beneficiary,   if  living,  or  if  such  designated
beneficiary is deceased or the Participant failed to designate a beneficiary, to
the  Participant's  estate.  If, on the other hand, a  Participant's  Continuous
Service terminates for a reason other than the Participant's death,  Disability,
early retirement,  or normal retirement,  the Participant's  Deferred Shares and
Deferred  Earnings  shall  be  distributed  to the  Participant  in a  lump  sum
occurring as soon as reasonably  practicable.  The distribution  provisions of a
Participant's Election Form shall become irrevocable on the date that occurs (i)
one year before the Participant's termination of Continuous Service for a reason
other than death,  and (ii) on the  Participant's  death if that  terminates the
Participant's Continuous Service.

          (d) HARDSHIP  WITHDRAWALS.  Notwithstanding any other provision of the
Plan or a Participant's  Election Form, in the event the Participant  suffers an
unforeseeable emergency hardship within the contemplation of this paragraph, the
Participant may apply to the Committee for an immediate distribution of all or a
portion of his Deferred Shares and Deferred  Earnings.  The hardship must result
from a sudden  and  unexpected  illness  or  accident  of the  Participant  or a
dependent  of the  Participant,  casualty  loss of  property,  or other  similar
conditions beyond the control of the Participant. Examples of purposes which are
not considered hardships include post-secondary school expenses or the desire to
purchase a residence.  In no event will a distribution be made to the extent the
hardship could be relieved through reimbursement or compensation by insurance or
otherwise,  or by liquidation of the  Participant's  nonessential  assets to the
extent such liquidation would not itself cause a severe financial hardship.  The
amount of any distribution hereunder shall be limited to the amount necessary to
relieve the  Participant's  financial  hardship.  The determination of whether a
Participant  has a  qualifying  hardship  and the  amount  which  qualifies  for
distribution, if any, shall be made by the Committee in its sole discretion. The
Committee  may require  evidence of the purpose and amount of the need,  and may
establish such application or other procedures as it deems appropriate.

          (e)  RIGHTS TO DEFERRED  SHARES AND EARNINGS.  A  Participant  may not
assign his or her claim to Deferred  Shares and Deferred  Earnings during his or
her  lifetime,   except  in  accordance  with  Section  8.03  of  this  Plan.  A
Participant's  right to Deferred Shares and Deferred Earnings shall at all times
constitute an unsecured promise of the Company to pay benefits as they come due.
The right of the  Participant  or his or her  beneficiary  to  receive  benefits
hereunder  shall be solely an unsecured  claim against the general assets of the
Company. Neither the Participant nor his or her beneficiary shall have any claim
against or rights in any specific  assets or other fund of the Company,  and any
assets in the Trust shall be deemed general assets of the Company.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     8.01 ADJUSTMENTS FOR CAPITAL CHANGES.

          (a)  RECAPITALIZATIONS;  STOCK  SPLITS,  ETC.  The  number and kind of
shares which may be purchased  under the Plan, and the number and kind of shares
subject to outstanding Plan Share Awards, shall be proportionately  adjusted for
any  increase,  decrease,  change or  exchange  of shares of Common  Stock for a
different

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number or kind of shares or other securities of the Company which results from a
merger, consolidation, recapitalization, reorganization, reclassification, stock
dividend, split-up,  combination of shares, or similar event in which the number
or kind of shares is changed without the receipt or payment of  consideration by
the Company.

          (b)  TRANSACTIONS IN WHICH THE COMPANY IS NOT THE SURVIVING ENTITY. In
the event of (i) the liquidation or dissolution of the Company, (ii) a merger or
consolidation  in which the Company is not the  surviving  entity,  or (iii) the
sale or disposition of all or substantially  all of the Company's assets (any of
the foregoing to be referred to herein as a "Transaction"), all outstanding Plan
Share  Awards  shall be adjusted  for any change or exchange of shares of Common
Stock for a different number or kind of shares or other securities which results
from the Transaction.

          (c)  CONDITIONS  AND  RESTRICTIONS  ON NEW,  ADDITIONAL,  OR DIFFERENT
SHARES OR  SECURITIEs.  If, by reason of any  adjustment  made  pursuant to this
Section, a Participant becomes entitled to new, additional,  or different shares
of stock or securities,  such new,  additional,  or different shares of stock or
securities  shall thereupon be subject to all of the conditions and restrictions
which were  applicable to the shares pursuant to the Plan Share Award before the
adjustment  was made. In addition,  the Committee  shall have the  discretionary
authority to impose on the Shares subject to Plan Share Awards to Employees such
restrictions as the Committee may deem  appropriate or desirable,  including but
not limited to a right of first refusal,  or repurchase option, or both of these
restrictions.

