<PAGE>


                                                                   EXHIBIT 10.16


                               XTRA CORPORATION
                              Severance Agreement
                              -------------------


     AGREEMENT, dated December 12, 1997, by and between William H. Franz
("Executive") and XTRA Corporation (the "Company"), amended and restated as of
June 18, 1999.

                                   WITNESSETH

     Executive is a key executive of the Company or one of its subsidiaries,
responsible, in part, for the policy-making functions of the Company and the
overall viability of the Company's business; and

     The Company recognizes that the possibility that certain significant
transactions involving the Company may result in the departure or distraction of
management to the detriment of the Company and its shareholders, and

     The Company wishes to assure Executive of fair severance should his
employment terminate in specified circumstances following the consummation of
certain significant transactions involving the Company and to assure Executive
of certain other benefits in the event of such transactions.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

1.   If, within the 24-month period (the "Post Significant Transaction Period")
     beginning on the date of a Significant Transaction (as defined in Exhibit A
     attached hereto and made a part hereof), (i) Executive's employment with
     the company is terminated (i) by the Company for any reason other than for
     "Cause" (as defined in paragraph 2 below), or (ii) Executive terminates
     such employment for Good Reason (as defined in paragraph 4 below):

     a.   The Company will pay to Executive within five (5) business days of
          such termination of employment a lump-sum cash payment equal to the
          sum of (i) the Executive's annual base salary ("Annual Base Salary")
          through the date of such termination of employment, and any earned
          bonuses for any completed fiscal period, to the extent not theretofore
          paid, (ii) a prorated portion (the "Prorated Bonus Amount") of the
          award payable under the Company's Economic Profit Incentive Plan, or
          any comparable or successor annual plan or plans in which the
          Executive is then a participant (the "Cash Plan"), notwithstanding
          anything to the contrary in the Cash Plan, determined by calculating
          the product of (A) the bonus payable with respect to the award for the
          fiscal period in which the
<PAGE>

          date of termination occurs under the Cash Plan annualizing the
          Company's performance under the plan up to the date of termination by
          dividing the Company's performance to the date of termination by the
          number of full months in the performance period through the date of
          termination and multiplying the result by 12, times (B) a fraction,
          the numerator of which is the number of full months in the current
          fiscal year through the date of termination of employment, and the
          denominator of which is 12, and (iii) any compensation, including
          compensation for the fiscal year in which the date of termination
          occurs, previously deferred by the Executive (together with any
          accrued interest or earnings thereon) and any accrued vacation pay, in
          each case to the extent not theretofore paid (the sum of the amounts
          described in the above subsections (i) through (iii) shall be
          hereinafter referred to as the "Accrued Obligations"); and

     b.   any stock, stock option or cash awards granted to the Executive by the
          Company, including any awards under the Company's 1987 and 1997 Stock
          Incentive Plans (or any successor plan or plans), that would have
          become vested and exercisable had the Executive continued to be
          employed by the Company shall immediately vest and become exercisable
          in full notwithstanding any provision to the contrary of such grant
          and shall remain exercisable until the later of (i) the latest date on
          which such grant could have been exercised had the Executive remained
          employed by the Company, and (ii) the date upon which any period
          during which the Executive has agreed not to sell the type of
          securities that may be issuable to such Executive upon the exercise of
          such grant shall expire; and

     c.   the Company will pay to Executive within five (5) business days of
          such termination of employment a lump-sum cash payment equal to two
          times the sum of: (A) the amount of the Executive's Annual Base Salary
          at the rate in effect immediately prior to the date of termination,
          and (B) the Average Annualized Bonus Amount which shall be calculated
          by multiplying by 12 the quotient determined by dividing (i) the sum
          of the actual cash bonus earned by the Executive during each of the
          two fiscal years immediately preceding the date of termination, plus
          the Prorated Bonus Amount, by (ii) 24 plus the number of full months
          in the period for which the Prorated Bonus Payment is calculated; and

     d.   the Company will pay to Executive within five (5) business days of
          such termination of employment a lump-sum cash payment equal to the
          amount of the forfeitable portion of the Executive's accrued benefit
          under the Company's qualified 401(k) or other qualified retirement
          plans; and

     e.   Executive, together with his dependents, will continue following such
          termination of employment to participate fully at the Company's
          expense

