April 5, 1995
Dear Stockholder:
It is with great pleasure that the directors and I invite you to attend
the Annual Meeting of Stockholders of PLM International, Inc. which will be held
at 1:00 p.m. (Pacific Time) on Thursday, May 18, 1995 at the A.P. Giannini
Auditorium, Concourse Level, 555 California Street, San Francisco, California.
At the meeting, the stockholders will elect two directors, vote on a
stock option plan for management and other key employees, vote on a stockholder
proposal concerning natural resources and transact such other business as may
properly come before the meeting. The Notice of Annual Meeting of Stockholders
and Proxy Statement accompanying this letter describe the business to be
transacted at the meeting.
Whether you plan to attend the meeting or not, we urge you to sign,
date and return the enclosed proxy card in the enclosed postage-paid envelope in
order that as many shares as possible may be represented at the meeting. The
vote of every stockholder is important and your cooperation in promptly
returning your executed proxy will be appreciated. Each proxy is revocable and
will not affect your right to vote in person in the event that you attend the
meeting. Thank you for your continued support.
Very truly yours,
J. ALEC MERRIAM
Chairman of the Board
<PAGE>
PLM INTERNATIONAL, INC.
One Market
Steuart Street Tower, Suite 900
San Francisco, California 94105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of PLM International, Inc. will be
held on Thursday, May 18, 1995 at 1:00 p.m. (Pacific Time) in the A.P. Giannini
Auditorium, Concourse Level, 555 California Street, San Francisco, California
for the following purposes:
1. Elect two Class II directors of PLM International, Inc.
2. Approve the Company's 1995 Management Stock Compensation Plan.
3. Vote on a stockholder proposal concerning natural resources.
4. Transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record on April 3, 1995 shall be entitled to notice of, and to
vote at, the Annual Meeting of Stockholders.
By Order of the Board of Directors
STEPHEN PEARY
Senior Vice President, Secretary and General Counsel
April 5, 1995
San Francisco, California
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING OF STOCKHOLDERS, WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE, PREPAID ENVELOPE. IF YOU ATTEND THE MEETING, YOU
MAY VOTE YOUR SHARES IN PERSON BY COMPLETING A BALLOT OR PROXY AT THE MEETING.
YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING
OF STOCKHOLDERS.
<PAGE>
PLM INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 18, 1995
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of PLM International, Inc. ("PLM
International" or the "Company") of proxies to be voted at the Annual Meeting of
Stockholders to be held at 1:00 p.m. (Pacific Time) on Thursday, May 18, 1995,
at the A.P. Giannini Auditorium, Concourse Level, 555 California Street, San
Francisco, California, or any adjournment thereof (the "Annual Meeting").
The Notice of Annual Meeting, this Proxy Statement and the accompanying
proxy card are being mailed to stockholders on or about April 19, 1995. The
costs of this proxy solicitation will be borne by the Company. Proxies may be
solicited by mail, personal interview, telephone, telegraph and advertisements.
Proxies are expected to be solicited by directors, officers and regular
employees of the Company. The directors, officers and employees who assist in
the solicitation will not receive any additional compensation for such services
and will perform such services in addition to their usual duties. The Company
has retained MacKenzie Partners, Inc. to assist in the solicitation of proxies
from brokers, nominees and individuals. MacKenzie Partners, Inc.'s estimated fee
for this service is $5,000. Brokers and other nominees who hold stock of the
Company will be asked to contact the beneficial owners of the shares which they
hold.
VOTING OF PROXIES
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting as specified in such
proxies. If no choice is given, the shares represented by a signed proxy will be
voted in favor of the first two items set forth in the notice attached hereto
and against the third item, if properly presented at the meeting. The two
nominees for election as directors who receive the highest number of votes
therefor at the Annual Meeting shall be elected as directors (Proxy Item No. 1).
The affirmative votes of the holders of a majority of the shares present in
person or by proxy at the Annual Meeting shall be required to approve the 1995
Management Stock Compensation Plan (Proxy Item No. 2) and the stockholder
proposal concerning natural resources (Proxy Item No. 3).
Votes at the Annual Meeting will be tabulated by one or more
independent inspectors of election appointed by the Company. Abstentions and
votes withheld by brokers in the absence of instructions from street-name
holders (broker non-votes) will be included in the determination of shares
present at the Annual Meeting for purposes of determining a quorum. Abstentions
will be counted towards the tabulation of votes cast on proxy items submitted to
stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proxy item has been approved.
A stockholder submitting a proxy may revoke it at any time before it is
voted at the Annual Meeting by notifying the Secretary of the Company in writing
of such revocation, by properly executing a later-dated proxy, or by voting in
person at the Annual Meeting.
-1-
<PAGE>
OUTSTANDING VOTING SECURITIES
Stockholders of record on April 3, 1995, or their proxies, are entitled
to vote at the Annual Meeting. On such date, the outstanding voting stock of the
Company consisted of 11,608,373 shares of the Common Stock. Each share of Common
Stock will be entitled to one vote per share, on each matter to be voted at the
Annual Meeting. There is no provision in the Certificate of Incorporation of the
Company permitting cumulative voting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership of shares of the
Company's Common Stock by each stockholder known to be the beneficial owner of
more than 5% of the outstanding Common Stock as of the date of this Proxy
Statement.
Number of
Shares of Percent of
Name and Address Common Common
of Beneficial Owner Stock Stock(1)
The Travelers(2) 814,000 7.0
65 E. 55th Street
New York, NY 10022
HPB Associates, L.P.(3) 960,000 8.3
888 Seventh Avenue
New York, NY 10106
- - --------------------------
(1) Computed on the basis of 11,608,373 shares of Common Stock outstanding.
(2) Schedule 13G filed on February 13, 1995 by The Travelers ("TRV")
indicating 814,000 shares of Common Stock owned beneficially by Smith
Barney Holdings Inc. ("SBH") of which 735,000 shares owned
beneficially by Smith Barney Mutual Funds Management Inc. ("MFM"). TRV
is sole shareholder of SBH. SBH is sole shareholder of MFM. Common
shares owned beneficially by MFM acquired in October 1994 from
Official Bondholders Committee of Transcisco Industries, Inc. ("OBC")
in a transaction in which the Company repurchased 922,367 common
shares and other institutions and individuals acquired beneficial
ownership of 1,631,000 common shares.
(3) Schedule 13D filed on October 21, 1994 indicating beneficial ownership
of 960,000 shares of Common Stock. Shares acquired in October 1994
from OBC in a transaction in which the Company repurchased 922,367
common shares and other institutions and individuals acquired
beneficial ownership of 1,485,000 common shares.
-2-
<PAGE>
The following table shows the amount and percent of the Company's
outstanding Common Stock beneficially owned by each of its directors and named
executive officers (as hereinafter defined), and by all directors and executive
officers as a group, as of the date of this Proxy Statement.
Number of
Shares of Percent of
Common Common
Name of Beneficial Owner Stock(1) Stock(1)
Allen V. Hirsch(2)............... 192,095 1.6%
Walter E. Hoadley(3)............ 31,000 *
J. Alec Merriam(4)............... 100,696 *
Robert L. Pagel(5)................ 30,000 *
Harold R. Somerset(6)........... 13,000 *
Robert N. Tidball(7)............. 234,438 2.0%
J. Michael Allgood(8)............ 36,431 *
Douglas P. Goodrich(9)......... 72,823 *
Stephen Peary(10)................. 86,796 *
All directors and executive officers
as a group (14 people)(11) 990,144 8.2%
- - ------------------
* Represents less than 1% of the outstanding shares.
(1) Computed on the basis of 11,608,373 shares of Common Stock outstanding
plus, in the case of any person deemed to own shares of Common Stock as a
result of owning options to purchase such securities exercisable within
60 days of the date of the Proxy Statement, the additional shares of
Common Stock which would be outstanding upon exerciseby such person.
(2) Includes 125,000 shares of Common Stock which may be purchased by Mr.
Hirsch upon exercise of options.
(3) Includes 30,000 shares of Common Stock which may be purchased by Dr.
Hoadley upon exercise of options.
(4) Includes 30,000 shares of Common Stock which may be purchased by Mr.
Merriam upon exercise of options.
(5) Represents 30,000 shares of Common Stock which may be purchased by Mr.
Pagel upon exercise of options.
(6) Includes 10,000 shares of Commons Stock which may be purchased by Mr.
Somerset upon exercise of options.
(7) Includes 150,000 shares of Common Stock which may be purchased by Mr.
Tidball upon exercise of options.
(8) Includes 30,000 shares of Common Stock which may be purchased by Mr.
Allgood upon exercise of options.
(9) Includes 30,000 shares of Common Stock which may be purchased by Mr.
Goodrich upon exercise of options.
(10) Includes 40,000 shares of Common Stock which may be purchased by Mr.
Peary upon exercise of options.
(11) Includes 555,000 shares of Common Stock which may be purchased by members
of the Board of Directors and executive officers upon exercise of
options.
-3-
<PAGE>
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
As of the date of this report the directors and executive officers of
PLM International (and key executive officers of its subsidiaries) are as
follows:
<TABLE>
<CAPTION>
Name............. Age Position
<S> <C> <C>
J. Alec Merriam................ 59 Director, Chairman of the Board, PLM International, Inc.; Director,
PLM Financial Services, Inc.
Allen V. Hirsch................ 41 Director, Vice Chairman of the Board, Executive Vice President, PLM
................. International, Inc.; Director and President, PLM Financial Services
Inc.; President, PLM Securities Corp.
Walter E. Hoadley.............. 78 Director, PLM International, Inc.
Robert L. Pagel................ 58 Director, Chairman of the Executive Committee, PLM International,
Inc.; Director, PLM Financial Services, Inc.
Harold R. Somerset . . . . . . . 59 Director, PLM International, Inc.
Robert N. Tidball.............. 56 Director, President and Chief Executive Officer, PLM International, Inc.
J. Michael Allgood............. 46 Vice President of Finance and Chief Financial Officer, PLM
International, Inc. and PLM Financial Services, Inc.
Robin L. Austin................ 47 Vice President, Human Resources, PLM International, Inc.; Vice
President, PLM Financial Services, Inc.
Stephen M. Bess................ 47 President, PLM Investment Management, Inc.; Vice President, PLM
Financial Services, Inc.
David J. Davis................. 38 Vice President and Corporate Controller, PLM International, Inc.
Douglas P. Goodrich............ 48 Senior Vice President, PLM International, Inc.
Dirk Langeveld................. 43 Senior Vice President, Marine Group, PLM Transportation Equipment
Corporation
Steven O. Layne................ 40 Vice President and General Manager, Air Group, PLM Transportation
Equipment Corporation
Stephen Peary.................. 46 Senior Vice President, Secretary and General Counsel, PLM
International, Inc.,PLM Financial Services, Inc., PLM Investment
Management, Inc., PLM Transportation Equipment Corporation; Vice
President, PLM Securities Corp.
</TABLE>
J. Alec Merriam was appointed Chairman of the Board of Directors of PLM
International in September 1990, having served as a director since February
1988. In October 1988 he became a member of the Executive Committee of the Board
of Directors of PLM International. From 1972 to 1988 Mr. Merriam was Executive
Vice President and Chief Financial Officer of Crowley Maritime Corporation, a
San Francisco area-based company engaged in maritime shipping and transportation
services. Previously, he was Chairman of the Board and Treasurer of LOA
Corporation of Omaha, Nebraska, and served in various financial positions with
Northern Natural Gas Company, also of Omaha.
Allen V. Hirsch became Vice Chairman of the Board and a Director of PLM
International in April 1989. He is an Executive Vice President of PLM
International and President of PLM Securities Corp. Mr. Hirsch became the
President of PLM Financial Services, Inc. in January 1986 and President of PLM
Investment Management, Inc. and PLM Transportation Equipment Corporation in
August 1985, having served as a Vice President of PLM Financial Services, Inc.
and Senior Vice President of PLM Transportation Equipment Corporation beginning
in August 1984, and as a Vice President of PLM Transportation Equipment
Corporation beginning in July 1982 and of PLM Securities Corp. from July 1982 to
October 1, 1987. He joined PLM, Inc. in July 1981, as Assistant to the Chairman.
Prior to joining PLM, Inc., Mr. Hirsch was a Research Associate at the Harvard
Business School. From January 1977 through September 1978, Mr. Hirsch was a
consultant with the Booz, Allen and Hamilton
-4-
<PAGE>
Transportation Consulting Division, leaving that employment to obtain his
master's degree in business administration.
