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SEVERANCE AGREEMENT DATED AS OF FEBRUARY 22, 2006 BETWEEN

WILMINGTON TRUST COMPANY AND MICHAEL A. DIGREGORIO




EXHIBIT 10.7




 









 






SEVERANCE AGREEMENT




     THIS AGREEMENT is made as of the 22nd day of February, 2006 between WILMINGTON
TRUST COMPANY, a Delaware-chartered bank and trust company (the “Bank”), and Michael A. DiGregorio
(“Employee”).



BACKGROUND




     A. Bank currently employs Employee and considers Employee a key employee.



     B. Bank desires to retain Employee’s services.



     C. Bank has from time to time made payments and provided benefits to employees who have
terminated employment with Bank (the “Prior Severance Arrangements”).



     D. Bank and Employee desire to set forth the amounts payable and benefits Bank will provide
Employee in the event of a termination of Employee’s employment with Bank under the circumstances
set forth herein after a Change in Control (as that term is defined in Subparagraph 4(e) below).



     NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants contained herein,
the parties hereto, intending to be legally bound hereby, agree as follows:



     1. Continued Employment. In reliance upon Bank’s promises contained herein, Employee
agrees that, for a period of not less than six months commencing on the date first set forth above,
and subject to reasonable absences for illness, holiday, and vacation pursuant to Bank’s policies
and practices in effect on the date hereof, and from time to time hereafter, Employee shall
continue his or her employment with Bank and devote his or her best efforts to duties which may be
assigned to him or her by Bank from time to time.



     2. Prior Severance Arrangements. Except as set forth herein, if Employee’s employment
with Bank is terminated under circumstances in which Bank is required to make payment to him or her
pursuant to Paragraph 5 below, Employee shall make no claim or demand arising or alleged to arise
from any severance plan, program, policy, or arrangement (including, without limitation, any Prior
Severance Arrangement) which Bank may have had in effect, currently sponsors, or adopts hereafter.
Notwithstanding the preceding sentence, if Employee’s employment with Bank is terminated under
circumstances in which Bank is required to make payment to him pursuant to Paragraph 5 below,
Employee or Employee’s spouse, heirs, estate or personal representative, as the case may be, shall
be entitled to receive any benefits payable under any employee benefit plan, program, policy or
arrangement which may then be in effect and which is not a severance plan, program, policy or
arrangement.




     3. Effective Date. This Agreement shall be effective as of the date first written
above (the “Effective Date”) and continue and remain in full force and effect until the termination
of




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Employee’s employment with Bank, unless terminated earlier by the parties in writing. The
completion of six months of employment with Bank by Employee in accordance with Paragraph 1 above
shall not be a condition precedent to the effectiveness hereof or to the payment of amounts or the
provision of benefits hereunder if Employee’s employment with Bank is terminated under the
circumstances described in Subparagraph 4(b) below.



     4. Termination of Employment.



          a. Requiring No Payments Under Paragraph 5. If Employee’s employment with Bank is
terminated under any of the following circumstances, no payments shall be or become due and owing
hereunder, and Bank shall have no other obligation under Paragraph 5 below:





	 	(1)	 	By either party for any reason before a
Change in Control, except as otherwise provided in Subparagraph
4(b)(3) below.
	 
	 	(2)	 	By either party for any reason at any
time more than two years after a Change in Control.
	 
	 	(3)	 	By Bank at any time, whether
contemporaneous with or subsequent to a Change in Control, due to
“Cause” (as that term is defined in Subparagraph 4(c) below) or upon
Employee’s death or Disability. For purposes hereof, the term
“Disability” means any physical or mental injury or disease of a
permanent nature which makes Employee incapable of meeting the
requirements of the employment performed immediately before the
commencement of that disability.
	 
