8-K

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)   November 25, 2008

First Keystone Financial, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania	000-25328		23-2576479
(State or other jurisdiction	(Commission File Number)		(IRS Employer
of incorporation)			Identification No.)
22 West State Street, Media, Pennsylvania				19063
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code   (610) 565-6210

Not Applicable
(Former name, former address and former fiscal year, 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 (see General Instruction A.2 below):
[  ]	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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(a)           Not applicable.

(b)           Not applicable.

(c)           Not applicable.

(d)           Not applicable.

(e)           On November 25, 2008, certain amendments to each of the following agreements and plans were approved by the Board of Directors of First Keystone Financial, Inc. (the "Company") and/or in certain cases, First Keystone Bank, its wholly owned subsidiary.

· Amended and Restated Agreement between the Company and Carol Walsh;

· Amended and Restated Agreement between the Bank and Carol Walsh;

· Amended and Restated Transition, Consulting, Noncompetition and Retirement Agreement by and between the Company, the Bank and Donald S. Guthrie;

· Amended and Restated 1995 Stock Option Plan;

· Amended and Restated 1998 Stock Option Plan; and

· Amended and Restated 1995 Recognition and Retention Plan and Trust Agreement.

The purpose of the amendments was to make changes necessary to ensure that such agreements and plans comply with the final regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended. The Amended and Restated Agreements between Ms. Walsh and each of the Company and the Bank (the “Agreements”) are subject to the non-objection of the Office of Thrift Supervision (the “OTS”) and the concurrence therewith of the Federal Deposit Insurance Corporation (the “FDIC”) under the provisions of the supervisory agreements between the OTS and each of the Company and the Bank, each dated February 13, 2006 (the “Supervisory Agreements”).  The Agreements, as amended and restated, provide for reduced severance benefits as long as the Bank and/or the Company are subject to the Supervisory Agreements or are deemed to be in troubled condition. The agreements have been submitted to the OTS and the FDIC requesting such non-objection and concurrence.

The foregoing description is qualified in its entirety by reference to the agreements, copies of which are attached as Exhibits 10.1 through 10.6 to this Current Report on Form 8-K and incorporated herein by reference.

(f)           Not applicable.

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Item 9.01           Financial Statements and Exhibits

(a)           Not applicable.

(b)           Not applicable.

(c)           Not applicable.

(d)           Exhibits

The following exhibits are included herewith.

	Exhibit Number	Description
10.1		Form of Amended and Restated Agreement between the Company and Carol Walsh
10.2		Form of Amended and Restated Agreement between the Bank and Carol Walsh
10.3		Amended and Restated Transition, Consulting, Noncompetition and Retirement Agreement by and between the Company, the Bank and Donald S. Guthrie
10.4		Amended and Restated 1995 Stock Option Plan
10.5		Amended and Restated 1998 Stock Option Plan
10.6		Amended and Restated 1995 Recognition and Retention Plan and Trust Agreement

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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 thereunto duly authorized.

	FIRST KEYSTONE FINANCIAL, INC.
Date:  December 1, 2008	By:	/s/Hugh J. Garchinsky
		Hugh J. Garchinsky
		Chief Financial Officer

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INDEX TO EXHIBITS

	Exhibit Number	Description
10.1		Form of Amended and Restated Agreement between the Company and Carol Walsh
10.2		Form of Amended and Restated Agreement between the Bank and Carol Walsh
10.3		Amended and Restated Transition, Consulting, Noncompetition and Retirement Agreement by and between the Company, the Bank and Donald S. Guthrie
10.4		Amended and Restated 1995 Stock Option Plan
10.5		Amended and Restated 1998 Stock Option Plan
10.6		Amended and Restated 1995 Recognition and Retention Plan and Trust Agreement

EX-10.1

Exhibit 10.1

FIRST KEYSTONE FINANCIAL, INC.

AMENDED AND RESTATED AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT(the “Agreement”), between First Keystone Financial, Inc. (the “Corporation”), a Pennsylvania corporation, and Carol Walsh (the “Executive”), is hereby amended and restated effective as of December 1, 2008, provided that the effectiveness of this Agreement is subject to and conditioned upon the non-objection of the Office of Thrift Supervision (the “OTS”) as set forth below.

WHEREAS, the Executive is presently an officer and Corporate Secretary of the Corporation and First Keystone Bank (the “Savings Bank”) (together, the “Employers”), pursuant to an employment agreement between the Corporation and the Executive originally dated as of December 1, 2004 (the “Prior Agreement”);

WHEREAS, the Corporation entered into a Supervisory Agreement with the OTS dated as of February 13, 2006 (the “Supervisory Agreement”), which generally precludes the Corporation from making or agreeing to make any “golden parachute payments” as defined in 12 U.S.C. Section 1828(k) and 12 C.F.R. Part 359, except as may be permitted by the OTS and the preceding statutory authority;

WHEREAS, the Corporation previously authorized a renewal of the Prior Agreement subject to and conditioned upon the receipt of non-objection from the OTS, which non-objection has been requested;

WHEREAS, the Corporation wishes to amend and restate the Prior Agreement in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), with this Agreement to supersede the Prior Agreement in its entirety, subject to and conditioned upon the receipt of non-objection from the OTS in accordance with the Supervisory Agreement;

WHEREAS, the Employers desire to assure themselves of the continued availability of the Executive’s services as provided in this Agreement; and

WHEREAS, the Executive is willing to serve the Employers on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereby agree as follows:

1.           Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

(a)          Annual Compensation. The Executive’s “Annual Compensation” for purposes of this Agreement shall be deemed to mean the highest level of base salary paid to the Executive by the Corporation during any of the three calendar years ending immediately prior to the calendar year in which the Date of Termination occurs.

(b)           Cause. Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

(c)           Change in Control.  “Change in Control” shall mean a change in the ownership of the Corporation or the Savings Bank, a change in the effective control of the Corporation or the Savings Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Savings Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

(d)           Code.  Code shall mean the Internal Revenue Code of 1986, as amended.

(e)           Date of Termination. “Date of Termination” shall mean (i) if the Executive’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if the Executive’s employment is terminated for any other reason, the date specified in such Notice of Termination.

(f)            Disability. “Disability” shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Savings Bank.

(g)           Good Reason.  “Good Reason” means the occurrence of any of the following events:

(i)any material breach of this Agreement by the Corporation, including without limitation any of the following: (A) a material diminution in the Executive’s base compensation, (B) a material diminution in the Executive’s authority, duties or responsibilities, or (C) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report, or

(ii)any material change in the geographic location at which the Executive must perform her services under this Agreement;

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Corporation within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Corporation shall thereafter have the right to remedy the condition within thirty (30) days of the date the Corporation received the written notice from the Executive.  If the Corporation remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Corporation does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

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(h)           Notice of Termination. Any purported termination of the Executive’s employment by the Corporation for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, including without limitation for Good Reason, shall be communicated by a written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) days nor more than ninety (90) days after such Notice of Termination is given, except any termination of the Executive’s employment for Cause shall be effective immediately, and (iv) is given in the manner specified in Section 7 hereof.

(i)           Retirement.  “Retirement” shall mean voluntary termination by the Executive in accordance with the Employers’ retirement policies, including early retirement, generally applicable to their salaried employees.

2.           Benefits Upon Termination. If the Executive’s employment by the Corporation shall be terminated subsequent to a Change in Control by (i) the Corporation other than for Cause, Retirement or as a result of the Executive’s death or Disability, or (ii) the Executive for Good Reason, then the Corporation or the Savings Bank shall, subject to the provisions of Sections 2(d) and 3 hereof, as applicable:

(a)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to two (2) times the Executive’s Annual Compensation;

(b)           maintain and provide for a period ending at the earlier of (i) two (2) years after the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Corporation or any successors pursuant to this Section 2(b) shall be payable at such times and in such amounts (except that the Corporation shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Corporation, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Corporation in any taxable year shall not affect the amount of insurance premiums required to be paid by the Corporation in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Corporation shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Corporation as of the Date of Termination; and

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(c)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Corporation of providing benefits to the Executive for a period of twenty-four (24) months pursuant to any other employee benefit plans, programs or arrangements offered by the Corporation in which the Executive was entitled to participate immediately prior to the Date of Termination (other than retirement plans or stock compensation plans of the Corporation), with the projected cost to the Corporation to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs.

(d) Notwithstanding the provisions of Sections 2(a), 2(b) and 2(c) hereof, in the event the Executive’s employment is terminated subsequent to a Change in Control by (i) the Corporation other than for Cause, Retirement or as a result of the Executive’s death or (ii) the Executive for Good Reason and at the time of such termination (A) either of the supervisory agreements entered into by each of the Corporation and the Savings Bank with the OTS as of February 13, 2006 are still in effect or (B) either the Corporation or the Savings Bank are deemed to be in “troubled condition” as defined in 12 C.F.R. §563.555 (or any successor thereto) unless, with respect to clause (A) and/or (B), as applicable, prior to or in connection with the Executive’s termination subsequent to the Change in Control, the OTS, and, to the extent required, the FDIC, has approved or not objected to the payment of the severance and the provision of benefits as provided by Sections 2(a), 2(b) and 2(c), respectively, pursuant to the provisions of 12 C.F.R. Part 359, then the Employers, instead of providing Executive the benefits set forth in Sections 2(a), 2(b) and 2(c), shall, subject to the provisions of Section 3 hereof, if applicable:

(I)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to one (1) times the Executive’s Annual Compensation;

(II)           maintain and provide for a period ending at the earlier of (i) one (1) year after the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Corporation or any successors pursuant to this Section 2(d)(II) shall be payable at such times and in such amounts (except that the Corporation shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Corporation, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Corporation in any taxable year shall not affect the amount of insurance premiums required to be paid by the Corporation in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Corporation shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Corporation as of the Date of Termination; and

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(III)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Corporation of providing benefits to the Executive for a period of twelve (12) months pursuant to any other employee benefit plans, programs or arrangements offered by the Corporation in which the Executive was entitled to participate immediately prior to the Date of Termination (other than retirement plans or stock compensation plans of the Corporation), with the projected cost to the Corporation to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs.

3.           Payment of Additional Benefits under Certain Circumstances.

 (a)           If the payments and benefits pursuant to Section 2 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers (including, without limitation, the payments and benefits which the Executive would have the right to receive from the Savings Bank pursuant to Section 2 of the Agreement between the Savings Bank and the Executive dated as of the date hereof (the “Savings Bank Agreement”), before giving effect to any reduction in such amounts pursuant to the provisions of Section 3 of the Savings Bank Agreement), would constitute a “parachute payment” as defined in Section 280G(b)(2) of the Code (the “Initial Parachute Payment,” which includes the amounts paid pursuant to clause (A) below), then the Corporation shall pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the sum of the following:

(A)           the amount by which the payments and benefits that would have otherwise been paid by the Savings Bank to the Executive pursuant to Section 2 of the Savings Bank Agreement are reduced by the provisions of Section 3 of the Savings Bank Agreement;

(B)           twenty (20) percent (or such other percentage equal to the tax rate imposed by Section 4999 of the Code) of the amount by which the Initial Parachute Payment exceeds the Executive’s “base amount” from the Employers, as defined in Section 280G(b)(3) of the Code, with the difference between the Initial Parachute Payment and the Executive’s base amount being hereinafter referred to as the “Initial Excess Parachute Payment”; and

(C)           such additional amount (tax allowance) as may be necessary to compensate the Executive for the payment by the Executive of federal, state and local income and excise taxes on the payment provided under clause (B) above and on any payments under this clause (C).  In computing such tax allowance, the payment to be made under clause (B) above shall be multiplied by the “gross up percentage” (“GUP”).  The GUP shall be determined as follows:

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GUP =    Tax Rate

1 – Tax Rate

The Tax Rate for purposes of computing the GUP shall be the highest marginal federal, state and local income and employment-related tax rate (including Social Security and Medicare taxes), including any applicable excise tax rate, applicable to the Executive in the year in which the payment under clause (B) above is made and shall also reflect the phase out of deductions and the ability to deduct certain of such taxes.

(b)           Notwithstanding the foregoing, if it shall subsequently be determined in a final judicial determination or a final administrative settlement to which the Executive is a party that the actual excess parachute payment as defined in Section 280G(b)(1) of the Code is different from the Initial Excess Parachute Payment (such different amount being hereafter referred to as the “Final Excess Parachute Payment”), then the Corporation’s independent tax counsel shall determine the amount (the “Adjustment Amount”) which either the Executive must pay to the Corporation or the Corporation must pay to the Executive in order to put the Executive (or the Corporation, as the case may be) in the same position the Executive (or the Corporation, as the case may be) would have been if the Initial Excess Parachute Payment had been equal to the Final Excess Parachute Payment.  In determining the Adjustment Amount, the independent tax counsel shall take into account any and all taxes (including any penalties and interest) paid by or for the Executive or refunded to the Executive or for the Executive’s benefit.  As soon as practicable after the Adjustment Amount has been so determined, and in no event more than thirty (30) days after the Adjustment Amount has been determined, the Corporation shall pay the Adjustment Amount to the Executive or the Executive shall repay the Adjustment Amount to the Corporation, as the case may be.

(c)           In each calendar year that the Executive receives payments of benefits under this Section 3, the Executive shall report on her federal, state and local income tax returns such information as is consistent with the determination made by the independent tax counsel of the Corporation as described above.  The Corporation shall indemnify and hold the Executive harmless from any and all losses, costs and expenses (including without limitation, reasonable attorneys’ fees, interest, fines and penalties) which the Executive incurs as a result of so reporting such information.  The Executive shall promptly notify the Corporation in writing whenever the Executive receives notice of the institution of a judicial or administrative proceeding, formal or informal, in which the federal tax treatment under Section 4999 of the Code of any amount paid or payable under this Section 3 is being reviewed or is in dispute.  The Corporation shall assume control at its expense over all legal and accounting matters pertaining to such federal tax treatment (except to the extent necessary or appropriate for the Executive to resolve any such proceeding with respect to any matter unrelated to amounts paid or payable pursuant to this Section 3), and the Executive shall cooperate fully with the Corporation in any such proceeding.  The Executive shall not enter into any compromise or settlement or otherwise prejudice any rights the Corporation may have in connection therewith without the prior consent of the Corporation.

