SEVERANCE AGREEMENT

         THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into on this
17th  day of  December,  1999,  by and  between  PLM  INTERNATIONAL,  INC.,  its
successors and/or assigns (the "Company"), and Susan C. Santo ("Employee").

         WHEREAS,  Employee  currently  holds the  position  of Vice  President,
General Counsel and Secretary of the Company; and

         WHEREAS, the Board of Directors of the Company has recently engaged the
investment  banking firm of Imperial  Capital,  LLC to explore various strategic
and  financial  alternatives  for  maximizing  shareholder  value on a near-term
basis,  including,  but not  limited  to, a  possible  transaction  or series of
transactions  representing  a  merger,  consolidation,  or  any  other  business
combination, a sale of all or a substantial amount of the business,  securities,
or assets of the Company, or a recapitalization or spin-off;

         WHEREAS,  the  consideration  of any such  transaction  by the Board of
Directors  has led to  uncertainty  regarding the future path of the Company and
the long-term prospects for executive employment with the Company;

         WHEREAS,  the Company's Board of Directors  believes it is important to
the enhancement of shareholder  value that,  notwithstanding  such  uncertainty,
Employee act vigorously and  constructively  in connection with any negotiations
being  conducted  regarding  any such  transaction  to achieve the results  most
favorable to the Company's  shareholders  and to continue to manage the on-going
business  of  the  Company  in  order  to  achieve  the  most  positive  results
attainable; and

         WHEREAS,  as an inducement  for Employee to remain in the employ of the
Company during this period of uncertainty,  this Agreement  provides for certain
incentives  for  Employee  upon a change in control (as defined  herein) and for
certain  severance  benefits  to be paid and  provided  to Employee in the event
Employee's employment is terminated following a change in control.

         NOW,  THEREFORE,  in  consideration  of the above premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree as follows:

         1. Term. The term of this  Agreement  shall commence on January 1, 2000
and shall  continue (i) until  December 31, 2000 so long as no Change in Control
(as defined  below) has occurred on or before  December 31, 2000; or (ii) in the
event a Change in Control has occurred on or before  December  31,  2000,  until
Employee's  employment  has been  terminated (by the Company or by Employee) and
all obligations under this Agreement have been met.

         2.       Change in Control.

                  A. For the purposes of this  Agreement  only, the term "Change
in Control" shall mean the occurrence of any one of the following events:

                           (i) Any  person  or group (a  "Person"),  within  the
                  meaning of Sections 13(d) or 14(d) of the Securities  Exchange
                  Act of  1934,  as  amended  (the  "Exchange  Act"),  acquiring
                  "beneficial ownership" ("Beneficial Ownership"), as defined in
                  Rule  13d-3  under the  Exchange  Act,  of  securities  of the
                  Company  representing  more than  fifty  percent  (50%) of the
                  combined  voting  power  of  the  Company's  then  outstanding
                  securities; provided, however, in determining whether a Change
                  in Control has occurred,  voting securities which are acquired
                  in a "Non-Control  Acquisition" (as hereinafter defined) shall
                  not  constitute an  acquisition  which would cause a Change in
                  Control. A "Non-Control Acquisition" shall mean an acquisition
                  by (a) an  employee  benefit  plan (or  trust  forming  a part
                  thereof) maintained by the Company or any corporation or other
                  Person of which a majority  of its voting  power or its voting
                  equity  securities or equity  interests is owned,  directly or
                  indirectly, by the Company (for purposes of this definition, a
                  "Subsidiary"), (b) the Company or its Subsidiaries, or (c) any
                  Person in  connection  with a  "Non-Control  Transaction"  (as
                  hereinafter defined);

                           (ii)  A  merger,   consolidation  or   reorganization
                  (collectively,  a "Transaction")  involving the Company unless
                  such   Transaction   is   a   "Non-Control   Transaction."   A
                  "Non-Control  Transaction" shall mean a Transaction  involving
                  the Company where:

                                    (a)   The   stockholders   of  the   Company
                           immediately  before such Transaction own, directly or
                           indirectly,  immediately  following such Transaction,
                           at least fifty percent  (50%) of the combined  voting
                           power of the  outstanding  voting  securities  of the
                           corporation  resulting  from  such  Transaction  (the
                           "Surviving  Corporation") in  substantially  the same
                           proportion   as  their   ownership   of  the   voting
                           securities  of the  Company  immediately  before such
                           Transaction, or

