Document:

EX-4.2

 

SECOND AMENDMENT

TO CREDIT AGREEMENT

     This Second Amendment to Credit Agreement (“Amendment”), is entered into as of April
24, 2007, by and between LaSalle Bank National Association (the “Lender”) and Telvent
Traffic North America Inc., a corporation organized and existing under the laws of the State of
Texas (the “Borrower”).

WITNESSETH:

     WHEREAS, the Borrower and the Lender have entered into a Credit Agreement, dated as of May 31,
2006 (as amended, extended, modified or supplemented from time to time, the “Credit
Agreement”);

     WHEREAS, the Borrower and the Lender desire to amend certain provisions of the Credit
Agreement to increase the Commitment to Twenty Five Million Dollars ($25,000,000), as set forth
under the terms and conditions stated herein;

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

1. Definitions. Capitalized terms used herein but not defined herein shall have the
meaning ascribed thereto in the Credit Agreement, as amended hereby.

2. Amendment.

     (a) Section 2.01 of the Credit Agreement is hereby amended to delete the reference to the
number “Twenty Million Dollars ($20,000,000)” appearing on the second and third lines thereof and
to replace such reference with the number “Twenty Five Million Dollars ($25,000,000).”

     (b) Exhibit B to the Credit Agreement and is hereby replaced by Exhibit B attached hereto and
made a part hereof. After giving effect to this Amendment, all references in the Credit Agreement
to the “Note” or terms of like import, shall mean and be references to the Note appearing as
Exhibit B attached hereto and made a part hereof.

3. Conditions. This Amendment shall not become effective until:

     (a) This Amendment shall have been executed and delivered by the Borrower and the Lender;

     (b) The Note in the form attached hereto is executed and delivered by the Borrower;

     (c) The Guarantor has executed an Affirmation of Guaranty substantially in the form of Annex 1
to this Amendment;

     (d) Resolutions; Incumbency.

 

 

          (1) Copies of the resolutions, powers of attorney or other analogous action of the board of
directors, members or other governing body of the Borrower and the Guarantor authorizing the
transactions contemplated hereby, certified as of the date hereof by the Secretary, Assistant
Secretary or other analogous official of the Borrower and the Guarantor, respectively; and

          (2) A certificate of the Secretary , Assistant Secretary or other analogous official of the
Borrower and the Guarantor, certifying the names and true signatures of the officers or other
persons of the Borrower and the Guarantor authorized to execute, deliver and perform, as
applicable, this Amendment and the Note;

     (e) Organization Documents; Good Standing. Each of the following documents:

          (1) The articles or certificate of incorporation or certificate of formation or other
constitutive documents and the bylaws or limited liability company agreements of the Borrower as in
effect on the date hereof, certified by the Secretary, Assistant Secretary, or other authorized
officer or person of the Borrower as of the Closing Date; and

          (2) A good standing certificate for the Borrower from the Secretary of State (or similar,
applicable Governmental Authority) of its state of incorporation or formation as of a recent date;

     (f) Legal Opinions. The opinions of [Jones Day], counsel to the Borrower and [Jones
Day], counsel to the Guarantor addressed to the Lender, in form and substance satisfactory to the
Lender and its counsel;

     (g) Certificate. A certificate signed by a Responsible Officer, dated as of the
Closing Date, stating that:

          (1) the representations and warranties contained in Article V of the Credit Agreement
are true and correct on and as of such date, as though made on and as of such date;

          (2) no Default or Event of Default exists or would result from the execution, delivery and
performance of this Amendment; and

          (3) no event or circumstance that has resulted or could reasonably be expected to result in a
Material Adverse Effect;

     (h) Such other approvals, opinions, documents, financial statements or materials as the Lender
may reasonably request.

4. Representations and Warranties. The Borrower represents and warrants to the Lender
(which representations and warranties shall become part of the representations and warranties made
by the Borrower under the Credit Agreement) that:

     (a) The execution, delivery and performance of this Amendment has been duly authorized by all
necessary company action and will not require any consent or approval of its

– 2 –

 

shareholders, violate in any material respect any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in effect having
applicability to it or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected;

     (b) No consent, approval or authorization of or declaration or filing with any governmental
authority or any non-governmental person or entity, including without limitation, any creditor or
partner of the Borrower is required on the part of the Borrower in connection with the execution,
delivery and performance of this Amendment or the transactions contemplated hereby and the
execution, delivery and performance of this Amendment will not violate the terms of any contract or
agreement to which the Borrower is a party;

     (c) The Credit Agreement, as amended pursuant to this Amendment, is the legal, valid and
binding obligation of the Borrower, enforceable against it in accordance with the terms thereof;

     (d) After giving effect to the Amendment contained herein and effective pursuant hereto, the
representations and warranties contained in Article V of the Credit Agreement (other than those
made solely in reference to an express date) are true and correct on and as of the Effective Date
hereof in the same force and effect as if made on and as of such Effective Date; and

     (e) After giving effect to this Amendment no Event of Default has occurred or exists under the
Credit Agreement as of the date hereof.