Dr. Walter E. Hoadley joined PLM International's Board of Directors and
its Executive Committee in September, 1989. He served as a Director of PLM, Inc.
from November 1982 to June 1984 and PLM Companies, Inc. from October 1985 to
February 1988. Dr. Hoadley has been a Senior Research Fellow at the Hoover
Institute since 1981. He was Executive Vice President and Chief Economist for
the Bank of America from 1968 to 1981 and Chairman of the Federal Reserve Bank
of Philadelphia from 1962 to 1966. Dr. Hoadley has served as a Director of
Transcisco Industries, Inc. since February 1988.
Robert L. Pagel was appointed Chairman of the Executive Committee of
the Board of Directors of PLM International in September 1990, having served as
a director since February 1988. In October 1988 he became a member of the
Executive Committee of the Board of Directors of PLM International. From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation, a holding company traded on the New York Stock Exchange. He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes in sports fan's gift shops. He previously served as President and
Chief Executive Officer of Super Sky International, Inc., a publicly traded
company, located in Mequon, Wisconsin, engaged in the manufacture of skylight
systems. He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi, Inc., a Milwaukee based investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985 after a career spanning 20 years in all phases of the
brokerage and financial industries. Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.
Harold R. Somerset was appointed to the Board of Directors of PLM
International in July 1994. From February 1988 to December 1993, Mr. Somerset
was President and Chief Executive officer of California & Hawaiian Sugar
Corporation, a recently acquired subsidiary of Alexander & Baldwin, Inc.
("C&H"). Mr. Somerset joined C&H in 1984 as Executive Vice President and Chief
Operating Officer, having served on its Board of Directors since 1978, a
position in which he continues to serve. Between 1972 and 1984, Mr. Somerset
served in various capacities with Alexander & Baldwin, Inc., a publicly-held
land and agriculture company headquartered in Honolulu, Hawaii, including
Executive Vice President - Agriculture and Vice President and General Counsel.
Mr. Somerset also serves on the board of directors for various other companies
and organizations.
Robert N. Tidball was appointed President and Chief Executive Officer
of PLM International in March 1989. At the time of his appointment, he was
Executive Vice President of PLM International. Mr. Tidball became a director of
PLM International in April 1989 and a member of the Executive Committee of the
Board of Directors of PLM International in September 1990. Mr. Tidball was
Executive Vice President of Hunter Keith, Inc., a Minneapolis-based investment
banking firm, from March 1984 to January 1986. Prior to Hunter Keith, Inc., he
was Vice President & General Manager and Director of North American Car
Corporation, and Director of the American Railcar Institute and the Railway
Supply Association.
J. Michael Allgood was appointed Vice President of Finance and Chief
Financial Officer of PLM International in October 1992. Between July 1991 and
October 1992, Mr. Allgood was a consultant to various private and public sector
companies and institutions specializing in financial operational systems
development. In October 1987, Mr. Allgood cofounded Electra Aviation Limited and
its holding company, Aviation Holdings Plc of London, where he served as Chief
Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood served as a First Vice President with American Express Bank, Ltd. In
February 1978, Mr. Allgood founded and until June 1981, served as a director of
Trade Projects International/Philadelphia Overseas Finance Company, a joint
venture with Philadelphia National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.
-5-
<PAGE>
Robin L. Austin is Vice President, Human Resources of PLM
International. Ms. Austin became Vice President, Human Resources of PLM
Financial Services, Inc. in February 1984, having served in various capacities
with PLM Investment Management, Inc., including Director of Operations, since
February 1980. From June 1970 to September 1978, Ms. Austin served on active
duty in the United States Marine Corps. She is currently a Colonel in the United
States Marine Corps Reserves.
Stephen M. Bess was appointed President of PLM Investment Management,
Inc. in August 1989, having served as Senior Vice President of PLM Investment
Management, Inc. beginning in February 1984 and as Corporate Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller of PLM, Inc., beginning in December 1982. Mr. Bess was Vice
President-Controller of Trans Ocean Leasing Corporation, a container leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field Operations Group of Memorex Corp., a manufacturer of computer peripheral
equipment, from October 1975 to November 1978.
David J. Davis was appointed Vice President and Controller of PLM
International in January 1994. From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms, including PLM International.
Prior to that Mr. Davis was Chief Financial Officer of LB Credit Corporation in
San Francisco from July 1991 to March 1993. From April 1989 to May 1991, Mr.
Davis was Vice President and Controller for ITEL Containers International
Corporation which is located in San Francisco. Between May 1978 and April 1989,
Mr. Davis held various positions with Transamerica Leasing Inc. in New York,
including that of Assistant Controller for its rail leasing division.
Douglas P. Goodrich was appointed Senior Vice President of PLM
International in March 1994. Mr. Goodrich was appointed Vice President, Rail
Group, of PLM Transportation Equipment Corporation in July 1989, and President
of PLM Railcar Management Services, Inc. in September 1992. Mr. Goodrich was an
Executive Vice President of G.I.C. Financial Services Corporation, a subsidiary
of Guardian Industries Corp. of Chicago, Illinois from December 1980 to
September 1985.
Dirk Langeveld was appointed Vice President of PLM Transportation
Equipment Corporation's Marine Division in June 1990 and Senior Vice President,
Marine Group, in January 1991. Mr. Langeveld was Executive Vice President, Chief
Operation Officer, and a Director of Marine Transport Lines from 1987 to 1990.
From 1977 to 1987 Mr. Langeveld was employed by Stolt Tankers and Terminals Inc.
in a variety of executive positions in the United States and the Far East.
Steven O. Layne was appointed Vice President and General Manager, Air
Group, PLM Transportation Equipment Corporation in November 1992. Mr. Layne was
its Vice President, Commuter and Corporate Aircraft beginning in July 1990.
Previously, Mr. Layne was the Director, Commercial Marketing for Bromon Aircraft
Corporation, a joint venture of General Electric Corporation and the Government
Development Bank of Puerto Rico. Mr. Layne is a Major in the United States Air
Force Reserves and Senior Pilot with 13 years of accumulated service.
Stephen Peary was appointed Senior Vice President, Secretary and
General Counsel of PLM International in March 1994. Mr. Peary served as Vice
President, Secretary and General Counsel of PLM International beginning in
February 1988. Mr. Peary was Assistant General Counsel of PLM Financial
Services, Inc. from August 1987 through January 1988. Previously, Mr. Peary was
engaged in the private practice of law in San Francisco. Mr. Peary is a graduate
of the University of Illinois, Georgetown University Law Center, and Boston
University (Masters of Taxation Program).
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Board of Directors currently consists of six directors and is
divided into three classes, designated Class I, Class II and Class III. Each
director is elected to a three-year term. The current Class I directors are
Messrs.
-6-
<PAGE>
Hoadley and Tidball. The current Class II directors are Messrs. Merriam and
Pagel. The current Class III directors are Messrs. Hirsch and Somerset.
At the Annual Meeting, two directors will be elected for a term of
three years. The term of the current Class II directors expires at the Annual
Meeting, and the terms of the Class I and Class III directors will expire at the
annual meetings of stockholders convened in 1997 and 1996, respectively. The
Company's nominees for Class II director are J. Alec Merriam and Robert L.
Pagel, who are presently serving as Class II directors of the Company. Mr.
Merriam is also presently serving as the Chairman of the Board of Directors and
Mr. Pagel is presently serving as Chairman of the Executive Committee of the
Board of Directors.
The Company's nominees have consented to be nominated and to serve if
elected. If the nominees become unavailable for election, the proxy will be
voted for such other persons, if any, as the Board of Directors may designate.
INFORMATION CONCERNING DIRECTORS
The Company's Board of Directors held 13 meetings in 1994 and, to date,
has held 5 meetings in 1995. Each of the directors serving on the Board of
Directors attended at least 75% of (i) the total number of meetings of the Board
of Directors held in 1994 and (ii) the total number of meetings held by all
committees of the Board of Directors on which such director served.
Among the committees of the Board of Directors are an Executive
Committee, an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Executive Committee consists of Mr. Pagel-Chairman, Dr. Hoadley,
Mr. Merriam and Mr. Tidball. The Executive Committee, which was formed in
October 1988, may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Company, subject
to the limitations prescribed by the Board of Directors, the bylaws of the
Company and Delaware law. The Executive Committee did not meet in 1994.
The Audit Committee consists of Mr. Merriam-Chairman, Dr. Hoadley and
Mr. Pagel. The Audit Committee was formed in February 1988 to recommend the
appointment and compensation of the independent auditors, approve professional
services provided by the auditors, review the scope of the annual audit and the
auditors' report to management and review financial statements and internal
accounting controls. The Audit Committee met twice in 1994.
The Compensation Committee consists of Mr. Pagel-Chairman, Mr. Merriam
and Mr. Somerset. The Compensation Committee was formed in February 1988 to
review all compensation programs, policies and practices, including salaries,
incentives, stock options and stock purchase programs, and to make
recommendations to the Board of Directors regarding the salary of all corporate
officers and certain key employees. The Compensation Committee met twice in
1994.
The Nominating Committee was established in September 1990 to
investigate and make recommendations to the Board of Directors for nominees to
the Board of Directors and its committees. The Nominating Committee consists of
Mr. Tidball-Chairman, Mr. Merriam and Mr. Pagel. The Nominating Committee met
twice in 1994. The Nominating Committee will consider nominees to the Board of
Directors recommended by security holders upon submission of the names of such
nominees and such other information as requested by the Nominating Committee in
accordance with the Company's bylaws.
-7-
<PAGE>
CERTAIN BUSINESS RELATIONSHIPS
On February 1, 1988, Transcisco Industries, Inc. ("Transcisco")
acquired approximately 35.7% of the Company's outstanding Common Stock pursuant
to the exchange of all of the stock of certain of Transcisco's subsidiary
corporations, including PLM Financial Services, Inc. and PLM Railcar Management
Services, Inc. Transcisco also received $5 million in cash and a $5 million
subordinated promissory note (the "Note"). Interest in the amount of $580,936
was accrued and paid in 1994 pursuant to the terms of the Note. In July 1991,
Transcisco filed a petition for reorganization in the United States Bankruptcy
Court. On October 20, 1993, the Bankruptcy Court issued an order confirming a
joint plan of reorganization (the "Plan") of Transcisco. Under the Plan,
Transcisco, in October 1994, transferred on behalf of its Official Bondholders
Committee, the 3,367,367 shares of Company Common Stock owned by Transcisco to
the Company (as to 922,367 shares) and to other institutional and individual
investors (as to 2,445,000 shares). The purchase price was $3.25 per share. As
part of that same transaction, the Company repurchased the Note for $4.5
million.
During the year ended December 31, 1994, PLM Financial Services, Inc.
("FSI"), a subsidiary of the Company, and other Company affiliates, on behalf of
certain partnerships and for their own accounts, paid a total of approximately
$946,505 to Transcisco and its affiliates for replacement railcar wheels, and
maintenance, repair, modification and cleaning of railcars.
COMPENSATION OF DIRECTORS
Through October 1994, each nonemployee director of the Company (Messrs.
Hoadley, Merriam, Pagel and Somerset) received a monthly retainer of $1,000 and
a per meeting fee of $1,000 for meetings attended in person ($250 for meetings
attended by telephone). Each nonemployee director of the Company who is a member
of the Executive Committee of the Board of Directors (Messrs. Hoadley, Merriam
and Pagel) received a monthly retainer of $1,000 and a per meeting fee of $1,000
for meetings attended in person ($250 for meetings attended by telephone). In
addition, Mr. Merriam, as Chairman of the Board of Directors, received a monthly
retainer equal to $7,500, and Mr. Pagel, as Chairman of the Executive Committee,
received a monthly retainer equal to $6,000.
Beginning November 1, 1994, the $1,000 per month retainer fee paid to
nonemployee members of the Executive Committee was eliminated. The fees for
directors were increased so each nonemployee director receives a monthly
retainer of $2,000 per month and a per meeting fee of $1,000 for meetings of the
Board of Directors and the Executive Committee attended in person ($250 for
meetings attended by telephone). A fee of $250 per meeting is paid to all
nonemployee directors for meetings of all other committees of the Board of
Directors. In addition, Mr. Merriam, as Chairman of the Board of Directors,
receives a reduced monthly retainer equal to $4,000, and Mr. Pagel, as Chairman
of the Executive Committee, receives a reduced monthly retainer equal to $3,000.