                                    (b) No Person,  other than (1) the  Company,
                           (2) any Subsidiary,  or (3) any employee benefit plan
                           (or any trust forming a part  thereof)  maintained by
                           the  Company  or  any   Subsidiary,   has  Beneficial
                           Ownership  of more than  fifty  percent  (50%) of the
                           combined voting power of the Surviving  Corporation's
                           then outstanding voting securities;

                           (iii)  The  sale  or  other  disposition  of  all  or
                  substantially  all of the assets of the  Company to any Person
                  (other than a transfer to a Subsidiary of the Company)  and/or
                  the sale or other disposition of the Company's  subsidiary PLM
                  Financial Services, Inc. (through an asset sale or stock sale)
                  to any Person  (other than a transfer to a  Subsidiary  of the
                  Company);  provided,  however, that in no event shall the sale
                  or other  disposition  of the  Company's  subsidiary  American
                  Finance  Group,  Inc.  (AFG) by  itself,  or the sale or other
                  disposition of the Company's trailer leasing business (through
                  a sale of  substantially  all of the Company's  trailer assets
                  and/or  sale of the  stock  of the  Company's  subsidiary  PLM
                  Rental,  Inc.) (Trailer  Leasing) by itself, be deemed to be a
                  sale or other  disposition of all or substantially  all of the
                  assets of the Company for the purposes of this Agreement;  and
                  further provided, that the sale or other disposition of AFG or
                  the sale or other disposition of Trailer Leasing,  followed by
                  the sale or other  disposition of Trailer Leasing (in the case
                  of an earlier sale or  disposition of AFG) or AFG (in the case
                  of an earlier sale or disposition of Trailer  Leasing),  shall
                  be  deemed  to be a  sale  or  other  disposition  of  all  or
                  substantially all of the assets of the Company; or

                           (iv) The  stockholders  of the Company approve a plan
                  of dissolution or liquidation of the Company.

                  B. In the  event  that a  Change  in  Control  transaction  as
defined in this Agreement  occurs,  and such  transaction is also deemed to be a
Change  in  Control  as  defined  in and  under the  Employment  Agreement  (the
"Employment  Agreement")  dated as of November  19, 1997 between the Company and
Employee (specifically, a majority of the members of the Continuing Directors of
the Board of  Directors  of the  Company  does not approve the Change in Control
event specifically for purposes of the Employment Agreement), then the terms and
conditions of the  Employment  Agreement,  including but not limited to Sections
10.2, 11, 12 and 13 thereof, shall govern and supercede this Agreement.

         3.       Acceleration and Vesting.

                  A.       Stock Options and Grants.

                           (i) Upon the  occurrence of a Change in Control,  any
                  and all options to purchase  stock and grants of stock (common
                  or otherwise) in the Company  granted to Employee  pursuant to
                  any plan or otherwise,  including  options granted pursuant to
                  the 1988 Management  Stock  Compensation  Plan and/or the 1998
                  Management Stock  Compensation Plan, and any and all grants of
                  stock in the Company granted to Employee  pursuant to the 1996
                  Mandatory  Management Stock Bonus Plan  (collectively,  any or
                  all of these  plans  shall be referred to herein as the "Stock
                  Plans"), shall become immediately accelerated and fully vested
                  and any  restrictions on such options and grants shall, to the
                  extent  permissible  under  applicable  securities laws, fully
                  lapse. The Company shall endeavor to cause any restrictions on
                  the options or grants not lapsed by  operation of this Section
                  3(A)(i) to so lapse.