5. Expenses. The Borrower agrees to pay and save the Lender harmless from liability for
the payment of all costs and expenses arising in connection with this Amendment, including the
reasonable fees and expenses of Baker & McKenzie LLP, counsel to the Lender, in connection with the
preparation and review of this Amendment and any related documents.

6. Governing Law. This Amendment shall be governed by and construed in accordance with the
internal laws of the State of Illinois.

7. Counterparts; Facsimile. This Amendment may be executed in one or more counterparts,
each of which together shall constitute the same agreement. One or more counterparts of this
Amendment may be delivered by facsimile, with the intention that such delivery shall have the same
effect as delivery of an original counterpart thereof.

– 3 –

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered as of the day and year first above written.

	 	 	 	 	 
	LASALLE BANK NATIONAL ASSOCIATION  
	 
	 	 	 	 
	By:
	 	/s/ Amy Kehoe	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:
	 	First Vice President	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	TELVENT TRAFFIC NORTH AMERICA INC.
	 
	 	 	 	 
	By:
	 	/s/ Cameron Demcoe	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:
	 	Corporate Secretary	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	By:
	 	/s/ Larry Stack	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:
	 	Vice President	 	 
	 

	 	 	 	 

– 4 –

 

EXHIBIT B

	 	 	 
	AMENDED AND RESTATED NOTE
	 

$25,000,000

April __, 2007

Chicago, Illinois

     The undersigned, for value received, promises to pay to the order of LaSalle Bank National
Association (the “Lender”) at its offices in Chicago, Illinois, the aggregate unpaid amount
of all Loans made to the undersigned by the Lender pursuant to the Credit Agreement referred to
below (as shown on the schedule attached hereto (and any continuation thereof) or in the records of
the Lender), such principal amount to be payable on the date set forth in the Credit Agreement.

     The undersigned further each jointly and severally promises to pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such Loan is paid in full, payable
at the rate(s) and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.

     This Note evidences indebtedness incurred under, and is subject to the terms and provisions of
the Credit Agreement, dated as of May 31, 2006 (as amended or otherwise modified from time to time,
the “Credit Agreement”; terms not otherwise defined herein are used herein as defined in
the Credit Agreement), between the undersigned and the Lender to which such Credit Agreement
reference is hereby made for a statement of the terms and provisions under which this Note may or
must be paid prior to its due date or its due date accelerated.

     This Note replaces and amends and restates in their entirety, all of the terms and conditions
contained in that certain Note, dated May 31, 2006, in the original principal amount of Twenty
Million Dollars ($20,000,000) payable by the Borrower to the order of the Lender.

     This Note is made under and governed by the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State.

	 	 	 
	TELVENT TRAFFIC NORTH AMERICA INC.
	 
	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Title:
	 	 
	 

	 	 

 

 

Schedule attached to Note

dated April __, 2007

of TELVENT TRAFFIC NORTH AMERICA INC.

payable to the order of LaSalle Bank National Association.

	 	 	 	 	 	 	 	 	 
	Date and
Amount of Loan or
of Conversion from
another type of Loan

	 	Date and Amount of
Repayment or of
Conversion into
another type of Loan
	 	Interest Period/
Maturity Date
	 	Unpaid

Principal Balance
	 	Notation Made by
	 

	 	 
	 	 
	 	 
	 	 

1. BASE RATE LOANS

 

 

 

 

 

 

 

 

2. LIBOR LOANS

 

 

 

 

 

 

 

 

 

 

ANNEX 1

AFFIRMATION

OF GUARANTY

     Telvent GIT, S.A., a company organized under the laws of the Kingdom of Spain (the
“Guarantor”) hereby acknowledges, agrees and affirms the following for the benefit of
LaSalle Bank National Association (the “Lender”) in its capacity as the Lender under the
Credit Agreement (the “Credit Agreement”), dated May 31, 2006, by and between the Lender
and Telvent Traffic North America Inc., a corporation organized and existing under the laws of the
State of Texas (the “Borrower”). Capitalized terms appearing herein but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.