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(d)           Notwithstanding any other provision herein to the contrary, for as long as required by the Supervisory Agreement, if the Supervisory Agreement is still in effect as of the date of such termination, or if the Corporation is deemed “troubled” as such term is defined in 12 C.F.R. §563.555, the Corporation shall not make or agree to make any “golden parachute payments” (as such term is defined in 12 U.S.C. Section 1828(k) and 12 C.F.R. Part 359) pursuant to this Section 3 prior to such time as the Corporation has complied in all respects with the restrictions concerning the making of such payments that apply to the Corporation as set forth in 12 C.F.R. Part 359, and has received all required regulatory approvals or non-objections to make such payments.

4. Mitigation; Exclusivity of Benefits.

(a)           The Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise, nor shall the amount of any such benefits be reduced by any compensation earned by the Executive as a result of employment by another employer after the Date of Termination or otherwise, except as set forth in Section 2(b) above.

(b)           The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to the Executive upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

5.            Withholding.  All payments required to be made by the Corporation hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Corporation may reasonably determine should be withheld pursuant to any applicable law or regulation.

6.            Assignability. The Corporation may assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which the Corporation may hereafter merge or consolidate or to which the Corporation may transfer all or substantially all of its assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Corporation hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

7.           Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

To the Corporation:	President
	First Keystone Financial, Inc.
	22 West State Street
	Media, Pennsylvania 19063

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To the Executive:	Carol Walsh
	At the address last appearing on the
	personnel records of the Savings Bank

8.           Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer or officers as may be specifically designated by the Board of Directors of the Corporation to sign on its behalf.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  In addition, notwithstanding anything in this Agreement to the contrary, the Corporation may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.

9.         Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the Commonwealth of Pennsylvania.

10. Nature of Employment and Obligations.

(a)        Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Corporation and the Executive, and the Corporation may terminate the Executive’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

(b)        Nothing contained herein shall create or require the Corporation to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Corporation hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

11.       Term of Agreement. This Agreement shall terminate two (2) years after the date first written above.  Subject to the last sentence of this Section 11, on or prior to the first annual anniversary of the date first written above and each annual anniversary thereafter, the Board of Directors of the Corporation shall consider (with appropriate corporate documentation thereof, and after taking into account all relevant factors, including the Executive’s performance as an employee) renewal of the term of this Agreement for an additional one (1) year, and the term of this Agreement shall be so extended unless the Board of Directors of the Corporation does not approve such renewal and provides written notice to the Executive, or the Executive gives written notice to the Corporation, at least thirty (30) days prior to the date of any such anniversary, of such party’s election not to extend the term beyond its then scheduled expiration date; provided that, notwithstanding the foregoing to the contrary, this Agreement shall be automatically extended for an additional one (1) year upon a Change in Control.  Notwithstanding anything in this Agreement to the contrary, as long as the Corporation remains subject to the Supervisory Agreement or is deemed “troubled” as such term is defined in 12 C.F.R. §563.555 and for as long as required by the Supervisory Agreement, any renewal of this Agreement shall be subject to and conditioned upon the written approval or non-objection of the OTS and, if applicable, the Federal Deposit Insurance Corporation.

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12.           Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

13.           Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

14.           Changes in Statutes or Regulations.  If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

15.           Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

16.           Regulatory Prohibition. Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. §1828(k)) and 12 C.F.R. Part 359.

17.           Entire Agreement.  This Agreement embodies the entire agreement between the Corporation and the Executive with respect to the matters agreed to herein.  All prior agreements between the Corporation and the Executive with respect to the matters agreed to herein, including the Prior Agreement, are hereby superseded and shall have no force or effect.  Notwithstanding the foregoing, nothing contained in this Agreement shall affect the agreement of even date being entered into between the Savings Bank and the Executive.

[signature page follows]

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IN WITNESS WHEREOF, this Agreement has been executed effective as of the date first written above.

ATTEST:	FIRST KEYSTONE FINANCIAL, INC.
By: _______________________	By:   ___________________________
Name:  Hugh J. Garchinsky	Donald S. Guthrie
Title:  Chief Financial Officer	Chairman of the Board of Directors
	EXECUTIVE
	By:   ___________________________
	Carol Walsh, Individually

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EX-10.2

Exhibit 10.2

FIRST KEYSTONE BANK

AMENDED AND RESTATED AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT(the “Agreement”), between First Keystone Bank (the “Savings Bank”), a federally chartered savings bank, and Carol Walsh (the “Executive”), is hereby amended and restated effective as of December 1, 2008, provided that the effectiveness of this Agreement is subject to and conditioned upon the non-objection of the Office of Thrift Supervision (the “OTS”) as set forth below.

WHEREAS, the Executive is presently an officer and Corporate Secretary of First Keystone Financial, Inc. (the “Corporation”) and the Savings Bank (together, the “Employers”), pursuant to an employment agreement between the Savings Bank and the Executive originally dated as of December 1, 2004 (the “Prior Agreement”);

WHEREAS, the Savings Bank entered into a Supervisory Agreement with the OTS dated as of February 13, 2006 (the “Supervisory Agreement”), which generally precludes the Savings Bank from (i) entering into, renewing, extending or revising any arrangement related to compensation or benefits of any director or senior executive officer of the Savings Bank unless the Savings Bank first: (A) provides a minimum of 30 days’ advance written notice of the proposed transaction to the OTS, and (B) receives a written notice of non-objection from the OTS; and (ii) making or agreeing to make any “golden parachute payments” as defined in 12 U.S.C. Section 1828(k) and 12 C.F.R. Part 359, except as may be permitted by the OTS and the preceding statutory authority;

WHEREAS, the Savings Bank previously authorized a renewal of the Prior Agreement subject to and conditioned upon the receipt of non-objection from the OTS, which non-objection has been requested;

WHEREAS, the Savings Bank wishes to amend and restate the Prior Agreement in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), with this Agreement to supersede the Prior Agreement in its entirety, subject to and conditioned upon the receipt of non-objection from the OTS in accordance with the Supervisory Agreement;

WHEREAS, the Employers desire to assure themselves of the continued availability of the Executive’s services as provided in this Agreement; and

WHEREAS, the Executive is willing to serve the Employers on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereby agree as follows:

1.           Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

(a)           Annual Compensation. The Executive’s “Annual Compensation” for purposes of this Agreement shall be deemed to mean the highest level of base salary paid to the Executive by the Savings Bank or any subsidiary thereof during any of the three calendar years ending immediately prior to the calendar year in which the Date of Termination occurs.

(b)           Cause. Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

(c)           Change in Control.  “Change in Control” shall mean a change in the ownership of the Corporation or the Savings Bank, a change in the effective control of the Corporation or the Savings Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Savings Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

(d)           Code.  Code shall mean the Internal Revenue Code of 1986, as amended.

(e)           Date of Termination. “Date of Termination” shall mean (i) if the Executive’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if the Executive’s employment is terminated for any other reason, the date specified in such Notice of Termination.

(f)           Disability. “Disability” shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Savings Bank.

(g)           Good Reason.  “Good Reason” means the occurrence of any of the following events:

(i)           any material breach of this Agreement by the Savings Bank, including without limitation any of the following: (A) a material diminution in the Executive’s base compensation, (B) a material diminution in the Executive’s authority, duties or responsibilities, or (C) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report, or

(ii)           any material change in the geographic location at which the Executive must perform her services under this Agreement;

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provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Savings Bank within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Savings Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Savings Bank received the written notice from the Executive.  If the Savings Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Savings Bank does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(i)           Notice of Termination. Any purported termination of the Executive’s employment by the Savings Bank for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, including without limitation for Good Reason, shall be communicated by a written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) days nor more than ninety (90) days after such Notice of Termination is given, except any termination of the Executive’s employment for Cause shall be effective immediately, and (iv) is given in the manner specified in Section 7 hereof.

(j)           Retirement.  “Retirement” shall mean voluntary termination by the Executive in accordance with the Employers’ retirement policies, including early retirement, generally applicable to their salaried employees.

2.           Benefits Upon Termination. If the Executive’s employment by the Savings Bank shall be terminated subsequent to a Change in Control by (i) the Savings Bank other than for Cause, Retirement or as a result of the Executive’s death or Disability, or (ii) the Executive for Good Reason, then the Corporation or the Savings Bank shall, subject to the provisions of Sections 2(d) and 3 hereof, as applicable:

(a)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to two (2) times the Executive’s Annual Compensation; and

(b)           maintain and provide for a period ending at the earlier of (i) two (2) years after the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance, and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Savings Bank or any successors pursuant to this Section 2(b) shall be payable at such times and in such amounts (except that the Savings Bank shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Savings Bank, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Savings Bank in any taxable year shall not affect the amount of insurance premiums required to be paid by the Savings Bank in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Savings Bank shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Savings Bank as of the Date of Termination; and

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(c)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Savings Bank of providing benefits to the Executive for a period of twenty-four (24) months pursuant to any other employee benefit plans, programs or arrangements offered by the Savings Bank in which the Executive was entitled to participate immediately prior to the Date of Termination (other than retirement plans or stock compensation plans of the Savings Bank), with the projected cost to the Savings Bank to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs.

(d)           Notwithstanding the provisions of Sections 2(a), 2(b) and 2(c) hereof, in the event the Executive’s employment is terminated subsequent to a Change in Control by (i) the Savings Bank other than for Cause, Retirement or as a result of the Executive’s death or (ii) the Executive for Good Reason and at the time of such termination (A) either of the supervisory agreements entered into by each of the Corporation and the Savings Bank with the OTS as of February 13, 2006 are still in effect or (B) either the Corporation or the Savings Bank are deemed to be in “troubled condition” as defined in 12 C.F.R. §563.555 (or any successor thereto) unless, with respect to clause (A) and/or (B), as applicable, prior to or in connection with the Executive’s termination subsequent to the Change in Control, the OTS, and, to the extent required, the FDIC, has approved or not objected to the payment of the severance and the provision of benefits as provided by Sections 2(a), 2(b) and 2(c), respectively, pursuant to the provisions of 12 C.F.R. Part 359, then the Employers, instead of providing Executive the benefits set forth in Sections 2(a), 2(b) and 2(c), shall, subject to the provisions of Section 3 hereof, if applicable:

(I)           pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash severance amount equal to one (1) times the Executive’s Annual Compensation;

(II)           maintain and provide for a period ending at the earlier of (i) one (1) year after the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Savings Bank or any successors pursuant to this Section 2(d)(II) shall be payable at such times and in such amounts (except that the Savings Bank shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Savings Bank, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Savings Bank in any taxable year shall not affect the amount of insurance premiums required to be paid by the Savings Bank in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Savings Bank shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Savings Bank as of the Date of Termination; and

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(III)         pay to the Executive, in a lump sum within five (5) business days following the Date of Termination, a cash amount equal to the projected cost to the Savings Bank of providing benefits to the Executive for a period of twelve (12) months pursuant to any other employee benefit plans, programs or arrangements offered by the Savings Bank in which the Executive was entitled to participate immediately prior to the Date of Termination (other than retirement plans or stock compensation plans of the Savings Bank), with the projected cost to the Savings Bank to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs.

3.           Limitation of Benefits under Certain Circumstances.  If the payments and benefits pursuant to Section 2 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Savings Bank and the Corporation, would constitute a “parachute payment” under Section 280G of the Code, then the payments and benefits payable by the Savings Bank pursuant to Section 2 hereof shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits under Section 2 being non-deductible to the Savings Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  If the payments and benefits under Section 2 are required to be reduced, the cash severance shall be reduced first, followed by a reduction in the fringe benefits. The parties hereto agree that the payments and benefits payable pursuant to this Agreement to the Executive upon termination shall not exceed three times the Executive’s average taxable income from the Employers for the five calendar years preceding the year in which the Change in Control occurs, in accordance with the provisions of Section 310 of the OTS Examination Handbook.  The determination of any reduction in the payments and benefits to be made pursuant to Section 2 shall be based upon the opinion of independent tax counsel selected by the Savings Bank and paid for by the Savings Bank.  Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination, and may use such actuaries as such counsel deems necessary or advisable for the purpose.  Nothing contained in this Section 3 shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to Section 2 hereof, or a reduction in the payments and benefits specified in Section 2 below zero.

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4. Mitigation; Exclusivity of Benefits.

(a)           The Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise, nor shall the amount of any such benefits be reduced by any compensation earned by the Executive as a result of employment by another employer after the Date of Termination or otherwise, except as set forth in Section 2(b) above.

(b)           The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to the Executive upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

5.           Withholding.  All payments required to be made by the Savings Bank hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Savings Bank may reasonably determine should be withheld pursuant to any applicable law or regulation.

6.           Assignability. The Savings Bank may assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which the Savings Bank may hereafter merge or consolidate or to which the Savings Bank may transfer all or substantially all of its assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Savings Bank hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

7.           Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

To the Savings Bank:	President
	First Keystone Bank
	22 West State Street
	Media, Pennsylvania 19063

To the Executive:	Carol Walsh
	At the address last appearing on the personnel
	records of the Savings Bank

8.           Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer or officers as may be specifically designated by the Board of Directors of the Savings Bank to sign on its behalf.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  In addition, notwithstanding anything in this Agreement to the contrary, the Savings Bank may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.

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9.           Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the Commonwealth of Pennsylvania.