	 	(4)	 	By Employee at any time, whether
contemporaneous with or subsequent to a Change in Control, upon his
or her retirement or resignation for reasons other than “Good
Reason” (as that term is defined in Subparagraph 4(d) below).





          b. Requiring Payments Under Paragraph 5. If Employee’s employment with Bank is
terminated under any of the following circumstances, Bank shall make the payments and provide the
benefits set forth in Paragraph 5 below:





	 	(1)	 	By Bank contemporaneously with or within
two years after a Change in Control for any reason other than (a)
for Cause or (b) upon Employee’s death or Disability;
	 
	 	(2)	 	By Employee, contemporaneously with or
within two years after a Change in Control, for Good Reason; or







	 	(3)	 	Before a Change in Control occurs either
(1) by Bank other than for Cause or (2) by Employee for Good Reason,
and in either case it is reasonably demonstrated that that
termination of employment (x) was at the request of a Third Party
(as that term is defined in







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Subparagraph 4(e) below) that has taken
steps reasonably calculated to effect a Change in Control or (y)
otherwise arose in connection with or in anticipation of a Change in
Control.





          c. Definition of “Cause”. For purposes hereof, the term “Cause” shall mean Employee’s
personal dishonesty, willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule, regulation (other
than traffic violations or similar offenses), or a final cease-and-desist order, or a material
violation of any provision hereof.




          d. Definition of “Good Reason”. For purposes hereof, the term “Good Reason” shall,
absent Employee’s written consent to the contrary, mean:





	 	(1)	 	Any material violation by Bank of its
obligations hereunder;
	 
	 	(2)	 	The assignment to Employee of any duties
inconsistent with the status of his or her position with Bank on the
day immediately preceding a Change in Control, or an alteration in the
nature or status of Employee’s duties and responsibilities that
renders Employee’s position to be of less responsibility or scope than
that which existed on the day immediately preceding the Change in
Control;
	 
	 	(3)	 	A reduction by Bank in Employee’s annual base
salary in effect on the day immediately preceding a Change in Control,
as the same may be increased from time to time thereafter, except for
proportional, across-the-board salary reductions similarly affecting
all of Bank’s employees;
	 
	 	(4)	 	The relocation of the office at which
Employee works to a location more than 25 miles from its location on
the day immediately preceding the Change in Control, or Bank’s
requiring Employee to be based anywhere other than that office, except
for required travel on Bank’s business to an extent substantially
consistent with Employee’s present business travel obligations; or
	 
	 	(5)	 	Any material reduction by Bank or Wilmington
Trust Corporation (“Parent”) of the benefits enjoyed by Employee under
any of Bank’s or Parent’s pension, retirement, profit-sharing,
savings, life insurance, medical, health-and-accident,
disability, or other employee benefit plans, programs, or
arrangements in effect from time to time, the taking of any action
by Bank or Parent that would directly or indirectly materially
reduce any of those benefits or deprive Employee of any material
fringe benefits, or the failure by Bank to provide Employee with
the number of paid vacation days to which he or she is entitled on
the basis of years of service with Bank in accordance with Bank’s
normal vacation policy; provided, however,






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that this Subparagraph
4(d)(5) shall not apply to any proportional, across-the-board
reduction or action similarly affecting all employees of Bank or
Parent.





          e. Definition of “Change In Control”. For purposes hereof, a “Change in Control”
shall mean the occurrence, after the Effective Date, of any of the following events, directly or
indirectly or in one or more series of transactions:





	 	(1)	 	A consolidation or merger of Bank or Parent
with any third party (which includes a single person or entity or a
group of persons or entities acting in concert) not wholly-owned,
directly or indirectly, by Bank or Parent (a “Third Party”), unless
Bank or Parent is the entity surviving that merger or consolidation;
	 
	 	(2)	 	A transfer of all or substantially all of the
assets of Bank or Parent to a Third Party or a complete liquidation or
dissolution of Bank or Parent;
	 
	 	(3)	 	A Third Party, without the prior approval of
Bank’s or Parent’s Board of Directors, as the case may be, through one
or more subsidiaries:






	 	(a)	 	Acquires beneficial ownership
of 15% or more of any class of Bank’s or Parent’s voting
stock;
	 
	 	(b)	 	Acquires irrevocable proxies
representing 15% or more of any class of Bank’s or Parent’s
voting stock;
	 
