Exhibit 3
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STOCK OPTION AGREEMENT
(Non-Qualified Option - Immediate Vesting - Restricted Stock)
THIS AGREEMENT GRANTS A NON-QUALIFIED STOCK OPTION
RESALE OF STOCK ISSUED ON EXERCISE OF THIS OPTION BY DIRECTORS AND CERTAIN
SENIOR EXECUTIVE OFFICERS WILL BE RESTRICTED BY APPLICABLE SECURITIES LAWS
Dear _______________________________ ("Grantee"):
In view of your substantial contributions toward the achievement of the business
goals and objectives of DNB Financial Corporation (the "Corporation") and DNB
First, National Association (the "Bank") and the expectation of your future
contributions, the Board of Directors of the Corporation is pleased to award you
an option to purchase shares of the Common Stock of the Corporation pursuant to
the 1995 Stock Option Plan of DNB Financial Corporation (As amended and
restated, effective as of April 27, 2004) (the "Plan"). This letter will serve
as the stock option agreement between you and the Corporation. The option
awarded to you is subject to the following terms.
1. NUMBER OF SHARES: You are awarded an option to purchase a total of ______
shares of the Common Stock of the Corporation, subject to the terms, conditions
and restrictions set forth in this Agreement and the Plan.
2. SECURITIES LAW RESTRICTIONS ON SHARES OWNED BY DIRECTORS AND CERTAIN OFFICERS
OF THE CORPORATION: If you are an "affiliate" of the Corporation, your resale of
the Common Stock you receive on exercise of an Option will be subject to resale
restrictions under applicable securities laws. A person who is an "affiliate" of
the Corporation may not resell shares of Common Stock received by such employee
upon exercise of Options under the Plan, except pursuant to an effective
registration statement under the Securities Act of 1933 (the "Securities Act")
or in accordance with Rule 144 promulgated under the Securities Act or another
exemption available under the Securities Act. For purposes of the Securities
Act, an employee will be considered to be an "affiliate" of the Corporation if
such employee directly or indirectly controls the Corporation. In addition,
under Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"),
if you are a director or one of certain types of "officer" of the Corporation
identified in SEC regulations under Section 16(b), you may be liable to the
Corporation for profit you are deemed to realize if you make certain types of
purchases and certain types of sales of the Common Stock within a period of less
than six months of each other. You should consult with legal counsel as to your
status as an "affiliate" of the Corporation and the applicability of Section
16(b) of the Exchange Act to you.
3. TYPE OF OPTION: The option awarded to you is a Non-Qualified Option as that
term is defined in the Plan.
4. EXERCISE PRICE: The shares may be purchased upon your exercise of this option
for the price of $____ per share
5. DATE OF GRANT OF AWARD: The Grant Date of the award of this option is _____,
200_, which is also the date of this Agreement.
6. STATED EXPIRATION DATE: Unless earlier terminated as explained below, the
option awarded to you expires (with respect to any number of shares subject to
this option not previously exercised) on the 10th anniversary of the Grant Date
stated above. This is the Stated Expiration Date.
7. DATE OPTION BECOMES EXERCISEABLE; LOSS OF OPTION IN CERTAIN CIRCUMSTANCES:
The stock option awarded to you is exerciseable at any time after the Grant Date
stated above. The stock option remains exerciseable by you until the expiration
of the option in accordance with the terms of this Agreement and the terms of
the Plan.
8. EXERCISE OF OPTION: You may exercise the option awarded to you from time to
time as provided above by delivering to the Corporation all of the following:
Rev. 4-18-2005
(a) Written notice of the exercise marked to the attention of the Chief
Financial Officer specifying the number of whole shares in respect of which you
are exercising the option.
(b) Payment of the exercise price for such shares in any of the
following forms: (i) cash, (ii) certified check payable to the order of the
Corporation, (iii) shares of Common Stock of the Corporation already owned by
you, (iv) shares of Common Stock of the Corporation you are entitled to receive
as a result of stock option exercises that you are entitled to make for such
purpose, but only if those options are "in the money," or (v) any combination of
the foregoing.
(c) Payment of any federal, state and local withholding taxes required
in respect of such exercise in any combination of the forms of payment described
in (b) above.
Shares of Common Stock of the Corporation may only be applied against
the exercise price or to pay any federal, state or local withholding taxes to
the extent consistent with any restrictions applicable to such shares. If shares
of Common Stock of the Corporation are to be applied in whole or partial payment
of the exercise price or any withholding taxes, they shall be applied at their
fair market value (as determined under the Plan) on the Exercise Date.
Upon receipt of the documents and payments listed above, the
Corporation will issue you a certificate for the number of shares with respect
to which you have exercised the option.