     WHEREAS, pursuant to the Guaranty, dated as of May 31, 2006, entered into by the Guarantor in
favor of the Lender (the “Guaranty”), the Guarantor unconditionally guarantees the
“Guaranteed Obligations” as defined therein, which include, among other things, certain obligations
of the Borrower arising under or described in the Credit Agreement;

     WHEREAS, the Guarantor is familiar with the terms and conditions contained in the Credit
Agreement;

     WHEREAS, pursuant to that certain Second Amendment to Credit Agreement (the
“Amendment”) the Lender has agreed to increase its Commitment from Twenty Million Dollars
($20,000,000) to Twenty Five Million Dollars ($25,000,000), from which increase the undersigned
derives a financial benefit and accordingly the Guarantor desires to reaffirm its obligations under
the Guaranty after giving effect to the Amendment.

     NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Guarantor and the Bank agree as follows:

     1. Reaffirmation After giving effect to the Amendment and the increase to the
Commitment contemplated thereby, all of the Guaranteed Obligations under and within the meaning of
the Guaranty are hereby unconditionally ratified and affirmed and remain in full force and effect,
enforceable against the undersigned in accordance with their terms.

 

 

[The remainder of this page has been left blank intentionally.]

 

 

     2. Miscellaneous This Affirmation shall be governed by and construed in accordance
with the internal laws of the State of Illinois. Signatures to this Affirmation may be delivered
in counterparts, with the intention that all such counterparts, when taken together, shall
constitute one and the same instrument. One or more executed counterparts of this Affirmation may
be delivered by facsimile or by e-mail, with the intention that such delivery shall have the same
effect as delivery of an original counterpart thereof.

     Executed as of April ___, 2007

	 	 	 
	TELVENT GIT, S.A.
	 
	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Its:
	 	 
	 

	 	 
	 
	 	 
	 
	 	 
	By:
	 	 
	 

	 	 
	 
	 	 
	Its:Exhibit 10.r

    Exhibit
      10r

    

    

     

    

    

    

    DNB
      FINANCIAL CORPORATION

    SUPPLEMENTAL
      EXECUTIVE RETIREMENT PLAN

    FOR

    WILLIAM
      S. LATOFF

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF
      CONTENTS

     

    
      
        	 	 PAGE
	
                ARTICLE
                  I. PURPOSE

              	
                1

                 

              
	
                ARTICLE
                  II. DEFINITIONS 

              	
                1

                 

              
	
                ARTICLE
                  III. ALLOCATION OF DEFERRED COMPENSATION 

              	
                3

                 

              
	
                ARTICLE
                  IV. VESTING 

              	
                3

                 

              
	
                ARTICLE
                  V. ENTITLEMENT TO DEFERRED COMPENSATION 

              	
                4

                 

              
	
                ARTICLE
                  VI. FUNDING OF DEFERRED COMPENSATION 

              	
                6

                 

              
	
                ARTICLE
                  VII. DESIGNATION OF BENEFICIARIES 

              	
                6

                 

              
	
                ARTICLE
                  VIII. ADMINISTRATION 

              	
                7

                 

              
	
                ARTICLE
                  IX. AMENDMENT 

              	
                8

                 

              
	
                ARTICLE
                  X. MISCELLANEOUS 

              	
                8

                 

              
	
                APPENDIX
                  A DESIGNATION OF BENEFICIARY 

              	10 

      

    

    
      
        
          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ARTICLE
      I

    PURPOSE

    

    1.01
       The
      primary purpose of this Plan is to provide a supplemental retirement benefit
      to
      the Executive in order to competitively compensate him for being elected
      full-time Chairman and Chief Executive Officer of the Company in 2004 and,
      as a
      result, foregoing opportunities to accrue substantial retirement income in
      connection with his other business interests. The Deferred Compensation shall
      be
      earned by the Executive and accrued by the Company on a defined contribution
      basis. 

    

    

    ARTICLE
      II

    DEFINITIONS

    

    2.01
       "Account"
      means a bookkeeping reserve account established in the books of the Company
      for
      the Executive.

    

    2.02 “Accrued
      Benefit” means, at any point in time, the Executive’s vested interest, as
      determined pursuant to Article IV, below, in the Account resulting from all
      thirteen (13) allocations pursuant to Section 3.01, below, plus or minus
      earnings or losses pursuant to Section 3.02, below, and after taking into
      account any previous payments pursuant to Article V, below. 