          (d) OTHER ISSUANCES. Except as expressly provided in this Section, the
issuance by the Company or an Affiliate  of shares of stock of any class,  or of
securities  convertible  into shares of Common Stock or stock of another  class,
for cash or property  or for labor or  services  either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor,  shall not affect, and
no  adjustment  shall be made with  respect to, the number or class of shares of
Common Stock then  subject to Plan Share  Awards or reserved for issuance  under
the Plan.

     8.02 AMENDMENT AND  TERMINATION  OF PLAn. The Board may, by resolution,  at
any time amend or terminate the Plan;  provided that no amendment or termination
of the Plan  shall,  without the written  consent of a  Participant,  impair any
rights or  obligations  under a Plan  Share  Award  theretofore  granted  to the
Participant.

     The power to amend or terminate  the Plan in  accordance  with this Section
8.02 shall  include the power to direct the Trustee to return to the Company all
or any part of the assets of the Trust, including shares of Common Stock held in
the Plan Share Reserve. However, the termination of the Trust shall not affect a
Participant's  right to earn Plan Share Awards and to receive a distribution  of
Common Stock relating thereto,  including  earnings thereon,  in accordance with
the terms of this Plan and the grant by the Committee or the Board.

     8.03  NONTRANSFERABILITY.  Plan  Share  Awards  may not be  sold,  pledged,
assigned,  hypothecated,  transferred or disposed of in any manner other than by
will or by the laws of descent and distribution.  Notwithstanding the foregoing,
or any other  provision of this Plan, a Participant  who holds Plan Share Awards
may  transfer  such  Awards  to his or her  spouse,  lineal  ascendants,  lineal
descendants,  or to a duly  established  trust for the benefit of one or more of
these   individuals.   Plan  Share  Awards  so  transferred  may  thereafter  be
transferred  only to the Participant who originally  received the grant or to an
individual or trust to whom the Participant could have initially transferred the
Awards  pursuant to this Section 8.03.  Plan Share Awards which are  transferred
pursuant to this Section 8.03 shall be exercisable  by the transferee  according
to the same terms and conditions as applied to the Participant.

     8.04 NO  EMPLOYMENT  OR OTHER  RIGHTS.  Neither the Plan nor any grant of a
Plan Share Award or Plan Shares  hereunder  nor any action taken by the Trustee,
the Committee or the Board in  connection  with the Plan shall create any right,
either  express or implied,  on the part of any Employee or Director to continue
in the service of the Company, the Bank, or an Affiliate thereof.

     8.05 VOTING AND DIVIDEND  RIGHTS.  No Participant  shall have any voting or
dividend  rights or other rights of a stockholder  in respect of any Plan Shares
covered by a Plan Share Award  prior to the time said Plan  Shares are  actually
distributed to him.

                                       7
<PAGE>

     8.06  GOVERNING  LAW.  The Plan and Trust shall be governed  and  construed
under the laws of the State of North  Carolina  to the extent not  preempted  by
Federal law.

     8.07  EFFECTIVE  DATE. The Plan shall become  effective  immediately on its
approval by the Board,  subject to approval by a favorable vote of  stockholders
of the Company  who own at least a majority  of the total  votes  eligible to be
cast at a duly called meeting of the Company's  stockholders  held in accordance
with  applicable  laws. In no event shall Plan Share Awards be made prior to the
Effective Date.

     8.08 TERM OF PLAN.  This Plan shall  remain in effect  until the earlier of
(i)  termination  by the Board,  or (ii) the  distribution  of all assets of the
Trust. Termination of the Plan shall not affect any Plan Share Awards previously
granted,  and such Awards  shall remain valid and in effect until they have been
earned and paid, or by their terms expire or are forfeited.