10. Nature of Employment and Obligations.

(a)          Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Savings Bank and the Executive, and the Savings Bank may terminate the Executive’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

(b)          Nothing contained herein shall create or require the Savings Bank to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Savings Bank hereunder, such right shall be no greater than the right of any unsecured general creditor of the Savings Bank.

11.          Term of Agreement. This Agreement shall terminate two (2) years after the date first written above.  Subject to the last sentence of this Section 11, on or prior to the first annual anniversary of the date first written above and each annual anniversary thereafter, the Board of Directors of the Savings Bank shall consider (with appropriate corporate documentation thereof, and after taking into account all relevant factors, including the Executive’s performance as an employee) renewal of the term of this Agreement for an additional one (1) year, and the term of this Agreement shall be so extended unless the Board of Directors of the Savings Bank does not approve such renewal and provides written notice to the Executive, or the Executive gives written notice to the Savings Bank, at least thirty (30) days prior to the date of any such anniversary, of such party’s election not to extend the term beyond its then scheduled expiration date; provided that, notwithstanding the foregoing to the contrary, this Agreement shall be automatically extended for an additional one (1) year upon a Change in Control.  Notwithstanding anything in this Agreement to the contrary, as long as the Savings Bank remains subject to the Supervisory Agreement or is deemed “troubled” as such term is defined in 12 C.F.R. §563.555 and for as long as required by the Supervisory Agreement, any renewal of this Agreement shall be subject to and conditioned upon the written approval or non-objection of the OTS and, if applicable, the Federal Deposit Insurance Corporation (the “FDIC”).

12.           Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

13.           Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

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14.           Changes in Statutes or Regulations.  If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

15.           Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

16.           Regulatory Prohibition. Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. §1828(k)) and 12 C.F.R. Part 359.

17.           Regulatory Actions.  The following provisions shall be applicable to the parties to the extent that they are required to be included in agreements between a savings association and its employees pursuant to Section 563.39(b) of the Regulations Applicable to all Savings Associations, 12 C.F.R. §563.39(b), or any successor thereto, and shall be controlling in the event of a conflict with any other provision of this Agreement.

(a)           If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Savings Bank’s affairs pursuant to notice served under Section 8(e)(3) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(3) and 1818(g)(1)), the Savings Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Savings Bank may, in its discretion: (i) pay the Executive all or part of the compensation withheld while its obligations under this Agreement were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(b)           If the Executive is removed from office and/or permanently prohibited from participating in the conduct of the Savings Bank’s affairs by an order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and (g)(1)), all obligations of the Savings Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the Executive and the Savings Bank as of the date of termination shall not be affected.

(c)           If the Savings Bank is in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C. §1813(x)(1)), all obligations under this Agreement shall terminate as of the date of default, but vested rights of the Executive and the Savings Bank as of the date of termination shall not be affected.

(d)           All obligations under this Agreement shall be terminated pursuant to 12 C.F.R. §563.39(b)(5), except to the extent that it is determined that continuation of the Agreement for the continued operation of the Savings Bank is necessary: (i) by the Director of the OTS, or his/her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Savings Bank under the authority contained in Section 13(c) of the FDIA (12 U.S.C. §1823(c)); or (ii) by the Director of the OTS, or his/her designee, at the time the Director or his/her designee approves a supervisory merger to resolve problems related to operation of the Savings Bank or when the Savings Bank is determined by the Director of the OTS to be in an unsafe or unsound condition, but vested rights of the Executive and the Savings Bank as of the date of termination shall not be affected.

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18.           Entire Agreement.  This Agreement embodies the entire agreement between the Savings Bank and the Executive with respect to the matters agreed to herein.  All prior agreements between the Savings Bank and the Executive with respect to the matters agreed to herein, including the Prior Agreement, are hereby superseded and shall have no force or effect.  Notwithstanding the foregoing, nothing contained in this Agreement shall affect the agreement of even date being entered into between the Corporation and the Executive.

[signature page follows]

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IN WITNESS WHEREOF, this Agreement has been executed effective as of the date first written above.

ATTEST:	FIRST KEYSTONE BANK
By:   _________________________	By:    _________________________________
Name: Hugh J. Garchinsky	Donald S. GuthrieCarol Walsh, Individually
Title:  Chief Financial Officer	Chairman of the Board of Directors
	EXECUTIVE
	By:    _________________________________
	Carol Walsh, Individually

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EX-10.3

Exhibit 10.3

FIRST KEYSTONE FINANCIAL, INC.

FIRST KEYSTONE BANK

AMENDED AND RESTATED

TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT

This Transition, Consulting, Noncompetition and Retirement Agreement (the “Agreement”) by and between First Keystone Financial, Inc. (the “Company”), First Keystone Bank (the “Bank”) and Donald S. Guthrie (the “Consultant”) is hereby amended and restated effective as of November 25, 2008.

WHEREAS, the Company and the Consultant were parties to an employment agreement dated as of December 1, 2004, pursuant to which the Consultant served as Chief Executive Officer of the Company (the “Company Employment Agreement”);

WHEREAS, the Bank and the Consultant were parties to an employment agreement dated as of December 1, 2004, pursuant to which the Consultant served as Chief Executive Officer of the Bank (the “Bank Employment Agreement”);

WHEREAS, the Consultant was a participant in the Supplemental Executive Retirement Plan adopted by the Bank effective March 31, 2004 (the “SERP”);

WHEREAS, the Company, the Bank and the Consultant entered into a Transition, Consulting, Noncompetition and Retirement Agreement dated as of March 23, 2005 (the “Prior Agreement”), which superseded the Company Employment Agreement, the Bank Employment Agreement and the SERP (collectively, the “Plans”), and by which the Consultant agreed to relinquish his rights under the Plans in exchange for the payments and benefits set forth in the Prior Agreement;

WHEREAS, the Consultant became the interim Chief Executive Officer of both the Company and the Bank effective as of August 15, 2008 and is currently serving in such capacity;

WHEREAS, when the Company and the Bank hire a new president and chief executive officer, the Consultant will relinquish his position as the interim Chief Executive Officer and will continue to provide Consulting Services for the remainder of the Consulting Period (as such terms are defined below); and

WHEREAS, the Company and the Bank desire to amend and restate the Prior Agreement in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and to reflect the Consultant’s current position as the interim Chief Executive Officer;

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows:

1.           Effective Date.  The “Effective Date” of the Agreement is May 1, 2005.

2.           Consulting Period.  The Company and the Bank hereby agree to engage the Consultant, and the Consultant hereby agrees to provide services to the Company and the Bank, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on April 30, 2010 (the “Consulting Period”).

3.           Consulting Services.

(a)          Duties.  During the Consulting Period, the Consultant shall report to the President of the Company and the Bank, except that during the time period the Consultant serves as the interim Chief Executive Officer of the Company and the Bank, the Consultant shall report directly to the Boards of Directors of the Company and the Bank.  During the Consulting Period, the Consultant shall provide his personal advice and counsel to the Company and the Bank regarding their operations, customer relationships, growth and expansion opportunities and other business matters that may arise in connection with the business and operations of the Company and its subsidiaries in the Commonwealth of Pennsylvania and as may be reasonably requested by the President of the Company and the Bank or his designee (or by the Boards of Directors of the Company and the Bank while the Consultant is serving as the interim Chief Executive Officer) from time to time (collectively, the “Consulting Services”).  Except as set forth below, the Consulting Services will include, without limitation, monthly meetings or teleconferences between the Consultant and the President of the Company and the Bank; efforts by the Consultant to enhance the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania, including without limitation meeting with existing and potential customers of the Company and its subsidiaries located in such state; attendance at certain public functions in the Commonwealth of Pennsylvania on behalf of the Company and its subsidiaries; attendance at meetings of the Board of Directors of the Company and the Bank to report on the business activities of the Company and its subsidiaries in the Commonwealth of Pennsylvania and attendance at certain functions of the Company and its subsidiaries.  During the time period that the Consultant serves as the interim Chief Executive Officer of the Company and the Bank, he shall manage the operations of the Company and the Bank, oversee the officers that report to him, oversee the implementation of the policies adopted by the Boards of Directors of the Company and the Bank, and perform such executive services for the Company and the Bank as may be consistent with his title of interim Chief Executive Officer.  Consulting Services may be provided in person, telephonically, electronically or by correspondence to the extent appropriate under the circumstances.

(b)           Geographic Location.  The Consultant shall provide the Consulting Services in the Commonwealth of Pennsylvania, including without limitation the market areas of the Company and the Bank.

(c)           Time Limitation.  Other than during the time period that the Consultant serves as the interim Chief Executive Officer of the Company and the Bank, the Consultant shall not be required to provide Consulting Services hereunder for more than 25 hours per week or 100 hours in any calendar month during the Consulting Period, with the maximum monthly hours being pro-rated for the first and last month of the Consulting Period.

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(d)           Directorship.  The Consultant was appointed as Chairman of the Board of Directors of the Bank as of the Effective Date.  The Consultant shall continue to serve as Chairman of the Board of Directors of the Company and of the Bank throughout the Consulting Period, provided that the Consultant continues to be a director in good standing during such period.  In addition to the compensation set forth in Section 4 hereof and any fees paid to directors of the Company and the Bank for attendance at meetings, the Consultant shall receive an annual fee of $15,000.00 for serving as Chairman of the Board of the Company and the Bank during the Consulting Period.

4.           Compensation.

(a)           Monthly Payments.  In consideration of the obligations and commitments of the Consultant under this Agreement, including but not limited to Sections 3 and 8 hereof, the Company and/or the Bank agrees to pay to the Consultant an amount equal to $12,500.00 per month on the first business day of each month during the Consulting Period, commencing May 1, 2005 through and including April 1, 2010 (the “Monthly Fee”).  No additional compensation shall be paid to the Consultant during the time period that he serves as the interim Chief Executive Officer of the Company and the Bank.  During the Consulting Period, the Consultant shall be treated as an independent contractor and shall not be deemed to be an employee of the Company or any affiliate or subsidiary of the Company.

(b)           Medical and Other Benefits. The Company and the Bank shall provide medical insurance for the benefit of the Consultant and his spouse during the Consulting Period, at no cost to the Consultant and his spouse, with the terms of such coverage being similar to the coverage provided by the Company and the Bank to their employees.  In addition, the Company and the Bank shall provide dental and long-term care insurance coverage for the benefit of the Consultant and his spouse during the Consulting Period, at no cost to the Consultant and his spouse, with the terms of such coverage being similar to the coverage provided by the Company and the Bank as of the Effective Date of this Agreement.  Any insurance premiums payable by the Company and the Bank pursuant to this Section 4(b) shall be payable at such times and in such amounts (except that the Company and the Bank shall also pay any employee portion of the premiums) as if the Consultant was still an employee of the Company and the Bank, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Company and the Bank in any taxable year shall not affect the amount of insurance premiums required to be paid by the Company and the Bank in any other taxable year; and provided further that if the Consultant’s participation in any group insurance plan is barred, the Company and the Bank shall either arrange to provide the Consultant with insurance benefits substantially similar to those which the Consultant was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following such bar for the then remaining period based on the annualized rate of premiums then being paid by the Company and the Bank.

(c)           Existing Stock Options.  The 9,750 vested stock options held by the Consultant as of the Effective Date of this Agreement to purchase shares of common stock of the Company shall remain outstanding and exercisable in accordance with their terms, and the Consultant had three months following the Effective Date to exercise his incentive stock options.

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(d)           Employee Benefit Plans.  The Consultant shall be entitled to receive his vested benefits under the Company=s Employee Stock Ownership Plan and the Bank=s 401(k) Profit Sharing Plan as of the Effective Date in accordance with the terms of such plans. As of the Effective Date, the Consultant shall no longer be entitled to participate in any of the employee benefit plans or programs offered by the Company, the Bank or any of their subsidiaries, and no additional benefits shall accrue or vest on behalf of the Consultant under such employee benefit plans or programs after the Effective Date, except as set forth in Sections 4(b) and 4(c) hereof.

(e)           Lump Sum Payment.  In recognition of the years of service that the Consultant provided to the Company and the Bank prior to the Effective Date and in satisfaction of the Consultant’s accrued and/or carried over but unused vacation leave, the Consultant acknowledges the receipt from the Company and/or the Bank prior to the Effective Date of a lump sum cash payment equal to $165,519.27.

(f)           Use of an Automobile.  During the Consulting Period, the Company and/or the Bank shall provide the Consultant with the continued use of the automobile that was provided for the Consultant’s use immediately prior to the Effective Date.  At the end of the Consulting Period, the Company and/or the Bank shall transfer title to the automobile to the Consultant for no additional consideration.

(g)           Expenses.  The Company and/or the Bank shall reimburse the Consultant or otherwise provide for or pay for all reasonable expenses incurred by the Consultant at the request of the Company and/or the Bank, including, but not by way of limitation, the costs of insurance, repair, maintenance and licensing of the automobile provided by Section 4(f) hereof, subject to such reasonable documentation as may be requested by the Company and/or the Bank.  If such expenses are paid in the first instance by the Consultant, the Company and/or the Bank shall reimburse the Consultant therefor upon receipt of such reasonable documentation as may be requested by the Company.  Such reimbursements or payments shall be made promptly by the Company or the Bank and, in any event, no later than March 15 of the year immediately following the year in which such expenses were incurred.

(h)           Proration.  The Consultant’s compensation, benefits and expenses shall be paid by the Company and the Bank in the same proportion as the time and services actually expended by the Consultant on behalf of the Company and the Bank.