                           (ii) Upon the vesting of all such  options and grants
                  pursuant to Section 3(A)(i) or Section  6(C)(ii) below and, in
                  the case of options, so long as such options have not expired,
                  Employee  may elect by  written  notice to the  Company at any
                  time following such vesting that the Company  "cash-out"  such
                  options  and/or  grants by paying to Employee  within five (5)
                  days of such notice the value of the options  and/or grants so
                  long as Employee surrenders to the Company,  and agrees to the
                  cancellation  of,  the  options  or  grants.  The value of the
                  options  and/or grants shall be calculated as follows:  (a) in
                  the event  that the  Change in Control is a result of a tender
                  offer and so long as Employee  provides his "cash-out"  notice
                  to the Company  within 30 days of the conclusion of the tender
                  offer, then Employee shall be paid the per share price paid to
                  the  Company's  shareholders  in  connection  with such tender
                  offer, or (b) in all other  circumstances,  the Employee shall
                  be paid the average daily closing price of the common stock of
                  the Company for the ten trading days immediately preceding the
                  date of Employee's "cash-out" notice, less in the case of both
                  (a) and (b) for the cash-out  options,  the exercise  price of
                  the option. In the event Employee does not elect to "cash-out"
                  pursuant to this  Section  3(A)(ii),  then  Employee's  rights
                  regarding such options and grants shall be as set forth in the
                  respective  Stock Plans and agreements  governing such options
                  and grants,  except that Employee  shall be deemed to be fully
                  vested and any  restrictions  on such options and grants shall
                  remain fully lapsed.

                  B. Executive Deferred Compensation  Agreement. In the event of
a Change in Control as  defined  in this  Agreement,  a Change in Control of the
Company shall also be deemed to have occurred for the purpose of Section 10.1 of
the  Executive  Deferred   Compensation   Agreement  (the  "Executive   Deferred
Compensation  Agreement")  dated as of January 18, 1999  between the Company and
Employee,  so that  effective  with the  occurrence  of the  Change in  Control,
Employee  shall be treated for purposes of the Executive  Deferred  Compensation
Agreement  as if  Employee  had  attained  age 60 on the first day of the second
calendar  month  preceding the calendar  month in which the Change in Control of
the Company  occurs,  and  Employee's  Vesting  Factor under  Section 1.4 of the
Executive  Deferred  Compensation  Agreement shall become and forever thereafter
remain 1.

         4. Termination By Company In Connection With a Change in Control.

                  A. In the event that  Employee's  employment  is terminated by
the Company subsequent to or in connection with a Change in Control for a reason
other than Cause or  Disability,  the Company  shall pay Employee the  Severance
Benefits specified in Section 6(C).

                  B. For purposes of this  Agreement,  "Cause"  shall be limited
to:

                           (i) The willful and continued  failure by Employee to
                  perform his/her day to day  responsibilities  substantially in
                  the same  manner as  performed  prior to the Change in Control
                  (other than any failure  resulting from Employee's  incapacity
                  due to physical or mental  illness),  which has not been cured
                  within ten (10) days  after  written  demand  for  substantial
                  performance  is delivered  by the Company to  Employee,  which
                  demand  specifically  identifies  the manner in which Employee
                  has   not   substantially   performed   his/her   day  to  day
                  responsibilities.  The  financial  condition  of  the  Company
                  (including any  subsidiary,  division or department  thereof),
                  and/or   Employee's   contribution   thereto,   shall  not  be
                  considered  for the purposes of determining  whether  Employee
                  has   willfully   failed  to  perform   his/her   day  to  day
                  responsibilities;

                           (ii) A willful  and  intentional  act or  omission by
                  Employee  which is,  in the  reasonable  determination  of the
                  Company,  materially  injurious to the Company,  monetarily or
                  otherwise.  For  purposes  of  subsection  (i)  above and this
                  subsection  (ii), no act or omission on Employee's  part shall
                  be considered  willful and intentional unless done, or omitted
                  to be done,  by  him/her  not in good  faith and  without  the
                  reasonable belief that his/her action(s) or omission(s) was in
                  the best interests of the Company; or

                           (iii) The  conviction  of  Employee  of,  or  his/her
                  admission or plea of nolo  contendere to, a crime involving an
                  act of moral turpitude,  which is a felony or which results or
                  is intended  to result,  directly  or  indirectly,  in gain or
                  personal  enrichment  of Employee,  relatives of Employee,  or
                  their affiliates at the expense of the Company;

provided,  however, that,  notwithstanding anything to the contrary contained in
this Section 4(B),  "Cause" shall not be deemed to include a refusal by Employee
to execute any  certificate  or document that Employee in good faith  determines
contains any untrue statement of a material fact.