On January 25, 1995, the Board of Directors adopted the Directors' 1995
Nonqualified Stock Option Plan (the "1995 Directors' Plan") pursuant to which
Directors who are not employees of the Company will receive annual options to
purchase 10,000 shares Common Stock of the Company. The first such grant to each
nonemployee director was made on February 1, 1995. The exercise price is the
closing price of the Company's Common Stock on the date of grant. The exercise
price of options granted on February 1, 1995 under the 1995 Directors' Plan is
$2.625 per common share. The total number of shares for which options may be
granted under the 1995 Directors' Plan is 120,000 shares. Options granted under
the 1995 Directors' Plan vest pro rata over a three-year period. Generally,
vested options held by a nonemployee director who ceases to be a director of the
Company may be exercised within six months after ceasing to be a director. As of
the date of this Proxy Statement, no options were exercisable under the 1995
Directors' Plan.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the fiscal years ended December 31,
1994, 1993 and 1992, a summary of compensation awarded to, earned by or paid to
the Company's Chief Executive Officer and each of its four other most highly
compensated executive officers (together, the "named executive officers") at
December 31, 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation<F1> Compensation
- - -----------------------------------------------------------------------------------------------------------------------
Name Securities All Other
and Underlying Compen-
Principal Salary Bonus<F2> Options/ sation
Position Year ($) ($) SARS (#) ($)<F3>
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert N. Tidball 1994 $268,333 $225,000 20,000 $105,716
----
President, Chief 1993 260,000 100,000 -- 15,237
----
Executive Officer 1992 200,000 95,000 130,000 8,703
----
Allen V. Hirsch 1994 228,333 100,000 10,000 90,559
----
Executive Vice President 1993 220,000 100,000 -- 12,956
----
and Director 1992 167,500 85,000 115,000 7,355
----
Stephen Peary 1994 158,333 100,000 10,000 65,129
----
Senior Vice President 1993 150,000 50,000 -- 9,532
----
and Secretary 1992 120,800 25,000 30,000 5,530
----
Douglas P. Goodrich 1994 170,833 60,000 10,000 61,211
----
Senior Vice President 1993 125,000 35,000 -- 9,133
----
1992 115,250 30,000 20,000 5,375
----
J. Michael Allgood 1994 140,231 60,000 10,000 7,041
----
Chief Financial Officer 1993 130,000 20,000 -- 1,008
----
and Vice President 1992 23,167 20,000 20,000 117
----
- - --------------------------------
<FN>
<F1> Amounts shown do not include the cost to the Company of personal benefits,
the value of which did not exceed 10 percent of the aggregate salary and
bonus compensation for each named executive officer.
<F2> Bonus compensation reflects amount earned in designated year, but paid in
the immediate subsequent year.
<F3> Includes the following compensation:
Fair market value of Cash balances Company paid
Common Stock allocated distributed from premiums for term
to ESOP accounts ESOP accounts life insurance
------------------------------ --------------------------------------
1994 1993 1992 1994 only 1994 1993 1992
---- ---- ---- --------- ---- ---- ----
Robert N. Tidball $78,469 $14,576 $8,087 $26,700 $547 $661 $616
Allen V. Hirsch 67,098 12,285 6,739 22,914 547 661 616
Stephen Peary 48,072 8,871 4,914 16,510 547 661 616
Douglas P. Goodrich 45,167 8,472 4,759 15,497 547 661 616
J. Michael Allgood 4,536 347 -- 1,958 547 661 616
Total fair market value Total cash balances
of Common Stock allocated distributed from all
to all ESOP accounts: ESOP accounts:
$4,847,085 $641,914 $715,034 $589,517
</FN>
</TABLE>
-9-
<PAGE>
Fair market value of shares allocated to ESOP accounts was determined using
closing price of the Company's Common Stock on January 18, 1995 ($2.9375),
the date all ESOP account balances were distributed to ESOP participants.
Amounts reported in this column for 1992 and 1993 for named individuals in
prior proxy statements consisted of the fair market value of ESOP
allocations made to individual accounts determined using appraised fair
market value of ESOP preferred stock at December 31 of applicable year,
plus the value of Company paid premiums for term life insurance.
STOCK OPTION GRANTS IN 1994
The following table sets forth certain information with respect to
stock options granted to each of the named executive officers during the fiscal
year ended December 31, 1994, including estimated potential realizable value
assuming certain rates of annual compound stock price appreciation over the
option term:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
% of Total Potential Realizable Value at Assumed
Common Options Annual Rates of Stock
Stock Granted Price Appreciation for
Options to Exercise Individual Option Term <F3>
Granted Employees Price Expiration
Name (#)<F1> in Fiscal ($/Share) Date<F2> 5% ($) 10% ($)
Year
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert N. Tidball 20,000 19.5 $ 3.0625 March 21, 1998 $11,428 $24,350
Allen V. Hirsch 10,000 9.7 3.0625 March 21, 1998 5,714 12,175
Stephen Peary 10,000 9.7 3.0625 March 21, 1998 5,714 12,175
Douglas P. Goodrich 10,000 9.7 3.0625 March 21, 1998 5,714 12,175
J. Michael Allgood 10,000 9.7 3.0625 March 21, 1998 5,714 12,175
-------
<FN>
<F1> Granted effective September 12, 1994 pursuant to the Company's
shareholder-approved 1988 Management Stock Compensation Plan. The
exercise price is 100% of fair market value on the date of grant.
Options vest pro rata over a three-year period beginning on effective
date of grant, subject to acceleration in certain circumstances
following a change in control. Aggregate number of Common Stock options
granted in 1994 equals 102,500. The 1988 Management Stock Compensation
Plan is administered by the nonemployee members of Board of Directors.
<F2> Subject to earlier termination in certain events related to termination
of employment.
<F3> Represents assumed rates of stock price appreciation in accordance with
rules of the Securities and Exchange Commission. Actual gains, if any,
on stock options exercises are dependent on the future market price of
the Company's Common Stock. Computation based on actual option term and
annual compounding, computed as the product of: (a) the difference
between: (i) the product of the per share market price at the effective
date of grant ($3.0625) and the sum of 1 plus the adjusted stock price
appreciation rate (5% - 18.7%, 10% - 39.8%) and (ii) the per share
exercise price of the option ($3.0625) and (b) the number of securities
underlying the grant at fiscal year end.
</FN>
</TABLE>
-10-
<PAGE>
There were no exercises of options by any named executive officer in
1994. The following table sets forth certain information, based on market value
of the Company's Common Stock on December 31, 1994, with respect to stock
options held by each of the named executive officers as of such date:
FISCAL YEAR END OPTION VALUES
- - -------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options at
Options at December 31, 1994
December 31, 1994
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
- - -------------------------------------------------------------------------------
Robert N. Tidball 86,667/63,333 $75,834/$37,916
Allen V. Hirsch 76,667/48,333 $67,084/$33,541
Stephen Peary 20,000/20,000 $17,500/$8,750
Douglas P. Goodrich 13,334/16,666 $11,667/$5,833
J. Michael Allgood 13,334/16,666 $11,667/$5,833
---------------
(1) Options granted in 1992 have an exercise price of $2.00. Options granted in
1994 have an exercise price of $3.0625. Market value of Common Stock at
December 31, 1994 close $2.875 per share.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into Employment Agreements (the "Employment
Agreements") with the Chief Executive Officer, each of its four other named
executive officers and others (each a "Contract Employee"). The Employment
Agreements are designed to encourage Contract Employees to remain in the employ
of the Company and to reinforce their continued attention and dedication to
their duties in the event of an unsolicited attempt to take over control of the
Company. The Employment Agreements have terms of one, two or three years from
the date on which they were entered (the "Original Term") and are automatically
extended one additional year on each succeeding anniversary thereof unless
earlier terminated by the Company or the employee. Each Employment Agreement
contains provisions governing salary, bonus and participation in Company benefit
plans, and provides in certain events for payments to the Contract Employee upon
termination of his or her employment with the Company. In addition, each
Employment Agreement includes a covenant not to solicit the Company's customers
or otherwise compete against the Company for a period of time after termination
of employment.
If, after a change in control occurs, the Company terminates a Contract
Employee other than for cause or if the employee terminates his or her
employment for good reason (including, without limitation, any demonstrable and
material diminution of the compensation duties, responsibilities, authority or
powers of the Contract Employee), then the Company is required to pay the
Contract Employee the sum of (i) the employee's annual base compensation rate
then in effect multiplied by the number of years in the Original Term (up to
2.99 years), (ii) an amount equal to the greater of the amount paid and/or
payable to or due the Contract Employee under the Company's bonus or incentive
plans (a) for the Company's fiscal year prior to the fiscal year of any change
in control or (b) for the immediately preceding fiscal year, multiplied by the
number of years in the Original Term (up to 2.99 years) and (iii) all other cash
benefits due the Contract Employee.
-11-
<PAGE>
In addition, if following a change in control, the Contract Employee
terminates his or her employment for good reason all options to purchase stock
of the Company granted to such Contract Employee immediately become fully vested
and any restrictions on the exercise of such options lapse.
For purposes of the Employment Agreements, a change in control is
defined to include, among other things, (i) any Person acquiring Beneficial
Ownership (as defined in the Employment Agreements) of 36% or more of the
combined voting power of the Company's securities, (ii) any Person who did not
have Beneficial Ownership of 5% or more of the voting power of the Company's
securities on the date the Employment Agreement was entered into acquiring
Beneficial Ownership of more than 15% of such voting power or (iii) a change in
the Board of Directors of the Company due to proxy solicitations or other
actions to influence voting at a meeting of stockholders of the Company by a
Person who has Beneficial Ownership of 5% or more of the voting power of the
Company, and which causes the Continuing Directors (as defined below) to cease
to be a majority of the Board of Directors, unless such event(s) have been
approved by a majority of the Continuing Directors.
"Continuing Directors" are (a) those who were directors on the date the
Employment Agreement was entered, (b) those who were appointed or recommended
for election by a majority of those who were directors on such date, or (c)
those who were appointed or recommended by a majority of those directors
described in (a) and (b) above.
The Employment Agreements are structured so that no excess payments
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), will be made to any Contract Employee pursuant to the
Employment Agreements. If a change in control occurred on the date hereof and
the employment of the Contract Employees was immediately terminated without
cause, based on certain assumptions, the following would be the present value of
post-employment compensation benefits provided under the Employment Agreements
to the following named executive officers: Mr. Tidball, $1,569,750; Mr. Hirsch,
$986,700; Mr. Peary, $777,400; Mr. Goodrich, $717,600; and Mr. Allgood,
$657,800.
(This space intentionally left blank.)
-12-
<PAGE>
PENSION BENEFITS
The following table sets forth certain information regarding annual
benefits payable in specified compensation and years of service classifications
under the Company's nonqualified supplemental retirement income plan:
<TABLE>
<CAPTION>
Average Annual Credited Years of Service<F3>
Compensation Annual Payout to be Received
During Last in Each of Five Years
Five Years of Following later of Termination of
Employment<F1><F2> Employment or Attainment of Age 60
- - ---------------- -------------------------------------------------------
5 10 15
--- ---- ---
<S> <C> <C> <C>
60,000 $ 15,000 $ 30,000 $ 45,000
100,000 25,000 50,000 75,000
140,000 35,000 70,000 105,000
180,000 45,000 90,000 135,000
220,000 55,000 110,000 165,000
260,000 65,000 130,000 195,000
300,000 75,000 150,000 225,000
400,000 100,000 200,000 300,000
- - ---------------------------------
<FN>
<F1> The Company's shareholder-approved nonqualified supplemental retirement income plan provides that an
executive participating in the plan is generally entitled to receive for a period of 60 months, commencing upon
the later of attainment of age 60 or termination of employment, an amount equal to the product of (i) 5%, (ii)
number of years of employment with PLM International, its affiliates or predecessors (up to a maximum of 15
years) and (iii) average monthly base compensation during the most recent consecutive months of employment
(not to exceed 60) preceding termination of employment. Obligations under the plan are funded by general
corporate funds and insurance policies on the lives of the participants. For purposes of computing benefits
under the plan, compensation includes only salaries and wages and does not include directors' fees or bonuses.
Benefits payable are not subject to any deduction for social security or other offset amounts. The annual base
compensation 60-month averages at December 31, 1994 for the named executive officers equalled: Mr.