                                      -2-
<PAGE>

          (subject to any required employee contributions at the rate in effect
          immediately prior to the date of the Significant Transaction) in all
          welfare benefit plans (other than disability insurance), programs,
          practices and policies maintained or sponsored by the Company
          immediately prior to the Significant Transaction, or receive
          substantially the equivalent coverage (or the full value thereof in
          cash) from the Company, until the second anniversary of such
          termination or such longer period as may be provided by the terms of
          the appropriate plan, program, practice or policy, provided, however,
          that if the Executive becomes re-employed with another employer and is
          eligible to receive reasonably comparable medical or other welfare
          benefits under another employer provided plan, the Company's
          obligation to provide the medical and other welfare benefits described
          herein shall cease; and provided further that if Executive's continued
          participation is not possible under the terms of such Company plans
          and programs, the Company shall instead either arrange to provide
          Executive with substantially similar benefits upon comparable terms or
          pay to the Executive (within five (5) business days of the date of
          termination) an amount equal to the full value thereof in cash; and

     f.   to the extent not theretofore paid or provided for, the Company shall
          timely pay or provide to the Executive any other amounts or benefits
          required to be paid or provided or which the Executive is eligible to
          receive under any plan, program, policy, practice, contract or
          agreement of the Company ("Other Benefits").

     Notwithstanding anything herein to the contrary, to the extent that any
     payment or benefit provided for herein is required to be paid or vested on
     any earlier date under the terms of any plan, agreement or arrangements,
     such plan, agreement or arrangement shall control. Further, notwithstanding
     anything herein to the contrary, if a Significant Transaction occurs and if
     the Executive's employment with the Company is terminated by the Company
     for a reason other than Cause prior to the date upon which the Significant
     Transaction occurs, and if it can be reasonably demonstrated by the
     Executive that such termination of employment (i) was at the request of a
     third party who has taken steps reasonably calculated to effect a
     Significant Transaction or (ii) otherwise arose in connection with or in
     anticipation of a Significant Transaction, then for all purposes of this
     Agreement, Executive shall be entitled to the benefits provided in Sections
     1(a)-(f) above.


2.   Cause, Other Than For Good Reason; Disability.
     ---------------------------------------------

     a.   Cause; Other Than for Good Reason. If the Executive's employment shall
          be terminated for Cause (as defined in Section 3 below), or if the
          Executive voluntarily terminates employment, excluding a termination
          for Good Reason, during the Post Significant Transaction Period, this
          Agreement shall terminate

                                      -3-
<PAGE>

          without further obligations to the Executive other than the obligation
          to pay the Executive (A) his Annual Base Salary through the date of
          termination, (B) the amount of any compensation previously deferred by
          the Executive, and (C) Other Benefits, in each case to the extent
          theretofore unpaid.

     b.   Disability. If the Executive's employment is terminated during the
          Post Significant Transaction Period by reason of the Executive's
          Disability, this Agreement shall terminate without further obligations
          to the Executive other than for payment of Accrued Obligations and the
          timely payment or provision of Other Benefits. Accrued Obligations
          shall be paid to the Executive in a lump sum in cash within five (5)
          business days of the date of termination of employment. For purposes
          of this Agreement, "Disability" shall mean the absence of the
          Executive from the Executive's duties with the Company on a full-time
          basis for 180 consecutive business days as a result of incapacity due
          to mental or physical illness which is determined to be total and
          permanent by a physician selected by the Company or its insurers and
          reasonably acceptable to the Executive or the Executive's legal
          representative. If the Company determines in good faith that the
          Disability of the Executive has occurred during the Post Significant
          Transaction Period, it may give the Executive written notice of its
          intention to terminate the Executive's employment. In such event, the
          Executive's employment with the Company shall terminate effective on
          the 30th day after receipt of such notice by the Executive, provided
          that, within the 30 days of such receipt, the Executive shall not have
          returned to full-time performance of the Executive's duties.

     In the case of (a) or (b) above, all obligations shall be paid to the
     Executive in a lump sum in cash within five (5) business days of date of
     the termination of employment or such earlier time as may be required under
     law.