5.           Termination of Consulting Services.

(a)           Death or Disability.  The Consultant’s services shall terminate automatically upon the Consultant’s death during the Consulting Period.  If the Consultant becomes Disabled during the Consulting Period (pursuant to the definition of Disability set forth below), the Company and/or the Bank may give to the Consultant written notice in accordance with Section 15 of this Agreement of its intention to terminate the Consultant’s services.  In such event, the Consultant’s services with the Company and the Bank shall terminate effective on the 60th day after receipt of such notice by the Consultant (the “Disability Effective Date”), provided that, within the 60 days after such receipt, the Consultant shall not have returned to performance of the Consultant’s duties.  For purposes of this Agreement, “Disability” shall mean the Consultant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as determined by a physician selected by the Company or its insurers and reasonably acceptable to the Consultant or the Consultant’s legal representative.

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(b)        Cause.  The Company and the Bank may terminate the Consultant’s services during the Consulting Period for Cause.  For purposes of this Agreement, “Cause” shall mean:

(i)           the continued failure of the Consultant to perform substantially the Consultant’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Consultant by the Board of Directors of the Company or the Bank which specifically identifies the manner in which the Board of Directors believes that the Consultant has not substantially performed the Consultant’s duties and after the Consultant has been given a 15 day period to cure such failure; or

(ii)           the willful engaging by the Consultant in illegal conduct or gross misconduct which violates any code of conduct of the Company and/or the Bank or which is otherwise materially and demonstrably injurious to the Company or the Bank; or

(iii)           conviction of a felony or a guilty or nolo contendere plea by the Consultant with respect thereto.

For purposes of this provision, no act or failure to act, on the part of the Consultant, shall be considered “willful” unless it is done, or omitted to be done, by the Consultant in bad faith or without reasonable belief that the Consultant’s action or omission was in the best interests of the Company and/or the Bank.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or upon the instructions of the President or a senior officer of the Company and/or the Bank or based upon the advice of counsel for the Company and/or the Bank shall be conclusively presumed to be done, or omitted to be done, by the Consultant in good faith and in the best interests of the Company and the Bank.  The cessation of the services of the Consultant for conduct described in subparagraph (i) or (ii) above shall not be deemed to be for Cause unless and until there shall have been delivered to the Consultant a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors of the Company or the Bank at a meeting of the Board of Directors called and held for such purpose (after not less than ten days’ advance notice is provided to the Consultant and the Consultant is given an opportunity, together with counsel chosen by the Consultant, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board, the Consultant is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.  The Company and/or the Bank may suspend the Consultant’s authority (with a continuation of the Monthly Fee during such period of suspension) after the provision of a notice of intention to terminate the Consultant’s services for conduct described in subparagraph (i) or (ii) above and prior to the time the Consultant is given an opportunity to meet with the Board of Directors, and any such suspension shall not constitute “Good Reason” as defined in Section 5(c) below.

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(c)           Good Reason.  The Consultant’s services may be terminated by the Consultant for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean, in the absence of a written consent of the Consultant, any material breach of this Agreement by the Company and/or the Bank, including without limitation any of the following: (A) a material reduction in the Monthly Fees payable to the Consultant; or (B) a material diminution in the authority, duties or responsibilities of the individual to whom the Consultant is required to report; provided, however, that prior to any termination of service for Good Reason, the Consultant must first provide written notice to the Company and the Bank within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Company and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Company and the Bank received the written notice from the Consultant.  If the Company and the Bank remedy the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Company and the Bank do not remedy the condition within such thirty (30) day cure period, then the Consultant may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(d)           Notice of Termination.  Any termination by the Company and/or the Bank for Cause, or by the Consultant for Good Reason, shall be communicated by a written Notice of Termination to the other party hereto given in accordance with Section 15 of this Agreement.  For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Consultant’s services under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice).  The failure by the Consultant or the Company and/or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Consultant or the Company and/or the Bank, respectively, hereunder or preclude the Consultant or the Company and/or the Bank, respectively, from asserting such fact or circumstance in enforcing the Consultant’s or the Company’s or the Bank’s rights hereunder.

(e)           Date of Termination.  “Date of Termination” means (i) if the Consultant’s services are terminated by the Company and/or the Bank for Cause, or by the Consultant for Good Reason, the date on which the Notice of Termination is given, or any later date specified therein within 30 days of delivery of such notice, as the case may be, or (ii) if the Consultant’s services are terminated for any other reason, the Date of Termination shall be the date specified in such Notice of Termination.

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6.           Obligations of the Company and the Bank upon Termination of Consulting Services.

(a)          Good Reason; Other Than for Cause, Death or Disability.  If, during the Consulting Period, the Company and/or the Bank shall terminate the Consultant’s services other than for Cause, Death or Disability or the Consultant shall terminate his services by the Company and the Bank for Good Reason, the Company and/or the Bank shall pay to the Consultant in a lump sum in cash within 30 days after the Date of Termination the sum of (1) any accrued but unpaid Monthly Fee of the Consultant through the Date of Termination (the “Accrued Obligations”), (2) an amount equal to the present value of the Monthly Fees that would have been paid through and including April 30, 2010 (the “Remaining Monthly Fees”), and (3) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present values calculated as set forth in Section 6(e) below.  In addition, the Company and the Bank shall provide the Consultant and his spouse with the medial and other benefits set forth in Section 4(b) hereof through April 30, 2010 (the “Medical Benefits”) and shall transfer title to the automobile to the Consultant as provided in Section 4(f) hereof.

(b)           Death.  If the Consultant’s services are terminated by reason of the Consultant’s death during the Consulting Period, the Company and/or the Bank shall pay to the Consultant’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the Date of Termination the sum of (1) any Accrued Obligations, (2) the present value of the Remaining Monthly Fees, and (3) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present values calculated as set forth in Section 6(e) below.  In addition, the Company and the Bank shall provide the Consultant’s spouse with the Medical Benefits and shall transfer title to the automobile to the Consultant’s spouse as provided in Section 4(f) hereof.

(c)           Disability.  If the Consultant’s services are terminated by reason of the Consultant’s Disability during the Consulting Period, the Company and/or the Bank shall pay to the Consultant in a lump sum in cash within 30 days after the Date of Termination the sum of (1) any Accrued Obligations, and (2) the present value of the Retirement Benefits (as defined in Section 9 hereof), with the present value calculated as set forth in Section 6(e) below.  In addition, the Company and the Bank shall provide the Consultant and his spouse with the Medical Benefits and shall transfer title to the automobile to the Consultant as provided in Section 4(f) hereof.

(d)           Cause; Other than for Good Reason.  If the Consultant’s services shall be terminated for Cause or the Consultant terminates his services without Good Reason during the Consulting Period, this Agreement shall terminate without further obligations to the Consultant other than for payment of the Accrued Obligations.  The Accrued Obligations shall be paid to the Consultant in a lump sum in cash within 30 days of the Date of Termination.

(e)           Calculation of Present Values.  In calculating the present value of any benefits hereunder that would otherwise be paid in the future, the future benefits shall be discounted to present value using a discount rate equal to 120% of the applicable short-term, mid-term or long-term federal rate, as published by the Internal Revenue Service for the month in which the Date of Termination occurs.

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7.         Full Settlement.  Except as provided in Section 8(d), the obligations of the Company and/or the Bank to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company and/or the Bank may have against the Consultant or others.  In no event shall the Consultant be obligated to seek other services or take any other action by way of mitigation of the amounts payable to the Consultant under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Consultant obtains other services.

8. Non-Compete; Confidentiality.

(a)       The Consultant agrees that during the Consulting Period the Consultant will not, directly or indirectly, (i) become a director, officer, employee, principal, agent, consultant or independent contractor of any insured depository institution, trust company or parent holding company of any such institution or company (excluding the Company and the Bank) which has an office in the Commonwealth of Pennsylvania (a “Competing Business”), provided, however, that this provision shall not prohibit the Consultant from owning bonds, non-voting preferred stock or up to five percent (5%) of the outstanding common stock of any such entity if such common stock is publicly traded, (ii) solicit or induce, or cause others to solicit or induce, any employee of the Company or any of its subsidiaries to leave the services of such entities or (iii) solicit (whether by mail, telephone, personal meeting or any other means) any customer of the Company or any of its subsidiaries to transact business with any other entity, whether or not a Competing Business, or to reduce or refrain from doing any business with the Company or its subsidiaries, or interfere with or damage (or attempt to interfere with or damage) any relationship between the Company or its subsidiaries and any such customers.

(b)       Except as required by law or regulation (including without limitation in connection with any judicial or administrative process or proceeding), the Consultant shall keep secret and confidential and shall not disclose to any third party (other than the Company or any of its subsidiaries or any persons employed or engaged by such entities) in any fashion or for any purpose whatsoever any information regarding the Company or any of its subsidiaries which is not available to the general public to which the Consultant had access at any time during the course of the Consultant’s service to the Company or any of its subsidiaries, including, without limitation, any such information relating to:  business or operations; plans, strategies, prospects or objectives; products, technology, processes or specifications; research and development operations or plans; customers and customer lists; distribution, sales, service, support and marketing practices and operations; financial condition, results of operations and prospects; operational strengths and weaknesses; and personnel and compensation policies and procedures.

(c)       The Consultant agrees that damages at law will be an insufficient remedy to the Company and the Bank in the event that the Consultant violates any of the provisions of paragraph (a) or (b) of this Section 8, and that the Company and/or the Bank may apply for and, upon the requisite showing, have injunctive relief in any court of competent jurisdiction to restrain the breach or threatened or attempted breach of or otherwise to specifically enforce any of the covenants contained in paragraph (a) or (b) of this Section 8.  The Consultant hereby consents to any injunction (temporary or otherwise) which may be issued against the Consultant and to any other court order which may be issued against the Consultant from violating, or directing the Consultant to comply with, any of the covenants in paragraph (a) or (b) of this Section 8.  The Consultant also agrees that such remedies shall be in addition to any and all remedies, including damages, available to the Company and/or the Bank against the Consultant for such breaches or threatened or attempted breaches.

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(d)         In addition to the rights of the Company and the Bank set forth in paragraph (c) of this Section 8, in the event that the Consultant shall violate the terms and conditions of paragraphs (a) or (b) of this Section 8, the Company and its subsidiaries may terminate any payments or benefits of any type and regardless of source payable by the Company or its subsidiaries, if applicable, to the Consultant, other than with respect to payments or benefits to the Consultant under plans or arrangements that are covered by the Employee Retirement Income Security Act of 1974, as amended.

9.           Retirement Benefits.

(a)          Retirement Benefits.  If the Consultant satisfies all of his obligations under Sections 3 and 8 of this Agreement, then following the end of the Consulting Period on April 30, 2010, the Company and/or the Bank shall pay to the Consultant an annual supplemental retirement benefit of $135,175.00 per year, payable in equal monthly installments on the first day of each month commencing on May 1, 2010 and continuing thereafter for a period of ten (10) years (i.e., ten years certain and continuous) (the “Retirement Benefits”).  The Retirement Benefits are subject to earlier payment as set forth in Section 6 hereof.

(b)           Death Following the End of the Consulting Period.  If the Consultant dies after the end of the Consulting Period but before all of the Retirement Benefits have been paid, then the Company and/or the Bank shall pay to the Consultant’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days after the date the Company and/or the Bank receives notice of the Consultant’s death, the present value of the remaining unpaid Retirement Benefits.  The present value shall be calculated in accordance with Section 6(e) hereof, with the date of death substituted for the Date of Termination.

(c)           Supplemental Insurance. During the ten years following the end of the Consulting Period, the Company and/or the Bank shall provide medical insurance which supplements Medicare coverage for the benefit of the Consultant and his spouse at no cost to the Consultant and his spouse.  Any insurance premiums payable by the Company and the Bank pursuant to this Section 9(c) shall be payable at such times and in such amounts as required by the insurance company, and the amount of insurance premiums required to be paid by the Company and the Bank in any taxable year shall not affect the amount of insurance premiums required to be paid by the Company and the Bank in any other taxable year; provided that if the Consultant’s participation in any insurance plan is barred, the Company and the Bank shall either arrange to provide the Consultant with insurance benefits substantially similar to those which the Consultant was entitled to receive under such insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following such bar for the then remaining period based on the annualized rate of premiums then being paid by the Company and the Bank.

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10.          Designation of Beneficiary.  The Consultant may from time to time, by providing a written notification to the Company and the Bank, designate any person or persons (who may be designated concurrently, contingently or successively), his estate or any trust or trusts created by him to receive benefits which are payable under this Agreement.  Each beneficiary designation shall revoke all prior designations and will be effective only when filed in writing with the Compensation Committees of the Boards of Directors of the Company and the Bank (the “Committee”).  If the Consultant fails to designate a beneficiary or if a beneficiary dies before the date of the Consultant’s death and no contingent beneficiary has been designated, then the benefits which are payable as aforesaid shall be paid to his estate.  If benefits commence to be paid to a beneficiary and such beneficiary dies before all benefits to which such beneficiary is entitled have been paid, the remaining benefits shall be paid to the successive beneficiary or beneficiaries designated by the Consultant, if any, and if none to the estate of such beneficiary.

11.          Claims Procedure.  The Consultant or his designated beneficiary or beneficiaries may make a claim for benefits under this Agreement by filing a written request with the Committee.  If a claim is wholly or partially denied, the Committee shall furnish the claimant with written notice setting forth in a manner calculated to be understood by the claimant;

(a) the specific reason or reasons for the denial;

(b)    specific reference to the pertinent provisions of this Agreement on which the denial is based;

(c)    a description of any additional material or information necessary for the claimant to perfect his claim and an explanation why such material or information is necessary; and

(d)    appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review.

Such notice shall be furnished to the claimant within ninety (90) days after the receipt of his claim, unless special circumstances require an extension of time for processing his claim.  If an extension of time for processing is required, the Committee shall, prior to the termination of the initial ninety (90) day period, furnish the claimant with written notice indicating the special circumstances requiring an extension and the date by which the Committee expects to render its decision.  In no event shall an extension exceed a period of ninety (90) days from the end of the initial ninety (90) day period.