Tidball, $217,667; Mr. Hirsch, $183,167; Mr. Peary, $128,743; Mr. Goodrich, $125,617; and Mr. Allgood,
$134,722.
<F2> Benefits under the plan generally vest over a five-year period. Vesting is
accelerated immediately to 100% in the event of a change in control of the
Company. The Board of Directors has discretion to accelerate the date for
making payments under the plan in the event of a change in control.
<F3> Years of credited service for named executive officers who participate in
the plan are as follows:
Years
Robert N. Tidball 9
Allen V. Hirsch 13
Stephen Peary 7
Douglas Goodrich 7
J. Michael Allgood 2
</FN>
</TABLE>
-13-
<PAGE>
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for advising and recommending to the Board of Directors of the
Company policies governing employee compensation and the Company's employee
benefit plans, including its 1988 Management Stock Compensation Plan, and
determining the compensation of the Company's executive officers, subject to
review by the disinterested members of the Board of Directors. The Committee
evaluates the performance of management and determines compensation polices and
levels. The disinterested members of the Board of Directors review the
Committee's recommendations regarding the compensation of executive officers.
The Company's executive compensation programs are designed to attract
and retain executives capable of leading the Company to meet its business
objectives and motivate them to enhance long-term shareholder value.
Compensation for the Company's executive officers consists of both fixed (base
salary) and variable (incentive) compensation elements. Variable compensation
consists of annual cash incentives and stock option grants. These elements are
designed to operate on an integrated basis and together comprise total
compensation value.
It is the Compensation Committee's belief that none of the Company's
executive officers will be affected by the provisions of Section 162(m) of the
Code which limits the deductibility of certain executive compensation during
1994. Therefore, the Committee has not adopted a policy as to compliance with
the requirements of Section 162(m) of the Code.
Base Salary
Base salary levels of the Company's key executives are largely
determined through comparison with comparable companies in the San Francisco Bay
Area. Salary information about comparable companies is reviewed by reference to
public disclosures and published surveys. In addition, the Committee from time
to time obtains information about comparable salary levels from outside
compensation consultants.
The companies included in the salary comparisons are generally not the
same as the companies included in the index in the stock performance graph
included in this Proxy Statement. The Committee believes that the Company's most
direct competitors for executive talent in the San Francisco Bay Area are not
necessarily the same companies to which the Company would be compared for stock
performance purposes.
In 1994, the Company engaged the services of a national compensation
consultant to advise on the overall compensation of the CEO and the Company's
Executive Vice President ("EVP"). Findings of the report submitted to the Board
of Directors were that the base salaries and level of actual total cash
compensation for both the CEO and EVP appear reasonable and do not require
adjustment. The consultant did suggest, which suggestion was approved by the
Committee as well as the Board of Directors, that after a threshold level is
met, the EVP should have an uncapped override or commission on the production of
syndication sales for which the EVP is responsible.
For fiscal 1994, base salaries of the Company's executive officers
(other than the President and Chief Executive Officer ("CEO")) were set to
approximate the 75th percentile of the survey data. The base salary of the CEO
was set to approximate the 50th percentile of the survey data.
Annual Cash Incentives
The annual cash incentive is designed to provide a short-term
(one-year) incentive to executive officers. The cash incentive is paid from a
single bonus pool established by the Compensation Committee at the beginning
- - --------
1 The material in this report is not "soliciting material," is not deemed
filed with the Securities and Exchange Commission and is not to be
incorporated by reference in any filing of the Company under the
Securities Act of 1993, as amended, or the Securities Exchange Act of
1934, as amended.
-14-
<PAGE>
of each year based on a targeted level of profitability. The Committee retains
the right to increase or decrease the size of the bonus pool during the year.
Payment of cash incentives is not contingent on the Company's meeting the
targeted level of profitability, which level was not met during 1994.
Incentive awards for the Company's key executives (other than the CEO)
are based on the achievement of predetermined individual performance goals.
Specific individual goals for each executive are established at the beginning of
the year by the CEO and are tied to the functional responsibilities of each
executive. Individual goals may include objective and subjective factors, such
as improving the performance of assets managed by the executive, successful
acquisitions or sales, management of operating expenses, development of
leadership skills and personal training and education. No specific weights are
assigned to the individual goals. In fiscal 1994, certain of the individual
performance targets were met. The Summary Compensation Table shows, under the
caption "Bonus," incentive awards for the named executive officers for 1994.
In establishing the annual cash incentive for the CEO, the Committee
considers the performance of the Company and the CEO, including his leadership
and effectiveness in dealing with major corporation problems and opportunities.
While overall corporate performance, including stock price performance, is taken
into account, the incentive award for the CEO is primarily determined by a
subjective account of his individual performance. The Summary Compensation Table
shows, under the caption "Bonus," the incentive award for the CEO in 1994.
Stock Options
Stock options are designed to provide long-term incentives and rewards
tied to the price of the Company's Common Stock. Given the fluctuations of the
stock market, stock price performance and financial performance are not always
consistent. The Committee believes that stock options, which provide value to
participants only when the Company's shareholders benefit from stock price
appreciation, are an important component of the Company's annual executive
compensation program. In August 1994 the Committee recommended to the Board of
Directors that options under the 1988 Management Stock Compensation Plan be
granted. Therefore, upon the recommendation of the Committee, the Board of
Directors approved the grant of options to 16 employees for 102,500 shares of
Common Stock. The size of an individual option grant is related primarily to the
officer's and employee's position and length of service to the Company. The
exercise price is $3.0625 per share, the closing price of the Company's Common
Stock on the effective date of grant, September 12, 1994. The options expire on
March 31, 1998. The tables "Stock Option Grants In 1994" and "Fiscal Year End
Option Values" identify the options granted to the named executive officers for
the past three years, including the CEO.
The national compensation consultant engaged by the Company in 1994
also opined that the level of stock option grants for the CEO and EVP positions
is substantially below competitive levels, and the practice of making infrequent
grants at multi-year intervals is uncommon and less effective as an incentive
and retention device. It was recommended that each year the top executives of
the Company be granted a competitive face value amount of options at fair market
value on the date of grant. Such a practice would be consistent with competitive
practice and shareholder desires to have executive compensation aligned with
total shareholder value creation. The consultant found that the level of stock
options granted and reserved for new grants at the Company is substantially
below typical levels. Consistent with guidelines published by the Institutional
Shareholder Service, Inc., a proxy advisory service that advises most of the
nation's leading institutional shareholders on how to vote various matters of
corporate governance at annual meetings of public companies, the consultant
recommended that the Company shareholders approve additional share authorization
for stock option grants to approximately 10% of total shares outstanding.
-15-
<PAGE>
The Committee believes, consistent with the recommendations enumerated
in the recently received report from a nationally recognized compensation
consultant, that options totalling approximately 10% of the Company's
outstanding Common Stock is an appropriate level for option grants. The
Committee believes option grants should be made widely available to Company
employees but concentrated in those senior level employees who make significant
contributions to the Company's overall performance. The Committee supports the
adoption of the 1995 Management Stock Compensation Plan (Proxy Item No. 2). In
addition, accumulation and retention of shares of Company stock by officers is
encouraged.
J. ALEC MERRIAM ROBERT L. PAGEL
The Members of the Compensation Committee
(This space intentionally left blank.)
-16-
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following performance graph compares the performance of the
Company's Common Stock to the S&P 500 Index and the Russell 2000 Index, an index
of small market capitalization companies. The graph assumes that the value of
the investment in the Company's Common Stock and each index was $100 on December
31, 1989, and that all dividends were reinvested. All year references are to
December 31 of the applicable year.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG PLM INTERNATIONAL INC., THE S&P 500 INDEX AND THE RUSSELL 2000 INDEX
PLM International, Inc.:
12/89, $100; 12/90, $65; 12/91, $44; 12/92, $27; 12/93, $31; 12/94, $43
S&P 500:
12/89, $100; 12/90, $97; 12/91, $126; 12/92, $136; 12/93, $150; 12/94, $152
Russell 2000:
12/89, $100; 12/90, $80; 12/91, $117; 12/92, 139; 12/93, $166; 12/94, $163
The Company is an equipment leasing company specializing in the
management of equipment on operating leases domestically and internationally.
Its portfolio of owned and managed equipment primarily consists of diversified
transportation equipment and includes marine vessels, aircraft,
trailers/tractors, railcars/locomotives, marine containers, mobile offshore
drilling units and storage vaults. No issuers are leasing similar portfolios of
diversified transportation equipment on operating leases. Therefore, the Company
believes it cannot reasonably identify a peer group and has used an index
composed of companies with similar market capitalizations.
-17-
<PAGE>
TERMINATION OF EMPLOYEE STOCK OWNERSHIP PLAN
The Board of Directors established the Company's Employee Stock
Ownership Plan (the "Plan") on August 21, 1989. The Plan was a defined
contribution plan which was established to invest primarily in qualified
employer securities issued by the Company. On August 21, 1989, the Company
borrowed $63,654,993 from a group of banks to finance the Plan. The Company
immediately reloaned that amount to the Plan and made an initial contribution to
the Plan of $345,007. The Plan then utilized $64,000,001 of the foregoing amount
to purchase 4,923,077 shares of the Company's newly issued Series A Preferred
Stock (the "Preferred Stock"). All of those shares were initially held in a
pledge account (the "Loan Suspense Account") and were released from the Loan
Suspense Account for allocation to participants as payments were made on the
Plan's indebtedness to the Company. As a condition to their loans to the
Company, the banks required the Company to provide security for the loans, which
security, except for a short period in 1990, took the form of cash (or cash
equivalents) deposited in a collateral account maintained by one of the banks.
This collateral is referred to as the "restricted cash collateral." Except for
the form of the collateral, the terms of the loans from the banks to the Company
and from the Company to the Plan had substantially identical terms and
substantially identical principal balances.
The Plan received an initial determination letter from the Internal
Revenue Service ("IRS") which states that the Plan (and the related trust) are
exempt from Federal income taxation under Section 401(a) of the Code and qualify
as an employee stock ownership plan under Section 4975(e)(7) of the Code. Under
the terms of the Plan, all employees of the Company and its subsidiaries who
were United States citizens were eligible to participate in the Plan after the
satisfaction of certain age and service requirements. Under the terms of the
Plan, the Company retained the right to terminate the Plan at any time.
In October 1994, the Company's Board of Directors announced its
intention to terminate the Plan. The Plan was terminated effective December 31,
1994. The assets of the Plan allocated to participants were distributed on
January 18, 1995. The Board's decision was based on several factors. First, the
Company anticipated that the cash collateral initially required as part of the
Plan financing described above could ultimately be fully accessed for use in the
Company's business. Instead, however, the banks required that all such amounts
be held in a collateral account which could only be invested in certificates of
deposit and similar low yielding investments. The Plan financing arrangement for
that reason continuously reduced corporate earnings and growth. Second,
employees were generally dissatisfied with the Plan as a vehicle for retirement
planning. An employee stock ownership plan like the Plan generally provides an
undiversified investment, and the annual allocation of an increased number of
shares to participants was unfortunately matched by a decline in the value of
the Company's outstanding Common Stock. The Company's Board of Directors
determined to terminate the Plan because it was satisfying neither the Company's
nor the participants' expectations and could not be expected to do so in the
foreseeable future. The Company received a favorable final IRS determination
letter as to the qualified status of the Plan as of the date of termination
under the rules and regulations of the Code. Upon Plan termination, each share
of Preferred Stock held by the Plan which had been allocated to Plan
participants became 100% vested. Upon distribution each allocated share
automatically converted to one share of Common Stock.
At termination 1,650,075 common shares were distributed to (or to the
individual retirement accounts of) approximately 191 Plan participants (215,153
shares of Common Stock were distributed to the named executive officers or their
respective individual retirement accounts). In addition, approximately 468,519
shares were distributed in November 1994 to participants who at the time were no
longer employees of the Company. All shares distributed from the Plan to
participants are freely tradeable and listed on the American Stock Exchange.
Shares of Preferred Stock held by the Plan which were not allocated to
participants' accounts at the date of termination (2,804,483 shares) were
surrendered to the Company. All indebtedness of the Plan to the Company was
cancelled. In addition, the corresponding bank indebtedness of the Company
related to the Plan was fully repaid using restricted cash collateral. At plan
termination, the principal amount of this indebtedness was $43,288,241 and was
fully secured by restricted cash collateral.