3.   "Cause" means only: (a) commission of a felony or gross neglect of duty by
     the Executive which is intended to result in substantial personal
     enrichment of the Executive at the expense of the Company, (b) conviction
     of, or plea of nolo contendere to, a crime involving moral turpitude, or
     (c) gross neglect by the Executive in the performance of his duties to the
     Company which results in material injury to the Company, and continues for
     more than 30 days after written notice given to the Executive pursuant to a
     two-thirds vote of all of the members of the Board at a meeting called and
     held for such purpose (after reasonable notice to Executive) and at which
     meeting the Executive and his counsel were given an opportunity to be
     heard, such vote to set forth in reasonable detail the nature of the
     failure. For purposes of this definition of Cause, no act or omission shall
     be considered to have been "willful" unless it was not in good faith and
     the Executive had knowledge at the time that the act or omission was not in
     the best interest of the Company. Any act, or failure to act, based on
     authority given pursuant to a resolution duly adopted by the Board or upon
     the instructions of the Chief Executive Officer or

                                      -4-
<PAGE>

     another senior officer of the Company or based on the advice of counsel of
     the Company shall be conclusively presumed to be done, or omitted to be
     done, by the Executive in good faith and in the best interest of the
     Company.

4.   Executive shall be deemed to have voluntarily terminated his employment for
     Good Reason if the Executive leaves the employ of the Company for any
     reason following:

     a.   Any action by the Company which results in a material diminution in
          Executive's position, authority, duties or responsibilities, excluding
          for this purpose an isolated, insubstantial and inadvertent action not
          taken in bad faith and which is remedied by the Company promptly after
          receipt of notice thereof given by the Executive; provided, however, a
          sale or transfer of some or all of the business of the Company or any
          of its subsidiaries or other reduction in its business or that of its
          subsidiaries, or the fact that the Company shall become a subsidiary
          of another company or the securities of the Company shall no longer be
          publicly traded, shall not constitute "Good Reason" hereunder;

     b.   Any reduction in the Executive's rate of Annual Base Salary for any
          fiscal year to less than 100% of the rate of Annual Base Salary
          payable for the completed fiscal year immediately preceding the
          Significant Transaction; or

     c.   Failure of the Company to permit the Executive to participate in all
          incentive, retirement, and savings policies and programs, and all
          welfare benefit plans, practices and programs (including without
          limitation, life, accidental death and travel accident insurance,
          medical insurance, dental insurance or disability plans) to the extent
          applicable generally at the time to other peer executives of the
          Company and its affiliated companies, other than an isolated,
          insubstantial and inadvertent failure not occurring in bad faith and
          which is remedied by the Company promptly after receipt of notice
          thereof given by the Executive; or

     d.   The Company requires Executive to be based at any office or location
          further than 50 miles from St. Louis, Missouri; or

     e.   Any failure by the Company to comply with and satisfy Section 7 of
          this Agreement.

5.   Certain tax-related payments.
     ----------------------------

     a.   If any "parachute payment" as defined in Section 280G(b)(2) of the
          Internal Revenue Code of 1986, as amended (the "Code"), whether
          payable pursuant to this Agreement or otherwise, is made to or for the
          benefit of Executive in connection with a Change in Control (the
          "Subject Payment"), the Company will promptly pay to Executive an
          additional amount in cash (the "Gross-Up

                                      -5-
<PAGE>

          Payment") which on an after-tax basis equals the excise tax under
          Section 4999 of the Code and any related interest and penalties due
          with respect to the "excess parachute payment" allocable to the
          Subject Payment. All determinations as to whether a Gross-Up Payment
          is required to be made under this Section 5, and if so the amount and
          timing of such Gross-Up Payment, shall be made at the Company's
          expense by Arthur Anderson LLP (Boston Office) or, if the Compensation
          Committee of the Company's Board of Directors shall designate another
          accounting firm, employment consulting firm, or law firm prior to a
          Change in Control, such other accounting firm, employment consulting
          firm, or law firm (the "Consultant"). Not later than thirty (30) days
          following receipt by the Consultant of notice from Executive that a
          payment believed by Executive to be a Subject Payment has been made or
          at such earlier time as may be requested by the Company, the
          Consultant shall deliver to Executive and the Company a preliminary
          statement (each such statement, a "Preliminary Statement") containing
          a computation of the Gross-Up Payment, if any, payable to Executive
          with respect thereto, together with supporting work papers. If both
          the Company and Executive agree with the Preliminary Statement, it
          shall become final (the "Final Statement"). If either the Company or
          Executive (the "objecting party") believes that a Preliminary
          Statement is incorrect for any reason, the objecting party may, within
          thirty (30) business days of receipt of the Preliminary Statement,
          deliver to the Consultant and to the other party additional
          information to be considered by the Consultant in making its
          determination. Within ten (10) business days following receipt by the
          Consultant of such additional information, it shall either confirm its
          Preliminary Statement or issue another statement that shall constitute
          the Final Statement. Subject to the correction of typographic mistakes
          or similar manifest errors, and except as provided at (b) below, the
          Final Statement shall be binding on both parties. With respect to each
          Subject Payment, the Company will pay the Gross-Up Payment to
          Executive not later than ten (10) business days after the Consultant
          has rendered its related Final Statement.

