In the event of the Executive's termination of employment with DNB for cause, all benefits otherwise payable under the SERP shall be forfeited.

 

The SERP defines "cause" to mean conduct by determined by the Board to be personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, conviction of a felony, suspension or removal from office or prohibition from participation in the conduct of DNB's affairs pursuant to a notice or other action by any Regulatory Agency, or willful violation of any law, rule or regulation or final cease-and-desist order which in the reasonable judgment of the Board will probably cause substantial economic damages to DNB, willful or intentional breach or neglect by the Executive of his duties, or material breach of any material provision of the SERP. No act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by him without good faith and without reasonable belief that this action or omission was in the best interest of DNB; provided that any act or omission to act in reliance upon an approving opinion of counsel to DNB or counsel to the Executive shall not be deemed to be willful. The terms "incompetence" and "misconduct" shall be defined with reference to standards generally prevailing in the banking industry. In determining incompetence and misconduct, DNB shall have the burden of proof with regard to the acts or omissions and the standards prevailing in the banking industry.

 

The SERP defines "change in control" as any one or more of the following four events with respect to DNB, provided that such event constitutes a change in ownership or effective control of DNB, or a change in the ownership of a substantial portion of its assets, within the meaning of Section 409A of the Code and as described in the Treasury Regulations promulgated thereunder:

 

(1) a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") (or any successor provision) as it may be amended from time to time;

 

(2) any "persons" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act in effect on the date first written above), other than DNB or any "person" who on the date hereof is a director of officer of DNB, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of DNB representing 25% or more of the combined voting power of

DNB's then outstanding securities;

 

 

(3) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors of DNB cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were directors at the beginning of the period; or

 

(4)  the signing of a letter of intent or a formal acquisition or merger agreement between DNB, of the one part, and a third party which contemplates a transaction which would result in a change in control as described in (1), (2) or (3) above.

 

The SERP may be amended or terminated only by written agreement between DNB and the Executive.  To the extent permitted by Section 409A of the Code and the Treasury Regulations promulgated thereunder, upon termination of the SERP, the present value of the Executive's vested percentage of his age 67 benefit described above, or present value of the remaining installments if benefit payments have commenced, shall be paid to him in a lump sum.  Present value shall be determined by using a discount rate equal to the accounting discount rate used by DNB in preparing its financial statements in effect at the time of Plan termination, and, in the case where benefits have not already commenced, with no discounting between the date of termination and age 67.

 

The SERP shall be unfunded, with no assets of DNB segregated in trust or otherwise dedicated to pay benefits which may become due thereunder.

 

Complete copies of the SERPs are filed herewith as Exhibits 99.1 and 99.2 respectively and are incorporated herein as if set forth in full.

 

(b)  On October 25, 2017, the Board of Directors of DNB and the Board of Directors of DNB First, N.A. (the "Bank"), DNB's wholly-owned subsidiary, terminated the DNB First Success-Sharing Supplemental Executive Retirement Plan (the "Plan").  DNB and the Bank had adopted the Plan on February 22, 2017.  No employees or contractors of DNB or the Bank had been designated as participants in the Plan.