     8.09 TAX STATUS OF TRUST. It is intended that (i) the Trust associated with
the Plan be treated as a grantor  trust of the Company  under the  provisions of
Section 671 et seq. of the Code,  as the same may be amended  from time to time,
and (ii) that in  accordance  with Revenue  Procedure  92-65 (as the same may be
amended from time to time),  Participants  have the status of general  unsecured
creditors of the Company,  the Plan  constitutes a mere unfunded promise to make
benefit  payments in the future,  the Plan is unfunded  for tax purposes and for
purposes of Title I of the Employee  Retirement  Income Security Act of 1974, as
amended, and the Trust has been and will continue to be maintained in conformity
with Revenue Procedure 92-64 (as the same may be amended from time to time).

                                       8<PAGE>

                                                                   EXHIBIT 4.1

                          VOTING AND TENDER AGREEMENT

         This VOTING AND TENDER AGREEMENT (this "AGREEMENT"), dated as of
December 22, 2000, is entered into by and between MILPI ACQUISITION CORP., a
Delaware corporation ("BUYER"), PLM INTERNATIONAL, INC., a Delaware corporation
("COMPANY"), and the other parties who have signed this Agreement (each, a
"STOCKHOLDER" and, collectively, the "STOCKHOLDERS").

         WHEREAS, each Stockholder is the beneficial owner of the number of
shares of common stock of Company, par value $.01 per share, set forth on the
signature page to this Agreement (such shares, together with any other shares of
capital stock of Company acquired by such Stockholder after the date hereof
(including through the exercise of stock options, warrants or similar rights or
the conversion or exchange of securities) being collectively referred to herein
as the "SHARES" of such Stockholder);

         WHEREAS, the respective Boards of Directors of Buyer and Company have
approved the execution of an Agreement and Plan of Merger, dated as of the date
hereof (as the same may be amended, supplemented or otherwise modified in
accordance with its terms, the "MERGER AGREEMENT"), pursuant to which Buyer has,
among other things, agreed to commence a cash tender offer to purchase shares of
Company Common Stock as described in the Merger Agreement, which is to be
followed by the merger of Buyer with and into Company on the terms and
conditions set forth in the Merger Agreement;

         WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer and Company have entered into the Merger Agreement, setting
forth certain representations, warranties, covenants and agreements of the
parties thereto in connection with the Offer and the Merger; and

         WHEREAS, as an inducement and an essential condition to Buyer entering
into the Merger Agreement, Company and each Stockholder have agreed to enter
into this Agreement;

         NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

     1. VOTING AGREEMENT. Each Stockholder, severally and not jointly,
covenants and agrees with Buyer that, at any meeting of Company's stockholders,
however called, and any postponement or adjournment thereof, or in connection
with any written consent of Company's stockholders (collectively, the "COMPANY
STOCKHOLDERS MEETING"), such Stockholder shall vote all Shares of such
Stockholder (or, if applicable and requested by Buyer, grant proxies with
respect to such Shares), and shall cause each Affiliate of such Stockholder to
vote all of such Affiliate's Shares (or, if applicable and requested by Buyer,
grant proxies with respect to such Shares), (a) in favor of the adoption and
approval of the Merger Agreement and the transactions contemplated thereby
(including the Merger), and (b) against (i) any proposal made in opposition to
or in competition with the Offer, the Merger or the transactions contemplated by
the Merger Agreement, (ii) any merger, reorganization, consolidation, share
exchange, business

<PAGE>

combination, sale of assets or similar transaction with or involving Company
and any party other than Buyer, and (iii) any other action the consummation
of which would reasonably be expected to prevent or delay the consummation of
the Offer, the Merger or the transactions contemplated by the Merger
Agreement.

     2. TENDER OF SHARES.

        (a) TENDER OF SHARES. Each Stockholder covenants and agrees with
Buyer that it shall tender (or cause to be tendered), and shall cause each
Affiliate of such Stockholder to tender (or cause to be tendered), pursuant
to and in accordance with the terms of the Offer, all of its Shares to Buyer
at the Offer Price. Subject to applicable Law and SEC regulations, each
Stockholder covenants and agrees that it shall not, and shall cause each of
its Affiliates not to, withdraw any Shares tendered by it pursuant to the
Offer.

        (b) GRANT OF OPTION. Each Stockholder hereby grants (and shall use
its best efforts to cause each of its Affiliates to grant) to Buyer an
irrevocable option (the "OPTION") to purchase its Shares not validly tendered
pursuant to the Offer, and its Shares validly tendered but withdrawn pursuant
to the Offer, at a price in cash per Share (the "OPTION PRICE") equal to the
Offer Price or any higher price paid by Buyer for any share of Company Common
Stock pursuant to the Offer or the Merger (but excluding any price paid to
any shareholder who exercises dissenter's, appraisal or similar rights in
connection with the Merger).