    b.    If there is a determination by the Internal Revenue Service (the
          "IRS") with respect to Executive that is inconsistent with a Final
          Statement and that if sustained would result in an excise tax (or a
          greater excise tax) under Section 4999 of the Code or in interest or
          penalties (or increased interest or penalties) with respect to any
          such excise tax, the Final Statement shall be deemed automatically
          modified to conform to the IRS' determination and the Company, upon
          receipt of written notice from Executive setting forth the IRS'
          determination, shall promptly pay to Executive the additional Gross-Up
          Payment required by such modification (the "Additional Gross-Up
          Payment").  The Company may elect to contest at its expense any IRS
          determination in respect of which the Company has made an Additional
          Gross-Up Payment, in which case such Additional Gross-Up Payment shall
          be considered an interest-free loan (the

                                      -6-
<PAGE>

          "Loan") to Executive until such time as the IRS' determination is
          final and no longer subject to judicial review. At such time Executive
          shall repay to the Company so much of the Loan, if any, as shall leave
          him on an after-tax basis in the same position he would have been in
          had the IRS' determination never been made, all as determined by the
          Consultant on a preliminary and, after opportunity for comment, final
          basis under rules substantially the same as those applicable under (a)
          above. Executive shall cooperate reasonably with the Company in any
          effort by the Company to contest an IRS determination under this
          paragraph, including by the making of such filings and appeals as the
          Company may reasonably require, but nothing herein shall be construed
          as requiring Executive to bear any cost or expense of such a contest
          or in connection therewith to compromise any tax item (including
          without limitation any deduction or credit) other than the excise tax
          under Section 4999 of the Code, and related interest and penalties if
          any, that are the subject of the contested IRS determination.

6.   The Company agrees (i) to promptly reimburse Executive for any and all
     legal fees and related expenses (including, without limitation,
     stenographer fees, printing costs, etc.) incurred by him to enforce the
     provisions of this Agreement or in contesting or disputing that the
     termination of his employment is for Cause or other than for Good Reason
     (regardless of the outcome thereof), (ii) to pay the cost of such judicial
     proceeding, and (iii) to pay interest to Executive on all amounts owed to
     Executive under this Agreement during any period of time that such amounts
     are withheld pending judicial proceedings (such interest will be at the
     base rate as published from time to time in the eastern edition of the Wall
     Street Journal); provided, however, that the Company shall not be required
     to reimburse the Executive for such fees, costs and expenses, if a court of
     competent jurisdiction shall issue a final order to the effect that the
     Executive shall not prevail on any claim relating to this Agreement.

7.   If the Company is at any time before, after or in connection with, a
     Significant Transaction merged or consolidated into or with any other
     corporation or other entity (whether or not the Company is the surviving
     entity), or if substantially all of the assets thereof are transferred to
     another corporation or other entity, the provisions of this Agreement will
     be binding upon and inure to the benefit of the corporation or other entity
     resulting from such merger or consolidation or the acquirer of such assets
     (the "Successor Entity"), and this paragraph 7 will apply in the event of
     any subsequent merger or consolidation or transfer of assets. The Company
     will require any such Successor Entity to assume expressly and agree to
     perform this Agreement in the same manner and to the same extent that the
     Company would be required to perform. As used in this Agreement, "Company"
     shall mean the Company as hereinbefore defined and any Successor Entity
     which assumes and agrees to perform this Agreement by operation of law or
     otherwise.

                                      -7-
<PAGE>

     In the event of any merger, consolidation, or sale of assets described
     above, nothing contained in this Agreement will detract from or otherwise
     limit Executive's right to or privilege of participation in any stock
     option or purchase plan or any bonus, profit sharing, pension, group
     insurance, hospitalization, or other incentive or benefit plan or
     arrangement which may be or become applicable to executives of the entity
     resulting from such merger or consolidation or the entity acquiring such
     assets of the Company.