A claimant may request the Committee to review a denied claim.  Such request shall be in writing and must be delivered to the Committee within sixty (60) days after receipt by the claimant of written notification of denial of claim.  A claimant or his duly authorized representative may:

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(a)          review pertinent documents, and

(b)          submit issues and comments in writing.

The Committee shall notify the claimant of its decision on review not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for review.  If an extension of time for review is required because of special circumstances, written notice of the extension must be furnished to the claimant prior to the commencement of the extension.  The Committee’s decision on the review shall be in writing and shall include specific reasons for the decision, as well as specific references to the pertinent provisions of this Agreement on which the decision is based.

12.           Resolution of Disputes.  With the exception of proceedings for equitable relief brought pursuant to Section 8(c) of this Agreement, any dispute or controversy arising under or in connection with this Agreement may, at the option of any party hereto, be settled exclusively by arbitration in Media, Pennsylvania in accordance with the rules of the American Arbitration Association then in effect and at the expense of the Company and/or the Bank.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  If a claim for any payments or benefits under this Agreement or any other provision of this Agreement is disputed by the Company and/or the Bank or the Consultant, the Consultant shall, to the extent and at such time or times as is not prohibited by applicable law, regulation, regulatory bulletin and/or any other regulatory requirements, as the same exists or may be hereafter promulgated or amended, if the Consultant is successful in his claim, be reimbursed for all reasonable attorney’s fees and expenses incurred by the Consultant in pursuing such claim.  Any payments made pursuant to this Section 12 shall be paid promptly by the Company and/or the Bank and, in any event, within sixty (60) days following the resolution of such dispute.

13.           Representations and Warranties.  Each party hereto represents and warrants to each other that they have carefully read this Agreement and consulted with respect thereto with their respective counsel and that each of them fully understands the content of this Agreement and its legal effect.  Each party hereto also represents and warrants that this Agreement is a legal, valid and binding obligation of such party which is enforceable against it in accordance with its terms.

14.           Successors and Assigns.  This Agreement will inure to the benefit of and be binding upon the Consultant and his assigns and upon the Company and the Bank, including any successor to the Company or the Bank by merger or consolidation or any other change in form or any other person or firm or corporation to which all or substantially all of the assets and business of the Company or the Bank may be sold or otherwise transferred.  Any successor to the Company or the Bank by merger, consolidation or other change in form shall expressly in writing assume all obligations of the Company and the Bank hereunder as fully as if it had been originally made a party hereto, and this Agreement shall continue in effect following any change in control of the Company and/or the Bank.  This Agreement may not be assigned by any party hereto without the written consent of the other party.

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15.           Notices.  Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party or parties, as applicable:

If to the Consultant:

Donald S. Guthrie

At the address last appearing on the

personnel records of the Bank

If to the Company and the Bank:

First Keystone Financial, Inc.

First Keystone Bank

22 West State Street

Media, Pennsylvania  19063

Attention: President

16.           Withholding.  The Company and/or the Bank may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

17.           Unsecured Promise.  Nothing contained in this Agreement shall create or require the Company or the Bank to create a trust of any kind to fund the benefits payable hereunder.  Any insurance policy or other asset acquired or held by, or on behalf of, the Company and/or the Bank or funds allocated by the Company and/or the Bank in connection with the liabilities assumed by the Company and/or the Bank pursuant to this Agreement shall not be deemed to be held under any trust for the benefit of the Consultant or his beneficiaries or to be a security for the performance of the obligations of the Company and/or the Bank pursuant hereto but shall be and remain a general asset of the Company and/or the Bank.  To the extent that the Consultant or any other person acquires a right to receive payments from the Company and/or the Bank hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company and/or the Bank.

18.           Spendthrift Provision.  Neither the Consultant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be non-assignable and non-transferable.  No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Consultant or any other person, nor be transferable by operation of law in the event of the Consultant’s or any other person’s bankruptcy or insolvency.

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19.           Entire Agreement; Severability.

(a)           This Agreement incorporates the entire understanding between the parties relating to the subject matter hereof, recites the sole consideration for the promises exchanged and supersedes any prior agreements between the Company and the Consultant or between the Bank and the Consultant with respect to the subject matter hereof, including but not limited to the Plans and the Prior Agreement.  In reaching this Agreement, no party has relied upon any representation or promise except those set forth herein.

(b)           Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.  In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.

20.           Amendment; Waiver.

(a)           This Agreement may not be amended, supplemented or modified except by an instrument in writing signed by each party hereto; provided, however, that notwithstanding anything in this Agreement to the contrary, the Company and the Bank may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

(b)           Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition.  A waiver of any provision of this Agreement must be made in writing, designated as a waiver and signed by the party against whom its enforcement is sought.  Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

21.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

22.           Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and entirely to be performed within such jurisdiction.

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23.           Headings.  The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.  Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

24.           Release of the Company and Related Parties.

(a)           In consideration of the payments and benefits to be provided to the Consultant pursuant to this Agreement, the sufficiency of which is acknowledged hereby, the Consultant, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company and its subsidiaries and affiliates (the “Company Affiliated Group”), their present and former officers, directors, executives, agents, attorneys and employees, and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which the Consultant, individually or as a member of a class, had, owned or held as of the Effective Date, or had at any time prior to the Effective Date had, owned or held, against any Company Released Party in any capacity, including, without limitation, any and all claims (i) arising out of or in any way connected with the Consultant’s service to any member of the Company Affiliated Group (or the predecessors thereof) in any capacity, or the termination of such service in any such capacity, (ii) for severance or vacation benefits, unpaid wages, salary or incentive payments, other than base salary accrued but unpaid as of the Effective Date, (iii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iv) for any violation of applicable state and local labor and employment laws (including, without limitation, all laws concerning unlawful and unfair labor and employment practices), (v) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Age Discrimination in Employment Act (“ADEA”) and any similar or analogous state statute, and (vi) under the Plans, excepting only:

(A)           the rights of the Consultant (i) relating to the vested stock options set forth in Section 4(c) hereof (collectively, the “Equity Arrangements”) and (ii) as a stockholder of the Company;

(B)           the right of the Consultant to receive COBRA continuation coverage in accordance with applicable law;

(C)           rights to indemnification the Consultant may have under (i) applicable corporate law, (ii) the articles of incorporation, charter or bylaws of any Company Released Party, (iii) any other agreement between the Consultant and a Company Released Party, or (iv) as an insured under any director’s and officer’s liability insurance policy now or previously in force;

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(D)           claims for vested benefits under any health, disability, retirement, life insurance or other similar “employee benefit plan” (within the meaning of Section 3(3) of ERISA) of the Company Affiliated Group existing as of the Effective Date (the “Company Benefit Plans”); and

(E)           the rights of the Consultant under this Agreement.

(b)        The Consultant acknowledges and agrees that the release of claims set forth in this Section 24 is not to be construed in any way as an admission of any liability whatsoever by any Company Released Party, with any such liability being expressly denied.

(c)        The release of claims set forth in this Section 24 applies to any relief no matter how called, including, without limitation, wages, back pay, front pay, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs, and attorney’s fees and expenses.

(d)        The Consultant specifically acknowledges that his acceptance of the terms of the release of claims set forth in this Section 24 is, among other things, a specific waiver of his rights, claims and causes of action under Title VII, ADEA, ADA and any state or local law or regulation in respect of discrimination of any kind.

(e)        The Consultant had a period of 21 days to consider whether to execute the Prior Agreement. To the extent the Consultant executed the Prior Agreement within less than twenty-one (21) days after its delivery to him, the Consultant hereby acknowledges that his decision to execute such Agreement prior to the expiration of such twenty-one (21) day period was entirely voluntary.  Following the Consultant’s acceptance of the terms and execution of the Prior Agreement, the Consultant had the right for a period of seven days following (and not including) the date of execution to revoke the Prior Agreement. Since no such revocation occurred, the Prior Agreement became irrevocable in its entirety, and binding and enforceable against the Consultant, on the day next following the day on which the foregoing 7 day period elapsed.

(f)        The Consultant acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the Effective Date hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, court or tribunal.

(g)       In addition to any other remedy available to the Company and the Bank hereunder, in the event that, as a result of a challenge brought by a Consultant Released Party (as defined below), the release of claims set forth in Section 24 becomes null and void or is otherwise determined not to be enforceable, then the obligation of the Company and/or the Bank to make any additional payments or to provide any additional benefits under this Agreement shall immediately cease to be of any force and effect, and the Consultant shall promptly return to the Company and the Bank any payments or benefits the provision of which by the Company and the Bank was conditioned on the enforceability of this Agreement.

(h)       Notwithstanding any other provision of this Agreement to the contrary, in consideration of any payments to be provided by the Company and/or the Bank to the Consultant under Section 6 of this Agreement, the Consultant (or, if applicable, his legal representatives) upon termination of the Consultant’s services by the Company and/or the Bank shall execute a general release of claims in favor of the Company, its affiliates, subsidiaries and personnel in a form similar to that set forth in this Section 24 and which is reasonably acceptable to the Company and the Bank. The Consultant (or his legal representatives) shall not be eligible for any payments under Section 6 of this Agreement until the Consultant (or his legal representatives) has executed such a general release.

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25.           Release of Claims by the Company and the Bank.

(a)           The Company and the Bank, with the intention of binding themselves and their subsidiaries, affiliates, predecessors and successors and their directors and officers (collectively, the “Releasing Entities”), do hereby release, remise, acquit and forever discharge the Consultant and his heirs, estate, executors, administrators and assigns (collectively, the “Consultant Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which the Company, the Bank and their subsidiaries, affiliates, predecessors and successors, individually or as a member of a class, had, owned or held as of the Effective Date, or had at any time prior to the Effective Date had, owned or held, against any Consultant Released Party, excepting only:

(A)    the rights of the Releasing Entities under this Agreement, the Equity Arrangements and the Company Benefit Plans; and

(B)    the rights of the Releasing Entities arising by reason of the Consultant having committed a crime or an act or omission to act which constitutes fraud, willful misconduct or gross negligence.

(b)           The Releasing Entities acknowledge and agree that the release of claims set forth in this Section 25 is not to be construed in any way as an admission of any liability whatsoever by any Consultant Released Party, with any such liability being expressly denied.

(c)           The release of claims set forth in this Section 25 applies to any relief no matter how called, including, without limitation, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs, and attorney’s fees and expenses.

(d)           Nothing herein shall be deemed, nor does anything contained herein purport, to be a waiver of any right or claim or cause of action which by law the Releasing Entities are not permitted to waive.

(e)           The Company and the Bank acknowledge and agree that they have not, with respect to any transaction or state of facts existing prior to the Effective Date hereof, filed any complaints, charges or lawsuits against any Consultant Released Party with any governmental agency, court or tribunal.

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26.           Regulatory Provisions.  Notwithstanding anything to the contrary contained in this Agreement, any payments to the Consultant by the Company and/or the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

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IN WITNESS WHEREOF, the Consultant has hereunto set the Consultant’s hand and the Company and the Bank have caused this Agreement to be executed by their duly authorized officers, all as of the day and year first written above.

ATTEST:                                                                    EXECUTIVE

By:  /s/ Carol Walsh                  /s/ Donald S. Guthrie    __

Name:  Carol Walsh                                                     Name:  Donald S. Guthrie

Title:  Senior Vice President and Secretary

FIRST KEYSTONE FINANCIAL, INC.

By: /s/ Hugh J. Garchinsky    

Name:  Hugh J. Garchinsky

Title:  Chief Financial Officer

FIRST KEYSTONE BANK

By: /s/ Hugh J. Garchinsky    

Name:  Hugh J. Garchinsky

Title:  Chief Financial Officer

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EX-10.4

Exhibit 10.4

FIRST KEYSTONE FINANCIAL, INC.

AMENDED AND RESTATED 1995 STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT OF THE PLAN

First Keystone Financial, Inc. (the "Corporation") hereby amends and restates its 1995 Stock Option Plan (as amended and restated, the "Plan") upon the terms and conditions hereinafter stated, with the amendment and restatement effective as of November __, 2008.  The Plan is being amended and restated in order to comply with Section 409A of the Code, as defined herein.

ARTICLE II

PURPOSE OF THE PLAN

The purpose of this Plan is to improve the growth and profitability of the Corporation and its Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest in the Corporation as an incentive to contribute to the success of the Corporation and its Subsidiary Companies, and rewarding those Employees for outstanding performance and the attainment of targeted goals.  All Incentive Stock Options issued under this Plan are intended to comply with the requirements of Section 422 of the Code and the regulations thereunder, and all provisions hereunder shall be read, interpreted and applied with that purpose in mind.

ARTICLE III

DEFINITIONS

3.01           "Award" means an Option or Stock Appreciation Right granted pursuant to the terms of this Plan.

3.02           "Bank" means First Keystone Bank, the wholly owned subsidiary of the Corporation.

3.03           "Board" means the Board of Directors of the Corporation.

3.04           "Code" means the Internal Revenue Code of 1986, as amended.

3.05           "Committee" means a committee of two or more directors appointed by the Board pursuant to Article IV hereof, none of whom shall be an Officer or Employee of the Corporation, and each of whom shall be a Non-Employee Director within the meaning of Rule 16b-3 under the Exchange Act, or any successor thereto.

3.06           "Common Stock" means shares of the common stock, $.01 par value per share, of the Corporation.

3.07           "Disability" means in the case of any Optionee that the Optionee: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Corporation or the Bank (or would have received such benefits for at least three months if he had been eligible to participate in such plan).

3.08           "Effective Date" means the day upon which the Board originally adopted this Plan.

3.09           "Employee" means any person who is employed by the Corporation, the Bank or any Subsidiary Company, or is an Officer of the Corporation, the Bank or any Subsidiary Company, but not including directors who are not also Officers of or otherwise employed by the Corporation or a Subsidiary Company.

3.10           "Exchange Act" means the Securities Exchange Act of 1934, as amended.