-18-
<PAGE>
Termination of the Plan and the related Plan loan eliminated payment
by the Company of the annual dividend on the Preferred Stock. For the year ended
December 31, 1994, the aggregate pretax amount of this dividend was $6,957,513.
1995 MANAGEMENT STOCK COMPENSATION PLAN (PROXY ITEM NO. 2)
General. The Company is submitting for approval by stockholders at the
Annual Meeting the PLM International, Inc. 1995 Management Stock Compensation
Plan (the "1995 Plan"). The purpose of this plan is to obtain for the Company
and its shareholders the commitment and motivation inherent in stock ownership
by those individuals upon whose judgment, initiative, creativity and efforts the
Company is substantially dependent for the successful operation of its business.
A copy of the 1995 Plan is attached as Exhibit A. The following summary of
certain provisions of the 1995 Plan does not purport to be complete and is
qualified in its entirety by reference to Exhibit A.
Types of Stock-Based Compensation Permitted by Plan. The 1995 Plan has
been designed to permit the Company to use equity-based compensation in a
flexible manner that will permit the Company to obtain the maximum possible
benefits by providing for a variety of possible types and structures of stock
and stock option awards. Thus, under the plan, the Company will be able to
adjust the types of awards to changing tax and accounting rules as well as to
the individual circumstances of specific groups of employees to whom the Company
desires to target incentives. To these ends, the plan would authorize the Board
of Directors to grant (a) incentive stock options under Section 422 of the Code
("Incentive Options"), (b) nonqualified stock options ("Nonqualified Options"),
and (c) shares of the Company's Common Stock.
Administration. The 1995 Plan would be administered by a committee of
the Board of Directors consisting of two or more directors who are
"disinterested persons" and who are "outside directors." The Board of Directors
has designated the Compensation Committee (the "Committee") to administer the
1995 Plan. "Disinterested person" has the meaning set forth in Rule 16b-3 under
the Exchange Act of 1934. "Outside director" has the meaning set forth in the
rules and regulations under Section 162(m) of the Code.
The Committee would have the authority to administer and interpret the
plan. The powers of the Committee would include the authority, taking into
consideration the recommendation of management, to select employees to whom
shares or options would be granted, structure the types of awards that would be
granted, determine whether an option would be a Nonqualified Option or an
Incentive Option, determine the number of shares that would be awarded or
subject to any options awarded, the time and manner in which awards of options
would be exercisable, the restrictions to placed on any shares, and the time or
times at which any such restrictions would lapse.
Eligibility to Receive Awards. Management employees and other key
employees (including employees who are directors) of the Company or its
subsidiaries would be eligible to participate in the 1995 Plan. The Company
estimates that the number of persons qualifying as management and other key
employees eligible to participate in the plan would not exceed 30. Participation
in the 1995 Plan does not preclude participation in any other stock or nonstock
compensation plans of the Company.
Duration of Plan/Securities Subject to Plan. The 1995 Plan would
terminate on March 31, 2005 unless terminated earlier by the Board of Directors.
Subject to typical antidulition provisions, 600,000 shares of the Company's
Common Stock would be available under the 1995 Plan. This represents
approximately 5.2% of the Company's currently outstanding Common Stock. The 1995
Plan authorization is in addition to the shares and options provided for in the
1988 Management Stock Compensation Plan (the "1988 Plan"). The 1988 Plan
provides that no more than 600,000 shares in total of the Company's Common Stock
could be received by the Company's management and key employees as a result of
grants of stock or the exercise of options over the term of the 1988 Plan. The
1988 Plan terminates on March 21, 1998. At April 5, 1995, nonqualified options
to purchase 548,300 shares of Company Common Stock had been granted and remain
outstanding under the 1988 Plan. Of these, options to purchase 297,170 shares
are vested.
-19-
<PAGE>
The closing price of the Company's Common Stock on April 5, 1995 was
$3.375 per share.
Exercise Prices and Other Terms of Option and Stock Grants. Under the
1995 Plan, the Committee would generally have the discretion to determine the
exercise prices of options, except that the exercise price of any Incentive
Option could not be less than 100% of the fair market value of the stock subject
to it on the date of grant of the option, and, except as provided in the
following paragraph, the exercise price of any Nonqualified Option also could
not be less than 85% of the fair market value of the stock subject to it on the
date of grant of the option. Additionally, the exercise price of any option,
whether an Incentive Option or a Nonqualified Option, granted to any person
owning, directly and indirectly, 10% of the Company's outstanding stock, could
not be less than 110% of the fair market value of the stock subject to the
option on the date of its grant.
The Committee could also make outright grants of bonus stock under the
plan. In the case of such grants, the Company would receive only nominal cash
consideration for the shares equal to the minimum price, if any, required to be
paid for such shares under applicable state law.
While the 1995 Plan would thus give the Committee the authority to
grant stock for no cash consideration, the terms of any such grant would
generally provide that the shares would initially be subject to a right of
repurchase on the part of the Company at a price equal to the price paid by the
grantee. This Company repurchase right would lapse ratably for a period of
several years. Thus, the employee to whom the stock was granted would be able to
benefit from the grant only to the extent that the goal sought to be achieved by
the award of retaining the employee's services over the vesting period was in
fact attained.
The deadline for exercising any option would generally be subject to
the Committee's discretion and established at the time the option was granted,
except that no option may be outstanding for more than the term of the plan. In
the case of any person directly or indirectly owning 10% or more of the
Company's stock, an Incentive Option could not be outstanding for more than five
years.
Options would either be immediately exercisable or in installments
over a period of months or years. The Company anticipates that generally any
stock received pursuant to the exercise of any option other than an option whose
exercisability was itself subject to a delayed vesting schedule would be subject
to delayed vesting. As in the case of grants of stock, delayed vesting of shares
would generally be accomplished by issuing the shares subject to the Company's
right to repurchase them upon the occurrence of a specified event (e.g.,
termination of employment) within a specified period of time for the same
consideration paid for the shares by the optionee. Upon the expiration of this
period of time without the occurrence of the specified event or without the
Company's exercising its right of repurchase, the right of repurchase would
"lapse" and the shares would "vest."
The exercise price for any shares would generally be payable in cash.
The exercise price may also be paid by (i) delivery to the Company already owned
shares of Common Stock having a fair market value equal to the aggregate
exercise price on the date of exercise, (ii) cashless exercise methods which are
permitted by law, including, without limitation, methods whereby a broker sells
shares of Common Stock to which the exercise relates or holds them as collateral
for a margin loan, delivers the aggregate exercise price to the Company, and
delivers the remaining proceeds to the optionee (and in connection therewith the
Company may establish a cashless exercise program including a program where the
commissions on the sale of shares of Common Stock to which the exercise relates
are paid by the Company), or (iii) any combination of cash, already owned shares
or such cashless exercise methods having a combined value equal to the aggregate
exercise price. In the discretion of the Committee, already owned shares must
have been owned by the optionee at the time of exercise for at least the period
of time specified by the Committee (which generally shall not be less than six
months). The exercise price might also, with the approval of the Committee, be
paid with a promissory note. The terms and conditions of each promissory note
would be established by the Committee in its discretion.
In the event the Company determined, in its sole discretion, that it
was or might be required to withhold federal, state, local or foreign income or
excise taxes as a result of the exercise of an option or the granting of any
stock under the plan, the optionee or grantee would be required, as a condition
to such exercise or grant, to make
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arrangements satisfactory to the Company to enable it to satisfy such
withholding requirements. Such arrangements could include the grantee's or
optionee's payment of cash to the Company, his or her authorization for the
withholding of shares that would otherwise be transferred to the grantee or
optionee pursuant to the award or exercise of the option, withholding from other
amounts contemporaneously owed to the grantee or optionee by the Company, or any
combination of these.
Stockholder Rights of Optionee/Assignability of Options and Nonvested
Shares. No optionee under the 1995 Plan will have any rights of a stockholder
until the option is exercised and the corresponding shares have been issued by
the Company. Options would not be assignable or transferable other than by will
or the laws of inheritance, and during an optionee's lifetime the option could
be exercised only by the optionee. The Committee, however, will have the
discretion to permit lifetime or death transfers to the extent permitted by Rule
16b-3 as in effect from time to time. The Securities and Exchange Commission has
proposed to amend Rule 16b-3 to permit options to become transferable. It is
anticipated that nonvested shares granted under the plan and shares issued
pursuant to the exercise of any options granted under the plan, would, under the
individual agreements under which they were granted, or under the individual
agreements granting the options covering them, also generally be nontransferable
until vested.
Recapitalization, Mergers, Etc. Upon the occurrence of certain
corporate events described in the 1995 Plan (dissolution or liquidation of the
Company, or a partial liquidation involving at least 50% of the Company's
assets, a corporate reorganization in which the Company would not be the
surviving company, a merger or reorganization under which more than 50% of the
Company's outstanding stock was converted into cash or other securities, a sale
of more than 50% of the Company's assets, or a similar event, including a change
in corporate control as determined by the Committee in its discretion
specifically for the purposes of the plan), the Committee would have discretion
under the plan to take any or all of the following actions: (i) accelerate the
exercisability of any options or the vesting of any shares of stock granted or
sold under the plan or issued pursuant to the exercise of options granted under
the plan; (ii) arrange to have any surviving corporation grant replacement
options or stock to optionees or grantees; or (iii) cancel options or repurchase
nonvested shares at a price determined by the Committee in its discretion to be
the fair market value of the cancelled option or repurchased stock.
If the outstanding shares of the Company's Common Stock were increased
or decreased in number, or changed into, or exchanged for, a different number of
securities of the Company or any other corporation by reason of a
recapitalization, reclassification, stock split, reverse stock split,
combination of shares, stock dividend, or other event, the Committee would
adjust the number and kind of securities as to which outstanding options might
be exercised, and/or their exercise price, as might be appropriate. The
Committee would also increase or decrease the 600,000-share limit otherwise
placed upon the plan to the extent necessary to prevent what would in substance
be a reduction or enlargement of the 600,000-share limit.
Restrictions on Transfer/Termination of Employment. Options granted
under the 1995 Plan would be nontransferable except in the case of the death of
the original optionee, in which case they would be transferable to (and
exercisable within a limited period of time no greater than one year by) the
original optionee's personal representative, legatee, or heir. It is also
anticipated that nonvested shares granted pursuant to the plan and nonvested
shares issued upon exercise of any options granted under the plan would
generally not be transferable until they were vested.
In the case of the termination of employment of any optionee other
than on account of his or her death, options held by the optionee that were
exercisable immediately before termination of employment would continue to be
exercisable for three months in the case of Incentive Options and six months in
the case of Nonqualified Options, except that, in the case of both Incentive
Options and Nonqualified Options, the period during which options would remain
exercisable would be one year if the optionee's termination of employment was
due to permanent and total disability.
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Cancellation and New Grant of Options. The Committee would have the
authority to cancel, at any time, and from time to time, any or all options
outstanding under the 1995 Plan and grant in substitution therefor new options
at the then current market price covering the same or a different number of
shares of Common Stock.
Amendment and Termination of the Plan. The Board could amend or modify
the 1995 Plan in any or all respects whatsoever at any time, except that the
Board could not increase the 600,000-share limit (other than in connection with
certain changes in the Company's capital structure as explained above), modify
the class of employees eligible to participate in the plan, lower the minimum
exercise price specified in the plan for any option, or change the formula for
granting options with an exercise price equal to $1.00, without the approval of
the Company's shareholders, and could not, without the consent of the grantee or
optionee, amend the plan, or any agreement covering an award of stock or options
under the plan in any way that would have a material adverse effect on any
grantee or optionee with respect to an outstanding award.
The Board of Directors could terminate the plan at any time. Such
termination would have no effect on any shares previously granted or sold under
the plan, or on any outstanding options or agreements placing restrictions on
any shares granted or sold under the plan.
Federal Tax Consequences. The following discussion is based on federal
income tax laws and regulations as in effect on the date of this Proxy Statement
and does not purport to be a complete description of the federal income tax
aspects of the 1995 Plan. No information is provided herein with respect to
estate, inheritance, or state or local tax laws, although there may be certain
tax consequences upon the receipt or exercise of an award or the disposition of
any of the acquired shares under those laws. The federal income tax treatment of
awards will depend on the specific nature of any such award. An award may,
depending on the conditions applicable to the award, be taxable as an option, an
award of restricted or unrestricted shares, an award which is payable in cash,
or otherwise.