     In the event of any merger, consolidation, or sale of assets described
     above, references to the Company in this Agreement shall unless the context
     suggests otherwise be deemed to include the entity resulting from such
     merger or consolidation or the acquirer of such assets of the Company.

8.   Any termination by the Company for Cause, or by the Executive for Good
     Reason, shall be communicated by Notice of Termination to the other party
     hereto given in accordance with the last paragraph of Section 13 of this
     Agreement. For purposes of this Agreement, a "Notice of Termination" means
     a written notice which (i) indicates the specific termination provision in
     this Agreement relied upon, (ii) to the extent applicable, sets forth in
     reasonable detail the facts and circumstances claimed to provide a basis
     for termination of the Executive's employment under the provision so
     indicated and (iii) if the Date of Termination (as defined below) is other
     than the date of receipt of such notice, specifies the termination date
     (which date shall be not more than thirty days after the giving of such
     notice). The failure by the Executive or the Company to set forth in the
     Notice of Termination any fact or circumstance which contributes to a
     showing of Good Reason or Cause shall not waive any right of the Executive
     or the Company, respectively, hereunder or preclude the Executive or the
     Company, respectively, from asserting such fact or circumstance in
     enforcing the Executive's or the Company's rights hereunder.

     "Date of Termination" means (i) if the Executive's employment is terminated
     by the Company for Cause, or by the Executive for Good Reason, the date of
     receipt of the Notice of Termination or any later date specified therein,
     as the case may be, and (ii) if the Executive's employment is terminated by
     the Company other than for Cause, the Date of Termination shall be the date
     on which the Company notifies the Executive of such termination.

9.   All payments required to be made by the Company hereunder to, or on behalf
     of, Executive or his dependents, beneficiaries, or estate will be subject
     to the withholding of such amounts relating to tax and/or other payroll
     deductions as may be required by law.

10.  There shall be no requirement on the part of the Executive to seek other
     employment or otherwise mitigate damages in order to be entitled to the
     full amount of any payments and benefits to which Executive is entitled
     under this Agreement, and the amount of such payments and benefits shall
     not be reduced by any compensation or benefits received by

                                      -8-
<PAGE>

     Executive from other employment, other than with respect to certain welfare
     benefits as provided in the proviso to Section 1(e).

11.  Nothing contained in this Agreement shall be construed as a contract of
     employment between the Company and the Executive, or as a right of the
     Executive to continue in the employ of the Company, or as a limitation of
     the right of the Company to discharge the Executive with or without Cause;
     provided that the Executive shall have the right to receive upon
     termination of his employment the payments and benefits provided in this
     Agreement and shall not be deemed to have waived any rights he may have
     either at law or in equity in respect of such discharge.

12.  No amendment, change, or modification of this Agreement may be made except
     in writing, signed by both parties.

13.  This Agreement shall terminate on the third anniversary of the date hereof,
     provided, however, that commencing on the date one year after the date
     hereof, and on each annual anniversary of such date (each such date
     hereinafter referred to as a "Renewal Date"), unless previously terminated,
     the term of this Agreement shall be automatically extended so as to
     terminate three years from such Renewal Date, unless at least sixty days
     prior to the Renewal Date the Company shall give notice to the Executive
     that the term of this Agreement shall not be so extended. This Agreement
     shall not apply to a Significant Transaction which takes place after the
     termination of this Agreement.

     Payments made by the Company pursuant to this Agreement shall be in lieu of
     severance payments, if any, which might otherwise be available to Executive
     under any severance plan, policy, program or arrangement generally
     applicable to the employees of the Company. If for any reason Executive
     receives severance payments (other than under this Agreement) upon the
     termination of his employment with the Company, the amount of such payments
     shall be deducted from the amount paid under this Agreement. The purpose of
     this provision is solely to avert a duplication of benefits; neither this
     provision nor the provisions of any other agreement shall be interpreted to
     reduce the amount payable to Executive below the amount that would
     otherwise have been payable under this Agreement.

     The provisions of this Agreement shall be binding upon and shall inure to
     the benefit of Executive, his executors, administrators, legal
     representatives, and assigns, and the Company and its successors.

     The validity, interpretation, and effect of this Agreement shall be
     governed by the laws of The Commonwealth of Massachusetts.

                                      -9-
<PAGE>

     The invalidity or unenforceability of any provisions of this Agreement
     shall not affect the validity or enforceability of any other provision of
     this Agreement, which shall remain in full force and effect.

