EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into on
this 19th day of November, 1997, by and between PLM INTERNATIONAL, INC.
("Employer") and Susan C. Santo ("Employee").
WHEREAS, the Board of Directors deems it in the best interest of the
shareholders of the Employer to maintain a continuity of management, and to
retain an experienced, successful and proven management team; and
WHEREAS, Susan C. Santo has accepted the appointment of the Board of
Directors to the position(s)of Vice President, Secretary and General Counsel:
W I T N E S S E T H
That in consideration of the covenants, duties, terms and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Services. Employer hereby engages the exclusive services of Employee
as Vice President, Secretary and General Counsel, with her powers and duties in
that capacity to be determined by Employer's Board of Directors, and Employee
hereby agrees to perform such services on the terms and conditions herein
contained and to abide by all rules and regulations for the conduct of the
Employee that are now or may hereafter be established by Employer. In connection
with this Agreement, Employee shall be based at the principal executive offices
of Employer or at such location as may be designated from time to time by the
Board of Directors of Employer, except for required travel on Employer's
business to an extent substantially consistent with present business travel
obligations.
2. Employment Term. The term of this Agreement shall commence on the
date hereof (the "Commencement Date"), and shall continue for 3 year(s) (the
"Original Term") unless terminated pursuant to Sections 10 or 11 of this
Agreement. One year from the Commencement Date and each anniversary thereafter,
the term of this Agreement shall be automatically extended one (1) additional
year unless prior to such anniversary of the Commencement Date, the Employer
shall have delivered to the Employee notice of a determination made pursuant to
Section 10.1(C) of this Agreement, or Employee shall have delivered to the
Employer written notice that the term of this Agreement shall not be extended.
3. Compensation.
3.1 Employer shall pay to Employee as full compensation for all
services performed, the sum of One Hundred Seventy Thousand Dollars ($170,000)
per year (or such higher amount as may be agreed to by Employer and Employee
from time to time)(the original amount or the adjusted amount, if applicable,
being the "Base Salary") payable in equal semi-monthly installments. Employee's
compensation may be adjusted from time to time, but it may not be reduced below
the Base Salary without the Employee's prior written consent.
3.2 Employer may deduct and withhold from all payments to be made to
Employee hereunder the amounts required or permitted to be deducted or withheld
pursuant to any provisions of any present or future applicable law or
regulation, together with the right and authority to pay any such deductions or
withholdings over to any party entitled to the same pursuant to the provisions
of any such law or regulation.
4. Bonus. The Employee shall be eligible to participate in any bonus or
incentive compensation plan for which Employee or other senior executives of
Employer may reasonably expect to participate (the "Incentive Compensation
Plan"). To the extent not otherwise determined pursuant to the Incentive
Compensation Plan, the Board of Directors shall have the sole discretion to
determine the amount of such bonus, or incentive compensation, if any.
5. Other Benefits. Employer shall maintain in full force and effect,
and Employee shall be entitled to continue to participate in, all of Employer's
employee benefit plans and arrangements in effect on the date hereof in which
Employee participates, or such other plans or arrangements that would provide
Employee with substantially equivalent benefits thereunder (including without
limitation each pension and retirement plan and arrangement, supplemental
pension and retirement plan and arrangement, stock option plan, life insurance
plan and arrangement, health and accident plan and arrangement, medical
insurance plan and arrangement, disability plan and arrangement, survivor income
plan and arrangement, relocation plan and vacation plan)(the "Employee Benefit
Plans"); provided, however, that this Section 5 shall not apply to any of
Employer's Incentive Compensation Plan(s). Employer shall not make any changes
in such plans or arrangements which would adversely affect Employee's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all employees or executives of the Employer and does not result in a
proportionately greater reduction in the rights of or benefits to the Employee
as compared with any other employee or executive of the Employer. Employee shall
be entitled to participate in and receive benefits under any Employee Benefit
Plan or arrangement made available by Employer in the future to its employees,
executives or key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Nothing paid to the Employee under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Employee pursuant to Section 3.1 hereof or
pursuant to an Incentive Compensation Plan as provided in Section 4 hereof. Any
payments or benefits payable to the Employee hereunder with respect to any
calendar year during which Employee is employed by Employer for less than the
entire such year shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in such calendar
year during which she is employed; provided, however, benefits or payments
payable to Employee under any life insurance plan or arrangement, health and
accident plan or arrangement or disability plan or arrangement shall be payable
on behalf of Employee by Employer for a period of six months after termination
of employment hereunder.