9. EXERCISE DATE: The date on which the Corporation receives the documents
specified above in complete and otherwise acceptable form and the payments
specified above will be treated as the Exercise Date with respect to your
exercise of the stock option.
10. NON-ASSIGNABILITY OF OPTION: Except as provided by the Plan, the option
awarded to you is exerciseable only by you. The option may not be transferred,
assigned, pledged as security or hypothecated in any other way and shall not be
subject to execution, attachment or similar process even if you agree with
someone else that it will be, except that if you die while still employed with
the Corporation or the Bank, your estate or the person who acquires the right to
exercise the Stock Option upon your death by bequest or inheritance may exercise
your option. Upon any attempt by you to transfer, assign, pledge, hypothecate or
otherwise dispose of this option or of any portion thereof or upon the levy of
any execution, attachment or similar process on this option or on any portion
thereof, the option awarded to you will immediately expire with respect to the
number of shares not exercised prior to such event.
11. RIGHTS IN SHARES SUBJECT TO OPTION: You will not be treated as a holder of
any of the shares subject to this option or of any rights of a holder of such
shares unless and until the shares are issued to you as evidenced by stock
certificates.
12. EFFECT ON EMPLOYMENT: This letter is not an employment agreement or service
contract. Therefore, none of the rights awarded to you by this letter affect, in
any way, your employment or service relationship with the Corporation or the
Bank.
13. TERMINATION OF EMPLOYMENT OR SERVICE: Except as otherwise provided in the
Plan or this Agreement, upon termination of your employment with the Corporation
or the Bank, if applicable, and your separation from service as a Director of
the Corporation and the Bank, if applicable, the unexercised portion of this
option will terminate according to the following terms:
(a) If you terminate or separate on account of death or disability or
you terminate on account of retirement which has been approved by the
Corporation, your option will terminate on the Stated Expiration Date described
above.
(b) If the termination of your employment or separation from service
as a Director is a "Termination for Cause" as defined in the Plan, your option
will terminate automatically with respect to any shares not previously
exercised, effective immediately as of your termination or separation.
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(c) If you terminate or separate by your own act, your option will
terminate at the close of business on the earlier of the Stated Expiration Date
described above or on the ninetieth (90th) day following the date of your
termination or separation.
(d) If you terminate or separate for any other reason, your option
will terminate at the close of business on the earlier of the Stated Expiration
Date described above or on the third (3rd) anniversary of the date of your
termination or separation.
14. OPTION AWARDED SUBJECT TO PLAN PROVISIONS: The Plan provisions take
precedence over the provisions of this letter agreement, Therefore, in the case
of any inconsistency between any provision of this letter agreement and any
provision of the Plan in effect on the Grant Date, the provision of the Plan
will control.
15. COUNTERPARTS: This letter agreement may be executed in one or more
counterparts each of which shall be deemed an original and all of which shall be
deemed one and the same agreement.
IN WITNESS WHEREOF, the Corporation and the Grantee have duly executed this
Agreement as of the Grant Date.
DNB FINANCIAL CORPORATION Grantee:
By: ________________________________ ___________________________(L.S.)
Print Name: __________________________ (Signature)
Title: _______________________________ Print Name: _____________________
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1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION
(As amended and restated, effective as of April 27, 2004)
NOTICE OF STOCK OPTION EXERCISE
To: DNB Financial Corporation Attention: Chief Financial Officer
From: _______________________________ Date: ____________________, 20____
(Grantee Name)
_______________________________ Xxx.Xx. (______) _______ - ___________
(Address)
_______________________________
_______________________________
Date of Grant: _______________, _______ Number of Shares Exercised: _____________
Exercise Price Per Share: $ _________.____ Total Exercise Price: $ __________. ____
PLUS:
Federal Income Tax Withholding $ __________. ____
(Contact Payroll to Determine)
F.I.C.A. Tax Withholding $ __________. ____
(Contact Payroll to Determine)
Pennsylvania Personal Income Tax Withholding $ __________. ____
(Contact Payroll to Determine))
Local Earned Income Tax Withholding $ __________. ____
(Contact Payroll to Determine)
Subtotal of withholding taxes $ __________. ____
(Contact Payroll to Determine)
Total Remittance $ __________. ____
_____ Check this box if you want to use all or part of any shares exercised
that are "in the money" to pay exercise price or withholding taxes.
(Attach certified check for net remittance due or attach properly endorsed
certificates of stock with equal value)
[Please note that final remittance due is subject to adjustment pending
determination of applicable stock value]
Please accept the above notice of exercise and issue share certificates as
required.
__________________________________
(signature of person authorized to exercise)
Rev. 4-18-2005
