-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TTtWrb+TfcjHP0WsitZisKN9Q+bOY/9ppVt+DWYSRk4tBt9Qno4CcEj76jOqbS73 oYS4OtJASU4YQxrN3gDc/w== 0000950159-05-000238.txt : 20050225 0000950159-05-000238.hdr.sgml : 20050225 20050225124248 ACCESSION NUMBER: 0000950159-05-000238 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050225 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Amendments to the Registrant.s Code of Ethics, or Waiver of a Provision of the Code of Ethics ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050225 DATE AS OF CHANGE: 20050225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DNB FINANCIAL CORP /PA/ CENTRAL INDEX KEY: 0000713671 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232222567 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16667 FILM NUMBER: 05639946 BUSINESS ADDRESS: STREET 1: 4 BRANDYWINE AVE CITY: DOWNINGTOWN STATE: PA ZIP: 19335 BUSINESS PHONE: 6102691040 MAIL ADDRESS: STREET 1: 4 BRANDYWINE AVENUE CITY: DOWNINGTOWN STATE: PA ZIP: 19335 8-K 1 dnb8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): February 25, 2005 DNB Financial Corporation ------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 0-16667 23-2222567 --------------------- ------------- -------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 4 Brandywine Avenue, Downingtown, Pennsylvania 19335 --------------------------------- ----------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 269-1040 Not Applicable ---------------------------------------------- Former name or former address, if changed since last report Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. On February 23, 2005, DNB Financial Corporation and DNB First, NA entered into a Director Change of Control Agreement with Mildred C. Joyner, Director. The agreement is in substantially the same form as change in control agreements heretofore entered into between the registrant and its other outside directors. A Form of Agreement is attached as Exhibit 99.1 and incorporated herein by reference. In addition, on February 23, 2005, the Board of Directors of DNB Financial Corporation and DNB First, N.A. approved an increase in base salary for William S. Latoff, the Registrant's and Bank's Chairman and CEO. Mr. Latoff's salary was increased to $250,000, retroactive to January 1, 2005. Item 1.02. Termination of a Material Definitive Agreement. On February 23, 2005, DNB Financial Corporation and DNB First, NA terminated its Director Change of Control Agreement dated November 10, 2003, with William S. Latoff, Chairman of the Board and Chief Executive Officer. Item 5.05. Amendments of the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics. (c) On February 23, 2005, the Registrant's Board of Directors approved a Revised Code of Ethics Policy. The primary modification to the policy entailed the inclusion of the Registrant's "Whistle Blower Policy," which heretofore had been a separate policy. A copy of the Registrant's Code of Ethics, as amended and restated February 23, 2005, is filed as Exhibit 99.2 herewith and incorporated herein by reference Item 8.01. Other Events. On February 23, 2005, DNB Financial Corporation announced that its Board of Directors declared a $0.13 cash dividend per share on its common stock. A copy of the press release is attached hereto as Exhibit 99.3, and is incorporated herein by reference. Item 9.01. Financial Statements and Exhibits. (a) Not Applicable. (b) Not Applicable. (c) Exhibits. The following exhibits are furnished herewith: 99.1 Director Change of Control Agreement with Mildred C. Joyner 99.2 DNB Financial Corporation Code of Ethics as amended and restated February 23, 2005 99.3 Press Release, dated February 23, 2005, of DNB Financial Corp. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DNB Financial Corporation February 25, 2005 By: /s/ Bruce E. Moroney Name: Bruce E. Moroney Title: Chief Financial Officer EX-99 2 ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 CHANGE OF CONTROL AGREEMENT THIS CHANGE OF CONTROL AGREEMENT (this "Agreement"), made as of ______________, is by and among DNB FINANCIAL CORPORATION ("Holding Company"), DNB First, a national banking association with principal offices at 4 Brandywine Avenue, Downingtown, PA 19335 ("Bank") (Holding Company and Bank are sometimes referred to individually and collectively herein as the "Company") and ____________________ , an individual residing at__________________("Director"). Background A. Company and Director wish to enter into an agreement pursuant to which Company wishes to secure the future services of each director and to induce the directors to devote their time and attention to the interests and affairs of the Corporation and the Bank under all circumstances, including without limitation circumstances involving a possible change in control of the Corporation and Bank. B. Director is willing to enter into this Agreement upon the terms and conditions herein set forth. C. The Boards of Directors of the Holding Company and the Bank have each approved this Agreement and it is intended to, and shall, be maintained as part of the official records of the Holding Company and the Bank. D. This Agreement amends and restates the terms of a plan originally approved by the Company on February 27, 2002, to eliminate retroactively the retirement features originally approved by the Company on that date. Any previous agreement signed by the parties incorporating a retirement feature is hereby rescinded absolutely and retroactively and shall be of no force or effect. NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms when capitalized shall have the following respective meanings: "Aggregate Annual Cash Compensation" means the aggregate annual cash compensation actually paid to Director for Director Services in a fiscal year (including any compensation which, but for an election by the Director to defer receipt, would have been paid to Director, and including any variable cash compensation such as payments for attendance at individual meetings, but not including the value of any stock option or other nonmonetary grants or any other deferred compensation, and not including any payments to third parties for benefits on behalf of Director). "Aggregate Annual Compensation" means, for any fiscal year, the Aggregate Annual Cash Compensation plus any noncash compensation, paid or credited to Director during the fiscal year for Director Services, including without limitation the value, on the later of the date of grant or vesting of any stock option or other nonmonetary grants or any other deferred compensation granted during such fiscal year, as well as the cash amount of any premiums paid by the Company for health insurance, HMO or other similar medical benefits (but not any disability plans or benefits) for the Director. "Base Fiscal Year" means the last full fiscal year of the Company ending prior to a Change in Control. "Cause" when used in connection with a termination means and includes (i) involuntary termination, prior to the expiration of a regular term of office, of Director's status or services as a director in accordance with the provisions of the Company's or Bank's articles or bylaws, or by court order or otherwise in accordance with applicable law or regulations, or (ii) personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, conviction of a felony, or willful or intentional breach or neglect by Director of his duties, or (iii) suspension or removal from office or prohibition from participation