	 	(c)	 	Acquires any combination of
beneficial ownership of voting stock and irrevocable proxies
representing 15% or more of any class of Bank’s or Parent’s
voting stock;
	 
	 	(d)	 	Acquires the ability to
control in any manner the election of a majority of Bank’s or
Parent’s directors; or
	 
	 	(e)	 	Acquires the ability to
directly or indirectly exercise a controlling influence over
the management or policies of Bank or Parent;








	 	(4)	 	Any election occurs of persons to Parent’s
Board of Directors that causes a majority of Parent’s Board of
Directors to consist of persons other than (a) persons who were
members of Parent’s Board of Directors on February 29, 1996 (the
“Determination Date”) and/or (b) persons who were nominated for
election as members of that Board of Directors by Parent’s Board of
Directors (or a committee thereof) at a time when the majority of that
Board of Directors (or that committee) consisted of persons who were
members of Parent’s







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Board of Directors on the Determination Date;
provided, however, that any person nominated for election by Parent’s
Board of Directors (or a committee thereof), a majority of whom are
persons described in clauses (a) and/or (b), or are persons who were
themselves nominated by that Board of Directors (or a committee
thereof), shall for this purpose be deemed to have been nominated by a
Board of Directors composed of persons described in clause (a) above;
or
	 
	 	(5)	 	A determination is made by any regulatory
agency supervising Bank or Parent that a change in control, as defined
in the banking, insurance or securities laws or regulations then
applicable to Bank or Parent, has occurred.





     Notwithstanding any provision herein to the contrary, a Change in Control shall not include
any of the events described above if they (x) are related to or occur in connection with the
appointment of a receiver or conservator for Bank or Parent, provision of assistance under Section
13(c) of the Federal Deposit Insurance Act (the “FDI Act”), the approval of a supervisory merger, a
determination that Bank is in default as defined in Section 3(x) of the FDI Act, insolvent, or in
an unsafe or unsound condition to transact business or the suspension, removal, and/or temporary or
permanent prohibition by a regulatory agency of Employee from participation in the conduct of
Bank’s or Parent’s business or (y) are the result of a Third Party inadvertently acquiring
beneficial ownership of or irrevocable proxies for or a combination of both for 15% or more of any
class of Bank’s or Parent’s voting stock, and that Third Party as promptly as practicable
thereafter divests itself of the beneficial ownership of or irrevocable proxies for a sufficient
number of shares so that that Third Party no longer has beneficial ownership or irrevocable proxies
or a combination of both for 15% or more of any class of Bank’s or Parent’s voting stock.



     5. Obligations of Bank Upon Termination of Employment. Upon termination of Employee’s
employment with Bank under the circumstances set forth in Subparagraph 4(b) above, notwithstanding
that termination, Employee shall be entitled to receive the following payments and provided the
following benefits:




          a. Compensation.




               (1) Bank shall pay Employee within ten days after the termination of his or her employment a
lump sum payment equal to the aggregate of 100% of the future Monthly Compensation Employee would
have received if he or she had continued in Bank’s employ until 36 months after the termination of
his or her employment, discounted to present value at a discount rate equal to the per annum rate
offered on that termination date (or the next preceding date on which that rate is published) on
U.S. Treasury bills with maturities of one and one-half years.



               (2) For purposes hereof, the term “Monthly Compensation” means:



                    (a) The gross salary and wages paid or payable to Employee by Bank for the month preceding the
termination of his or her employment and which is reportable on Form W-2 or any substitute therefor
(unless a reduction in Employee’s base salary preceded




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Employee’s resignation or retirement for
Good Reason, in which case in determining Monthly Compensation Bank shall use Employee’s highest
base salary in effect during the twelve-month period before the termination of his or her
employment);



                    (b) Plus one-twelfth of amounts paid or payable by Bank to Employee in respect of all
bonuses and incentive payments for Bank’s most recently completed fiscal year (including, without
limitation, Bank’s executive incentive plan);



                    (c) Reduced by (i) any amounts imputed under the Internal Revenue Code of 1986, as
amended (the “Code”), and regulations issued pursuant thereto and (ii) amounts attributable to
moving and travel expenses and tuition payments.