6. Other Interests. Employee shall devote her time and attention solely
to the business and interest of Employer, and Employer shall be entitled to all
the benefits arising from or incident to Employee's services. During the
employment term, Employee shall not, without Employer's written consent, have
any interest in any business which conflicts either directly or indirectly with
Employer's business, except that Employee may hold an interest not exceeding
five percent (5%) in any corporation whose stock is publicly traded.
7. Confidentiality. It is specifically understood and agreed that some
of the Employer's business activities are secret in nature and constitute trade
secrets, including but not limited to Employer's "know-how", methods of
production and manufacturing, ideas and results of research and development,
specifications of equipment and materials, profit margins, planning information,
projections, customer and supplier information, reports, analyses, agreements,
as well as financial data and reports. All Employer's trade secrets and
proprietary information are and shall be the property of Employer, for its own
exclusive use and benefit, and Employee agrees that she will hold the same in
strictest confidence and will not at any time, either during or after her
employment by the Employer, use or permit the use of the same for her own
benefit or for the benefit of others unless authorized to do so by the
Employer's written consent or by a contract or agreement to which the Employer
is a party or by which it is bound.
8. Services Furnished. During the term of Employee's employment with
Employer, Employer shall furnish Employee with office space, secretarial
assistance and such other facilities and service as have heretofore been
furnished to Employee.
9. Other Positions. Employee agrees to serve without additional
compensation (other than compensation accruing to any other person serving in
such capacity), if elected or appointed a director of the Employer or any of its
subsidiaries, provided that Employee is indemnified for serving in any and all
such capacities on a basis no less favorable than is currently provided other
directors.
10. Termination by Employer. Employee's employment hereunder may be
terminated by Employer without any breach of this Agreement only under the
following circumstances:
10.1 If occurring prior to a Change in Control (as hereinafter defined
in Section 11):
(A) Death. Employee's employment hereunder shall terminate
upon her death.
(B) Disability. If, as a result of Employee's incapacity due
to physical or mental illness, Employee shall have been absent or substantially
absent from her duties hereunder for the entire period of six (6) consecutive
months, and within thirty (30) days after written notice of termination is given
(which may occur before or after the end of such six month period) shall not
have returned to the performance of her duties hereunder on a full- time basis,
Employer may terminate Employee's employment hereunder. Employee's absence or
substantial absence from her duties will be treated as resulting from incapacity
due to physical or mental illness if Employee is "totally disabled from her own
occupation." Total disability from Employee's own occupation will exist where
(1) because of sickness or injury, Employee cannot perform the important duties
of her occupation, (2) Employee is either receiving Doctor's Care or has
furnished written proof acceptable to Employer that further Doctor's Care would
be of no benefit, and (3) Employee does not work at all. Doctor's Care means
regular and personal care of a Doctor, which, under prevailing medical
standards, is appropriate for the condition causing the disability.
(C) Without Cause. This Agreement may be terminated without
cause, in the sole, absolute and unreviewable discretion of Employer, by written
notice made by the President of Employer. Such notice shall state that the
President of Employer has determined that it is in the best interests of the
Employer or its shareholders to terminate this Agreement and the Employee's
employment hereunder.
10.2 If occurring subsequent to or resulting from a Change in Control
(as hereinafter defined in Section 11):
(A) Death. Employee's employment hereunder shall terminate
upon her death.
(B) Disability. If, as a result of Employee's incapacity due
to physical or mental illness Employee shall have been absent or substantially
absent from her duties hereunder for the entire period of six (6) consecutive
months, and within thirty (30) days after written notice of termination is given
(which may occur before or after the end of such six-month period) shall not
have returned to the performance of her duties hereunder on a full time basis,
Employer may terminate Employee's employment hereunder. Incapacity due to
physical or mental illness will be determined as provided in Section 10.1(B); or
(C) Cause. Employer may terminate Employee's employment
hereunder for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure by Employee to
perform her duties hereunder (other than any failure resulting from Employee's
incapacity due to physical or mental illness) after demand for substantial
performance is delivered by Employer, which demand specifically identifies the
manner in which Employee has not substantially performed her duties;
(ii) the willful and intentional act by the Employee
that is, in the reasonable determination of the Employer, materially injurious
to the Employer, monetarily or otherwise;
(iii) the breach by the Employee of any material
covenant of this Agreement; or
(iv) the conviction of the Employee of a crime
involving an act of moral turpitude or which is a felony resulting in or
intended to result, directly or indirectly, in gain or personal enrichment of
the Employee, relations of the Employee, or their affiliates at the expense of
the Employer.