in the conduct of Holding Company's or Bank's affairs pursuant to a notice or other action by any Regulatory Agency, or (iv) willful violation of any law, rule or regulation or final cease-and-desist order or other regulatory agreement, which violation in the reasonable judgment of the Board of Directors of the Company will probably cause substantial economic damages to the Company. For purposes of this paragraph, no act, or failure to act on Director'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 Company; provided that any act or omission to act by Director in reliance upon an approving opinion of counsel to the Company or counsel to the Director 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, Company shall have the burden of proof with regard to the acts or omission of Director and the standards prevailing in the banking industry. "Change in Control" means and includes any one or more of the following: (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 of this Agreement), other than Company or Bank, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Company or Bank representing 25% or more of the combined voting power of Company's or Bank's then outstanding securities; or (3) during any period of two (2) consecutive years after a Change in Control, individuals who at the beginning of such period constitute the Board of Directors of Company or Bank 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. (4) the signing of a letter of intent or a formal acquisition or merger agreement between the Holding Company or Bank, of the one part, and a third party which contemplates a transaction which would result in a "Change of Control" under paragraphs (1), (2) or (3) of this definition, but, as to any Triggering Event, only if such letter of intent or agreement, or the transaction contemplated thereby, has not been canceled or terminated at the time the Triggering Event in question occurs. "Director Services" means services as director for the Holding company, the Bank and all of their subsidiaries (as opposed to services as employee) "Good Reason" has the meaning assigned thereto in Section 3(c). "Termination" means termination of Director's service as director for any of the Holding Company, Bank or their subsidiaries, so that, immediately after such termination, Director is not a voting director of Holding Company, Bank or any of their subsidiaries. A "Termination" also occurs if Director's status is changed, for any remaining director positions with the Company, the Bank and their subsidiaries, to an emeritus, advisory or other nonvoting capacity. A termination of Director's service as director with less than all of Bank, Holding Company and their subsidiaries shall not be deemed a "Termination" for purposes of this Agreement so long as Director remains a director of Holding Company, Bank or any of their subsidiaries. "Triggering Event" has the meaning assigned thereto in Section 3(c). 2. Service as a Director; Compensation; Other Agreements; Employee Directors. (a) Director shall not be deemed to have received any vested rights to continued service as a Director by virtue of this Agreement. This Agreement is not an employment agreement, but shall only be interpreted as governing the making of certain payments in recognition of past service as director (but not as employee) which may be due to Director upon termination of Director's service as director with Company under the specific circumstances described in this Agreement. No provision of this Agreement shall be interpreted to derogate from the power of the Company or its Board of Directors to terminate the service or status of a Director in accordance with the articles of incorporation and bylaws of the Company and applicable laws and regulations, subject nevertheless to the terms of this Agreement. (b) The compensation to be paid by Company to Director from time to time for current services as Director, including any fringe benefits, shall not be governed by this Agreement. This Agreement shall not be deemed to affect the terms of any stock options or other agreements between the Company and Director. If Director is also an employee of the Company, this Agreement is not intended to address or affect Director's employment with the Company as an employee, or the termination of such employment, or any matters relating to termination of employment; likewise, termination of Director's employment with the Company for any reason shall not give Director any claim for payments under this Agreement except solely to the extent Director's service as a director of the Holding Company or Bank shall be terminated in circumstances giving Director a right to payment under the terms of this Agreement. This Agreement shall not be considered, in any respect, a benefit or perquisite of any employment relationship between Director and Company and is not given in consideration of employment. 3. Termination of Director Status; Compensation. (a) Termination at the Instance of Parties other than the Director. (i) If Director's service as a director for the Holding Company, Bank or any of their subsidiaries is terminated for Cause at any time before or after a Change in Control, then Director shall have no right to any payments under this Agreement due to such termination. (ii) If Termination occurs within three (3) years after a Change in Control and other than for Cause, then in such case Director's right to severance payments under this Agreement shall be as set forth in subsection (g) of this Section. (b) Termination at the Instance of the Director. (i) If a Termination occurs voluntarily by the Director at his or her own instance, either prior to a Change in Control for any reason, or within three (3) years after a Change in Control without Good Reason, or more than three (3) years after a Change in Control, Director shall have no right to any payments under this Agreement due to such Termination. (ii) If a Termination occurs for Good Reason within three (3) years after a Change in Control, Director's right to severance payments under this Agreement shall be as set forth in subsection (g) of this Section. (c) "Good Reason." For purposes of this Agreement, Director shall have "Good Reason" for causing a Termination if the Termination occurs within one (1) year after any of the following events described in (i), (ii) or (iii) of this subsection (a "Triggering Event") shall have occurred without Director's consent: (i) a reduction (for reasons other than the actions of the Director) in the Aggregate Annual Compensation paid to Director for Director Services during any fiscal year of the Company, as compared to the greater of (I) the Aggregate Annual Compensation paid to Director for all Director Services during the Base Fiscal Year, or (II) the Aggregate Annual Compensation paid to Director for all Director Services during any fiscal year of the Company after the Base Fiscal Year; or (ii) the Company's failure to give Director increases in Aggregate Annual Compensation for Director Services at least equal to any increases given to other directors of the Holding Company, the Bank or any of their subsidiaries in their compensation for comparable services as director; (iii) the imposition by the Company of changes in duties or schedule or location of attendance at board or committee meetings that, singly or in the aggregate, impose additional unreimbursed expense, or other unreasonable burdens, on the Director in attending or participating in board or