3.11          "Fair Market Value" shall be equal to the fair market value per share of the Corporation's Common Stock on the date an Award is granted.  For purposes hereof, the Fair Market Value of a share of Common Stock shall be the closing sale price of a share of Common Stock on the date in question (or, if such day is not a trading day in the U.S. markets, on the nearest preceding trading day), as reported with respect to the principal market (or the composite of the markets, if more than one) or national quotation system in which such shares are then traded, or if no such closing prices are reported, the mean between the high bid and low asked prices that day on the principal market or national quotation system then in use. Notwithstanding the foregoing, if the Common Stock is not readily tradable on an established securities market for purposes of Section 409A of the Code, then the Fair Market Value shall be determined by means of a reasonable valuation method that takes into consideration all available information material to the value of the Corporation and that otherwise satisfies the requirements applicable under Section 409A of the Code and the regulations thereunder.

3.12           "Incentive Stock Option" means any Option granted under this Plan which the Board intends (at the time it is granted) to be an incentive stock option within the meaning of Section 422 of the Code or any successor thereto.

3.13           "Non-Employee Director" means a member of the Board who is not an Officer or Employee of the Corporation or any Subsidiary Company.

3.14           "Non-Qualified Option" means any Option granted under this Plan which is not an Incentive Stock Option.

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3.15           "Offering" means the offering of Common Stock to the public pursuant to the conversion of the Bank from the mutual to the stock form and the organization of the Bank as a subsidiary of the Corporation.

3.16           "Officer" means an Employee whose position in the Corporation or Subsidiary Company is that of a corporate officer, as determined by the Board.

3.17           "Option" means a right granted under this Plan to purchase Common Stock.

3.18           "Optionee" means an Employee or Non-Employee Director or former Employee or Non-Employee Director to whom an Option is granted under the Plan.

3.19           "Retirement" means a termination of employment upon or after attainment of age sixty-five (65) or such earlier age as may be specified in any applicable qualified pension benefit plan maintained by the Corporation or a Subsidiary Company.

3.20           "Stock Appreciation Right" means a right to surrender an Option in consideration for a payment by the Corporation in cash and/or Common Stock, as provided in the discretion of the Committee in accordance with Section 8.11.

3.21           "Subsidiary Companies" means those subsidiaries of the Corporation, including the Bank, which meet the definition of "subsidiary corporations" set forth in Section 424(f) of the Code, at the time of granting of the Option in question.

ARTICLE IV

ADMINISTRATION OF THE PLAN

4.01           Duties of the Committee.  The Plan shall be administered and interpreted by the Committee, as appointed from time to time by the Board pursuant to Section 4.02.  The Committee shall have the authority in its absolute discretion to adopt, amend and rescind such rules, regulations and procedures as, in its opinion, may be advisable in the administration of the Plan, including, without limitation, rules, regulations and procedures which (i) deal with satisfaction of an Optionee's tax withholding obligation pursuant to Section 12.02 hereof, (ii) include arrangements to facilitate the Optionee's ability to borrow funds for payment of the exercise or purchase price of an Award, if applicable, from securities brokers and dealers, and (iii) include arrangements which provide for the payment of some or all of such exercise or purchase price by delivery of previously-owned shares of Common Stock or other property and/or by withholding some of the shares of Common Stock which are being acquired.  The interpretation and construction by the Committee of any provisions of the Plan, any rule, regulation or procedure adopted by it pursuant thereto or of any Award shall be final and binding in the absence of action by the Board.

4.02           Appointment and Operation of the Committee.  The members of the Committee shall be appointed by, and will serve at the pleasure of, the Board.  The Board from time to time may remove members from, or add members to, the Committee, provided the Committee shall continue to consist of two or more members of the Board, none of whom shall be an Officer or Employee of the Corporation, and each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act.  The Committee shall act by vote or written consent of a majority of its members.  Subject to the express provisions and limitations of the Plan, the Committee may adopt such rules, regulations and procedures as it deems appropriate for the conduct of its affairs.  It may appoint one of its members to be chairman and any person, whether or not a member, to be its secretary or agent.  The Committee shall report its actions and decisions to the Board at appropriate times but in no event less than one time per calendar year.

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4.03           Revocation for Misconduct.  The Committee may by resolution immediately revoke, rescind and terminate any Option, or portion thereof, to the extent not yet vested, or any Stock Appreciation Right, to the extent not yet exercised, previously granted or awarded under this Plan to an Employee who is discharged from the employ of the Corporation or a Subsidiary Company for cause, which, for purposes hereof, shall mean termination because of the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  Options granted to a Non-Employee Director who is removed for cause pursuant to the Corporation's Articles of Incorporation shall terminate as of the effective date of such removal.

4.04           Limitation on Liability.  No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any rule, regulation or procedure adopted by it pursuant thereto or any Awards granted under it.  If a member of the Committee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of anything done or not done by him in such capacity under or with respect to the Plan, the Corporation shall, subject to the requirements of applicable laws and regulations, indemnify such member against all liabilities and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation and its Subsidiary Companies and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

4.05           Compliance with Laws and Regulations.  All Awards granted hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.  The Corporation shall not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of or obtaining of consents or approvals with respect to such shares under any federal or state law or any rule or regulation of any government body, which the Corporation shall, in its sole discretion, determine to be necessary or advisable.  Moreover, no Option or Stock Appreciation Right may be exercised if such exercise would be contrary to applicable laws and regulations.

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4.06           Restrictions on Transfer.  The Corporation may place a legend upon any certificate representing shares acquired pursuant to an Award granted hereunder noting that the transfer of such shares may be restricted by applicable laws and regulations.

4.07           No Deferral of Compensation Under Section 409A of the Code. All Awards granted under the Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the Code.  Notwithstanding any other provision in this Plan to the contrary, all of the terms and conditions of any Awards granted under this Plan shall be designed to satisfy the exemption for stock options or stock appreciation rights set forth in the regulations issued under Section 409A of the Code.  Both this Plan and the terms of all Options and Stock Appreciation Rights granted hereunder shall be interpreted in a manner that requires compliance with all of the requirements of the exemption for stock options or stock appreciation rights set forth in the regulations issued under Section 409A of the Code.  No Optionee shall be permitted to defer the recognition of income beyond the exercise date of a Non-Qualified Option or Stock Appreciation Right or beyond the date that the Common Stock received upon the exercise of an Incentive Stock Option is sold.

ARTICLE V

ELIGIBILITY

Awards may be granted to such Employees or Non-Employee Directors of the Corporation and its Subsidiary Companies as may be designated from time to time by the Committee.  Awards may not be granted to individuals who are not Employees or Non-Employee Directors of either the Corporation or its Subsidiary Companies.  Non-Employee Directors shall be eligible to receive only Non-Qualified Options pursuant to Section 8.02 of the Plan.

ARTICLE VI

COMMON STOCK COVERED BY THE PLAN

6.01           Option Shares.  The aggregate number of shares of Common Stock which may be issued pursuant to this Plan, subject to adjustment as provided in Article IX, shall be 136,000, which is equal to 10.0% of the shares of Common Stock issued in the Offering.  None of such shares shall be the subject of more than one Award at any time, but if an Option as to any shares is surrendered before exercise, or expires or terminates for any reason without having been exercised in full, or for any other reason ceases to be exercisable, the number of shares covered thereby shall again become available for grant under the Plan as if no Awards had been previously granted with respect to such shares.  Notwithstanding the foregoing, if an Option is surrendered in connection with the exercise of a Stock Appreciation Right, the number of shares covered thereby shall not be available for grant under the Plan.

6.02           Source of Shares.  The shares of Common Stock issued under the Plan may be authorized but unissued shares, treasury shares or shares purchased by the Corporation on the open market or from private sources for use under the Plan.

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ARTICLE VII

DETERMINATION OF

AWARDS, NUMBER OF SHARES, ETC.

The Committee shall, in its discretion, determine from time to time which Employees will be granted Awards under the Plan, the number of shares of Common Stock subject to each Award, whether each Option will be an Incentive Stock Option or a Non-Qualified Stock Option and the exercise price of an Option.  In making all such determinations there shall be taken into account the duties, responsibilities and performance of each respective Employee, his present and potential contributions to the growth and success of the Corporation, his salary and such other factors as the Committee shall deem relevant to accomplishing the purposes of the Plan.  Non-Employee Directors shall be eligible to receive only Non-Qualified Options pursuant to Section 8.02 of the Plan.

ARTICLE VIII

OPTIONS AND STOCK APPRECIATION RIGHTS

Each Option granted hereunder shall be on the following terms and conditions:

8.01           Stock Option Agreement.  The proper Officers on behalf of the Corporation and each Optionee shall execute a Stock Option Agreement which shall set forth the total number of shares of Common Stock to which it pertains, the exercise price, whether it is a Non-Qualified Option or an Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Committee in each instance shall deem appropriate, provided they are not inconsistent with the terms, conditions and provisions of this Plan.  Each Optionee shall receive a copy of his executed Stock Option Agreement.  Any Option granted with the intention that it will be an Incentive Stock Option but which fails to satisfy a requirement for Incentive Stock Options shall continue to be valid and shall be treated as a Non-Qualified Option.

8.02           (a)           Initial Grants to Non-Employee Directors.  Non-Qualified Options to purchase 2,720 shares of Common Stock shall be initially granted to each Non-Employee Director as of the day that the Plan was initially approved by stockholders of the Corporation (except that each Non-Employee Director who has served as a director of the Bank for more than 30 years shall be awarded a Non-Qualified Option to purchase 5,440 shares of Common Stock), effective at such time and with a per share exercise price equal to the Fair Market Value of a share of Common Stock on such date.

     (b)           Subsequent Grants.  Each Non-Employee Director of the Corporation shall receive a Non-Qualified Option to purchase 340 shares of Common Stock (except that each Non-Employee Director who has served as a director of the Bank for more than 30 years shall be awarded a Non-Qualified Option to purchase 680 shares of Common Stock) on each anniversary date for two years after the initial grants pursuant to Section 8.02(a), or such lesser number as may then be available for grant under this Plan, at the per share exercise price equal to the Fair Market Value of a share of Common Stock on such date.

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(c)           Vesting and Exercise of Options.  Non-Qualified Options granted to Non-Employee Directors shall be vested and exercisable over five years at the rate of twenty percent per year commencing one year following the date of grant.

8.03     Option Exercise Price.

(a)           Incentive Stock Options.  The per share price at which the subject Common Stock may be purchased upon exercise of an Incentive Stock Option shall be no less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option is granted, except as provided in Section 8.10(b).

(b)           Non-Qualified Options.  The per share price at which the subject Common Stock may be purchased upon exercise of a Non-Qualified Option shall be established by the Committee at the time of grant, but in no event shall be less than the greater of (i) the par value or (ii) one hundred percent (100%) of the Fair Market Value of a share of Common Stock at the time such Non-Qualified Option is granted.

8.04     Vesting and Exercise of Options.

(a)           General Rules.  Incentive Stock Options and Non-Qualified Options granted to Employees shall become vested and exercisable at the rate, to the extent and subject to such limitations as may be specified by the Committee, provided, however, that in the case of any Option exercisable within the first six months following the date the Option is granted, the shares of Common Stock received upon the exercise of such Option may not be sold or disposed of by the optionee for the first six months following the date of grant.  Notwithstanding the foregoing, no vesting shall occur on or after an Optionee's employment or service with the Corporation and all Subsidiary Companies is terminated for any reason other than his death or Disability.  In determining the number of shares of Common Stock with respect to which Options are vested and/or exercisable, fractional shares will be rounded up to the nearest whole number if the fraction is 0.5 or higher, and down if it is less.

(b)           Accelerated Vesting Upon Death or Disability.  Unless the Committee shall specifically state otherwise at the time an Option is granted, all Options granted under this Plan shall become vested and exercisable in full on the date an Optionee terminates his employment or service with the Corporation or a Subsidiary Company because of his death or Disability.

(c)           Accelerated Vesting Upon a Change in Control.  Notwithstanding the general rule described in Section 8.04(a), all outstanding Options shall become immediately vested and exercisable in the event there is a change in control of the Corporation.  A "change in control of the Corporation" for this purpose shall mean a change in the ownership of the Corporation or the Bank, a change in the effective control of the Corporation or the Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

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8.05     Duration of Options.

(a)           General Rule.  Except as provided in Sections 8.05(b) and 8.10, each Option or portion thereof shall be exercisable at any time on or after it vests and becomes exercisable until the earlier of (i) ten (10) years after its date of grant or (ii) three (3) months after the date on which the Optionee ceases to be employed by or serve as a Director of the Corporation and all Subsidiary Companies, unless the Committee in its discretion decides at the time of grant or thereafter to extend such period of exercise upon termination of employment or service from three (3) months to a period not exceeding five (5) years.

(b)           Exception for Termination Due to Death, Disability or Retirement.  If an Optionee dies while in the employ or service of the Corporation or a Subsidiary Company or terminates employment or service with the Corporation or a Subsidiary Company as a result of Disability or Retirement without having fully exercised his Options, the Optionee or the executors, administrators, legatees or distributees of his estate shall have the right, during the twelve-month period following the earlier of his death, Disability or Retirement, to exercise such Options to the extent vested on the date of such death, Disability or Retirement.  In no event, however, shall any Option be exercisable within six (6) months after the date of grant or more than ten (10) years (or five (5) years for Options subject to Section 8.10(b) hereof) from the date it was granted.

8.06     Nonassignability.  Options shall not be transferable by an Optionee except by will or the laws of descent or distribution, and during an Optionee's lifetime shall be exercisable only by such Optionee or the Optionee's guardian or legal representative.

8.07     Manner of Exercise.  Options may be exercised in part or in whole and at one time or from time to time.  The procedures for exercise shall be set forth in the written Stock Option Agreement provided for in Section 8.01 above.