                  C. For the purposes of this Agreement,  Disability  shall mean
if, as a result of  Employee's  incapacity  due to physical  or mental  illness,
Employee  shall have been absent or  substantially  absent from  his/her  duties
hereunder  for a period of six (6)  consecutive  months,  and within thirty (30)
days after a Notice of  Termination  (as  hereinafter  defined) is given,  which
Notice  of  Termination  may be given  before or after the end of such six month
period,  Employee  shall not have returned to the  performance of his/her duties
hereunder on a full-time basis,  Employee's  employment shall terminate upon the
expiration of such thirty (30) days.  Employee's absence or substantial  absence
from his/her duties will be treated as resulting from incapacity due to physical
or mental illness if Employee is "totally disabled from his/her own occupation."
Total  disability from Employee's own occupation will exist where (i) because of
sickness or injury,  Employee  cannot  perform the  important  duties of his/her
occupation,  (ii)  Employee is either  receiving  Doctor's Care or has furnished
written proof  acceptable to the Company that further  Doctor's Care would be of
no benefit, and (iii) Employee does not work at all. Doctor's Care means regular
and personal care of a Doctor which,  under  prevailing  medical  standards,  is
appropriate for the condition causing the disability.

         5.       Termination by Employee.

                  A. Employee may terminate  his/her  employment during the term
of this  Agreement  upon thirty (30) days' Notice of  Termination to the Company
for any reason. If Employee terminates his/her employment  hereunder  subsequent
to a Change  in  Control  and such  termination  is made for any of the  reasons
listed  in  Section  5(B)  (such  reason(s)  to be  detailed  in the  Notice  of
Termination), such termination shall be deemed to have been done for good reason
("Good  Reason")  and the Company  shall pay  Employee  the  Severance  Benefits
specified in Section 6(C), below.

                  B. Reasons constituting "Good Reason" shall include:

                           (i)  Any  breach  by  the  Company  of  any  material
                  provision  of this  Agreement  which has not been cured within
                  ten  (10)   days   after   written   notice   detailing   such
                  non-compliance is given by Employee to the Company;

                           (ii) Any demonstrable and material  diminution of the
                  base  compensation,  duties,  responsibilities,  authority  or
                  powers of Employee as they relate to any  positions or offices
                  held by Employee during the term of this  Agreement;  provided
                  that Employee  provides a reasonable  description  of any such
                  diminution(s)  and a statement  that Employee  finds,  in good
                  faith,  such diminution to be a material  diminution and that,
                  as  such,  he/she  elects  to  terminate  his/her   employment
                  hereunder for Good Reason.  Notwithstanding  the foregoing,  a
                  reduction  in the staff of the  Company  following a Change in
                  Control  which  results in the Employee  taking on  additional
                  responsibilities  shall not be  considered a diminution of the
                  duties, responsibilities,  authority or powers of Employee for
                  the purposes of this Agreement;

                           (iii) The failure of the Company to include  Employee
                  in any employee  benefit plan or incentive  compensation  plan
                  for  which  Employee  has  previously  participated  or  would
                  reasonably  expect to participate  in. Employee may reasonably
                  expect  to   participate   in  a  benefit  plan  or  incentive
                  compensation plan if, without  limitation,  other employees of
                  the Company with similar titles, levels of responsibilities or
                  salaries  participate  or  have  participated  in  such  plan.
                  Notwithstanding the foregoing, (a) to the extent not otherwise
                  determined  pursuant to the incentive  compensation  plan, the
                  Board of Directors shall have the sole discretion to determine
                  the amount of such bonus, or incentive  compensation,  if any,
                  and (b) the Company  may change the terms of any benefit  plan
                  so long as such changes occur pursuant to a program applicable
                  to all  employees  or  executives  of the  Company  and do not
                  result in a proportionately greater reduction in the rights of
                  or  benefits  to the  Employee  as  compared  with  any  other
                  employee or executive of the Company; or

                           (iv) Any  requirement  by the Company  that  Employee
                  relocate  his/her  primary  business  office to a geographical
                  area  greater  than  twenty  (20)  miles  from the  Company 's
                  principal executive offices as existing on January 1, 1999, or
                  if  Employee  is based in an office  other than the  Company's
                  principal  executive  offices,  twenty  (20)  miles  from  the
                  Company's  office  where  Employee  is based as of  January 1,
                  1999.

                  C. In the event  Employee  terminates  his/her  employment for
Good Reason and the Company  disputes that the  termination was for Good Reason,
the Company  shall have the burden of proving that any such reason was not "Good
Reason".