committee meetings or otherwise fulfilling his or her responsibilities. (d) Severance. If Director is entitled to severance payments under subsection (a) or (b) of this Section, and if Director shall have signed a release or releases as more fully described in Section 4 of this Agreement, Company shall pay as severance to Director the following: (I) Base Severance. An amount equal to the product obtained by multiplying (A) 2.99 times (B) either: (i) if a change of control has occurred prior to the date of Termination, the greater of (I) the Aggregate Annual Cash Compensation paid to Director for Director Services during the Base Fiscal Year, or (II) the Aggregate Annual Cash Compensation paid to Director for Director Services during any fiscal year of the Company after the Base Fiscal Year, or (ii) if a change of control has not occurred prior to the date of Termination, the Aggregate Annual Cash Compensation paid to Director during the last full fiscal year of the Company prior to the date of Termination. Such amount shall be payable in equal installments over a period of three (3) years following the date of Termination, subject to withholding of any taxes by the Company as required by applicable law and regulations. Unless the Company shall have elected to pay in more frequent installments, such installments shall be monthly. (II) Medical/Health Benefits. If the Company paid for Director's health insurance, HMO or other similar medical provider benefits (excluding any disability plans or benefits) immediately prior to the date of Termination, the Company shall continue to pay for or reimburse Director's payments such benefits for a period of one (1) year after the date of Termination but in an aggregate amount not exceeding the Company's payments therefor in the year preceding the date of Termination. (III) Reduction to Avoid Excise Tax. Notwithstanding any provision of this Agreement or any other agreement of the parties, if the severance payment or payments under this Agreement, either alone or together with other payments which the Director has the right receive from the Company, would constitute a "parachute payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") or any successor provision, such severance payment or payments shall be reduced to the largest amount as will result in no portion of the severance payment under this Agreement being subject to the excise tax imposed by Section 4999 of the Code. (e) Any termination of Director's service as a director of Holding Company, Bank or any of their subsidiaries, whether by Company or by Director, shall be communicated by a dated, written notice, signed by the party giving the notice, which shall (A) indicate the specific termination provision in this Agreement relied upon or applicable; (B) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Director's service under the provision so indicated; (C) specify the effective date of termination. (f) All obligations under this Agreement are subject to termination by any bank regulatory agency having jurisdiction over Holding Company or Bank ("Regulatory Agency") in accordance with any applicable provisions of law or regulations granting such authority, but rights of the Director to compensation earned as of the date of termination shall not be affected. (g) Director shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The severance payments provided for in this Agreement shall not be reduced by any compensation or other payments received by Director from any source, except to the extent that a determination is made that Director's receipt of any such compensation or other payments from another source constitute a breach of Director's obligations to the Company. 4. Execution of Release Required. Director agrees that, as a precondition to receiving the payments provided for in this Agreement, Director shall have executed and delivered to Holding Company and Bank a release or releases, in form satisfactory to Holding Company and Bank, releasing all claims which Director may then have against Holding Company or Bank, including without limitation any claims related to termination of service, discrimination, harrassment, compensation or benefits, but excluding any claims for payments due or to become due under this Agreement. 5. Payment Obligations Absolute. Provided that the preconditions for payment set forth in this Agreement are fully satisfied, Company's obligation to pay Director the severance payments provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off counter claim, recoupment, defense or other right which Company may have against Director. All amounts payable by Company hereunder shall be paid without notice or demand. 6. Continuing Obligations. Director shall retain in confidence any confidential information known to him concerning Company and its business so long as such information is not publicly disclosed. 7. Amendments. No amendments to this Agreement shall be binding unless in a writing, signed by both parties, which states expressly that it amends this Agreement. 8. Notices. Notices under this Agreement shall be deemed sufficient and effective if (i) in writing and (ii) either (A) when delivered in person or by facsimile, telecopier, telegraph or other electronic means capable of being embodied in written form or (B) forty-eight (48) hours after deposit thereof in the U.S. mails by certified or registered mail, return receipt requested, postage prepaid, addressed to each party at such party's address first set forth above and, in the case of Company, to the attention of the Chairman of the Board, or to such other notice address as the party to be notified may have designated by written notice to the sending party. 9. Prior Agreements. This Agreement is the entire agreement of the parties with respect to its subject matter and supersedes any and all prior or contemporaneous discussions, representations, understandings or agreements regarding its subject matter. 10. Assigns and Successors. The rights and obligations of Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Company and Director, provided, however, that Director shall not assign or anticipate any of his rights hereunder, whether by operation of law or otherwise. For purposes of this Agreement, "Company" shall also refer to any successor to Holding Company or Bank, whether such succession occurs by merger, consolidation, purchase and assumption, sale of assets or otherwise. 