8.08     Payment for Shares.  Payment in full of the purchase price for shares of Common Stock purchased pursuant to the exercise of any Option shall be made to the Corporation upon exercise of the Option.  All shares sold under the Plan shall be fully paid and nonassessable.  Payment for shares may be made by the Optionee in cash or, at the discretion of the Committee in the case of Awards to Employees, by delivering shares of Common Stock (including shares acquired pursuant to the exercise of an Option) or other property equal in Fair Market Value to the purchase price of the shares to be acquired pursuant to the Option, by withholding some of the shares of Common Stock which are being purchased upon exercise of an Option, or any combination of the foregoing.

8.09     Voting and Dividend Rights. No Optionee shall have any voting or dividend rights or other rights of a stockholder in respect of any shares of Common Stock covered by an Option prior to the time that his name is recorded on the Corporation's stockholder ledger as the holder of record of such shares acquired pursuant to an exercise of an Option.

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8.10      Additional Terms Applicable to Incentive Stock Options.  All Options issued under the Plan as Incentive Stock Options will be subject, in addition to the terms detailed in Sections 8.01 to 8.09 above, to those contained in this Section 8.10.

(a)           Amount Limitation.  Notwithstanding any contrary provisions contained elsewhere in this Plan and as long as required by Section 422 of the Code, the aggregate Fair Market Value, determined as of the time an Incentive Stock Option is granted, of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year, under this Plan and stock options that satisfy the requirements of Section 422 of the Code under any other stock option plan or plans maintained by the Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.

(b)           Limitation on Ten Percent Stockholders.  The price at which shares of Common Stock may be purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock issued to stockholders of the Corporation or any Subsidiary Company, shall be no less than one hundred and ten percent (110%) of the Fair Market Value of a share of the Common Stock of the Corporation at the time of grant, and such Incentive Stock Option shall by its terms not be exercisable after the earlier of the date determined under Section 8.05 or the expiration of five (5) years from the date such Incentive Stock Option is granted.

(c)           Notice of Disposition; Withholding; Escrow.  An Optionee shall immediately notify the Corporation in writing of any sale, transfer, assignment or other disposition (or action constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any shares of Common Stock acquired through exercise of an Incentive Stock Option, within two (2) years after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such shares, setting forth the date and manner of disposition, the number of shares disposed of and the price at which such shares were disposed of.  The Corporation shall be entitled to withhold from any compensation or other payments then or thereafter due to the Optionee such amounts as may be necessary to satisfy any withholding requirements of federal or state law or regulation and, further, to collect from the Optionee any additional amounts which may be required for such purpose.  The Committee may, in its discretion, require shares of Common Stock acquired by an Optionee upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the purpose of enabling compliance with the provisions of this Section 8.10(c).

8.11     Stock Appreciation Rights.

(a)           General Terms and Conditions.  The Committee may, but shall not be obligated to, authorize the Corporation, on such terms and conditions as it deems appropriate in each case, to grant rights to Optionees to surrender an exercisable Option, or any portion thereof, in consideration for the payment by the Corporation of an amount equal to the excess of the Fair Market Value of the shares of Common Stock subject to the Option, or portion thereof, surrendered over the exercise price of the Option with respect to such shares (any such authorized surrender and payment being hereinafter referred to as a "Stock Appreciation Right").  Such payment, at the discretion of the Committee, may be made in shares of Common Stock valued at the then Fair Market Value thereof, or in cash, or partly in cash and partly in shares of Common Stock.

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The terms and conditions set with respect to a Stock Appreciation Right may include (without limitation), subject to other provisions of this Section 8.11 and the Plan, the period during which, date by which or event upon which the Stock Appreciation Right may be exercised; the method for valuing shares of Common Stock for purposes of this Section 8.11; a ceiling on the amount of consideration which the Corporation may pay in connection with exercise and cancellation of the Stock Appreciation Right; and arrangements for income tax withholding.  The Committee shall have complete discretion to determine whether, when and to whom Stock Appreciation Rights may be granted.  Notwithstanding the foregoing, the Corporation may not permit the exercise of a Stock Appreciation Right issued pursuant to this Plan until the Corporation has been subject to the reporting requirements of Section 13 of the Exchange Act for a period of at least one year prior to the exercise of any such Stock Appreciation Right and until a Stock Appreciation Right issued pursuant to this Plan has been outstanding for at least six months from the date of grant.

(b)           Time Limitations.  If a holder of a Stock Appreciation Right terminates service with the Corporation as an Officer or Employee, the Stock Appreciation Right may be exercised only within the period, if any, within which the Option to which it relates may be exercised.  Notwithstanding the foregoing, any election by an Optionee to exercise the Stock Appreciation Rights provided in this Plan shall be made during the period beginning on the third business day following the release for publication of quarterly or annual financial information required to be prepared and disseminated by the Corporation pursuant to the requirements of the Exchange Act and ending on the twelfth business day following such date.  The required release of information shall be deemed to have been satisfied when the specified financial data appears on or in a wire service, financial news service or newspaper of general circulation or is otherwise first made publicly available.

(c)           Effects of Exercise of Stock Appreciation Rights or Options.  Upon the exercise of a Stock Appreciation Right, the number of shares of Common Stock available under the Option to which it relates shall decrease by a number equal to the number of shares for which the Stock Appreciation Right was exercised. Upon the exercise of an Option, any related Stock Appreciation Right shall terminate as to any number of shares of Common Stock subject to the Stock Appreciation Right that exceeds the total number of shares for which the Option remains unexercised.

(d)           Time of Grant.  A Stock Appreciation Right must be granted concurrently with the Option to which it relates.

(e)           Non-Transferable.  The holder of a Stock Appreciation Right may not transfer or assign the Stock Appreciation Right otherwise than by will or in accordance with the laws of descent and distribution, and during a holder's lifetime a Stock Appreciation Right may be exercisable only by the holder.

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ARTICLE IX

ADJUSTMENTS FOR CAPITAL CHANGES

9.01           General Adjustments.  The aggregate number of shares of Common Stock available for issuance under this Plan, the number of shares to which any Award relates and the exercise price per share of Common Stock under any Option or Stock Appreciation Right shall be proportionately adjusted for any increase or decrease in the total number of outstanding shares of Common Stock issued subsequent to the Effective Date of this Plan resulting from a split, subdivision or consolidation of shares or any other capital adjustment, the payment of a stock dividend, or other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation.

9.02           Adjustments for Mergers and Other Corporate Transactions.  If, upon a merger, consolidation, reorganization, liquidation, recapitalization or the like of the Corporation, the shares of the Corporation's Common Stock shall be exchanged for other securities of the Corporation or of another corporation, each Award shall be converted, subject to the conditions herein stated, into the right to purchase or acquire such number of shares of Common Stock or amount of other securities of the Corporation or such other corporation as were exchangeable for the number of shares of Common Stock of the Corporation which such optionees would have been entitled to purchase or acquire except for such action, and appropriate adjustments shall be made to the per share exercise price of outstanding Options and Stock Appreciation Rights, provided that in each case the number of shares or other securities subject to the substituted or assumed stock options and stock appreciation rights and the exercise price thereof shall be determined in a manner that satisfies the requirements of Treasury Regulation §1.424-1 and the regulations issued under Section 409A of the Code so that the substituted or assumed option is not deemed to bea modification of the outstandingOptions or Stock Appreciation Rights.  Notwithstanding any provision to the contrary herein, the term of any Option or Stock Appreciation Right granted hereunder and the property which the Optionee shall receive upon the exercise or termination thereof shall be subject to and be governed by the provisions regarding the treatment of any such Options or Stock Appreciation Rights set forth in a definitive agreement with respect to any of the aforementioned transactions entered into by the Corporation to the extent any such Option and Stock Appreciation Right remains outstanding and unexercised upon consummation of the transactions contemplated by such definitive agreement.

ARTICLE X

AMENDMENT AND TERMINATION OF THE PLAN

The Board may, by resolution, at any time terminate or amend the Plan with respect to any shares of Common Stock as to which Awards have not been granted, subject to any required stockholder approval or any stockholder approval which the Board may deem to be advisable for any reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits under tax, securities or other laws or satisfying any applicable stock exchange listing requirements.  The Board may not, without the consent of the holder of an Award, alter or impair any Award previously granted or awarded under this Plan as specifically authorized herein.  Notwithstanding anything contained in this Plan to the contrary, the provisions of Articles V, VII and VIII of this Plan relating to Awards granted to Non-Employee Directors shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the rules and regulations promulgated under such statutes.

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ARTICLE XI

EMPLOYMENT RIGHTS

Neither the Plan nor the grant of any Awards hereunder nor any action taken by the Committee or the Board in connection with the Plan shall create any right on the part of any Employee or Non-Employee Director of the Corporation or a Subsidiary Company to continue in such capacity.

ARTICLE XII

WITHHOLDING

12.01  Tax Withholding.  The Corporation may withhold from any cash payment made under this Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount of such cash payment is insufficient, the Corporation may require the Optionee to pay to the Corporation the amount required to be withheld as a condition to delivering the shares acquired pursuant to an Award.  The Corporation also may withhold or collect amounts with respect to a disqualifying disposition of shares of Common Stock acquired pursuant to exercise of an Incentive Stock Option, as provided in Section 8.10(c).

12.02            Methods of Tax Withholding.  The Committee is authorized to adopt rules, regulations or procedures which provide for the satisfaction of an Optionee's tax withholding obligation by the retention of shares of Common Stock to which the Employee would otherwise be entitled pursuant to an Award and/or by the Optionee's delivery of previously-owned shares of Common Stock or other property.

ARTICLE XIII

EFFECTIVE DATE OF THE PLAN; TERM

13.01           Effective Date of the Plan. This Plan as originally adopted became effective on the Effective Date, and Awards may be granted hereunder no earlier than the date this Plan was approved by stockholders and no later than the termination of the Plan.  This Plan, as originally adopted, was approved at meeting of stockholders held within twelve (12) months of the Effective Date.  The amendment and restatement of this Plan was adopted effective as of the date set forth in Article 1 hereof.

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13.02          Term of Plan.  Unless sooner terminated, this Plan shall remain in effect for a period of ten (10) years ending on the tenth anniversary of the Effective Date.  Termination of the Plan shall not affect any Awards previously granted and such Awards shall remain valid and in effect until they have been fully exercised or earned, are surrendered or by their terms expire or are forfeited.

ARTICLE XIV

MISCELLANEOUS

14.01           Governing Law. To the extent not governed by federal law, this Plan shall be construed under the laws of the Commonwealth of Pennsylvania.

14.02           Pronouns.  Wherever appropriate, the masculine pronoun shall include the feminine pronoun, and the singular shall include the plural.

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EX-10.5

Exhibit 10.5

FIRST KEYSTONE FINANCIAL, INC.

AMENDED AND RESTATED 1998 STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT OF THE PLAN

First Keystone Financial, Inc. (the "Corporation") hereby amends and restates its 1998 Stock Option Plan (as amended and restated, the "Plan") upon the terms and conditions hereinafter stated, with the amendment and restatement effective as of November 25, 2008.  The Plan is being amended and restated in order to comply with Section 409A of the Code, as defined herein.

ARTICLE II

PURPOSE OF THE PLAN

The purpose of this Plan is to improve the growth and profitability of the Corporation and its Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest in the Corporation as an incentive to contribute to the success of the Corporation and its Subsidiary Companies, and rewarding Employees and Non-Employee Directors for outstanding performance.  All Incentive Stock Options issued under this Plan are intended to comply with the requirements of Section 422 of the Code and the regulations thereunder, and all provisions hereunder shall be read, interpreted and applied with that purpose in mind. Each recipient of an Award hereunder is advised to consult with his or her personal tax advisor with respect to the tax consequences under federal, state, local and other tax laws of the receipt and/or exercise of an Award hereunder.

ARTICLE III

DEFINITIONS

3.01           "Award" means an Option or Stock Appreciation Right granted pursuant to the terms of this Plan.

3.02           "Bank" means First Keystone Bank, the wholly owned subsidiary of the Corporation.

3.03           "Board" means the Board of Directors of the Corporation.

3.04           “Change in Control” shall mean a change in the ownership of the Corporation or the Bank, a change in the effective control of the Corporation or the Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

3.05           "Code" means the Internal Revenue Code of 1986, as amended.

3.06           "Committee" means a committee of two or more directors appointed by the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto and within the meaning of Section 162(m) of the Code and the regulations thereunder.

3.07           "Common Stock" means shares of the common stock, par value $.01 per share, of the Corporation.

3.08           "Disability" means the Optionee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Corporation or the Bank (or would have received such benefits for at least three months if he had been eligible to participate in such plan).

3.09           "Effective Date" means the day upon which the Board originally adopted this Plan.

3.10           "Employee" means any person who is employed by the Corporation, the Bank or a Subsidiary Company, or is an Officer of the Corporation or a Subsidiary Company, but not including directors who are not also Officers of or otherwise employed by the Corporation, the Bank or a Subsidiary Company.

3.11           "Exchange Act" means the Securities Exchange Act of 1934, as amended.

3.12           "Fair Market Value" shall be equal to the fair market value per share of the Corporation's Common Stock on the date an Award is granted.  For purposes hereof, the Fair Market Value of a share of Common Stock shall be the closing sale price of a share of Common Stock on the date in question (or, if such day is not a trading day in the U.S. markets, on the nearest preceding trading day), as reported with respect to the principal market (or the composite of the markets, if more than one) or national quotation system in which such shares are then traded, or if no such closing prices are reported, the mean between the high bid and low asked prices that day on the principal market or national quotation system then in use. Notwithstanding the foregoing, if the Common Stock is not readily tradable on an established securities market for purposes of Section 409A of the Code, then the Fair Market Value shall be determined by means of a reasonable valuation method that takes into consideration all available information material to the value of the Corporation and that otherwise satisfies the requirements applicable under Section 409A of the Code and the regulations thereunder.