For purposes of this Section 10, no act, or failure to act, on
Employee's part shall be considered willful unless done, or omitted to be done,
by her not in good faith and without the reasonable belief that her action(s) or
omission(s) was in the best interests of the Employer. Furthermore, no
termination of Employee's employment shall be effective until Notice of
Termination is given to Employee by Employer.
11. Termination by Employee. Employee may terminate her employment
hereunder upon thirty (30) days' written notice to Employer for any reason. If
Employee terminates her employment hereunder subsequent to a Change in Control
(as hereinafter defined) and such termination is made for any of the reasons
listed below, then such termination shall be deemed to have been done for good
reason ("Good Reason").
Reasons constituting Good Reason shall be limited to:
(A) any breach by Employer of any material provision of this
Agreement which has not been cured within ten (10) days after written notice of
such non-compliance is given by Employee to Employer;
(B) any demonstrable and material diminution of the
compensation, duties, responsibilities, authority or powers of Employee as such
relate to any positions or offices held by Employee immediately prior to such
Change in Control; provided that Employee provides a reasonable description of
any such diminution(s) and a statement that Employee finds, in good faith, that
the acts or omissions to act causing such diminution in duties,
responsibilities, authority or powers to be a material diminution and that, as
such, she elects to terminate her employment hereunder for Good Reason;
(C) the taking of, or failure to take, any action by Employer
which would deprive Employee of any material fringe benefit enjoyed at the time
of such Change in Control or the failure of Employer to include Employee in any
Employee Benefit Plan or Incentive Compensation Plan for which Employee is
properly eligible including the failure to pay Employee the amount, if any,
determined in good faith to be due and owing Employee pursuant to any such
Employee Benefit Plan or Incentive Compensation Plan; or
(D) any requirement by the Employer that Employee relocate her
primary business office to a geographical area greater than twenty (20) miles
from Employer's principal executive offices as existing immediately prior to the
applicable Change in Control or, if Employee is based in an office other than
Employer's principal executive office, the office of Employer where Employee is
based immediately prior to the most recent Change in Control.
For purposes of this Agreement, a "Change in Control" shall
mean an event or series of events which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"), as amended; provided that
the following events shall be deemed a Change in Control whether or not
reportable as a Change in Control pursuant to Regulation 14A of the Exchange
Act:
(i) any "person" [as such term is used in Sections 13(d) and
14(d) of the Exchange Act, as in effect on the date hereof (a "Person")]
acquiring "beneficial ownership" [as defined in Rule 13D-3 under the Exchange
Act, as in effect on the date hereof ("Beneficial Ownership")] of securities of
the Employer representing 36% or more of the combined voting power of the
Employer's then outstanding securities;
(ii) any Person, who does not have Beneficial Ownership of
securities of the Employer representing 5% or more of the combined voting power
of the outstanding securities of the Employer on the date hereof, acquiring
Beneficial Ownership of more than 15% of the combined voting power of the
securities of the Employer then outstanding; or
(iii) a change in the Board of Directors, which change is the
result of a proxy solicitation(s) or other action(s) to influence voting at a
shareholders' meeting of the Company (other than by voting one's own stock) by a
Person or group of Persons who has Beneficial Ownership of 5% or more of the
combined voting power of the securities of the Employer and which causes the
Continuing Directors to cease to be a majority of the Board of Directors of the
Employer; provided, however, that none of the foregoing events shall be deemed
to be a Change in Control if the event(s) or election(s) causing such change
shall have been approved specifically for purposes of this Agreement by the
affirmative vote of at least a majority of the members of the Continuing
Directors.
For purposes of this Agreement, "Continuing Directors" shall
mean a member of the Board of Directors who (i) is a member of the Board of
Directors on the date hereof, or (ii) who subsequently becomes a member of the
Board of Directors and who either (x) is appointed or recommended for election
with the affirmative vote of a majority of the Directors then in office who are
Directors on the date hereof, or (y) is appointed or recommended for election
with the affirmative vote of a majority of the Directors then in office who are
described in subsections (i) and (ii)(x) above, as applicable.