11. Director's Acknowledgment of Terms. Director acknowledges that he or she has read this Agreement fully and carefully, understands its terms and that it has been entered into by Director voluntarily. Director acknowledges that any payments to be made hereunder will constitute additional compensation to Director and may be subject to taxation or withholding. Director further acknowledges that Director has had sufficient opportunity to consider this Agreement and discuss it with Director's own advisors, including Director's attorney and accountants. Director has been informed that Director has the right to consider this Agreement for a period of at least twenty one (21) days prior to entering into it. Director acknowledges that Director has taken sufficient time to consider this Agreement before signing it. Director also acknowledges that Director has the right to revoke this Agreement for a period of seven (7) days following this Agreement's execution by giving written notice of revocation to Company. IN WITNESS WHEREOF, the parties hereto have caused the due execution of this Agreement as of the date first set forth above. Holding Company: Bank: DNB FINANCIAL CORPORATION DNB First By: __S/_____________________ By: ___S/______________________ Witness: Director: ____S/_______________________ ____S/_________________________ EX-99 3 ex99-2.txt EXHIBIT 99.2 Exhibit 99.2 Adopted by Board of Directors February 23, 2005 DNB Financial Corporation DNB First National Association Code of Ethics/Whistleblower Policy As directors, officers and employees of DNB Financial Corporation (the "Company") and its subsidiaries, including without limitation DNB First National Association (the "Bank") (collectively, "DNB"), we assume a duty to the Bank, its customers, depositors and Company shareholders. It is each director's, officer's and employee's responsibility to act in a manner that will merit public trust and confidence. This duty extends to all activities -- both personal and professional. Each director, officer and employee of DNB is expected to direct his or her personal conduct in a manner that will bring credit to the organization and to avoid any action that will discredit the Bank. With these considerations in mind, the purpose of this Code of Ethics/Whistleblower Policy is to deter wrongdoing by DNB's directors, officers and employees and to promote: - - Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - - Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the U.S.Securities and Exchange Commission ("the SEC") and in other public communications made by the registrant; - - Compliance with applicable governmental laws, rules and regulations; - - The prompt internal reporting to an appropriate person or persons identified in the code of violations of the policy; and - - Accountability for adherence to this Code of Ethics/Whistleblower Policy. Whenever you use the authority and privileges that come from employment with DNB, you must apply two principles: 1. A DNB director, officer or employee places DNB's interests ahead of his or her own private interest. 2. A DNB director, officer or employee must make full disclosure of any situation in which his or her private interests create a conflict or potential conflict with those of the Company or the Bank or any of their subsidiaries. This policy has been adopted by the Board of Directors and it is furnished to you for your guidance and information. Directors, officers and employees are requested and expected to (i) read this statement, (ii) understand its purposes, (iii) make appropriate disclosures to, or request appropriate exceptions or waivers from, the appropriate DNB official as designated in this Code of Ethics/Whistleblower Policy, and (iv) consult with their immediate supervisors if there are uncertainties or questions about the meaning of this policy. CONFIDENTIAL AND INTERNAL INFORMATION DNB encourages the free flow of information among its directors, officers and employees. However, if confidential or internal information is received by the wrong people, potential damage may be done through legal exposure and other adverse results. Confidential Information "Confidential information" includes: 1. All unpublished financial results; 2. All unpublished financial projections; and 3. All non-public information, the substance of which may be deemed material by an investor or which would give a competitor a competitive advantage, such as new products, services or pending lawsuits. Information that could have a definite and immediate impact on the market price of the security involved is regarded by the SEC as material. When in doubt about whether a piece of information is material or non-public, assume that it is confidential and consult with your supervisor at once. It may be appropriate to consult first with DNB's legal counsel before making disclosures of information that may be confidential. Nonpublic information about the Bank's customers, suppliers, directors, officers or employees acquired by a director, officer or employee through employment with DNB is considered to be privileged and must be held in the strictest confidence and is also considered "confidential information." It is to be used solely for Company or Bank purposes and not as a basis for personal gain. In no case should such information be transmitted to persons outside DNB, including family or associates, or even to other directors, officers or employees of DNB who do not need to know such information in discharging their Bank dutes. The restrictions in this paragraph also apply to the reports and statements prepared for use in the DNB's business and not generally released. Further, a director, officer or employee must not take for personal gain an opportunity that belongs to the Company, the Bank or any of their subsidiaries. Whenever DNB has been seeking a particular business opportunity, or the opportunity has been offered to it, or DNB's funds, facilites, or personnel have been used in developing the opportunity, the opportunity rightfully belongs to DNB, and not to directors, officers or employees who may be in a position to divert the opportunity to themselves or others. Internal Information "Internal information" means all communications (other than confidential information) between or among DNB directors, officers or employees and agents and their advisors, such as attorneys, accountants and consultants, and not intended for public consumption, no matter in what form (tangible or intangible) it may be embodied. Basic Restriction on Confidential Information and Internal Information Confidential information and internal information must not be released by DNB directors, officers or employees to the public or to persons outside DNB, except (i) in accordance with any applicable policies or procedures approved by the Board of Directors (or the Executive Committee in its place) or pursuant to authority delegated by the Board of Directors, or (ii) with the written approval of the Chief Executive Officer or the Chief Financial Officer. DISCLOSURES IN DEALINGS WITH AUDITORS AND BANK EXAMINERS The principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions for either the Company or the Bank are referred to in this Code of Ethics/Whistleblower Policy as "Executive and Financial Officers." The appropriate Executive and Financial Officers are obligated to establish appropriate systems and procedures to ensure that business transactions are recorded on the Bank's books in accordance with Generally Accepted Accounting Principals, established company policy, and appropriate regulatory pronouncements and guidelines. They must establish and administer financial accounting controls that are appropriate to ensure the integrity of the financial reporting process and the availability of timely, relevant information or the safe, sound and profitable operation of DNB. They must ensure that all accounting records and information are protected and retained as required by applicable law, regulation, or regulatory guidelines. Directors, officers and employees are required to cooperate fully with audits conducted by either the Bank's internal audit staff, external auditing firm or regulatory examiners. Questions raised by the Bank's auditors must be responded to candidly and no adverse or controversial information in response to any questions may be concealed. The appropriate Executive and Financial Officers must also establish and maintain an appropriate system to ensure full, fair, accurate, timely, and understandable disclosures in reports and