         6.       Compensation Upon Termination.

                  A.  Termination For Cause.  Following a Change in Control,  if
Employee's employment is terminated for Cause as defined in this Agreement,  the
Company shall pay Employee  his/her full Base Salary (and any accrued but unused
vacation  and  personal  days)  through the Date of  Termination  at the rate in
effect at the time Notice of Termination is given, and the Company shall have no
further obligations to Employee under this Agreement.  The Employment  Agreement
shall also be terminated as of the Date of Termination,  and neither party shall
have any further rights or obligations thereunder.  The rights,  limitations and
obligations of each of the Employee and the Company under any other agreement or
plan,  including  but not limited to any stock  option  plan,  stock grant plan,
deferred  compensation  plan and  related  agreement(s),  each as may have  been
modified by the terms of this Agreement, shall remain in full force and effect.

                  B. Termination for Disability.  Following a Change in Control,
if  Employee's  employment  is  terminated  for  Disability  as  defined in this
Agreement,  the Company shall pay to Employee  his/her full Base Salary  through
the Date of  Termination at the rate in effect at the time Notice of Termination
is given. The Company shall also pay to Employee any accrued but unused vacation
and  personal  days,  and the Company  shall also  provide  benefits to Employee
pursuant  to the  standard  policy of the  Company  with  respect to  terminated
disabled employees.  The Employment Agreement shall also be terminated as of the
Date of  Termination,  and  neither  party  shall  have any  further  rights  or
obligations thereunder.  The rights,  limitations and obligations of each of the
Employee and the Company  under any other  agreement or plan,  including but not
limited to any stock option plan, stock grant plan,  deferred  compensation plan
and related  agreement(s),  each as may have been  modified by the terms of this
Agreement, shall remain in full force and effect.

                  C.  Termination  Without Cause or  Termination by Employee For
Good Reason.  If, (a)  subsequent  to or resulting  from a Change in Control the
Company  terminates  Employee's  employment  hereunder  other  than for Cause or
Disability, or (b) subsequent to a Change in Control Employee terminates his/her
employment for Good Reason,  the Company shall,  in addition to paying  Employee
his/her full Base Salary  through the Date of  Termination at the rate in effect
at the time the  Notice of  Termination  is given  and any  accrued  but  unused
vacation and personal  days (as required by law),  pay to Employee  within seven
(7)  business  days of the Date of  Termination,  and provide to  Employee,  the
following severance benefits:

                           (i) The Company shall pay to Employee an amount equal
                  to twelve (12) months of Employee's  annual base salary at the
                  highest   rate  in  effect   during  the  twelve  (12)  months
                  immediately preceding the Date of Termination,  less customary
                  payroll  deductions,  such  payment  to be made at  Employee's
                  option either in a lump sum, or in  semi-monthly  installments
                  (starting on the first regularly  scheduled  payday  following
                  the Date of  Termination,  and  continuing  on each  regularly
                  scheduled payday thereafter until paid). In the event Employee
                  fails to notify  the  Company of  his/her  option,  the amount
                  shall be paid in a lump sum;

                           (ii) Any and all options to purchase stock (common or
                  otherwise)  in the  Company  granted to  Employee  following a
                  Change in Control  pursuant to any plan or otherwise,  and any
                  and all grants of stock in the  Company  granted  to  Employee
                  following  a  Change  in  Control  pursuant  to  any  plan  or
                  otherwise,  shall  become  immediately  accelerated  and fully
                  vested  and  any  restrictions  on  such  options,  grants  or
                  equivalent or similar rights shall, to the extent  permissible
                  under  applicable  securities  laws,  fully lapse. The Company
                  shall  endeavor  to cause  any  restrictions  on the  options,
                  grants or equivalent or similar rights not lapsed by operation
                  of this Section 6(C)(ii) to so lapse.  Employee shall have the
                  same rights in such  accelerated and vested options and grants
                  as provided in Section  3(A)(ii) and the Company  shall pay to
                  Employee the value of the options  and/or  grants upon receipt
                  of Employee's written notice of his/her election to "cash-out"
                  pursuant to Section 3(A)(ii); and