12. Compensation Upon Termination or During Disability.
12.1 During any period that Employee fails to perform her duties
hereunder as a result of incapacity due to physical or mental illness, Employee
shall continue to receive her full Base Salary at the rate then in effect for
such period until her employment is terminated pursuant to Section 10 hereof.
12.2 If Employee's employment is terminated by her death, Employer
shall pay to Employee's spouse, or if Employee leaves no spouse, to her estate,
commencing on the next succeeding day which is the last day of the month, and
monthly thereafter on the last day of each month, until a total of three
payments have been made, an amount equal to one twelfth of the Base Salary in
effect immediately prior to such termination.
12.3 If Employee's employment shall be terminated for Cause, the
Employer shall pay Employee her full Base Salary through the date of such
termination at the rate in effect at the time Notice of Termination is given and
the Employer shall have no further obligations to the Employee under this
Agreement.
12.4 If (A) Employer shall terminate the Employee's employment
hereunder other than as permitted hereby or (B) the Employee shall terminate her
employment for Good Reason, then Employer shall pay Employee in cash or by
cashier's check within five (5) business days of such termination as Employee's
sole remedy for such termination the sum of (1) Employee's Base Salary or, if
greater, the base compensation rate in effect immediately prior to such
termination, multiplied by a number equal to the number of years in the Original
Term, (2) an amount equal to the greater of the amount paid and/or payable to
Employee or accrued by the Employer for Employee pursuant to all applicable
Incentive Compensation Plans (i) for the fiscal year of the Employer prior to
the fiscal year of any Change in Control or (ii) for the immediately preceding
fiscal year of the Employer (even though in either (i) or (ii) payable in the
next succeeding fiscal year(s) of Employer), multiplied by a number equal to the
number of years in the Original Term, and (3) all cash amounts due pursuant to
Section 5 hereof. The receipt of such payments shall constitute the sole remedy
of Employee for such termination and the making of such payments shall
constitute full performance by Employer under this Agreement. For purpose of
this Section 12.4 only, the Original Term, if greater than 2.99 years, shall be
2.99 years.
12.5 If the Employee shall terminate her employment pursuant to Section
11 hereof for any reason other than Good Reason, Employer shall pay Employee her
full Base Salary through the date of such termination at the rate in effect at
the time Notice of Termination is given.
12.6 If Employee's employment shall be terminated pursuant to Section
10.1 (C) then Employer shall pay Employee and provide benefits to Employee
pursuant to the standard policy of Employer.
12.7 The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise.
13. Stock Options. In the event Employee's employment with Employer is
terminated pursuant to Section 11 for Good Reason, any and all options to
purchase stock (common or otherwise) in the Employer granted pursuant to any
plan or otherwise, or any equivalent or similar rights which appreciate or tend
to appreciate as the value of the Employer's stock appreciates, shall become
immediately accelerated and fully vested and any restrictions on such options or
equivalent or similar rights shall, to the extent permissible under applicable
securities laws, fully lapse. Employer shall endeavor to cause any restrictions
on such options or equivalent or similar rights not lapsed by operation of this
Section 13 to so lapse.
14. Covenant not to Compete. Employee, in consideration of the
compensation and other benefits to be received by her pursuant to this
Agreement, expressly agrees that she will not, within a radius of fifty (50)
miles from any place of business of the Employer, engage directly or indirectly,
as employee, principal, agent, partner, director or independent contractor or
otherwise in any business which is competitive to that of the Employer for a
period equal to the Original Term after she ceases to be employed by the
Employer.
15. Non-solicitation. Except in the case of a termination pursuant to
Section 11 for Good Reason, for a period equal to the Original Term following
termination of this Agreement, Employee shall not directly or indirectly solicit
any of Employer's customers existing as of the date of termination. If Employee
violates this Section 15, Section 14 or the confidentiality provisions of
Section 7, and continues to do so after Employer has notified Employee of such
violation, Employer shall have the right to seek equitable restraint of Employee
from such activities in contravention of the provisions of this Agreement,
including seeking and obtaining a temporary restraining order and/or injunction
against Employee; provided that Employer demonstrates that Employee's
solicitations result in direct financial detriment to Employer.