documents that DNB files with, or submits to, the SEC, banking regulators and other applicable regulatory agencies, and in other public communications made by or on behalf of DNB. Directors, officers and employees are required to cooperate fully with the appropriate Executive and Financial Officers in the process of preparing reports, filings and other documents to comply with DNB's disclosure and other regulatory compliance responsibilities. Any potentially material information, and any questions relating to such information, must be volunteered candidly and no adverse or controversial information may be concealed. PARTICIPATION IN PUBLIC AFFAIRS It is the philosophy of DNB to encourage on the part of its directors, officers and employees a full awareness and interest in civic and political responsibility. Each director, officer and employee shall have the opportunity to support community activities or the political process, as he/she desires. However, except strictly as the Board of Directors (or the Executive Committee in its place) or senior management may explicitly determine from time to time, (i) DNB does not support, sponsor or endorse these activities or political processes, (ii) DNB's name and address or facilities may not be used in any advertisements or literature to promote any activity, political or not, that is unrelated to DNB's business, and (iii) the Bank's letterhead may not be used for any purpose other than job related activities. It is illegal to use Bank funds for the purpose of making contributions or expenditures in connection with elections to any local, state, and federal office. However, the Federal Elections Commission does permit the use of Bank funds and assets for limited political purposes, such as: establishing political action committees and implementing nonpartisan voter registration or "get-out-the-vote" campaigns. Directors, officers and employees must be aware when considering election or appointment to corporate boards, public offices or commissions, that serving in such capacity will place them in a position where a potential conflict of interest may exist. Unless specifically approved by the CEO and/or the Board of Directors (or the Executive Committee in its place), no director, officer or employee shall serve on the board of directors, board of trustees or similar body of any non-bank entity that is in direct competition with DNB. If a conflict develops, DNB reserves the right to request the director, officer or employee involved to divest themselves of one of the conflicting interests. BORROWING FROM CUSTOMERS Directors, officers and employees shall not borrow money from any customer of the Bank unless the customer is a recognized lending institution. Further, directors, officers and employees shall not borrow from each other nor lend their personal funds to customers of the Bank. No director, officer or employee shall co-sign, endorse or otherwise assume liability, contingent or otherwise, in connection with borrowings of any customer or prospective customer. For purposes of these restrictions on borrowing, the term "customer" in this section excludes relatives of the director, officer or employee. OVERDRAFTS Overdrafts of director, officer and employee transaction accounts are to be avoided, unless associated with (i) as to directors and executive officers, an established overdraft facility permitted under Federal Reserve Regulation O, and (ii) as to other employees, an overdraft policy and procedure no more favorable than the policies and procedures applicable to customers generally. The Bank recognizes that occasionally, through oversight or human error, a mistake will occur; however, intentional abuse of an account may result in immediate termination. For additional information, refer to your Employee Handbook. PROHIBITED LENDING PRACTICES Directors, officers and employees are not permitted to process loan applications or to authorize or participate in the authorization of extensions of credit by DNB to members of their immediate family. Immediate family is defined as spouses, parents, children, and/or siblings. Any such loan application must be referred to another authorized employee. A director, officer or employee may not extend credit to companies in which he or she has an interest as a director, officer, controlling person, or partner, or in which a member of the lending officer's immediate family has such an interest. GIFTS AND ENTERTAINMENT Gifts or favors of nominal value are an accepted practice to the extent that they meet all standards of ethical business conduct and involve no element of concealment. All gifts given to customers and prospective customers must be approved by an officer's or employee's immediate supervisor and the responsible Executive Officer. Entertainment By Employees Entertainment involving a nominal expense is also an accepted practice to the extent that it meets all standards of ethical business conduct and involves no element of concealment or corrupt intent. Entertainment expense must be approved by an officer's or employee's immediate supervisor. Gifts Received By Employees DNB expects officers and employees to render efficient and courteous service to customers at all times without expectation of reward other than compensation regularly received for their employment. Further, Federal criminal law and Pennsylvania law makes it a crime for a director, officer or employee to receive or accept anything of value for or in connection with any transaction, business or confidential information of the Bank. To avoid even the implication of any impropriety, it is important that each director, officer and employee decline any gifts that would raise even the slightest doubt of improper influence if accepted. The solicitation of gifts, bequests or favors is specifically prohibited as a Federal crime. As a general rule, therefore, no gifts or bequests of other than nominal value from present or prospective customers or suppliers are to be accepted. It is never appropriate under any circumstances for directors, officers or employees to accept cash from a present or prospective customer, supplier or public official. Situations may arise when it may be appropriate for directors, officers or employees to accept a gift or favor. Such situations include: 1. Unsolicited gifts of nominal value (not over $100) given at Christmas, other holidays, or special occasions that represent expressions of friendship and are not in connection with any transaction or business DNB. 2. Luncheons, dinners or business meetings and accompanying reasonable entertainment with present and prospective customers and suppliers when the return of the expenditure on a comparable basis is likely to occur and is properly chargeable as a business expense. 