    

    2.03
       “Bank”
      means DNB First, National Association.

    

    2.04 "Beneficiary"
      means the beneficiary or beneficiaries designated by the Executive to receive
      the amounts, if any, payable under the Plan upon his or her death, pursuant
      to
      Article VII, below.

     

    2.05
       "Board
      of
      Directors" means the Board of Directors of the Company.

     

                   
      2.06 “Cause”
      means 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 the Company’s or
      Bank’s affairs pursuant to a notice or other action by any regulatory agency
      having jurisdiction over the Company or the Bank, or willful violation of any
      law, rule or regulation or final cease-and-desist order which in the reasonable
      judgment of the Board of Directors will probably cause substantial economic
      damages to the Company, willful or intentional breach or neglect by Executive
      of
      his duties, or material breach of any material provision of any agreement
      between the Company or the Bank and the Executive pertaining to his employment.
      For purposes of this definition of “Cause,” no act, or failure to act on
      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 Company; provided that any act or
      omission to act by Executive in reliance upon an approving opinion of counsel
      to
      the Company 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, Company shall have the burden of proof with regard
      to the acts or omission of Executive and the standards prevailing in the banking
      industry. 

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    2.07 “Change
      of Control” means any one or more of the following, with respect to the Company
      or the Bank: 

    

    (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 Company or Bank or any
      “person” who on the date hereof is a director of officer of 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, 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.
      

    

    2.08 “Code”
      means the Internal Revenue Code of 1986, as amended.

    

    2.09 "Company"
      means DNB Financial Corporation.

    

    2.10
       "Deferred
      Compensation" means the supplemental compensation and earnings thereon
      credited to the Account.

    

    2.11
       "Effective
      Date" means December 20, 2006.

     

    2.12
       "Executive"
      means William S. Latoff.

    

    2.13
       “Good
      Reason” means (a) the assignment to Executive of any duties inconsistent with
      Executive’s positions, duties, responsibilities, titles or offices with the
      Company or the Bank as in effect immediately prior to a Change in Control,
      (b)
      any removal of Executive from, or any failure to re-elect Executive to, any
      of
      such positions, except in connection with a termination or suspension of
      employment for Cause, disability, death or retirement, (c) a reduction by the
      Company or the Bank in Executive’s base annual salary, bonus and/or benefits as
      in effect immediately prior to a Change in Control or as the same may be
      increased from time to time thereafter, or the failure to grant periodic
      increases in the Executive’s base annual salary on a basis at least
      substantially comparable to the lowest periodic increase granted to other
      officers of the Company having the title of executive vice president or above,
      (iv) any purported termination of Executive’s employment with the Company or the
      Bank when Cause does not exist, or (v) a relocation of Executive’s workplace
      outside of Chester County. 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.14 “Payment
      Date” means January 1, 2019. 

    

    2.15 "Plan"
      means this DNB Financial Corporation Supplemental Executive Retirement Plan,
      as
      the same may be amended from time to time.

    

    2.16
       "Trustee"
      means the individual or corporation appointed by the Company to serve as trustee
      of a trust established by the Company pursuant to Article VI,
      below.

    

    2.17
       "Valuation
      Date" means the last day of each calendar month on which the New York Stock
      Exchange is open for business.

    

    

    ARTICLE
      III 

    ALLOCATION
      OF DEFERRED COMPENSATION

    

    3.01
       On
      or
      about the Effective Date, but not later than December 31, 2006, and on or about
      each one-year anniversary of the Effective Date during the years 2007 through
      2018, but not later than December 31 of such year, the Company shall credit
      Deferred Compensation to the Account in the amount of seventy thousand dollars
      ($70,000). 

    

    3.02
       As
      of
      each Valuation Date, the Company shall credit the Account with earnings or
      losses on the balance of the Account since the preceding Valuation Date in
      accordance with the performance of the investments selected pursuant to Section
      6.04, below. 