16. Arbitration. Except as provided in Section 15, if a dispute arises
between Employer and Employee concerning termination of this Agreement under
Section 10 or 11 above or otherwise, the disputed matter shall be submitted to
arbitration. Any disputed matter shall be settled by arbitration in the City of
San Francisco, California in accordance with the labor arbitration rules of the
American Arbitration Association ("AAA Rules"). Any judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The arbitrators shall have the authority to grant any equitable and
legal remedies that would be available in any judicial proceeding instituted to
resolve the disputed matter. The arbitrators shall apply the law of the State of
California in making any determination hereunder. Notwithstanding anything to
the contrary which may now or hereafter be contained in the AAA Rules, the
parties agree any such arbitration shall be conducted before a panel of three
arbitrators who shall be compensated for their services at a rate to be
determined by the American Arbitration Association in the event the parties are
not able to agree upon their rate of compensation. Each party shall have the
right to appoint one arbitrator (to be appointed within twenty days of the
notice of a dispute to be resolved by arbitration hereunder) and the two
arbitrators so chosen shall mutually agree upon the selection of the third
impartial arbitrator. The majority decision of the arbitrators will be final and
conclusive upon the parties hereto.
17. Taxes. Notwithstanding anything herein to the contrary, Employer
shall not be obligated to pay any portion of any amount otherwise payable to
Employee hereunder if Employer is not reasonably able to deduct such portion
(the "Excess Amount") solely by operation of Section 280G (or such other
provision(s) as may from time to time be enacted governing the deductibility of
so- called "Golden Parachute Payments") of the Internal Revenue Code of 1986, as
amended (the "Code"). Employer shall be deemed able to reasonably deduct such
Excess Amount; and all amounts accruing hereunder, including the Excess Amount,
shall be paid Employee in the event Employee delivers to Employer an opinion of
an attorney that is reasonably acceptable to Employer stating such Excess Amount
is reasonably deductible by Employer by operation of Section 280G (or such other
provisions as may from time to time be enacted governing the deductibility of
so-called "Golden Parachute Payments") of the Code.
18. Miscellaneous.
18.1 Written notices required by this Agreement shall be sent
to Employer or Employee by certified mail, with a return receipt requested, to
Employer's registered address and to Employee's last shown address on Employer's
records, respectively. Such notice shall be deemed to be delivered two days
after mailing.
18.2 This Agreement contains the full and complete
understanding of the parties and supersedes all prior representations, promises,
agreements, and warranties, whether oral or written.
18.3 This Agreement shall be governed by and interpreted
according to the laws of the State of California.
18.4 With respect to Employer, this Agreement shall inure to
the benefit of and be binding upon any successors or assigns of Employer. With
respect to Employee, this Agreement shall not be assignable, but shall inure to
the benefit of and be binding upon the heirs, executors, administrators, and
successors of Employee.
18.5 The captions of the various sections of this Agreement
are inserted only for convenience and shall not be considered in construing this
Agreement.
18.6 This Agreement can be modified, amended or any of its
terms waived only by a writing signed by both parties.
18.7 If any provision of this Agreement shall be held invalid,
illegal or unenforceable, the remaining provisions of the Agreement shall remain
in full force and effect and the invalid, illegal or unenforceable provision
shall be limited or eliminated only to the extent necessary to remove such
invalidity, illegality or unenforceability in accordance with the applicable law
at that time.
18.8 Without limiting the provisions of Section 16, if either
party institutes arbitration proceedings pursuant to Section 16 or an action to
enforce the terms of this Agreement, the prevailing party in such proceeding or
action shall be entitled to recover reasonable attorneys' fees, costs and
expenses.
18.9 No remedy made available to Employer by any of the
provisions of this Agreement is intended to be exclusive of any other remedy.
Each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder as well as those remedies existing at law, in
equity, by statute or otherwise.
IN WITNESS WHEREOF, this Agreement has been executed on the
day and year specified above.
EMPLOYER:
PLM INTERNATIONAL, INC.
By: /s/Robert N. Tidball
Its: President and Chief Executive
Officer
ATTEST:
/s/ Christopher Delyani
EMPLOYEE:
/s/Susan C. Santo
Susan C. Santo
ATTEST:
/s/Lorraine Schwerin