DCB FINANCIAL CORP

In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows (Topic 230)” which FASB believes clarifies guidance on how certain transactions are classified within the statement of cash flows.  The standard addresses a number of cash flow presentation items including  a) debt prepayment and extinguishment, b) contingent consideration payments made after a business combination, c) proceeds from the settlement of insurance claims, corporate owned life insurance policies and BOLI policies, d) distributions received from equity method investees, e) classification of beneficial interest received in a securitization transaction and cash receipts from beneficial interest in securitized trade receivables and f) separately identifiable cash flows and application of the predominance principle.  ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017 with early adoption permitted.   Since ASU 2016-15 applies to the classification of cash flows, no impact is anticipated on the Company’s financial position or results of operations; however, the Company is evaluating the effect, if any, on its statement of cash flows and its financial statement disclosures.

Vicki J. Lewis was appointed Lead Independent Director of the Company in February 2016. Previously, she was Chair of the Board of Directors of the Company from 2010 to February 2016. Since 2014 she has served as the President and CEO of CRH Health Care, Inc., a hospital system. From 2010 to 2014, she was the President responsible for two hospitals in the Aurora Health Care system, an integrated healthcare delivery company. She also served as Vice President, OhioHealth (Grady Memorial and Marion General Hospitals) from 1982 to 2010. Ms. Lewis has a wealth of experience in the executive leadership and operations of acute care hospitals and related entities, including physician practices. Her experience includes the development of medical staff leaders, compliance and policy formation through her decision-making, problem-solving and communication skills. She is a long-time resident of Delaware County. The Board has benefited from Ms. Lewis’s expertise in leadership, business operations and performance improvement.

Each participant is entitled to withdraw the balance of his or her account upon retirement after reaching age 62. Upon termination of employment prior to age 62 for any reason other than termination for “cause,” or involuntary termination following a change in control of the Company, the participant is entitled to withdraw the vested portion of his or her deferral account. Upon termination of employment due to the participant’s disability, the participant is entitled to withdraw the vested portion of his or her deferral account. Upon termination of employment because of death, the participant’s beneficiary is entitled to withdraw the vested portion of the participant’s deferral account. Upon “involuntary” termination within 12 months following a change in control of the Company, including a reduction in base salary or material reduction in benefits, the participant may withdraw the balance of his or her deferral account, providing that to the extent any benefit would create an excise tax under the excess parachute rules of Section 280G of the Internal Revenue Code, the benefit paid under the Deferred Compensation Plan will be reduced so as not to be an “excess parachute payment” as defined by Section 280G. Upon “Termination for Cause” as defined in the Plan, the participant will not be entitled to withdraw any amount in excess of the participant’s deferrals.

Upon the termination of the executive without cause or the voluntary termination by the executive with good reason within twenty-four (24) months following a “change of control,” the executive will receive a lump sum payment equivalent to a multiple of the average annual cash compensation amount paid to the executive during the three (3) full taxable years preceding the change of control. The multiple is three (3) times such average annual amount in the case of Mr. Seiffert and two (2) times the average annual amount in the case of Mr. Mohr. In addition, under such circumstances, each executive will also receive a lump sum payment equal to a multiple of the Company’s annual cost of providing health, life and long-term disability coverages and other fringe benefits equal to three (3) times such amount in the case of Mr. Seiffert and equal to two (2) times such amount in the case of Mr. Mohr. Further, if there is a change of control, then all forms of equity-based compensation, including unexpired stock options and unvested restricted stock, shall accelerate and become fully vested and, in the case of options, exercisable. In the event that any amounts payable under the Seiffert Employment Agreement or the Mohr Employment Agreement would be nondeductible to the Company or the Bank by reason of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then such amounts shall be reduced to the extent necessary that such payments will no longer be ineligible for deduction by reason of Section 280G of the Code.

Change of Control Agreement with Mr. Roberts

Under the change of control agreement, upon the termination of Mr. Roberts’s employment other than for “cause” or voluntary termination by Mr. Roberts as a result of a “constructive termination,” Mr. Roberts will receive a lump sum payment equivalent to 100% of his annual base salary in effect at the date of termination. In addition, all of Mr. Roberts’s unvested stock options and restricted stock shall accelerate and become fully vested and, in the case of options, fully exercisable. Further, Mr. Roberts shall be entitled to be reimbursed for his share of COBRA premiums for health care coverage until the earlier of (i) the date that he is no longer eligible to receive continuation coverage pursuant to COBRA, (ii) twenty-four (24) months following termination of his employment, or (iii) such shorter period of time until he obtains new employment offering health insurance coverage. In the event that any amounts payable under the change of control agreement would be nondeductible to the Company or the Bank by reason of Section 280G of the Code, then such amounts shall be reduced to the extent necessary that such payments will no longer be ineligible for deduction by reason of Section 280G of the Code.