          For purposes hereof, income Employee realizes from the exercise of stock options and vacation
time that has accrued but not been taken shall not be considered in determining “Monthly
Compensation.”




          b. Benefits. For three years after the termination of Employee’s employment, at
Bank’s expense, Employee shall participate in and be covered by all health, medical, life, and
disability plans, programs, policies, and arrangements of Bank applicable to employees, whether
funded or unfunded; provided, however, that, if any administrator or insurance carrier contests
Employee’s participation in or coverage under that plan, program, policy, or arrangement, then in
respect of insurance arrangements, Bank shall, at its own cost or expense, cause equivalent
insurance coverage to be provided and, in respect of arrangements other than insurance, make cash
payments to Employee in an amount equal to the amount which would have been contributed by Bank
with respect to Employee at the times those amounts would have been contributed; and provided
further that, to the extent Bank has an obligation to provide continuation coverage under Section
4980(B)(f) of the Code, the period for which benefits are provided under this Subparagraph 5(b)
constitutes a portion of that continuation coverage. Notwithstanding the foregoing, any payments
made to Employee pursuant hereto, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. § 1828(k) and any regulations promulgated thereunder.








          c. Other Entitlements. Any amounts payable under this Paragraph 5 shall be in
addition to any payments or benefits to which Employee or his or her spouse, beneficiaries, or
estate may be entitled as of the date of termination pursuant to any pension plan, profit-sharing
plan, employee benefit plan, or insurance policy maintained by Bank (except as otherwise provided
in Paragraph 2 of this Agreement) and any base salary, bonus, or other cash entitlement earned but
unpaid as of the date of termination.




          d. Limitations.





	 	(1)	 	Notwithstanding the foregoing or any other
provision hereof to the contrary, if Bank’s tax counsel determines
that any portion of any payment hereunder would constitute an “excess
parachute payment,” then the payments to be made to Employee hereunder
shall be reduced so that the value of the aggregate payments that
Employee is entitled to receive hereunder and under any other
agreement, plan, or






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program of Bank or Parent shall be one dollar less
than the maximum amount of payments which Employee may receive
without becoming subject to the tax imposed by Section 4999 of the
Code.
	 
	 	(2)	 	The parties intend that this Agreement shall
govern the rights and obligations of the parties with respect to
severance payments payable upon a termination of Employee’s employment
under circumstances described in Subparagraph 4(b) above. If the
Internal Revenue Service assesses an excise tax against Employee
pursuant to Sections 280G and 4999 of the Code, Bank shall be under no
obligation to Employee with respect to the amount of (a) that excise
tax or (b) any additional federal income tax due from and payable by
Employee as the result of his or her receipt of any payment hereunder.
	 
	 	(3)	 	Notwithstanding any provision hereof to the
contrary, Bank’s obligations hereunder shall be limited to the extent
required to comply with federal and state law.





     6. No Duty to Mitigate. Employee shall not be required to mitigate the amount of any
payment required hereunder by seeking other employment or otherwise, nor shall the amount paid
hereunder be reduced or offset by any compensation earned or received by Employee as a result of
employment with another employer, self-employment, or any amount received from any of Bank’s other
plans, programs, policies, or arrangements; provided that benefits provided under Subparagraph 5(b)
above shall be reduced to the extent that comparable benefits are actually received by Employee
from or through another employer.