Grants and Sales of Stock. Shares granted or sold to an
employee under the plan would generally be taxable to the employee as
ordinary income when the shares were vested, with the taxable amount
being measured as the excess of the fair market value of the shares on
the date they become vested over the price, if any, paid by the
employee. Alternatively, the employee could elect under Section 83(b)
of the Code to recognize as ordinary income in the year the shares
were first received, even though not yet vested, the excess of the
fair market value of the shares when first received over the amount,
if any, paid for them by the employee. If the Section 83(b) election
were made, the employee would not recognize any additional taxable
income when the shares vested.
Regardless of whether a Section 83(b) election were made or
not, the employee would be subject to additional tax when the shares
would eventually be disposed of if the amount received for the shares
exceeded the sum of the amount paid for them plus the amount, if any,
recognized as income at the time of vesting or pursuant to the Section
83(b) election. This additional income would be capital gain, and
would be long-term if the shares were held for more than 12 months.
The Company would be entitled to an income tax deduction equal
to only the amount of ordinary income recognized by the employee at
the time of vesting or pursuant to Section 83(b) elections in the year
in which such ordinary income was recognized by the employee.
Options. Options granted under the 1995 Plan could be either
Incentive Options satisfying the requirement of Section 422 of the
Code or Nonqualified Options not intended to satisfy such
requirements. The federal income tax treatments of the two types of
options differ as follows:
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Incentive Options. No taxable income is recognized by the
optionee at the time of the option grant and no taxable income is
recognized at the time an option is exercised, unless, for the year of
exercise, the optionee is subject to the alternative minimum tax.
For federal tax purposes, dispositions of the shares acquired
upon exercise of an Incentive Option are divided into two categories:
qualifying and disqualifying. The optionee makes a qualifying
disposition of purchased shares if the sale or other disposition of
such shares is made more than two years after the grant date of the
option and more than one year after the exercise date. If the optionee
fails to satisfy either of these two holding periods prior to the sale
or other disposition of the shares, then a disqualifying disposition
results.
Upon a qualifying disposition of the shares, the optionee
recognizes long-term capital gain in an amount equal to the excess of
(i) the amount realized upon the sale or disposition over (ii) the
option price paid for the shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market
value of the shares at the date of exercise over (ii) the option price
paid for them is taxable as ordinary income. Any additional gain
recognized upon the disposition is capital gain and such gain will be
long-term if the shares have been held for more than twelve months
following exercise of the option.
If the optionee makes a qualifying disposition of the
purchased shares, then the Company would not be entitled to an income
tax deduction in connection with the grant or exercise of the option,
or the disposition of the shares received by the optionee upon
exercise of the option. If the optionee made a disqualifying
disposition of the purchased shares, then the Company would be
entitled to an income tax deduction for the taxable year in which such
disposition occurred, equal (in general) to the amount by which the
fair market value of such shares on the date the option was exercised
exceeded the option price.
The aggregate fair market value (as of the date or dates of grant) of
the shares of stock for which options granted to any one individual
under the 1995 Plan and all other plans of the Company could first
become exercisable as Incentive Options in any one calendar year could
not exceed $100,000.
Nonqualified Options. No taxable income would be recognized by
an optionee upon the grant of a Nonqualified Option. The Optionee
would (in general) recognize ordinary income in the year in which the
option was exercised equal to the excess of the fair market value of
the purchased shares at the date of exercise over the exercise price,
and the optionee would be required to satisfy the tax withholding
requirements applicable to such income.
Special provisions of the Code apply to the acquisition of
Common Stock under a Nonqualified Option if the purchased shares are
nonvested. These special provisions may be summarized as follows:
(i) If the shares acquired upon exercise of the Nonqualified
Option are subject to repurchase by the Company at the original option
price in the event the optionee's service terminates before he or she
vests in the shares, or if such shares are subject to any other
substantial risk of forfeiture, the optionee does not recognize any
taxable income at the time of exercise but must report as ordinary
income, when the Company's repurchase right or the risk of forfeiture
lapses, an amount equal to the difference between (a) the fair market
value of the shares on the date the Company's repurchase right or the
risk of forfeiture lapses and (b) the purchase price paid for the
shares.
(ii) The optionee may, however, elect under Section 83(b) of
the Code to include as ordinary income in the year of exercise of the
Nonqualified Option an amount equal to the
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difference between (a) the fair market value of the purchased shares
on the date of exercise (determined as if the shares were not subject
to the Company's repurchase right or any substantial risk of
forfeiture) and (b) the purchase price paid for the shares. If the
Section 83(b) election is made, the optionee does not recognize any
additional income when the repurchase right or substantial risk of
forfeiture lapses.
Regardless of whether a Section 83(b) election is made, the
employee may be subject to additional tax when the shares received
upon exercise of the Nonqualified Option are eventually disposed of if
the amount received for the shares exceeds the sum of the amount paid
for them plus the amount, if any, recognized as income at the time of
vesting pursuant to the Section 83(b) election. This additional income
would generally be capital gain, and could be long-term if the shares
have been held for more than twelve months.
The Company would be entitled to an income tax deduction equal
to the amount of ordinary income recognized by the optionee in
connection with the exercise of a Nonqualified Option. The deduction
would (in general) be allowed for the taxable year of the Company in
which the optionee recognized ordinary income in connection with the
exercise of the option. However, if the purchased shares were subject
to the Company's repurchase rights or other substantial risk of
forfeiture, then the deduction would be allowed for the taxable year
of the Company in which occurred the last day of the calendar year in
which the optionee recognized ordinary income in connection with such
purchase.
Excess Parachute Payments. Where the terms of the agreements
pursuant to which specific awards made under the 1995 Plan provide for
accelerated vesting or payment of an award in connection with a change
in ownership or control of the Company, certain amounts with respect
to such awards may constitute "excess parachute payments" under the
golden parachute provisions of the Code. Pursuant to such provisions,
an employee would be subject to a 20% excise tax on any excess
parachute payment and the Company would be denied any deduction with
respect to such excess parachute payment.
Section 162(m) Compensation Deduction Limitation. Stock
options and performance-based stock granted under the 1995 Plan are
intended to be "performance-based compensation" and therefore not
subject to the deduction limitation of Section 162(m) of the Code.
Accounting Treatment. Under present accounting rules, the grant of
options under the 1995 Plan would result in a charge to the Company's earnings
only if and to the extent that any option, when granted, had an exercise price
that was, at the date of grant, below the fair market value of the stock subject
to the option. This would occur only in connection with options granted with an
exercise price of $1.00 per share under the formula contained in the plan,
described above, for paying bonus amounts in the form of discounted options.
However, the number of options outstanding would generally be a factor in
determining earnings per share on a fully-diluted basis.
Any grants of stock under the plan would generally result in a charge
to the Company's earnings equal to the fair market value of the shares granted.
Any stock granted under the plan and any stock issued pursuant to the exercise
of any option granted under the plan, would, of course, result in some dilution
of shareholders' equity and earnings per share. However, the bounds of such
dilution would be set by the 600,000-share limit (representing 5.2% of the
Company's currently outstanding shares) over the plan's 10-year life.
Existing accounting rules for stock compensation are currently being
reviewed by the Financial Accounting Standards Board and may be the subject of
significant changes in the future.
As of the date of this Proxy Statement no shares or options to
purchase shares have been granted to the named executive officers or any other
key employees of the Company under the 1995 Plan.
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The Board of Directors recommend a vote IN FAVOR of the 1995 Plan (Proxy Item
No. 2).
STOCKHOLDER PROPOSAL (PROXY ITEM No. 3)
One stockholder has requested that the following proposal (the
"Stockholder Proposal") be submitted to all stockholders at the Annual Meeting:
In recognition of our diminishing natural resources, the PLM
International, Inc. Company, and its employees, will embrace
as a corporate policy the concept of preserving natural
resources to the extent feasible and take no actions, unless
absolutely necessary for corporate survival, that greatly harm
our natural resources and the creatures that exist therein.
This policy must be addressed with respect to all new programs
and projects authorized by the Board of Directors and
Management.
In support of the Stockholder Proposal, the proponent has submitted
the following statement:
The above policy is a reasonable approach to a very serious
problem facing mankind worldwide. It makes a statement and
creates an awareness within the company that the preservation
of our natural resources (fauna and flora) is essential to the
survival of the planet as we know it.
The policy recognizes the fact that we can no longer plunder
the rich resources of our planet, e.g., the vast old growth
forests are about gone, the salmon are disappearing, the
wolves and grizzly bears are about to leave the lower 48
states, the amphibian population (worldwide) is about 40% of
what is was a few years ago. The list goes on and on.
We all need to be aware that the pioneering days are gone and
the period of conservation is now upon us. If we all do our
part, even in small ways, we can turn things around so that
future generations can see and enjoy those natural wonders
that are fast disappearing.
The name, address and number of shares of Common Stock held by the
proponent will be furnished by the Company to any person, orally or in writing
as requested, promptly upon receipt of any oral or written request therefore to
the Secretary, PLM International, Inc., One Market, Steuart Street Tower, Suite
900, San Francisco, California 94105, telephone number (415) 974-1399.
The Board of Directors Recommends a Vote AGAINST the Stockholder Proposal (Proxy
Item No. 3).
The Board of Directors is sensitive to environmental issues as they
relate to the Company's business, including the matter of diminishing natural
resources. The Company's objective is to employ its assets in the most efficient
manner possible so as to maximize revenues while preserving residual values.
This results in a collateral, positive impact on the environment as efficient
operating assets are less likely to waste resources or cause a pollution event.
The Board of Directors recognizes the importance of the matters noted by the
proponent in the Stockholder Proposal as well as the supporting statement.
However, as drafted, the Stockholder Proposal is ambiguous and could require the
Company to incur costs of an indeterminate nature which may be excessive in
relation to any benefit to the environment. The Board of Directors believes that
the Company is in material compliance with all environmental laws. The Board of
Directors believes environmental and other social issues should be addressed in
the context in which they arise, and that the Company should address these
issues in a sensible and flexible manner as they may arise in the course of its
business operations. Therefore, the Board of Directors recommends a vote against
the Stockholder Proposal.
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INDEPENDENT AUDITORS
Representatives of KPMG Peat Marwick, the Company's independent
auditors, are expected to be present at the Annual Meeting. They will be
afforded an opportunity to make a statement, if they so desire, and are expected
to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals from stockholders for the 1996 Annual Meeting must be
received by the Company no later than January 8, 1996, to be included in the
Company's Proxy Statement and form of proxy relating to the 1996 Annual Meeting.
Such proposals should be directed to the attention of the Secretary, PLM
International, Inc., One Market, Steuart Street Tower, Suite 900, San Francisco,
California 94105.
OTHER BUSINESS
The Board of Directors of the Company does not intend to present any
other items of business at the Annual Meeting. The Board of Directors knows of
no other items that are likely to be brought before the meeting except those set
forth in the foregoing Notice of Annual Meeting of Stockholders.
By Order of the Board of Directors
STEPHEN PEARY
Senior Vice President, Secretary and General Counsel
San Francisco, California
April 5, 1995
PLM International will provide without charge to each person furnished
a copy of this Proxy Statement, a copy of its Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, upon receipt of a written
request therefor sent to the Secretary of PLM International, Inc., One Market,
Steuart Street Tower, Suite 900, San Francisco, California 94105.
<PAGE>
EXHIBIT A
PLM INTERNATIONAL, INC.
1995 MANAGEMENT STOCK OPTION PLAN
1. Purpose
The purpose of this 1995 Management Stock Compensation Plan (the
"Plan") is to attract, retain, and motivate certain management and key employees
of PLM International, Inc. (the "Company"), or of any parent or subsidiary of
the Company, by giving such employees stock, or an opportunity to acquire stock,
in the Company. The Company may grant options under this Plan that may be either
(a) nonqualified options ("NQSOs") or (b) incentive stock options ("ISOs") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Additionally, the Company may make grants of stock under this Plan.
2. Shareholder and Board Approval: Effective Date: Term of Plan
This Plan was adopted by the Company's board of directors (the "Board")
on April 5, 1995, subject to approval by the holders of a majority of the
outstanding voting stock of the Company at the May 18, 1995 meeting of
shareholders. Options granted under the Plan prior to its approval by the
Company's shareholders shall be granted subject to such approval and shall not
be exercisable prior to such approval. The Plan shall terminate on March 31,
2005 unless terminated earlier by the Board. The Board may amend the Plan
without shareholder approval to the extent provided in Paragraph 17(a) and may
terminate the Plan at any time without shareholder approval. No options or
shares of stock shall be granted after termination of the Plan, but termination
shall not affect rights and obligations under then-outstanding options or share
grants.
