SEVERANCE AGREEMENT BETWEEN WILMINGTON TRUST
COMPANY AND XXXXXX X. XXXX
EXHIBIT 10.20
SEVERANCE AGREEMENT
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THIS AGREEMENT is made as of the 28th day of June, 1999 between WILMINGTON
TRUST COMPANY, a Delaware-chartered bank and trust company (the "Bank"), and
XXXXXX X. XXXX ("Employee").
BACKGROUND
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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 employment with Bank and devote his best efforts to duties which
may be assigned to him 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 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 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 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;
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(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 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 or 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 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 Bank's principal executive offices to a
location more than 25 miles from Wilmington, Delaware, or
Bank's requiring Employee to be based anywhere other than
Bank's principal executive offices, except for required
travel on Bank's business to an extent substantially
consistent with Employee's present business travel
obligations; or
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(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 is entitled on the basis of
years of service with Bank in accordance with Bank's normal
vacation policy; provided, however, 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;
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(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 the Effective 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 Board of Directors on the Effective
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.
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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. BASE SALARY. Bank shall pay Employee within ten days after the
termination of his employment a lump sum payment equal to the aggregate of 115%
of the future base salary payments Employee would have received if he had
continued in Bank's employ until 36 months after the termination of his
employment (unless a reduction in compensation preceded Employee's resignation
or retirement for Good Reason, in which case the Bank shall pay him a lump sum
payment equal to the aggregate amount of 115% of the future base salary payments
Employee would have received at his highest base salary in effect during the
twelve-month period before the termination of Employee's employment if he had
continued in the Bank's employ until 36 months after the termination of his
employment), in either case 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.
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 employee benefit plans, programs, policies and arrangements of Bank
applicable to executive 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 Internal Revenue Code of 1986, as
amended (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.
ss.1828(k) and anY regulations promulgated thereunder.
c. 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 program of Bank or Parent
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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 receipt of any payment
hereunder.
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 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
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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 rights to severance benefits under Paragraph 5 above and he
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 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.
ATTEST: WILMINGTON TRUST COMPANY
/s/ Xxxxxx X. Xxxxxxxxxxx /s/ Xxxxxx V.A. Harra, Jr.
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[Assistant] Secretary President
WITNESS: EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxxxxxx /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
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Address:
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