        (c) EXERCISE OF OPTION. The Option shall (i) become exercisable, in
whole but not in part, for all Shares (less any Shares that Buyer has
accepted for payment or paid for pursuant to the Offer) immediately after the
Offer Conditions Satisfaction Date; if, but only if, Buyer has accepted for
payment all shares of Company Common Stock tendered and not withdrawn by the
Offer Conditions Satisfaction Date, and (ii) shall remain exercisable for a
period of 30 days after the first such date on which the Option becomes
exercisable. If the Option does not become exercisable due to (x) the
withdrawal of the Offer prior to the Offer Conditions Satisfaction Date, or
(y) the failure of Buyer to accept for payment all shares of Company Common
Stock tendered and not withdrawn by such date, the Option shall be deemed to
have expired. In the event Buyer wishes to exercise the Option, Buyer shall,
prior to the expiration of the Option, send a written notice to each
Stockholder identifying the time and place for the closing of such purchase
at least three Business Days prior to such closing, which notice may be given
prior to the Option becoming exercisable, and which notice shall be
considered irrevocable.

     3. RESTRICTIONS ON TRANSFER. Each Stockholder covenants and agrees with
Buyer that, until after the Effective Time, such Stockholder shall not, and
shall cause each Affiliate of such Stockholder not to, directly or indirectly
(other than pursuant to this Agreement), (a) give, offer, sell, transfer,
assign, pledge, encumber or otherwise dispose of the record or beneficial
ownership (any such act, a "TRANSFER") of, or enter into any contract,
option, commitment or other arrangement (including any profit sharing
arrangement) or understanding for the Transfer of, or consent to any Transfer
of, any or all of such Stockholder's (or Stockholder's Affiliate's) Shares,
or any interest therein, or (b) grant any proxies or enter into any voting
trust or other agreement and arrangement with respect to the voting of any
such

                                  -2-
<PAGE>

Shares or deposit any of such Shares into a voting trust. No Transfer of any
Shares in violation of this Section 3 shall be made or recorded on the books
of Company and any such Transfer shall be void and of no effect.

     4. COOPERATION. Each Stockholder covenants and agrees with Buyer that it
shall, and shall cause each of its Affiliates to, in connection with carrying
out its obligations under this Agreement, cooperate fully with Buyer in
connection with the Offer, the Merger and the transactions contemplated by
the Merger Agreement.

     5. NO SOLICITATION. Each Stockholder covenants and agrees with Buyer
that such Stockholder, in his or her capacity as a shareholder of Company
only, shall not, and shall cause each Affiliate (other than Company) of such
Stockholder not to, directly or indirectly, (a) solicit, initiate or
encourage the submission of any Acquisition Proposal, (b) engage in any
discussions or negotiations with any Person concerning any Acquisition
Proposal, or (c) disclose any nonpublic information relating to Company or
any of its Affiliates to any Person who, to the knowledge of such Stockholder
or Affiliate of such Stockholder, is considering making or has made an
Acquisition Proposal. Each Stockholder shall, and shall cause each Affiliate
(other than Company) of such Stockholder to, (w) notify Buyer and Company as
promptly as practicable (but in no event later than 24 hours) after receipt
by such Person of any Acquisition Proposal or any request for nonpublic
information relating to Company or any of its Affiliates by any Person who,
to the knowledge of such Stockholder or Affiliate of such Stockholder, is
considering making or has made an Acquisition Proposal, (x) provide such
notice orally and in writing and identify the Person making, and the terms
and conditions of, any such Acquisition Proposal, (y) keep Buyer and Company
informed of the status and details of any such Acquisition Proposal, and (z)
cease immediately and cause to be terminated all activities, discussions and
negotiations, if any, with any Persons other than Buyer that are currently
being conducted or which have been conducted prior to the date hereof with
respect to any Acquisition Proposal.

     6. CONFIDENTIALITY. Each Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement (including
the Offer and the Merger) may be dependent upon confidentiality with respect
to the matters referred to herein. In this connection, pending public
disclosure thereof by Buyer and/or Company pursuant to the terms of the
Merger Agreement, each Stockholder hereby agrees, in his or her capacity as a
stockholder of Company only, not to issue any press release or make any other
public statement or disclose or discuss such matters with anyone not a party
to this Agreement (other than such Stockholder's counsel and advisors, if
any) without the prior written consent of Buyer and Company, except as
required by law (including any applicable Schedule 13D or other filings
required under the Securities Exchange Act of 1934, as amended).