3. Shares Subject to Plan
Subject to the other provisions of this Plan, the total number of
shares that may be granted under this Plan, or with respect to which options may
be granted under this Plan, shall not exceed in the aggregate 600,000 shares of
the Company's common stock, $.01 par value ("Common Shares"); provided, however,
that such number and kind of shares shall be appropriately adjusted in
accordance with Paragraph 12(b). Shares delivered to a grantee or optionee by
the Company as the result of an award of shares or upon exercise of options may
be previously unissued shares or repurchased shares, including shares
repurchased under the terms of this Plan, or under the terms of any agreement
awarding shares or granting options under this Plan. Shares covered by the
options granted under this Plan that expire or terminate shall again become
available for the grant of options. All shares issued under this Plan or upon
the exercise of any option granted under this Plan, whatever their source, shall
be counted against the 600,000-share limitation.
<PAGE>
4. Administration
(a) Board to Administer. Grants of stock or/and options under
this Plan shall be made, and the Plan shall be administered, by a committee (the
"Committee") of the Board consisting of two or more directors who are
Disinterested Persons and who are Outside Directors.
(b) Voting. A majority of the Committee shall constitute a
quorum for the purposes of this Plan. Provided a quorum is present, the
Committee may take action by consent of a majority of its members present at a
meeting. Meetings may be held telephonically as long as all parties are able to
hear one another, and a member of the Committee shall be "present" for purposes
of the preceding sentence if he or she is in simultaneous communication by
telephone with the other members, provided, again, that all parties are able to
hear one another.
(c) Tasks of Administering Plan. Without limiting the
generality of the foregoing, and unless otherwise determined by the Board, the
Committee shall have full and final authority, in its discretion, but subject to
the express provisions of this Plan, to (i) determine the management and key
employees of the Company to whom, and the times or times at which, stock or
options shall be granted, the number of shares to be granted or the number of
shares to be subject to any option, and the consideration, if any, to flow to
the Company for each share of stock or each option, or upon exercise of an
option; (ii) determine the terms and provisions of each stock awaRd or option
granted under the Plan (which terms and provisions may differ from those of
other stock awards or options granted under the Plan) and, but only with the
consent of the holder thereof where such consent is required under Paragraph
17(b), modify or amend the terms of any stock grant or option, or cancel any
option; (iii) authorize any person to execute on behalf of the Company an
agreement imposing restrictions on shares granted under the Plan, or to execute
an option agreement with respect to an option previously granted by the Board;
(iv) interpret the Plan; (v) accelerate the permissible exercise date of any
option or the lapse of any restrictions with respect to any shares granted under
the Plan or acquired as a result of the exercise of any option granted under the
Plan; and (vi) make all other determinations deemed necessary or advisable for
the administration of the Plan.
(d) Reports. Unless otherwise decided by the Board, the
Committee shall cause written summaries of stock and stock option grants under
this Plan to be maintained, including descriptions of all restrictions thereon,
as follows: (i) from time to time, all recent stock and stock option grants
under the Plan that have not previously been included in such a summary shall be
summarized; (ii) annually within 60 days after the end of the calendar year all
stock and stock option grants made during such preceding calendar year shall be
summarized; (iii) annually within 60 days of the end of the calendar year, and
at other times within the Committee's discretion, all outstanding unexercised
options, and all stock with respect to which restrictions have not yet lapsed,
shall be summarized; and (iv) at any additional time, within the Committee's
discretion, all stock and stock option grants ever made under the Plan shall be
reported.
(e) Delegation. The Committee may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper. The
Committee may also make whatever rules and regulations it deems useful to
administer the Plan. Any decision or action of the Committee in connection with
the Plan or any stock or options granted, or shares purchased, under the Plan,
shall be final and binding.
5. Eligibility.
(a) Only employees may receive grants. Shares of stock,
NQSO's, ISO's may be granted under this Plan only to persons who are management
and other key employees of the Company or any parent or subsidiary of the
Company.
(b) Selection of Grantees and Optionees. In selecting the
individuals to whom stock is, or options are, to be granted, and in determining
the number of shares comprising the award or subject to the option, the
Committee shall take into consideration such factors as it deems relevant in
accomplishing the Plan's purposes. An individual who has been granted stock or
options may later, if he or she is otherwise eligible, be granted additional
stock or options.
6. Grant of Stock or Options or Limitations
(a) General Rules. Subject to the rules and restrictions
contained elsewhere in this Plan, the Company may grant stock or stock options
under this Plan at any time, and from time to time, until the Plan terminates.
The Committee shall specify the date of grant or, if it fails to, the date of
grant shall be the date of the action taken by the Committee to grant the stock
or option; provided, however, that in the case of any option that is approved in
anticipation of employment, the date of grant with respect to an ISO shall be
the date the intended optionee first becomes an employee. Notice of the
determination shall be given to each person to whom stock or an option is
granted. Within a reasonable time after the date of grant of any option or of
any shares whose grant is subject to restrictions, the optionee and the Company
shall enter into a written agreement (the "Option Agreement" or the "Restricted
Shares Agreement", as the case may be) that shall specify the date of grant, the
number of shares covered by the grant or option, the option price, in the case
of an option, and the other terms and conditions of the stock or option grant,
and any restrictions on the shares granted or to be received on exercise of the
option.
(b) Special ISO limit. The maximum aggregate fair market value
(determined by the Committee at the time the option is granted, and without
regard to any restriction other than a restriction that, by its terms, will
never lapse) of shares with respect to which ISOs granted under this Plan or
under any other plan of the Company or any parent or subsidiary of the Company
to any employee may first be exercised in any calendar year shall not exceed
$100,000.
(c) Identification of option as ISO or NQSO. The status of any
option granted under this Plan as either an ISO or an NQSO shall be determined
by the Committee at the time the Committee acts to grant the option, and shall
be clearly reflected in the Option Agreement.
(d) Special limitation on amounts paid for non-option stock.
In the case of any share grant to any management or other key employee under
this Plan, the Company shall receive no consideration for such grant in excess
of any minimum price required to be paid for such shares under the General
Corporation Law of the State of Delaware, the California Corporate Securities
Rules, or any other state corporation or securities law, if applicable,
including, but not by way of limitation, a requirement that shares not be sold
for less than their par value.
7. Terms and Conditions of Options
Options granted under this Plan shall be subject to the
following terms and conditions, and to any other terms and conditions, not
inconsistent with this Plan, that the Committee imposes when the option is
granted;
(a) Time of Exercise. Options shall be exercisable at such
times and in accordance with such schedule as may be specified in the Option
Agreement.
(b) Price. The price to be paid by the optionholder for shares
issued pursuant to the exercise of any option granted under this Plan shall be
determined by the Committee, provided, however, that such price shall not be
less than any minimum price provided by the General Corporation Law of the State
of Delaware, the California Corporate Securities Rules, or any other state
corporation or securities law, if applicable, including, but not by way of
limitation, a requirement that shares not be sold for less than their par value,
if any, and provided that, except as provided in Paragraph 7(c) below, such
price shall not be less than, in the case of NQSO 85%, and in the case of any
ISO 100%, of the fair market value of the shares covered by the option at the
time the option was granted, determined without regard to any restriction on
such shares other than a restriction that, by its terms, will never lapse.
(c) Special pricing rule for 10% Owners. In the case of any
option, whether an ISO or an NQSO, granted to any individual who, at the time
the option is granted, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary of the Company (a "10% Owner"), the purchase price to be paid for
share issued pursuant to the exercise of the option shall not be less than 110%
of the fair market value of the shares at the time when the option was granted,
determined in the same manner as the option price under Paragraph 7(b). For
purposes of determining whether a person is a 10% Owner, and for other purposes
of this Plan as well, stock of the Company owned indirectly by a person shall be
treated as owned by him or her. Stock shall be considered as owned indirectly by
a person if it is owned, directly or indirectly, by or for his or her brothers
or sisters (whether by whole or half blood), spouse, ancestors, or lineal
descendants; also, a proportionate share of stock of the Company owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust shall be
considered as being owned proportionately by or for its shareholders, partners,
or beneficiaries.
(d) Option Term. The term of any option granted under the Plan
shall commence and expire on the date specified in the option; provided,
however, that in the case of any ISO the date specified for expiration of an
option shall not be later than the date that is 10 years after the date the
option is granted, or, in the case of a 10% Owner, 5 years after such date.
Options may be terminated earlier than their original expiration date, as herein
provided, and the Committee may extend the term of any option, again as herein
provided, except that in no event may an ISO's term be extended beyond that date
that is 10 years after the date it was granted, or in the case of 10% Owner, 5
years after the date of grant.
(e) Method of Exercise. Pursuant to the terms of any Option
Agreement, options may be exercised, in whole or in part, from time to time, by
written notice from the optionee to the Company stating the number of shares
being purchased and accompanied by payment in full of the exercise price for the
shares. Unless the Option Agreement provides otherwise, in the discretion of the
Committee exercised at the time the option is exercised, payment may be made in
cash, by check, by delivery to the Company of shares of Common Shares owned by
the optionee (duly endorsed in favor of the Company or accompanied by a duly
endorsed stock power), by the optionee's interest-bearing full recourse
promissory note (subject to any applicable restrictions, limitations, or
conditions imposed by General Corporation Law of the State of Delaware, the
California Corporations Code, or any other state law, if applicable) by cashless
exercise methods permitted by law, including, without limitation, methods
whereby a broker sells shares of Common Stock to which an exercise relates or
holds such shares as collateral for a margin loan, delivers the aggregate
exercise price to the Company, and delivers the remaining proceeds to the
Optionee (and in conjunction therewith the Company may establish a cashless
exercise program including a program where the commissions on the sale of shares
of Common Stock to which the exercise relates are paid by the Company), or by a
combination of the above having a combined value equal to the aggregate exercise
of the option, determined in the same manner as the option price under Paragraph
7(b). Irrespective of the form of payment, exercise shall be conditioned upon
payment by the optionee to the Company of amounts sufficient to enable the
Company to pay all federal, state and local withholding taxes applicable, in the
Company's judgment, to the exercise. Such payment to the Company by the Optionee
may be affected through (i) the Company's withholding from the number of shares
that would otherwise be delivered to the Optionee by the Company on exercise of
the option a number of shares equal in value to the aggregate withholding taxes,
(ii) payment by the Optionee to the Company of the aggregate withholding taxes
in cash, (iii) withholding by the Company from other amounts contemporaneously
owed by the Company to the Optionee; or (iv) any combination of the three
preceding methods.
(f) Nontransferability of Options. An option granted under
this Plan shall not be transferable other than by will or by the laws of descent
and distribution, and an option may be exercised, during the lifetime of the
holder of the option, only by such holder. More particularly, but without
limiting the generality of the foregoing, an option may not be assigned,
transferred (except as provided in the preceding sentence), pledged or
hypothecated in any way (whether by operation of law or otherwise), and will not
be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of any option
contrary to the provisions of this Plan, and any levy of any attachment or
similar process upon an option, will be null and void, and otherwise without
effect, and the Committee may, in its sole discretion, upon the happening of any
such event, terminate such option forthwith.
(g) Optionee Not a Shareholder Until Exercise. The holder of
an option shall not have any of the rights of a shareholder with respect to the
shares covered by his or her option until the option shall have been exercised
and such shares shall have been issued to him or her (as evidenced by an
appropriate entry on the books of a duly authorized transfer agent of the
Company) pursuant to the exercise of the option.
(h) Exercise After Termination of Employment. If an optionee
ceases to be employed by the Company, or a parent or subsidiary of the Company,
for any reason other than death, options held by the optionee at the date of
termination of employment may, but only if they were exercisable immediately
before the termination of employment, be exercised, in whole or in part, within,
in the case of an ISO, three months (12 months if the termination of employment
results from the optionee's permanent and total disability) and, in the case of
an NQSO, six months (12 months if the termination of employment results from the
Optionee's permanent and total disability) after the date of such termination of
employment, or within such lesser period as is specified in the Option
Agreement; provided, however, that in no case may an option be exercised after
its Expiration Date, if that occurs first. An optionee shall be considered
permanently and totally disabled if he or she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death, or that has lasted or
can be expected to last for a continuous period of not less than 12 months, but
in either case only as evidenced by the optionee's receipt of disability
benefits under Social Security.