                           (iii) At the Employee's election by written notice to
                  the Company made within five (5) business  days  following the
                  Notice of Termination,  the Company shall pay to Employee in a
                  lump  sum  the   total   amount  of  any   Monthly   Executive
                  Compensation  Benefit  payments  that are  payable  under  the
                  Executive Deferred Compensation Agreement,  which amount shall
                  have been  determined  pursuant to the terms of Sections  5(a)
                  and  5(b) of the  Executive  Deferred  Compensation  Agreement
                  after taking into consideration the automatic  acceleration of
                  vesting as provided in Section 10.1 (including Section 10.1(a)
                  and 10.1(b)) of the Executive Deferred Compensation Agreement.
                  In  the  event   Employee  is  paid  his  executive   deferred
                  compensation  in a  lump  sum  as  provided  in  this  Section
                  5(A)(ii),  the Executive Deferred Compensation Agreement shall
                  be terminated and of no further force or effect.  In the event
                  Employee  does not elect to receive a lump sum  payment of his
                  executive  deferred  compensation,  then the Monthly Executive
                  Compensation  Benefit  payments  that are  payable  under  the
                  Executive  Deferred  Compensation   Agreement  shall  be  paid
                  pursuant to the terms of that agreement, which shall remain in
                  full force and effect; and

                           (iv) Employee  shall  continue to  participate in all
                  life insurance,  medical, health, dental and disability plans,
                  programs or arrangements ("Insurance Plans") in which Employee
                  participated  immediately  prior to the Date of Termination on
                  the same terms as Employee  participated  immediately prior to
                  the Date of  Termination  for the shorter period of (a) twelve
                  (12) months  from the Date of  Termination  or (b)  Employee's
                  commencement  of full time  employment with a new company that
                  provides Employee with benefits at least as favorable as those
                  provided by the Company;  provided that  Employee's  continued
                  participation   is  possible   under  the  general  terms  and
                  provisions  of such  plans  and  programs  and  Employee  will
                  continue to be obligated to pay the same  employee  portion of
                  any premium and any deductible and/or  co-payments  associated
                  with such insurance Plans as was required immediately prior to
                  the Date of Termination.  Employee's  right to continued group
                  benefits  after any  period  covered  by the  Company  will be
                  determined in accordance with federal and state law.

                           (v) The payments  and  benefits  provided for in this
                  Section 6(C) are in addition to, and shall not be deemed to be
                  in lieu  of,  any  other  payments  and/or  benefits  to which
                  Employee is entitled, including without limitation any and all
                  payments and benefits under the PLM  International,  Inc. 401K
                  and Profit Sharing Plan and any other insurance and disability
                  plans.

                  D. Other  Termination  by  Employee.  If following a Change in
Control Employee  terminates  his/her  employment for any reason other than Good
Reason,  the Company shall pay to Employee  his/her full Base Salary through the
Date of  Termination  at the rate in effect at the time Notice of Termination is
given and any accrued but unused  vacation  and personal  days,  and the Company
shall  have no  further  obligations  to  Employee  under  this  Agreement.  The
Employment Agreement shall also be terminated as of the Date of Termination, and
neither  party  shall have any further  rights or  obligations  thereunder.  The
rights,  limitations  and  obligations  of each of the  Employee and the Company
under any other agreement or plan, including but not limited to any stock option
plan, stock grant plan,  deferred  compensation  plan and related  agreement(s),
each as may have been modified by the terms of this  Agreement,  shall remain in
full force and effect.

                  E.  Termination  Prior to a Change in Control.  This Agreement
does  not  provide  for the  payment  or  provision  of  severance  benefits  in
connection  with a  termination  by Employee or the Company  prior to and not in
connection  with a Change in  Control.  Employee's  rights to any such  benefits
shall continue to be governed by law or other written  agreement,  if any exists
between  Employee and the Company,  and nothing in this Agreement is intended to
change,  or shall be  construed  as  changing,  any of the legal or  contractual
rights of either party to terminate Employee's  employment (for Cause,  at-will,
for Good Reason,  or otherwise)  prior to and not in connection with a Change in
Control.