     The Company shall have no right of set-off or counterclaims, in respect of
     any claim, debt, or obligation, against any payments to Executive, his
     dependents, beneficiaries, or estate provided for in this Agreement.

     No right or interest to or in any payments shall be assignable by the
     Executive. No right, benefit, or interest hereunder, shall be subject to
     anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
     hypothecation, or set-off in respect of any claim, debt, or obligation, or
     to execution, attachment, levy, or similar process, or assignment by
     operation of law. Any attempt, voluntary or involuntary, to effect any
     action specified in the immediately preceding sentence shall, to the full
     extent permitted by law, be null, void, and of no effect.

     All notices and other communications hereunder shall be in writing and
     shall be given by hand delivery to the other party or by registered or
     certified mail, return receipt requested, postage prepaid, addressed as
     follows:


          If to the Executive:  William H. Franz
          -------------------   16418 Wilson Farm Drive
                                Chesterfield, Missouri  63005

          If to the Company:    XTRA Corporation
          -----------------     60 State Street - 11th Floor
                                Boston, Massachusetts 02109
                                Attn: Chair, Compensation Committee, and
                                       the General Counsel


     or to such other address as either party shall have furnished to the other
     in writing in accordance herewith.  Notice and communications shall be
     effective either on the date of delivery (in the case of delivery by hand),
     or three business days after deposit into the mails (in the case of
     delivery by mail).

                                      -10-
<PAGE>

     IN WITNESS WHEREOF, XTRA Corporation and Executive have each caused this
Agreement to be duly executed and delivered as of the date set forth above.

                         XTRA CORPORATION


                         By: /s/ Martin L. Solomon
                            ------------------------------
                            Name:  Martin L. Solomon
                            Title: Chair, Compensation Committee


                         /s/ William H. Franz
                         --------------------------------
                            William H. Franz

                                      -11-
<PAGE>

                                   EXHIBIT A

     Significant Transaction.  For the purposes of this Agreement, a
"Significant Transaction" shall mean:

     a.   Consummation of a reorganization, merger or consolidation or sale or
          other disposition of all or substantially all of the assets of the
          Company, or XTRA Lease, Inc., in one or a series of transactions (but
          excluding any reorganization, merger or consolidation or sale of
          assets with or to the Company or any subsidiary of the Company, unless
          in connection with such transaction there is also a Significant
          Transaction involving the Company) (a "Business Combination"), in each
          case unless, following such Business Combination, (i) all or
          substantially all of the individuals and entities who were the
          beneficial owners, respectively, of the then outstanding shares of
          common stock of the Company (the "Company Common Stock") and the then
          outstanding voting securities of the Company entitled to vote
          generally in the election of directors (the "Outstanding Company
          Voting Securities" immediately prior to such Business Combination
          beneficially own, directly or indirectly, more than 50% of,
          respectively, the then outstanding shares of common stock and the
          combined voting power of the then outstanding voting securities
          entitled to vote generally in the election of directors, as the case
          may be, of the corporation resulting from such Business Combination
          (including, without limitation, a corporation which as a result of
          such transaction owns the Company or all or substantially all of the
          Company's assets either directly or through one or more subsidiaries)
          in substantially the same proportions as their ownership, immediately
          prior to such Business Combination of the Outstanding Company Common
          Stock and outstanding Company Voting Securities, as the case may be,
          (ii) no individual, corporation, partnership, limited liability
          company, or other entity, which term shall include a "group" (within
          the meaning of section 13(d) of the Securities Exchange Act of 1934
          (the "Act"), excluding any employee benefit plan (or related trust) of
          the Company or such corporation resulting from such Business
          Combination, beneficially owns, directly or indirectly, 30% or more
          of, respectively, the then outstanding shares of common stock of the
          corporation resulting from such Business Combination or the combined
          voting power of the then outstanding voting securities of such
          corporation except to the extent that such ownership existed prior to
          the Business Combination and (iii) at least a majority of the members
          of the board of directors of the corporation resulting from such
          Business Combination were members of the Incumbent Board at the time
          of the execution of the initial agreement, or of the action of the
          Board, providing for such Business Combination; or

     b.   Approval by the shareholders of the Company of a complete liquidation
          or dissolution of the Company or XTRA Lease, Inc., other than a
          liquidation or

                                      -12-
<PAGE>

dissolution of XTRA Lease, Inc. into the Company or any subsidiary of the
Company.





                                      -13-