     

    ARTICLE
      IV

    VESTING

    

    4.01
       For
      purposes of this Plan, the Executive shall have a vested interest in the balance
      of the Account of forty percent (40%) as of the Effective Date. Thereafter,
      the
      Executive’s vested interest in the balance of the Account shall be determined in
      accordance with the following schedule, provided that the Executive remains
      employed, continuously, by the Company or the Bank through the dates
      indicated:

    

    
      	
              Date

            	
              Vested
                Percentage

            
	
              December
                15, 2007

            	
              60%

            
	
              December
                15, 2008

            	
              80%

            
	
              December
                15, 2009

            	
              100%

            

    

    

    4.02 Notwithstanding
      Section 4.01, above, (a) the Executive’s vested interest in the Account upon and
      at all times following his termination by the Company or the Bank for reasons
      other than Cause shall be one hundred percent (100%); (b) the Executive’s vested
      interest in the Account upon and at all times following his termination of
      employment with the Company or the Bank for Good Reason following a Change
      in
      Control shall be one hundred percent (100%); and (c) the Executive’s vested
      interest in the Account upon and at all times following his termination of
      employment with the Company or the Bank for Good Reason following the signing
      of
      a letter of intent or a formal acquisition or merger agreement between the
      Company or the Bank, of the one part, and a third party which contemplates
      a
      transaction that would result in a Change in Control, but only if such letter
      of
      intent or agreement, or the transaction contemplated thereby, has not been
      canceled or terminated at the time of his termination for Good
      Reason.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    

    ARTICLE
      V

    ENTITLEMENT
      TO DEFERRED COMPENSATION

    

    5.01  
      Commencing
      on the Payment Date, or as soon as practicable thereafter, the Executive’s
      Accrued Benefit shall be paid to him in ten (10) annual installments. Payment
      shall commence on the Payment Date whether or not the Executive is still
      employed by the Company or the Bank as of the Payment Date. 

    

    5.02  
      At
      least
      one year prior to the Payment Date, the Executive may make an election to defer
      receipt of the installment payments set forth in Section 5.01, and instead
      receive payment of his Accrued Benefit in two or more, but not more than ten
      (10), annual installments commencing as of a date specified by the Executive,
      or
      in a single lump sum as of a date specified by the Executive, provided that
      in
      either case such date is at least five years following the Payment Date. Any
      such election shall be in writing and delivered to the Chief Financial Officer
      of the Company at least one year prior to the Payment Date.

    

    5.03 
       In
      the
      event of the death of the Executive prior to the Payment Date, the Executive’s
      Accrued Benefit shall be paid to his Beneficiary in either a single lump sum,
      in
      annual installments over a period of years not exceeding ten (10), or by the
      purchase and distribution of a commercial annuity contract, as of or commencing
      on the Payment Date, or as soon as practicable thereafter, as directed by the
      Beneficiary in a written election delivered to the Chief Financial Officer
      of
      the Company. Such written election shall be made no later than the last date
      permitted by Section 409A of the Code and the regulations thereunder. If no
      such
      written election is made in a timely manner, or if no such election is permitted
      by Section 409A of the Code and the regulations thereunder, the Executive’s
      Accrued Benefit shall be paid to the Beneficiary in a single lump sum as of
      the
      Payment Date, or as soon as practicable thereafter. 

    

    5.04  
      If
      payments hereunder are to be made in two or more installments, the amount of
      each installment, other than the final installment, shall be equal to the
      Accrued Benefit as of the last Valuation Date preceding payment, divided by
      the
      number of payments remaining in the installment period, including the current
      payment. The amount of the final installment shall be equal to the Accrued
      Benefit as of the last Valuation Date preceding the date of payment. Any amount
      remaining upon the death of the Executive shall be paid to his Beneficiary
      in
      either a single lump sum, in annual installments over a period of years not
      exceeding ten (10), or by the purchase and distribution of a commercial annuity
      contract, as of or commencing on the Payment Date, or as soon as practicable
      thereafter, as directed by the Beneficiary in a written election delivered
      to
      the Chief Financial Officer of the Company. Such written election shall be
      made
      no later than the last date permitted by Section 409A of the Code and the
      regulations thereunder. If no such written election is made in a timely manner,
      or if no such election is permitted by Section 409A of the Code and the
      regulations thereunder, the Executive’s Accrued Benefit shall be paid to the
      Beneficiary in a single lump sum as of the Payment Date, or as soon as
      practicable thereafter.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    5.05  
      All
      amounts payable pursuant to this Plan shall be subject to all applicable
      Federal, state and local tax withholding requirements, and other charges and
      assessments imposed by law.

     

    5.06  
      Notwithstanding
      the foregoing provisions of this Article V, or the vesting rules of Article
      IV,
      if the Executive’s employment with the Company or the Bank is terminated for
      Cause prior to the commencement of payments, he shall forfeit the Accrued
      Benefit, and no payments to him or his Beneficiary shall be made under this
      Plan. If the Executive’s employment with the Company or the Bank is terminated
      for Cause after the commencement of payments, he shall forfeit the Accrued
      Benefit, and no further payments to him or his Beneficiary shall be made under
      this Plan.