                  F. Section 280G.  Notwithstanding any other provisions of this
Agreement or any other  agreement  between the Company and the Employee,  in the
event that any payment or benefit  received or to be received by the Employee in
connection  with a  Change  in  Control  or the  termination  of the  Employee's
employment  (whether  pursuant to the terms of this Agreement or any other plan,
arrangement  or agreement with the Company or any Person whose actions result in
a Change in Control or any Person  affiliated  with the Company or such  Person)
(all such payments and  benefits,  including  the  severance  benefits  provided
hereunder,  being  hereinafter  called "Total Payments") would not be deductible
(in whole or part),  by the Company,  an affiliate or Person making such payment
or providing  such  benefit as a result of section 280G of the Internal  Revenue
Code of 1986,  as amended (the "Code"),  then,  to the extent  necessary to make
such portion of the Total Payments deductible (and after taking into account any
reduction in the Total  Payments  provided by reason of section 280G of the Code
in such other plan,  arrangement or agreement),  the benefits provided hereunder
shall  be  reduced  (if   necessary,   to  zero);   provided,   however,   that,
notwithstanding the terms of any other plan or agreement, the Employee may elect
to have the  benefits  payable  under any other plan or  agreement  reduced  (or
eliminated) prior to any reduction of the benefits payable under this Agreement,
which may include, in the case of the Executive Deferred Compensation Agreement,
an election to reduce the  Employee's  Compensation  Period under the  Executive
Deferred Compensation  Agreement (without increasing the amount determined under
Section 1.1 of the  Executive  Deferred  Compensation  Agreement  as  Employee's
Monthly Deferred Compensation Benefit).

                           (i) For purposes of this  limitation in the event the
                  Company  asserts  that  the  limitation  would  apply,  (a) no
                  portion of the Total  Payments  the  receipt or  enjoyment  of
                  which the Employee  shall have waived at such time and in such
                  manner as not to constitute a "payment"  within the meaning of
                  section  280G(b) of the Code shall be taken into account,  (b)
                  no portion of the Total  Payments  shall be taken into account
                  that, in the opinion of tax counsel ("Tax  Counsel")  selected
                  by the Employee and reasonably  accepted by the Company,  does
                  not  constitute  a "parachute  payment"  within the meaning of
                  section 280G(b)(2) of the Code, including by reason of section
                  280G(b)(4)(A) of the Code, (c) the benefits payable under this
                  Agreement  shall be reduced  only to the extent  necessary  so
                  that the Total  Payments  (other  than  those  referred  to in
                  clauses (a) or (b)) in their  entirety  constitute  reasonable
                  compensation for services actually rendered within the meaning
                  of  section  280G(b)(4)(B)  of the Code or are  otherwise  not
                  subject to  disallowance  as  deductions  by reason of section
                  280G of the Code,  in the opinion of Tax Counsel,  and (d) the
                  value  of any  noncash  benefit  or any  deferred  payment  or
                  benefit  included in the Total Payments shall be determined in
                  accordance with the principles of sections  280G(d)(3) and (4)
                  of the Code.

                           (ii)  If  it  is  established  pursuant  to  a  final
                  determination  of a  court  or  an  Internal  Revenue  Service
                  proceeding  that,   notwithstanding  the  good  faith  of  the
                  Employee and the Company in applying the terms of this Section
                  6(F), the Total Payments paid to or for the Employee's benefit
                  are in an amount  that  would  result in any  portion  of such
                  Total  Payments being subject to the Excise Tax, then, if such
                  repayment  would  result in (a) no  portion  of the  remaining
                  Total  Payments  being  subject  to the  Excise  Tax and (b) a
                  dollar-for-dollar  reduction in the Employee's  taxable income
                  and wages for purposes of federal,  state and local income and
                  employment taxes, the Employee shall have an obligation to pay
                  the Company  upon demand an amount equal to the sum of (x) the
                  excess of the  Total  Payments  paid to or for the  Employee's
                  benefit over the Total  Payments  that could have been paid to
                  or for the  Employee's  benefit  without  any  portion of such
                  Total  Payments  being  subject  to the  Excise  Tax;  and (y)
                  interest  on the  amount  set  forth  in  clause  (x) of  this
                  sentence at the rate provided in section  1274(b)(2)(B) of the
                  Code from the date of the  Employee's  receipt of such  excess
                  until the date of such payment.

                           (iii) By execution  and  delivery of this  Agreement,
                  the  provisions  of  Section  10.4 of the  Executive  Deferred
                  Compensation  Agreement are hereby superseded and such section
                  is hereby declared null and void.