     7. Miscellaneous.



          a. General Creditor. All payments required hereunder shall be made from Bank’s
general assets, and Employee shall have no rights greater than the rights of a general creditor of
Bank.




          b. Notices. All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered personally
or sent by certified mail, return receipt requested, first-class postage prepaid, or by a
nationally recognized overnight mail carrier, to the parties hereto at the following addresses:




	 	 	 	 	 	 	 
	 

	 	 	(1	)	 	If to Bank, at:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Wilmington Trust Company
	 

	 	 	 	 	 	Rodney Square North
	 

	 	 	 	 	 	1100 North Market Street
	 

	 	 	 	 	 	Wilmington, DE 19890
	 

	 	 	 	 	 	Attention: Chairman of the Board
	 
	 	 	 	 	 	 






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	 	 	(2	)	 	If to Employee, at the address set forth at the end hereof,





or to such other address as either party hereto has last designated by notice to the other. All
such notices and communications shall be deemed to have been received on the earlier of the date of
receipt, the first business day after mailing by a nationally-recognized overnight mail carrier, or
the third business day after the date of other mailing.




          c. Binding Effect; Benefits. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. Nothing contained
herein, express or implied, is intended or shall be construed to give any person, other than the
parties hereto and their respective successors and assigns, any legal or equitable right, remedy,
or claim under or in respect of any agreement or provision herein.




          d. Costs of Enforcement. If Employee retains legal counsel to enforce any or all of
his or her rights to severance benefits under Paragraph 5 above and he or she substantially
prevails in enforcing those rights, Employee shall be entitled to recover from Bank Employee’s
reasonable attorneys’ fees, costs and expenses in connection with the enforcement of his or her
rights.




          e. Waiver. Either party may, by written notice to the other: (1) extend the time for
performance of any obligation or other action of the other hereunder; (2) waive compliance with any
condition or covenant of the other herein; or (3) waive or modify performance of any obligation of
the other hereunder. Except as provided in the preceding sentence, no action taken pursuant hereto,
including, without limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by that party of compliance

with any representation, warranty, covenant, or agreement contained herein. The waiver by any
party of a violation of any provision hereof shall not operate or be construed as a waiver of any
preceding or succeeding violation, and no failure by either party to exercise any right or
privilege hereunder shall be deemed a waiver of that party’s rights or privileges hereunder or that
party’s rights to exercise that right or privilege at any subsequent time hereunder.




          f. Amendment. This Agreement may be terminated, amended, modified, or supplemented
only by a written instrument executed by Employee and Bank.




          g. Assignability. Neither this Agreement nor any right, remedy, obligation, or
liability hereunder or arising by reason hereof shall be assignable by either Bank or Employee
without the prior written consent of the other.




          h. Governing Law. This Agreement shall be governed by and construed in accordance
with Delaware law, regardless of what law might be applied under principles of conflicts of laws,
except as that law is superseded by the laws of the United States.




          i. Section and Other Headings. The section and other headings herein are for
reference purposes only, and shall not affect the meaning or interpretation hereof.




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          j. Withholding of Taxes. Bank may withhold from amounts required to be paid to
Employee hereunder any applicable federal, state, local, and other taxes with respect thereto;
provided, however, that Bank shall promptly pay over the amounts so withheld to the appropriate
taxing authorities and provide Employee with appropriate statements on forms prescribed for those
purposes on the amounts so withheld.




          k. Severability. If, for any reason, any provision hereof is held invalid, that
invalidity shall not affect any other provision hereof not so held invalid, and each such other
provision hereof shall, to the full extent consistent with law, continue in full force and effect.
If any provision hereof is held invalid in part, that invalidity shall in no way affect the rest of
that provision not held invalid, and the rest of that provision, together with all other provisions
hereof, shall, to the full extent consistent with law, continue in full force and effect.




          l. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be deemed to be one and
the same instrument.





     IN WITNESS WHEREOF, Bank has executed this Agreement and caused its seal to be affixed hereto
by its officers thereunto duly authorized, and Employee has signed this Agreement, all as of the
date first written above.



	 	 	 	 	 	 	 
	 	 	WILMINGTON TRUST COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/   Ted T. Cecala	 	 
	 

	 	 	 	 

	 	 
	 	 	Authorized Officer	 	 






	 	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/   Michael A. DiGregorio
	 	 
	 	 	 	 	 
	 

	 	Name
	 	Michael A. DiGregorio	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address
	 	400 Collins Avenue	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Springfield, PA 19064	 	 
	 	 	 	 	 	 	 









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