    

    5.07 (a) If,
      as a
      result of payments provided for under or pursuant to this Plan, together with
      all other payments in the nature of compensation provided to or for the benefit
      of the Executive under any other plans or agreements in connection with a Change
      in Control, the Executive becomes subject to excise taxes under Section 4999
      of
      the Code, then, in addition to any other benefits provided under or pursuant
      to
      this Plan or otherwise, the Company shall pay to the Executive at the time
      any
      such payments are made under or pursuant to this or other plans or agreements,
      an amount equal to the amount of such excise taxes (the “Parachute Tax
      Reimbursement”). In addition, the Company shall “gross up” such Parachute Tax
      Reimbursement by paying to the Executive at the same time an additional amount
      equal to the aggregate amount of any additional taxes (whether income taxes,
      excise taxes, special taxes, employment taxes or otherwise, and whether Federal,
      state or local) that are or will be payable by the Executive as a result of
      the
      Parachute Tax Reimbursement being paid or payable to the Executive and as a
      result of such additional amounts paid or payable to the Executive pursuant
      to
      this sentence, such that after payment of such additional taxes the Executive
      shall have been paid on a net, after-tax basis an amount equal to the Parachute
      Tax Reimbursement. The amount of the gross-up described in the immediately
      preceding sentence shall be computed on the assumption that the Executive shall
      be subject to each applicable tax at the highest marginal rate of such tax.
      

    

    (b) The
      amount of any Parachute Tax Reimbursement and any gross-up shall be determined
      by a registered public accounting firm selected by the Compensation Committee
      of
      the Board of Directors of the Company, whose determination, absent manifest
      error, shall be treated as conclusive and binding absent a binding determination
      by a governmental authority that a greater or lesser amount of taxes is payable
      by the Executive. 

    

    (c) If
      the
      Parachute Tax Reimbursement and a gross-up are provided for the Executive
      pursuant to one or more other plans or agreements in addition to this Plan,
      they
      shall be provided only once. 

    
      
         

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    ARTICLE
      VI

    FUNDING
      OF DEFERRED COMPENSATION

    

    6.01
       Except
      as
      provided by the terms of the Trust established pursuant to Section 6.02, below,
      neither the Executive nor the Beneficiary shall have any right, title, or
      interest in or to any investments which the Company may make to aid it in
      meeting its obligations hereunder. Such investments, whether held in trust
      or
      otherwise, shall be unrestricted corporate assets.

    

    6.02
       The
      Company shall establish the Trust for the purpose of funding the Deferred
      Compensation provided hereunder. The Trust shall include such terms,
      restrictions and limitations as necessary to ensure that it will be treated
      as a
      "grantor trust" within the meaning of subpart E, part I, subchapter J, chapter
      I, subtitle A of the Code, with respect to the Company. Moreover, the Trust
      shall be evidenced by an agreement substantially similar to the form of the
      model trust agreement set forth in Internal Revenue Service Revenue Procedure
      92-64, including any modification to such Revenue Procedure, and include
      provisions required in such model trust agreement that all assets of the trust
      shall be subject to the claims of creditors of the Company in the event of
      its
      insolvency. Any assets of the Trust remaining after the obligations to the
      Executive and his Beneficiary have been satisfied shall be paid to the Company.
      

    

    6.03 On
      each
      date an amount is credited to the Account pursuant to Section 3.01, above,
      the
      Company shall contribute such amount to the Trust. 

    

    6.04 The
      Company shall direct the Trustee of the Trust to invest the assets of the Trust
      in accordance with the investment directions of the Executive, or, after the
      Executive’s death, the Compensation Committee of the Board of Directors. The
      Executive shall communicate his investment selections, and any changes thereto,
      in writing to the Company, and the Company shall direct the Trustee to implement
      such investment selections or changes thereto as soon as practicable thereafter.
      Neither the Company, the Compensation Committee of the Board of Directors,
      the
      Trustee, nor their respective employees and agents shall be liable for any
      losses attributable to the Executive’s investment selections or changes thereto,
      or a reasonable delay in implementation thereof, or the investment selections
      made by the Compensation Committee of the Board of Directors following the
      Executive’s death. 