         7. Mitigation. Employee shall not be required to mitigate the amount of
any  payment  or  benefit  provided  for in  this  Agreement  by  seeking  other
employment or otherwise and, except as otherwise  provided in Section  6(C)(iv),
no payment or benefit  provided  for in this  Agreement  shall be reduced by any
compensation  earned by Employee as the result of employment by another employer
after the termination of his/her employment with the Company.

         8.  Other  Definitions.  The  following  definitions  shall  apply  for
purposes of this Agreement:

                  A. Notice of  Termination.  Any purported  termination  by the
Company or by Employee shall be communicated by written Notice of Termination to
the  other  party  hereto.  For  purposes  of  this  Agreement,   a  "Notice  of
Termination"  shall mean a notice which shall indicate the specific  termination
provision in this Agreement relied upon. Any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination  satisfying
the requirements of this paragraph shall not be effective.

                  B. Date of Termination.  "Date of Termination"  shall mean, as
applicable,  (a) if Employee's  employment is terminated for Disability,  thirty
(30) days after Notice of Termination is given (provided that Employee shall not
have returned to the  performance of his/her duties on a full-time  basis during
such  thirty  (30)  day  period),  (b)  the  date  specified  in the  Notice  of
Termination in compliance with the terms of this Agreement, or (c) if no date is
specified, the date on which a Notice of Termination is given.

         9.       Successors; Binding Agreement.

                  A.  The  Company  shall  require  any  successors  or  assigns
(whether direct or indirect by purchase, merger,  consolidation or otherwise) to
all or substantially  all of the business and/or assets of the Company expressly
to assume and agree to perform this Agreement in the same manner and to the same
extent as if they were an original party hereto,  and this Agreement shall inure
to the benefit of any such successor or assign.

                  B.  This  Agreement  shall  inure  to  the  benefit  of and be
enforceable  by  Employee's  executors,   administrators,   successors,   heirs,
distributes, devisees and legatees.

         10. Other Agreements.  Except as expressly set forth herein, nothing in
this  Agreement is intended to alter the  obligations  of the Company and/or the
Employee in connection with any other written  agreement between the Company and
the Employee.

         11.      Miscellaneous.

         11.1 Written  notices  required by this Agreement shall be delivered to
the  Company or  Employee in person or sent by  overnight  courier or  certified
mail, with a return receipt requested,  to the Company's  registered address and
to Employee's last shown address on the Company's records, respectively.  Notice
sent by certified  mail shall be deemed to be delivered two days after  mailing,
and all other notices shall be deemed to be delivered when received.

         11.2 This Agreement contains the full and complete understanding of the
parties  regarding the subject matter  contained herein and supersedes all prior
representations, promises, agreements and warranties, whether oral or written.

         11.3 This Agreement shall be governed by and  interpreted  according to
the laws of the state of California.

         11.4  The  captions  of the  various  sections  of this  Agreement  are
inserted only for  convenience  and shall not be  considered in construing  this
Agreement.

         11.5 This Agreement can be modified, amended or any of its terms waived
only by a writing signed by both parties.

         11.6 If any provision of this Agreement shall be held invalid,  illegal
or unenforceable, the remaining provisions of the Agreement shall remain in full
force and effect and the invalid,  illegal or  unenforceable  provision shall be
limited or eliminated  only to the extent  necessary to remove such  invalidity,
illegality or  unenforceability  in accordance  with the  applicable law at that
time.

         11.7 If either party  institutes an action to enforce the terms of this
Agreement,  the  prevailing  party in such  action  shall be entitled to recover
reasonable attorneys' fee, costs and expenses.

         11.8 No remedy made  available to either party by any of the provisions
of this  Agreement  is intended to be exclusive  of any other  remedy.  Each and
every remedy shall be cumulative  and shall be in addition to every other remedy
given hereunder as well as those remedies existing at law, in equity, by statute
or otherwise.

         IN WITNESS  WHEREOF,  the parties have executed this document as of the
date specified above.

PLM INTERNATIONAL, INC.                     EMPLOYEE


By:      /s/Robert N. Tidball                /s/Susan C. Santo
         --------------------------          -----------------------------
Its:     President                           Susan C. Santo




ATTEST:  _______________________            ATTEST:  _____________________