     7. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER.

        (a) Each Stockholder has all necessary power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by each Stockholder, and the
performance of its obligations hereunder, have been duly and validly authorized
by all necessary action and no other proceedings on the part of any Stockholder
are necessary to authorize the execution and delivery of this Agreement or the
performance of such Stockholder's obligations hereunder. This Agreement has been
duly and validly executed and delivered by each Stockholder and, assuming the
due authorization,

                                  -3-
<PAGE>

execution and delivery by the other parties hereto, constitutes a legal,
valid and binding obligation of each Stockholder, enforceable against each
Stockholder in accordance with its terms.

        (b) The execution and delivery of this Agreement by each Stockholder
does not, and the performance of this Agreement by each Stockholder will not,
(i) conflict with or violate the certificate of incorporation, by-laws or
other governing documents, if any, of such Stockholder, (ii) require any
consent, approval, authorization, waiver or permit of, of filing with or
notification to, any Governmental Entity, (iii) conflict with or violate any
Law applicable to such Stockholder or by which any property of such
Stockholder is bound or affected, or (iv) result in any breach of or
constitute a default under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
Lien on any property or asset of such Stockholder pursuant to any contract,
agreement, note, bond, mortgage, indenture, credit agreement, lease, license,
permit, franchise or other instrument or obligation to which such Stockholder
or an of its affiliates is a party or by which such Stockholder or any of its
Affiliates, or any property or asset of such Stockholder or any of its
Affiliates, is bound or affected, except in the case of clauses (iii) and
(iv) for any such conflicts, violations, breaches, defaults or other
occurrences of the type referred to above which would not prevent or
materially delay such Stockholder's ability to perform its obligations under
this Agreement.

     8. TERMINATION. This Agreement and all obligations hereunder shall
terminate immediately upon the earlier of (a) the consummation of the Merger,
and (b) the termination of the Merger Agreement; PROVIDED, HOWEVER, that, this
Section 8 and Section 9 shall survive the termination of this Agreement.

     9. GENERAL PROVISIONS.

        (a) NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in person, by facsimile (with confirmation of
receipt), or by registered or certified mail, postage prepaid, return receipt
requested, addressed to the notice address specified on the applicable
signature page to this Agreement.

        (b) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree (without prejudice to a
party's right to contest any injunction or restraining order based upon a
claim of breach of this Agreement to the extent it reasonably believes, in
good faith, that it has a meritorious defense to such a claim for relief)
that each party shall be entitled to an injunction or restraining order to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other right or remedy to which
such party may be entitled under this Agreement, at Law or in equity.

        (c) ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and
supersedes all other prior

                                   -4-
<PAGE>

agreements and understandings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof.

        (d) ASSIGNMENT; PARTIES IN INTEREST. Neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by any of
the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties. Subject to the foregoing, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any Person not a party hereto any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, including to
confer third party beneficiary rights.

        (e) GOVERNING LAW. This Agreement shall be governed in all respects
by the Laws of the State of Delaware (without giving effect to the provisions
thereof relating to conflicts of Law). The exclusive venue for the
adjudication of any dispute or proceeding arising out of this Agreement or
the performance hereof shall be the courts located in Dover County, Delaware,
and the parties hereto and their Affiliates each consents to and hereby
submits to the jurisdiction of any court located in Dover County, Delaware or
Federal courts in Delaware.

        (f) HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.

        (g) CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION.

            (i) Capitalized terms used herein and not otherwise defined are
used with the meanings ascribed to them in the Merger Agreement.

            (ii) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires, references
in the singular include references in the plural and vice versa. References
to a party to this Agreement or to other agreements described herein means
those Persons executing such agreements.

            (iii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the phrase "but
not limited to" in all places where such words appear in this Agreement. The
word "or" shall be deemed to be inclusive.

            (iv) This Agreement is the joint drafting product of each of the
parties hereto, and each provision has been subject to negotiation and
agreement and shall not be construed for or against any party as drafter
thereof.