(i) Exercise upon death. If an optionee dies while employed by
the Company or a parent subsidiary of the Company, or within the period that the
option remains exercisable after termination of employment, those options held
by the optionee at the date of his or her death that, at such date, were
immediately exercisable by him or her, may be exercised in whole or in part by
the optionee's personal representative or by the person to whom the option is
transferred by will or the laws of descent and distribution, at any time prior
to the earliest of their Expiration Date or within one year after the death of
the optionee, or within any lesser period specified in the Option Agreement.
(j) Sick leaves and leaves of absence. An optionee's
employment shall not be deemed to terminated by reason of sick leave, military
leave, or other leave of absence approved by the company, if the period of any
such leave does not exceed a period approved by the Company, or, if longer, if
the optionee's right to reemployment by the Company (or any parent or
subsidiary) is guaranteed either contractually or by statute. Individual Option
Agreements may contain such other (additional or different) provisions with
respect to leaves of absence as the Committee may approve, either at the time of
grant or later.
(k) Discretionary Transfers. Notwithstanding anything herein
to the contrary, the Committee may, in its sole discretion, permit lifetime or
death transfers to the extent permitted by rule 16b-3 as in effect from time to
time as determined by the Securities and Exchange Commission.
8. Compliance with Securities Laws
The Company shall not be obligated to offer or sell any shares
upon exercise of an option unless the shares are at that time effectively
registered or exempt from registration under the federal securities laws and the
offer and sale of the shares are otherwise in compliance with all applicable
securities laws, including, without limitation, the Securities Act of 1933, as
amended, the Securities and Exchange Act of 1934, as amended, and the General
Rules and Regulations promulgated thereunder. The grant of any shares under this
Plan, or the offer or sale of any shares upon exercise of an option, shall
further be subject to approval by the Company's counsel with respect to such
compliance. The Company shall have no obligation to register under the federal
securities laws any shares granted under this Plan, or to take any other steps
necessary to enable shares to be offered and sold under federal or other
securities laws. Prior to the transfer by the Company of any shares to a
grantee, or upon the exercise of all or any portion of an option, a grantee or
optionee may be required to furnish representations or undertakings deemed
appropriate by the Company to enable the offer and sale of the option shares, or
subsequent transfers of any interest in the shares, to comply with applicable
securities laws. Stock certificates evidencing shares acquired under this Plan
or upon exercise of options granted under this Plan shall bear any legend
required by, or useful for compliance with, applicable securities laws, this
Plan, or any Restricted Shares Agreement evidencing any grant of shares or any
Option Agreement evidencing any option.
9. Restrictions on Shares
(a) Repurchase rights. At the time it grants stock or options
under this Plan, the Company may retain, for itself or others, such rights to
repurchase, rights of first refusal, and other transfer restrictions applicable
to shares acquired under the option, or may impose such other restrictions as
the Committee, in is complete discretion, may determine. The terms and
conditions of any such rights or other restrictions shall be set forth in the
Option Agreement covering the option or the Restricted Shares Agreement covering
the shares.
(b) Financial covenants. The Company may be precluded from
paying dividends on shares granted under this Plan, or issued with respect to
the exercise of any option granted under this Plan, by the terms of financial
covenants with any person that has purchased preferred equity or debt securities
of, or loaned money to, the Company or any parent or subsidiary of the Company.
(c) Escrow agreement. In order to enforce restrictions imposed
upon shares hereunder, the Committee may require any participant to enter into
an escrow agreement providing that the certificates representing shares issued
pursuant to this Plan shall remain in the physical custody of an escrow holder
until any or all of the restrictions imposed pursuant to the Plan have been
terminated.
(d) Legending share certificates. In order to enforce the
restrictions imposed upon shares hereunder, the Committee may cause a legend or
legends to be placed on any certificates representing shares issued pursuant to
this Plan or upon the exercise of any option granted under this Plan, which
legend or legends shall make appropriate reference to the restrictions imposed
hereunder, including, but not limited to (i) the Company's repurchase rights, if
any, under Paragraph 9(a) and (ii) a restriction against sale of the shares for
any period of time as may be required by an appropriate law or regulation. If
any restriction with respect to which a legend was placed on any certificate
ceases to apply to shares represented by such certificate, the owner of the
shares represented by such certificate may require the Company to cause the
issuance of a new certificate not bearing the legend.
(e) Additional restrictions. Additionally, and not by way of
limitation, the Committee may impose such restrictions on any shares sold
pursuant to this Plan as it may deem advisable, including, without limitation,
restrictions under the Securities Act of 1933, as amended, under the
requirements of any stock exchange upon which the shares of the same class are
then listed, and under any blue sky or other securities laws applicable to such
shares.
(f) Withholding on grants. In the case of any grant of shares,
or the lapse of any restrictions placed on any shares, any federal or state tax
withholding required under applicable tax laws shall be accomplished by the
Company through any of the methods, or combination of methods, described in the
last sentence of paragraph 7(e), but, generally, applying such method or
combination of methods at or around the date of grant of shares not subject to
any restrictions, and in the case of any shares subject to restrictions, at or
around the date of lapse of any restrictions, or if applicable, the date of any
election by the grantee under Section 83(b) of the Code.
10. Use of Proceeds
Proceeds realized from the sale of shares of pursuant to the
exercise of options granted under this Plan shall constitute general funds of
the Company.
11. Acquisitions and Other Transactions
In connection with the dissolution or liquidation of the
Company or a partial liquidation involving 50% or more of the assets of the
company, a reorganization of the Company in which another entity is the
survivor, a merger or reorganization of the Company under which more than 50% of
the shares of the company outstanding prior to the merger or reorganization are
converted into cash or into another security, a sale of more than 50% of the
Company's assets, or a similar event (including a change in corporate control,
as determined by the Committee for the purposes of this Plan) that the Committee
determines, in its absolute discretion, would materially alter the structure of
the Company or its ownership, the Committee, upon 10 days' prior written notice
to optionees, may in its absolute discretion do any one or more of the
following: (i) shorten the period during which options are exercisable (provided
they remain exercisable, to the extent otherwise exercisable, for at least 10
days after the date the notice is given); (ii) accelerate any vesting schedule
to which an option is subject, or any repurchase rights lapse schedule to which
shares acquired as the result of a grant of shares or the exercise of an option
are subject; (iii) arrange to have the surviving corporation grant replacement
restricted stock or replacement options with adjustments in the number and kind
of securities and option prices; and (iv) cancel options or repurchase
restricted stock upon payment to the optionee in cash, with respect to each
restricted share or each option to the extent then exercisable, of an amount
that, in the absolute discretion of the Committee, is determined to be
equivalent to the fair market value (at the effective time of the dissolution,
liquidation, merger, reorganization, sale or other event) of the restricted
stock or option. In the case of a change in corporate control, the Committee
may, in considering the advisability, or the terms and conditions, of any
acceleration of the exercisability of any option or the vesting of any shares,
take into account the penalties that may result directly or indirectly from such
acceleration to either the Company or the Optionee, or both, under Sections 280G
and 4980 of the Code, and may decide to limit such acceleration to the extent
necessary to avoid or mitigate such penalties or their effects.
12. Changes in Capital Structure
(a) No impediment to corporate transactions. The existence of
outstanding shares subject to restrictions, or options, granted under this Plan,
shall not affect the Company's right to effect adjustments, recapitalizations,
reorganizations, or other changes in its or any other corporations' capital
structure or business, or merger or consolidation, any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting Common
Shares, the dissolution or liquidation of the Company's or any other
corporation's assets or business, or any other corporate act, whether similar to
the events described above or otherwise.
(b) Adjustments. Subject to Paragraph 11, which shall, when
applicable, take precedence over this Paragraph 12(b), if the outstanding shares
of Common Shares are increased or decreased in number, or changed into, or
exchanged for, a different number or kind of securities of the Company or any
other corporation by reason of a recapitalization, reclassification, stock
split, combination of shares, stock dividend or other event, or if any other
dilutive event occurs, the number and kind of securities that may be granted
under this Plan or with respect to which options may be granted under this Plan,
the number and kind of securities as to which outstanding options may be
exercised, and the option price at which outstanding options may be exercised,
will be adjusted accordingly by the Committee.
13. Disqualifying Dispositions of ISOs
If stock acquired upon exercise of any ISO is disposed of in a
disposition that, under Section 422 of the Code, disqualifies the optionee from
the application of Section 421(a) of the Code with respect to the option, the
holder of the stock immediately before the disposition shall notify the Company
in writing of the date and terms of the disposition and shall comply with any
other requirements imposed by the Company in order to enable the Company to
secure the related income tax deduction to which it is entitled.
14. Definitions.
(a) Disinterested Person. "Disinterested person" has the
meaning set forth in Rule 16b-3 under the Securities Exchange Act of 1934.
(b) Employee. For the purposes of this Plan, an individual
shall be considered to be an "employee" for such period of time as the Company
is required to withhold federal income tax from the compensation paid by the
Company to such individual because the individual constitutes an "employee"
under Section 3401(c) of the Code.
(c) Parent and Subsidiary. For the purposes of this Plan, a
corporation shall be a parent of the Company only if (i) it is an unbroken chain
of corporations ending with the Company, and (ii) at the time of granting the
option each of the corporations in the chain other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation shall be a
subsidiary only if (i) it is an unbroken chain of corporations beginning with
the Company, and (ii) at the time of the granting of the option each of the
corporations in the chain other than the last corporation owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(d) Outside Director. "Outside director" has the meaning set
forth in the rules and regulations under Section 162(m) of the Code.
15. No Representations.
Neither the Company nor the Committee shall make any representations to
any optionee or grantee concerning the specific legal or tax effects surrounding
the grant or exercise of stock or options to such grantee or optionee under the
Plan, it being a condition of each grantee's right to accept any grant, or each
optionee's right to exercise any option, that said grantee or optionee shall be
subject to all applicable federal and state laws and regulations.
16. Limitation on Right of Action.
Any and all rights of action by the Company or any shareholder or
shareholders of the Company against any past, present, or future members of the
Committee or the Board, or against any past or present employee, arising out of
or in connection with the Plan or any act or omissions related thereto, shall be
limited to acts or omissions only that are the result of gross negligence or
willful misconduct. Any such right of action shall terminate and forever be
barred unless action is brought within one year of the time of the occurrence of
the act or omission upon which liability is claimed.
17. Amendments.
(a) General; shareholder approval. The Board may amend this
Plan at any time. Shareholder approval shall generally not be required for any
amendment. However, the approval of shareholders then sufficient to approve this
Plan in the first instance shall be required to (i) increase the maximum number
of shares beyond the number set forth in Paragraph 3, (ii) change the
designation of class of persons eligible to receive stock or options as set
forth in Paragraph 5, (iii) change the limit on the price to be paid by any
grantee of any shares as set forth in Paragraph 6(d), or (iv) reduce the minimum
exercise price applicable to any option under Paragraphs 7(b) or (c).
(b) Generally no unilateral adverse amendment. Except as
otherwise specifically provided in this Plan, without the consent of the grantee
or optionee, no amendment may affect outstanding grants of shares or options in
a way that substantially adversely affects the grantee or optionee except to
conform this Plan and options granted under it to federal or other tax laws
relating to ISOs.
(c) ISOs. The Committee is authorized to make any changes
necessary or desirable from time to time, or any interpretations of Plan
provisions or of provisions found in Option Agreements, to ensure that options
issued under the Plan that are intended to be ISOs qualify as ISOs under the
Code.
18. No effect on Terms of Employment.
Neither the establishment of this Plan and the granting of options
hereunder, nor the inclusion in any Restricted Shares Agreement or Option
Agreement of a right of the Company to repurchase shares received by a grantee,
or by an optionee on the exercise of any option, shall have any effect on the
terms and conditions of employment of any grantee or optionee. Subject to the
terms of any employment contract to the contrary, the Company, or any parent or
subsidiary of the Company, shall have the right to terminate or change the terms
of employment of any grantee or optionee at any time, for any reason whatsoever,
without regard to the impact, if any, that such termination change may have with
respect to the grantee's or optionee's rights under this Plan, or under any
Restricted Shares Agreement or Option Agreement evidencing a grant of stock or
of options under this Plan, immediately before such change or termination, and
without regarding to any resulting tax consequences to the grantee or optionee.
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