3. Unsolicited advertising or promotional material (e.g., pens and calendars) of a value not exceeding $100. INVESTMENTS No director, officer or employee, nor any member of his or her immediate family, shall directly or indirectly invest in any interest in real estate or its development, or in any business enterprise, if, to the knowledge of such person, any other person having a direct or indirect interest in such real estate or its development has obtained or made application for financing from the Bank or any of its subsidiaries. All exceptions to the foregoing investment prohibition must be approved in writing in advance by (i) the Board of Directors (or the Executive Committee in its place), acting by a majority of its disinterested members, in the case of any of the Executive and Financial Officers, or (ii) in other cases, by the Appropriate Official. If a director, officer or employee has, or if he or she knows that a member of his or her immediate family has, an investment that violates the above policy, an immediate and full disclosure must be made to (i) the Board of Directors in the case of any of the Executive and Financial Officers, or (ii) in other cases, by the Appropriate Official. TRANSACTIONS IN STOCK OF DNB FINANCIAL CORPORATION In accordance with the Securities Exchange Act of 1934, directors and certain "executive officers" are considered "insiders" and are subject by law to restrictions in the trading of the Bank's common stock. "Insiders" may also be held liable to the Bank for any "short swing profits" made from either purchasing or selling the stock during defined periods. The Chief Financial Officer shall maintain a list of those directors, officers and employees who are considered "insiders". Any director, officer or employee of DNB affected by this policy shall contact the Chief Financial Officer before transacting or agreeing to transact in DNB stock. SERVING AS AN INDIVIDUAL FIDUCIARY No director, officer or employee, nor any member of his or her immediate family, may accept an appointment as fiduciary unless (i) the Bank is named agent for the fiduciary and all compensation as fiduciary is received only by the Bank as agent and such appointment is also approved by the Trust Committee and, in the case of any director or any of the Executive and Financial Officers, the Board of Directors (or the Executive Committee in its place), or (ii) the grantor or decedent is a family member or personal friend and the relationship is not brought about through Bank employment. BENEFICIARY (OR LEGATEE) UNDER A WILL OR TRUST Directors, officers and employees must report any gift of a beneficial interest or legacy under wills or trusts of customers of the Bank, other than a relative, at such time as the director, officer or employee learns of the designation. The objective of such a notification requirement is to allow for consideration of all the facts in each case to make certain there are no real conflicts of interest and that a reasonable, disinterested third party could not allege a conflict of interest upon the director, officer or employee in receipt of the benefit. If this reporting requirement results in a decision that a real or apparent conflict exists or could exist, the director, officer or employee will be expected to make every effort to be relieved of the expectation of benefit and may be required to renounce the gift. REFERRING CUSTOMERS WHO SEEK ADVICE Legal Advice: In many cases discussions with customers lead to a request that the director, officer or employee make statements that may relate to the legality of the proposed transaction. Neither the Company nor the Bank nor their subsidiaries can practice law or give legal advice. Therefore, directors, officers and employees should be very careful in discussions with customers, and say nothing that might be interpreted as the giving of legal advice. Tax and Investment Advice: No director, officer or employee shall provide advice to a customer on matters concerning tax problems, or in the preparation of tax returns, or in investment decisions except as may be necessary or appropriate in the performance of a fiduciary duty as otherwise required in the ordinary course of his or her duties for DNB. Recommending Other Firms to Customers As a matter of policy, directors, officers and employees must not recommend attorneys, accountants, insurance brokers or agents, stock brokers, real estate agents, and the like to customers unless in every case several names are given without indicating favoritism. This policy shall not apply in cases where the service is provided directly or indirectly by DNB. CONFLICT OF INTEREST In general, a conflict of interest involves any situation which may, or may appear to, influence or interfere with a director's, officer's or employee's independent exercise of judgment in representing the best interests of DNB in a fair and impartial manner, or which could provide an opportunity for a director, officer or employee to profit personally as a result of his or her position with DNB. While it is not possible to identify every situation that may involve a conflict of interest, situations include business dealings with providers of services to DNB as well as personal relationships with customers, prospects and competitors. No director, officer or employee should make inappropriate use of his or her position with DNB in any business dealing with a provider of service to DNB. All business dealings must be in accordance with the highest ethical standards and must not create even the appearance of a conflict of interest. No decisions about whether or not DNB will do business with a customer, prospect, or supplier should be influenced by unrelated interests. Such decisions should only be based upon business considerations. Directors, officers and employees should not accept special discounts or other consideration from customers, prospects or suppliers unless such discounts or considerations are offered under the same terms and conditions to others. Whenever there is a question about a potential conflict of interest, a full and complete disclosure of the circumstances to the Appropriate Official is required; and whenever a transaction is involved, his or her prior approval must be obtained. OUTSIDE EMPLOYMENT The Bank does not encourage its full-time officers or employees to have employment outside DNB. However, such employment is permitted when the officer or employee receives prior approval of the Human Resource Department and the Appropriate Official. All outside employment must be consistent with this Code of Ethics/Whistleblower Policy and DNB's conflict of interest and other policies, and may not take precedence over DNB work requirements, including overtime. If the officer or employee is unable to maintain an acceptable level of performance at DNB as a result of the employment at the outside job, the officer or employee will be requested to terminate the outside employment. ADMINISTRATION OF THE CODE OF ETHICS/WHISTLEBLOWER POLICY The Board of Directors has adopted this Code of Ethics/Whistleblower Policy and delegated to the CEO and Senior Management the responsibility for its administration throughout DNB. It is each director's, officer's and employee's responsibility to be familiar with this Code of Ethics/Whistleblower Policy and to abide by the letter and spirit of its provisions at all times. All new directors, officers and employees are provided with a copy of the Code of Ethics/Whistleblower Policy at the time of their employment. Supervisors are expected to make every reasonable effort to ensure that their staff continues to comply with the provisions of this Code of Ethics/Whistleblower Policy. (a) Appropriate Official. For purposes of any disclosure, approval or reporting provisions in this Code of Ethics/Whistleblower Policy, the "Appropriate Official" shall be determined based upon the status of the director, officer or employee whose activities or relationships are in question (the "Subject Individual") and, subject to the following sentences, shall be: (1) If the Subject Individual is a director or any of the Executive and Financial Officers (other than the Chairman of the Board of Directors), the