            (v) In each case in this Agreement where this Agreement is
represented or warranted to be enforceable will be deemed to include as a
limitation to the extent that enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar Laws affecting the enforcement of creditors' rights generally and to
general equitable principles, whether applied in equity or at Law.

        (h) COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may
be executed in two or more counterparts which together shall constitute a
single agreement. Execution of this

                               -5-
<PAGE>

Agreement may be made by facsimile signature which, for all purposes, shall
be deemed to be an original signature.

        (i) SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economics or legal substance
of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable Law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.

        (j) AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.

        (k) WAIVER. The parties hereto may, to the extent permitted by
applicable Law, (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties by any other party
contained herein or in any documents delivered by any other party pursuant
hereto, and (iii) waive compliance with any of the agreements of any other
party or with any conditions to its own obligations contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.

                                  -6-
<PAGE>

         IN WITNESS WHEREOF, Buyer, Company and each Stockholder have caused
this Voting and Tender Agreement to be duly executed and delivered as of the
date first written above.

                                   MILPI ACQUISITION CORP.

                                   By: /s/ James A. Coyne
                                       ----------------------------------
                                        James A. Coyne, Vice President

                                   PLM INTERNATIONAL

                                   By: /s/ Robert Tidball
                                       ----------------------------------
                                        Robert Tidball, Chairman

                                   STOCKHOLDERS:

                                   STEEL PARTNERS II, L.P.

                                   By:  Steel Partners, L.L.C., its General
                                        Partner

                                   By: /s/ Warren G. Lichtenstein
                                       ----------------------------------
                                        Warren G. Lichtenstein, President

                                   Number of Shares Beneficially Owned as of
                                   December 22, 2000:

                                   1,337,300 shares of Common Stock (including

                                   0 shares issuable under options)

                                   Notice Address:

                                   Steel Partners II, L.P.

                                   -----------------------------
                                   150 East 52nd St., 21st Floor
                                   -----------------------------
                                   New York, NY 10022
                                   -----------------------------

                                        -7-
<PAGE>

                                   STEEL PARTNERS, L.L.C.

                                   By: /s/ Warren G. Lichtenstein
                                       ----------------------------------
                                        Warren G. Lichtenstein, President

                                   Number of Shares Beneficially Owned as
                                   of December 22, 2000:

                                   0 shares of Common Stock (including

                                   0 shares issuable under options)

                                   Notice Address:

                                   Steel Partners, L.L.C.

                                   -----------------------------
                                   150 East 52nd St., 21st Floor
                                   -----------------------------
                                   New York, NY 10022
                                   -----------------------------

                                   WARREN G. LICHTENSTEIN

                                   By: /s/ Warren G. Lichtenstein
                                       ----------------------------------
                                        Warren G. Lichtenstein

                                   Number of Shares Beneficially Owned as
                                   of December 22, 2000:

                                   20,000 shares of Common Stock (including

                                   20,000 shares issuable under options)

                                   Notice Address:

                                   Warren G. Lichtenstein

                                   c/o Steel Partners II, L.P.
                                   -----------------------------
                                   150 East 52nd St., 21st Floor
                                   -----------------------------
                                   New York, NY 10022
                                   -----------------------------

                                       -8-
<PAGE>

                                   ROBERT TIDBALL

                                   By: /s/ Robert Tidball
                                       ----------------------------------
                                        Robert Tidball

                                   Number of Shares Beneficially Owned as of
                                   December 22, 2000:

                                   110,000 shares of Common Stock (including

                                   304,005 shares issuable under options)

                                   Notice Address:

                                   Robert Tidball

                                   c/o PLM International, Inc.
                                   -------------------------------
                                   One Market
                                   -------------------------------
                                   Steuart Street Tower, Suite 800
                                   -------------------------------
                                   San Francisco, CA 94105

                                   DOUG GOODRICH

                                   By: /s/ Doug Goodrich
                                       ----------------------------------
                                       Doug Goodrich

                                   Number of Shares Beneficially Owned as of
                                   December 22, 2000:

                                   85,000 shares of Common Stock (including

                                   155,477 shares issuable under options)

                                   Notice Address:

                                   Doug Goodrich

                                   c/o PLM International, Inc.
                                   -------------------------------
                                   One Market
                                   -------------------------------
                                   Steuart Street Tower, Suite 800
                                   -------------------------------
                                   San Francisco, CA 94105
                                   -------------------------------

                                           -9-

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