    

    6.05 Notwithstanding
      any provision of the Trust to the contrary, all expenses of the Trust, and
      any
      taxes that may be levied against the Trust, shall be paid by the Company, other
      than taxes required to be withheld from payments of Trust assets to the
      Executive or his Beneficiary. In the event that any Trust assets are used to
      pay
      expenses or taxes of the Trust, the Company shall reimburse the Trust within
      five business days of such payment. 

    

    

    ARTICLE
      VII

    DESIGNATION
      OF BENEFICIARIES

    

    7.01
       The
      Executive shall file with the Company a written designation in the form attached
      hereto as Appendix A of one or more persons as Beneficiary to receive the
      amount, if any, payable under the Plan upon his death. The Executive may, from
      time to time, revoke or change his Beneficiary designation by filing a new
      designation with the Company. The last such designation received by the Company
      shall be controlling, provided, however, that no designation, change or
      revocation thereof, shall be effective unless received by the Company prior
      to
      the Executive’s death. 

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    7.02
       If
      no
      such Beneficiary designation is in effect at the time of the Executive’s death,
      or if no designated Beneficiary survives the Executive, the payment of the
      amount, if any, payable under the Plan upon his or her death shall be made
      to
      his or her surviving spouse; if no surviving spouse, to the Executive’s
      surviving children equally; if no surviving children, to the Executive’s
      surviving grandchildren equally; if no surviving grandchildren, to the
      Executive’s estate.

    

    ARTICLE
      VIII

    ADMINISTRATION

    

    8.01
       The
      Company shall have the discretionary authority to determine eligibility for
      payments under the Plan and to construe, interpret and administer the Plan,
      and
      shall do so in a manner that is consistent with the requirements and limitations
      of Section 409A of the Code. 

     

    8.02 The
      Executive or, in the event of the Executive’s death, the Executive’s
      Beneficiary, may file a written claim for payment hereunder with the Company.
      In
      the event of a denial of any payment due to or requested by the Executive or
      Beneficiary (the “claimant”), the Company will give the claimant written
      notification containing specific reasons for the denial. The written
      notification will contain specific reference to the pertinent provisions of
      this
      Agreement on which the denial of the claim is based. In addition, it will
      contain a description of any other material or information necessary for the
      claimant to perfect a claim, and an explanation of why such material or
      information is necessary. The notification will provide further appropriate
      information as to the steps to be taken if the claimant wishes to submit the
      claim for review and the time limits applicable thereto, and a statement of
      the
      claimant’s right to bring a civil action under Section 502(a) of the Employee
      Retirement Income Security Act of 1974, as amended. This written notification
      will be given to a claimant within ninety (90) days after receipt of the claim
      by the Company unless special circumstances require an extension of time for
      processing the claim, in which case the Company shall provide written notice
      of
      the extension to the claimant and the reasons therefore, and the date by which
      the Company expects to make its determination with respect to the claim. In
      no
      event shall such extension exceed 90 days.

     

    8.03 In
      the
      event of a denial of a claim for benefits, the claimant or a duly authorized
      representative will be permitted to submit issues and comments in writing to
      the
      Company and to submit documents, records and other information relating to
      the
      claim for benefits. The claimant or a duly authorized representative shall
      also
      be provided, upon request and free of charge, reasonable access to, and copies
      of, all documents, records, and other information relevant to the claimant’s
      claim for benefits. In addition, the claimant or a duly authorized
      representative may make a written request for a full and fair review of the
      claim and its denial by the Company that takes into account all comments,
      documents, records and other information submitted by the claimant, without
      regard to whether such information was submitted or considered in the initial
      benefits determination; provided, however, that such written request is received
      by the Company (or its delegate) within sixty (60) days after receipt by the
      claimant of written notification of the denial. The sixty (60) day requirement
      may be waived by the Company in appropriate cases.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    8.04 A
      decision on review of a claim for benefits will be rendered by the Company
      within sixty (60) days after the receipt of the request. Under special
      circumstances, an extension (up to an additional 60 days) can be granted for
      processing the decision. Notice of this extension must be provided in writing
      to
      the claimant prior to the expiration of the initial sixty-day period. In no
      event will the decision be rendered more than one hundred twenty (120) days
      after the initial request for review. Any decision by the Company will be
      furnished to the claimant in writing and will set forth the specific reasons
      for
      the decision and the specific provisions on which the decision is based. The
      claimant or a duly authorized representative shall also be provided, upon
      request and free of charge, reasonable access to, and copies of, all documents,
      records, and other information relevant to the claimant’s claim for benefits.