Appropriate Official shall be the Chairman of the Board of Directors; if the Subject Individual is the Chairman of the Board of Directors, the Appropriate Official shall be the Chairman of DNB's Audit Committee; (2) If the Subject Individual is an officer, but not a director or any of the Executive and Financial Officers, the Appropriate Official shall be DNB's Chief Executive Officer; (3) If the Subject Individual is not an officer or director, the Appropriate Official shall be the Bank's Compliance Officer. Notwithstanding the foregoing designations of the Appropriate Official, the Appropriate Official as to any alleged violation or proposed Authorization or Waiver shall not be involved in the matter giving rise to the alleged violation or proposed Authorization or Waiver, and shall have sufficient status within DNB to engender respect for this Policy and shall have the authority to adequately deal with the persons involved in the matter regardless of their stature in DNB. If in any circumstance the Appropriate Person that would otherwise be designated in the first sentence of this paragraph does not meet all of the requirements of the preceding sentence, the Board of Directors (or the Executive Committee in its place), acting by a majority of its disinterested members, shall have the authority and responsibility to designate the Appropriate Person for that matter. (b) Procedures on Notice of Possible Violation. Upon receiving notice or disclosure of any violation, alleged violation or suspected violation of this Code of Ethics/Whistleblower Policy, the Appropriate Official shall take such action as may be appropriate under the circumstances within his or her scope of authority to determine if a violation has occurred or is occurring or about to occur and, if applicable, to prevent or terminate any such violation. (c) Reporting by Appropriate Officers. Each Appropriate Officer shall report each matter involving an alleged violation or requested Authorization or Waiver under this Code of Ethics/Whistleblower Policy to the Board of Directors no later than at its next regular board meeting, and shall thereafter update the Board of Directors at each subsequent regular meeting regarding the status of the matter until it is resolved. (d) Authorizations and Exceptions Under Code of Ethics/Whistleblower Policy.. For purposes of this Code of Ethics, an authorization or exception contemplated or permitted by this Code of Ethics/Whistleblower Policy is referred to herein as an "Authorization," and any authorization or exception not contemplated or permitted by this Code of Ethics/Whistleblower Policy, or any other deviation from, waiver of, decision not to enforce, or failure to enforce, any of the provisions of this Code of Ethics/Whistleblower Policy, is referred to herein as a "Waiver." Any Authorization may be granted without the approval of the Board of Directors, except to the extent this Code of Ethics/Whistleblower Policy requires Board of Directors approval, but shall be reported to the Board of Directors no later than at the next regular board meeting of the Board of Directors of the Company or the Bank, whichever first occurs. Any Waiver shall only be granted pursuant to a resolution duly adopted by the Board of Directors (or Executive Committee in its place) of the Bank (if applicable solely to the Bank) or the Board of Directors (or Executive Committee in its place) of the Company (if not applicable solely to the Bank). (e) Participation of Subject Individual at Board Meetings. In any meeting of a Board of Directors (or of a committee thereof) at which action is to be taken on any matter governed by this Code of Ethics/Whistleblower Policy, the Subject Individual may make a presentation to the Board of Directors on the questions involved, except to the extent that the Board of Directors or committee determines otherwise. If the Subject Individual is precluded from participating in a meeting and wishes to express his or her views on the subject, a reasonable means shall be provided for his or her views to be communicated to each person attending the meeting. If the Subject Individual is a director, his or her presence may be counted if applicable for purposes of determining a quorum. However, he or she shall not be permitted to vote on, or to discuss in his or her capacity as director, any resolution, motion, decision or other action relating to the matter, and shall be absent from the meeting when the action is taken. (f) Guidance Regarding Code of Ethics/Whistleblower Policy. Directors, officers or employees who wish guidance regarding this Code of Ethics/Whistleblower Policy and its potential application to a particular transaction, circumstance or action shall first consult with the Appropriate Official. Each Appropriate Official shall make himself or herself available to respond to inquiries by any appropriate director, officer or employee. However, no interpretation or construction of this Code of Ethics/Whistleblower Policy that differs from DNB's actual or historic practice may be made without the express approval of the Board of Directors (or the Executive Committee in its place). (g) Periodic Review of Compliance with Code of Ethics/Whistleblower Policy. At least once during each calendar year, DNB's Audit Committee, together with each Appropriate Official, shall conduct a review of (i) compliance with this Code of Ethics/Whistleblower Policy by DNB's directors, officers and employees during the prior year, (ii) Authorizations and Waiver given with respect to this Code of Ethics/Whistleblower Policy during the prior year, (iii) all other matters disclosed in the past year to any Appropriate Officials in connection with this Code of Ethics/Whistleblower Policy, and (iv) any questions of interpretation of this Code of Ethics/Whistleblower Policy raised in the past year. As a result of such review, the Audit Committee shall (I) identify any actions, transactions or relationships not in conformity with this Code of Ethics/Whistleblower Policy and report thereon to the Board of Directors, together with recommendations for actions to remedy any nonconformities, and (II) review and recommend to the Board of Directors any changes to this Code of Ethics or any recommended communications to Bank directors, officers and employers to help clarify the meaning or operation of this Code of Ethics. (h) Confidentiality. Notwithstanding any provision of this Code of Ethics/Whistleblower Policy, to the extent that an Appropriate Official, the Committee or a Board of Directors may determine that confidentiality of any matter relating to this Code of Ethics/Whistleblower Policy is in the best interests of the Bank, any Appropriate Official, the Committee, the Board of Directors or a representative thereof shall be authorized to consult with the Bank's designated legal counsel (or, in the case of the Audit Committee if it shall deem it appropriate, independent counsel to the Audit Committee) for purposes of seeking advice regarding such matters or any compliance or liability risks related thereto, and thereupon such matters may thereafter be handled in accordance with the advice of legal counsel. (i) Use of Code of Ethics. This Code of Ethics/Whistleblower Policy is intended solely to facilitate DNB's internal management of its business and activities. Violations of this Code of Ethics/Whistleblower Policy may be the basis for disciplinary action by DNB, termination of a director's, officer's or employee's relationship