     

    

    ARTICLE
      IX

    AMENDMENT
      

    

    9.01
       Except
      as
      provided in Section 9.02, the Company may amend the Plan only with the express,
      written consent of the Executive or, after his death, the
      Beneficiary.

    

    9.02 The
      Company may amend the Plan at any time to the extent necessary to comply with
      any requirement or limitation set forth in Section 409A of the Code or the
      regulations relating thereto.

     

    

    ARTICLE
      X

    MISCELLANEOUS

    

    10.01
       Nothing
      contained in the Plan shall give the Executive the right to be retained in
      the
      employment of the Company or the Bank or affect the right of either party to
      terminate the Executive’s services. The adoption of the Plan shall not
      constitute an employment contract between the Company and
      Executive.

    

    10.02
       If
      the
      Company shall find that any person to whom any amount is payable under the
      Plan
      is unable to care for his or her affairs because of illness or accident, or
      is a
      minor, the Company may direct that any amount to which such person is entitled
      be paid to his or her spouse, a child, a relative, an institution maintaining
      or
      having custody of such person, or any other person deemed by the Company to
      be a
      proper recipient on behalf of such person otherwise entitled to payment. Any
      such payment shall be a complete discharge of the liability of the Plan and
      the
      Company therefor.

    

    10.03
       Except
      insofar as may otherwise be required by law, no amount payable at any time
      under
      the Plan shall be subject in any manner to alienation by anticipation, sale,
      transfer, assignment, bankruptcy, pledge, attachment, charge, encumbrance or
      garnishment by creditors of the Executive or the Beneficiary nor be subject
      in
      any manner to the debts or liabilities of any person,
      and any attempt to do so alienate or subject any such amount, whether presently
      or thereafter payable, shall be void.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    10.04
       It
      is the
      intention of the Company that the Plan shall be unfunded for Federal income
      tax
      purposes and for purposes of the Employee Retirement Income Security Act of
      1974, as amended. 

    

    10.05 All
      rights under this Plan shall be governed by and construed in accordance with
      the
      laws of the Commonwealth of Pennsylvania, except to the extent such laws are
      superseded by the laws of the United States. 

    

    IN
      WITNESS WHEREOF, the Company has caused this Plan to be executed by its
authorized
      officers as of this 20th
      day of
      December, 2006. 

    

    
      	 	 
	
              ATTEST:
                

            	
              DNB
                FINANCIAL CORPORATION

            
	 	 
	 	 
	 	 
	
              __________________________

            	
              By:_________________________

            

    

    
      
         

         

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    DNB
      FINANCIAL CORPORATION

    SUPPLEMENTAL
      EXECUTIVE RETIREMENT PLAN

    FOR

    WILLIAM
      S. LATOFF

    

    APPENDIX
      A· 

    

    DESIGNATION
      OF BENEFICIARY

    

    Pursuant
      to the above-referenced Supplemental Executive Retirement Plan (“Plan”), I,
      William S. Latoff, hereby designate the following person(s) or entity(ies)
      as
      beneficiary(ies) of any and all amounts which shall be payable pursuant to
      the
      Plan by reason of or following my death and revoke all such prior beneficiary
      designations:

     

    
      
        	
                Primary
                  Beneficiary I

              	
                Primary
                  Beneficiary II (optional)

                 

              
	
                Name:

                 

              	
                Name:

                 

              
	
                Address:
                  

                 

              	 
	 	
                Address:

                 

              
	 	
                 

                 

              
	
                SSN/EIN:
                  

                 

              	
                SSN/EIN:

                 

              
	
                Relationship:
                  Spouse

                 

              	
                Relationship:

                 

              
	
                Percentage:
                  100%

                 

              	
                Percentage:

                 

              
	 	
                 

                 

              
	
                Contingent
                  Beneficiary I

              	
                Contingent
                  Beneficiary II (optional)

                 

              
	
                Name:
                  

                 

              	
                Name:
                  

                 

              
	
                Address:
                  

                 

              	
                Address:
                  

                 

              
	 	
                 

                 

              
	
                SSN/EIN:
                  

                 

              	
                SSN/EIN:
                  

                 

              
	
                Relationship:
                  Daughter

                 

              	
                Relationship:
                  

                 

              
	
                Percentage:
                  100%

              	
                Percentage:

              
	 	 
	 	 
	 	 

                _____________________
                  12/20/2006

                (signature)   (date)

              

      
________________

    
      
        · This
          form
          should be revised if more than two Primary Beneficiaries or more than two
          Contingent Beneficiaries are to be designated.

         

         

          10

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