with the Bank, or other regulatory or legal action that DNB may deem appropriate. However, neither violations nor alleged violations of this Code of Ethics/Whistleblower Policy, nor any actions or omissions of DNB, the Company, the Bank or any of their subsidiaries, or of any representatives of any of those entities in administering or enforcing this Code of Ethics/Whistleblower Policy or in identifying or responding to any matters raised under this Code of Ethics/Whistleblower Policy, shall be the basis of any liability of, or any claims against, DNB, the Bank or any of their subsidiaries, except solely to the extent required by applicable law. Without limiting the foregoing, neither the inclusion of any provision in this Code of Ethics/Whistleblower Policy, nor the determination that any matter may be a violation of this Code of Ethics/Whistleblower Policy shall, by such fact alone, be deemed material for securities disclosure purposes nor for any other purposes under applicable federal and state securities or other laws or regulations. WHISTLEBLOWER POLICY As employees of DNB Financial Corporation (the "Company") and its subsidiaries, including without limitation DNB First National Association (the "Bank") (collectively, "DNB"), we assume a duty to the Bank, its customers, depositors and Company shareholders. It is each employee's responsibility to act in a manner that will merit public trust and confidence. This duty extends to all activities - both professional and personal. Each employee of DNB is expected to direct his or her personal conduct in a manner that will bring credit to the organization and to avoid any action that will discredit the Bank. DNB is committed to being in compliance with all applicable securities laws and regulations, accounting standards, accounting controls and audit practices. Fair and accurate reporting of financial matters of the company is required. Fraud and misrepresentation of financial records is prohibited. With these considerations in mind, the purpose of this Complaint Procedure is to provide each and every employee with a means to report any wrongdoing by DNB's directors, officers and employees to the Audit Committee of DNB. Employees are encouraged to raise concerns they have regarding any suspected violations. These violations can be reported anonymously. All reports will be promptly investigated and the appropriate corrective action will be taken. Protection Employee conduct that is protected from retaliation includes: o Providing information to or otherwise assisting in an investigation by a federal regulatory or law enforcement agency, any member of Congress or committee of Congress, or any person with supervisory authority over the employee or who has the authority to investigate, discover, or terminate misconduct, where such information or investigation relates to any conduct of the employer that the employee reasonably believes constitutes a violation of specified federal fraud laws, any SEC rule or regulation, or any other federal law relating to fraud against shareholders. o Filing, testifying, participating in, or otherwise assisting in a proceeding relating to alleged violations of any of the federal fraud or securities laws described above. Procedure o Any employee wishing to file a complaint, may do so by e-mailing the Chairman of the Audit Committee at jameshthornton@worldnet.att.net . o If you prefer to remain anonymous, you may mail your complaint to James H. Thornton, 43 Cedar Hill Lane, Media, PA 19063. o The chairman of the audit committee will present the complaint to the full Audit Committee at the next schedule meeting. Any serious concerns that are revealed will be reviewed with the audit committee before implementation of any final corrective action. The chairman has the authority communicate with other committee members prior to the next scheduled meeting where warranted. o A complete investigation of the complaint will occur. The Audit Committee may use the Internal Audit Department staff for any investigations. The Chairman of the Audit Committee has the right to retain any advisers need to carry out the committee's duties. o All documentation relating to complaints will be maintained by the Audit Department for a period of five years. Conslusion This policy provides a means for each and every employee to identify concerns or suspicions of fraudulent activities or misrepresentation of financial records. The collective goal is to create a bank with greater sensitivity, awareness and commitment to high ethical standards. The Audit Committee vows to follow up promptly on any concerns raised. Only through such regular and concerted actions will a culture of the highest ethical behavior becom e a way of life and create an environment in which the employees of DNB do not fear voicing opposition to questionable practices. DNB Financial Corporation DNB First, National Association Code of Ethics/Whistleblower Policy Acknowledgment I have received a copy of the Revised Code of Ethics/Whistleblower Policy dated February 23. 2005 for DNB Financial Corporation and DNB First National Association and their subsidiaries, and I certify that: 1. I have read and understand the Code of Ethics/Whistleblower Policy. 2. I have complied with and will continue to comply with all of the requirements of the Code of EthicsWhistleblower Policy, and I have nothing to disclose as required by the Policy except as follows: 3. I am not engaged in any outside employment except as follows: 4. Neither I nor any member of my immediate family is engaged in any activity which may reasonably be deemed a conflict of interest as defined in the Bank's Code of Ethics/Whistleblower Policy except as follows: ----------------------------------- -------------------- Director/Officer/Employee Signature Date -------------------------------------- -------------------- Director/Officer/Employee - Print Name Department/Location EX-99 4 ex99-3.txt EXHIBIT 99.3 Exhibit 99.3 DNB Financial Corporation [GRAPHIC OMMITTED] For further information, please contact: Bruce Moroney CFO/ Executive Vice President 484-359-3153 FOR IMMEDIATE RELEASE ================================================================================ DNB Financial Corporation Declares a $0.13 Cash Dividend (February 23, 2005 -- Downingtown, PA) DNB Financial Corporation, parent of DNB First, National Association, today announced that its Board of Directors declared a cash dividend of $0.13 per share for the first quarter of 2005 to shareholders of record on March 10, 2005. The cash dividend will be paid on March 20, 2005. DNB Financial Corporation is a bank holding company whose bank subsidiary, DNB First, is a commercial bank and a member of the FDIC. The Bank, headquartered in Downingtown, Chester County, Pennsylvania, has nine (9) full service offices. Through DNB Advisors, DNB First provides wealth management and trust services to individuals and businesses throughout Chester County. The Bank and its subsidiary, DNB Financial Services, Inc., make available certain nondepository products and services, such as securities brokerage, mutual funds, life insurance and annuities. Customers may also visit us on our website at http://www.dnbfirst.com. Inquiries regarding the purchase of DNB Financial Corporation stock may be made through the market makers listed on our website at http://www.dnbfirst.com. 4 Brandywine Avenue o Downingtown, PA 19335-0904 o (610) 269-1040 End of Filing -----END PRIVACY-ENHANCED MESSAGE-----