3.13           "Incentive Stock Option" means any Option granted under this Plan which the Board intends (at the time it is granted) to be an incentive stock option within the meaning of Section 422 of the Code or any successor thereto.

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3.14           "Non-Employee Director" means a member of the Board of the Corporation or Board of Directors of the Bank or any successor thereto, including a Director Emeritus of the Boards of the Corporation and/or the Bank, who is not an Officer or Employee of the Corporation or any Subsidiary Company.

3.15           "Non-Qualified Option" means any Option granted under this Plan which is not an Incentive Stock Option.

3.16           "Officer" means an Employee whose position in the Corporation or Subsidiary Company is that of a corporate officer, as determined by the Board.

3.17           "Option" means a right granted under this Plan to purchase Common Stock.

3.18           "Optionee" means an Employee or Non-Employee Director or former Employee or Non-Employee Director to whom an Option is granted under the Plan.

3.19           "Retirement" means a termination of employment which constitutes a "retirement" under any applicable qualified pension benefit plan maintained by the Corporation or a Subsidiary Company, or, if no such  plan is applicable, which would constitute "retirement" under the Corporation's pension benefit plan, if such individual were a participant in that plan. With respect to Non-Employee Directors, retirement means retirement from service on the Board of Directors of the Corporation or the Bank or any successor thereto (including service as an Director Emeritus) after attaining the age of 70.

3.20           "Stock Appreciation Right" means a right to surrender an Option in consideration for a payment by the Corporation in cash and/or Common Stock, as provided in the discretion of the Board or the Committee in accordance with Section 8.10.

3.21           "Subsidiary Companies" means those subsidiaries of the Corporation, including the Bank, which meet the definition of "subsidiary corporations" set forth in Section 424(f) of the Code, at the time of granting of the Option in question.

ARTICLE IV

ADMINISTRATION OF THE PLAN

4.01           Duties of the Committee.  The Plan shall be administered and interpreted by the Committee, as appointed from time to time by the Board pursuant to Section 4.02.  The Committee shall have the authority to adopt, amend and rescind such rules, regulations and procedures as, in its opinion, may be advisable in the administration of the Plan, including, without limitation, rules, regulations and procedures which (i) deal with satisfaction of an Optionee's tax withholding obligation pursuant to Section 12.02 hereof, (ii) include arrangements to facilitate the Optionee's ability to borrow funds for payment of the exercise or purchase price of an Award, if applicable, from securities brokers and dealers, and (iii) include arrangements which provide for the payment of some or all of such exercise or purchase price by delivery of previously-owned shares of Common Stock or other property and/or by withholding some of the shares of Common Stock which are being acquired.  The interpretation and construction by the Committee of any provisions of the Plan, any rule, regulation or procedure adopted by it pursuant thereto or of any Award shall be final and binding in the absence of action by the Board.

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4.02           Appointment and Operation of the Committee.  The members of the Committee shall be appointed by, and will serve at the pleasure of, the Board.  The Board from time to time may remove members from, or add members to, the Committee, provided the Committee shall continue to consist of two or more members of the Board, each of whom shall be a Non-Employee Director, as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto.  In addition, each member of the Committee shall be an "outside director" within the meaning of Section 162(m) of the Code and regulations thereunder at such times as is required under such regulations.  The Committee shall act by vote or written consent of a majority of its members.  Subject to the express provisions and limitations of the Plan, the Committee may adopt such rules, regulations and procedures as it deems appropriate for the conduct of its affairs.  It may appoint one of its members to be chairman and any person, whether or not a member, to be its secretary or agent.  The Committee shall report its actions and decisions to the Board at appropriate times but in no event less than one time per calendar year.

4.03           Revocation for Misconduct.  The Board or the Committee may by resolution immediately revoke, rescind and terminate any Option, or portion thereof, to the extent not yet vested, or any Stock Appreciation Right, to the extent not yet exercised, previously granted or awarded under this Plan to an Employee who is discharged from the employ of the Corporation or a Subsidiary Company for cause, which, for purposes hereof, shall mean termination because of the Employee's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  Options granted to a Non-Employee Director who is removed for cause pursuant to the Corporation's Restated Articles of Incorporation and Bylaws or the Bank's Charter and Bylaws shall terminate as of the effective date of such removal.

4.04           Limitation on Liability.  Neither the members of the Board nor any member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any rule, regulation or procedure adopted by it pursuant thereto or any Awards granted under it.  If a member of the Board or the Committee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of anything done or not done by him in such capacity under or with respect to the Plan, the Corporation shall, subject to the requirements of applicable laws and regulations, indemnify such member against all liabilities and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation and its Subsidiary Companies and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

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4.05           Compliance with Laws and Regulations.  All Awards granted hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.  The Corporation shall not be required to issue or deliver any certificates for shares of Common Stock prior to the completion of any registration or qualification of or obtaining of consents or approvals with respect to such shares under any federal or state law or any rule or regulation of any government body, which the Corporation shall, in its sole discretion, determine to be necessary or advisable.  Moreover, no Option or Stock Appreciation Right may be exercised if such exercise would be contrary to applicable laws and regulations.

4.06           Restrictions on Transfer.  The Corporation may place a legend upon any certificate representing shares acquired pursuant to an Award granted hereunder noting that the transfer of such shares may be restricted by applicable laws and regulations.

4.07           No Deferral of Compensation Under Section 409A of the Code. All Awards granted under the Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the Code.  Notwithstanding any other provision in this Plan to the contrary, all of the terms and conditions of any Awards granted under this Plan shall be designed to satisfy the exemption for stock options or stock appreciation rights set forth in the regulations issued under Section 409A of the Code.  Both this Plan and the terms of all Options and Stock Appreciation Rights granted hereunder shall be interpreted in a manner that requires compliance with all of the requirements of the exemption for stock options or stock appreciation rights set forth in the regulations issued under Section 409A of the Code.  No Optionee shall be permitted to defer the recognition of income beyond the exercise date of a Non-Qualified Option or Stock Appreciation Right or beyond the date that the Common Stock received upon the exercise of an Incentive Stock Option is sold.

ARTICLE V

ELIGIBILITY

Awards may be granted to such Employees and Non-Employee Directors of the Corporation and its Subsidiary Companies as may be designated from time to time by the Board or the Committee.  Awards may not be granted to individuals who are not Employees or Non-Employee Directors of either the Corporation or its Subsidiary Companies.  Non-Employee Directors shall be eligible to receive only Awards of Non-Qualified Options pursuant to this Plan.

 ARTICLE VI

COMMON STOCK COVERED BY THE PLAN

6.01           Option Shares.  The aggregate number of shares of Common Stock which may be issued pursuant to this Plan, subject to adjustment as provided in Article IX, shall be 111,200.   None of such shares shall be the subject of more than one Award at any time, but if an Option as to any shares is surrendered before exercise, or expires or terminates for any reason without having been exercised in full, or for any other reason ceases to be exercisable, the number of shares covered thereby shall again become available for grant under the Plan as if no Awards had been previously granted with respect to such shares.  Notwithstanding the foregoing, if an Option is surrendered in connection with the exercise of a Stock Appreciation Right, the number of shares covered thereby shall not be available for grant under the Plan.  During the time this Plan remains in effect, grants to each Employee shall not exceed 25% of the shares of Common Stock available under the Plan.  Awards made to Non-Employee Directors in the aggregate may not exceed 25% of the number of shares available under this Plan

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6.02           Source of Shares.  The shares of Common Stock issued under the Plan may be authorized but unissued shares, treasury shares or shares purchased by the Corporation on the open market or from private sources for use under the Plan.

ARTICLE VII

DETERMINATION OF

AWARDS, NUMBER OF SHARES, ETC.

The Board or the Committee shall, in its discretion, determine from time to time which Employees and Non-Employee Directors will be granted Awards under the Plan, the number of shares of Common Stock subject to each Award, whether each Option will be an Incentive Stock Option or a Non-Qualified Stock Option (in the case of Employees) and the exercise price of an Option.  In making all such determinations there shall be taken into account the duties, responsibilities and performance of each respective Employee and Non-Employee Director, his present and potential contributions to the growth and success of the Corporation, his salary or other compensation and such other factors deemed relevant to accomplishing the purposes of the Plan.

ARTICLE VIII

OPTIONS AND STOCK APPRECIATION RIGHTS

Each Option granted hereunder shall be on the following terms and conditions:

8.01           Stock Option Agreement.  The proper Officers on behalf of the Corporation and each Optionee shall execute a Stock Option Agreement which shall set forth the total number of shares of Common Stock to which it pertains, the exercise price, whether it is a Non-Qualified Option or an Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Board or the Committee in each instance shall deem appropriate, provided they are not inconsistent with the terms, conditions and provisions of this Plan.  Each Optionee shall receive a copy of his executed Stock Option Agreement.  Any Option granted with the intention that it will be an Incentive Stock Option but which fails to satisfy a requirement for Incentive Stock Options shall continue to be valid and shall be treated as a Non-Qualified Option.

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8.02     Option Exercise Price.

(a)           Incentive Stock Options.  The per share price at which the subject Common Stock may be purchased upon exercise of an Incentive Stock Option shall be no less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option is granted, except as provided in Section 8.09(b).

(b)           Non-Qualified Options.  The per share price at which the subject Common Stock may be purchased upon exercise of a Non-Qualified Option shall be established by the Committee at the time of grant, but in no event shall be less than the one hundred percent (100%) of the Fair Market Value of a share of Common Stock at the time such Non-Qualified Option is granted.

8.03    Vesting and Exercise of Options.

(a)           General Rules.  Incentive Stock Options and Non-Qualified Options shall become vested and exercisable at the rate, to the extent and subject to such limitations as may be specified by the Committee.  Notwithstanding the foregoing, except as provided in Section 8.03(b) hereof, no vesting shall occur on or after an Employee's employment or service as a Non-Employee Director with the Corporation and all Subsidiary Companies is terminated for any reason other than his death, Disability, Retirement or in the event of a Change in Control.  In determining the number of shares of Common Stock with respect to which Options are vested and/or exercisable, fractional shares will be rounded up to the nearest whole number if the fraction is 0.5 or higher, and down if it is less.

(b)           Accelerated Vesting.  Unless the Board or the Committee shall specifically state otherwise at the time an Option is granted, all Options granted under this Plan shall become vested and exercisable in full on the date an Optionee terminates his employment with the Corporation or a Subsidiary Company or service as a Non-Employee Director because of his death or Disability. All Options hereunder shall become immediately vested and exercisable in full on the date an Optionee terminates his employment with the Corporation or a Subsidiary Corporation due to Retirement. In addition, all outstanding Options hereunder shall become immediately vested and exercisable in full as of the effective date of a Change in Control.

8.04     Duration of Options.

(a)           General Rule.  Except as provided in Sections 8.04(b) and 8.09, each Option or portion thereof granted to an Employee shall be exercisable at any time on or after it vests and becomes exercisable until the earlier of (i) ten (10) years after its date of grant or (ii) one (1) year after the date on which the Employee ceases to be employed by the Corporation and all Subsidiary Companies, unless the Board or the Committee in its discretion decides at the time of grant or thereafter to extend such period of exercise upon termination of employment to a period not exceeding five (5) years.

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Except as provided in Section 8.04(b), each Option or portion thereof granted to a Non-Employee Director shall be exercisable at any time on or after it vests and becomes exercisable until the earlier of (i) ten (10) years after its date of grant or (ii) three (3) years after the date on which the Non-Employee Director ceases to serve as a director of the Corporation and all Subsidiary Companies, unless the Board or the Committee in its discretion decides at the time of grant or thereafter to extend such period of exercise upon termination of service to a period not exceeding five (5) years.

(b)           Exceptions.  Unless the Board or the Committee shall specifically state otherwise at the time an Option is granted: (i) if an Employee terminates his employment with the Corporation or a Subsidiary Company as a result of Disability or Retirement without having fully exercised his Options, the Employee shall have the right, during the three (3) year period following his termination due to Disability or Retirement, to exercise such Options, and (ii) if a Non-Employee Director terminates his service as a director (including service as a Director Emeritus) with the Corporation or a Subsidiary Company as a result of Disability or Retirement without having fully exercised his Options, the Non-Employee Director shall have the right, during the three (3) year period following his termination due to Disability or Retirement, to exercise such Options.

Unless the Board or the Committee shall specifically state otherwise at the time an Option is granted, if an Employee or Non-Employee Director terminates his employment or service with the Corporation or a Subsidiary Company following a Change in Control without having fully exercised his Options, the Optionee shall have the right to exercise such Options during the remainder of the original ten (10) year term (or five (5) year term for Options subject to Section 8.09(b) hereof) of the Option from the date of grant.

If an Optionee dies while in the employ or service of the Corporation or a Subsidiary Company or terminates employment or service with the Corporation or a Subsidiary Company as a result of Disability or Retirement and dies without having fully exercised his Options, the executors, administrators, legatees or distributees of his estate shall have the right, during the one (1) year period following his death, to exercise such Options.

In no event, however, shall any Option be exercisable more than ten (10) years (or five (5) years for Options subject to Section 8.09(b) hereof) from the date it was granted.

8.05           Nonassignability.  Options shall not be transferable by an Optionee except by will or the laws of descent or distribution, and during an Optionee's lifetime shall be exercisable only by such Optionee or the Optionee's guardian or legal representative.  Notwithstanding the foregoing, or any other provision of this Plan, an Optionee who holds Non-Qualified Options may transfer such Options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust for the benefit of one or more of these individuals.  Options so transferred may thereafter be transferred only to the Optionee who originally received the grant or to an individual or trust to whom the Optionee could have initially transferred the Option pursuant to this Section 8.05.  Options which are transferred pursuant to this Section 8.05 shall be exercisable by the transferee according to the same terms and conditions as applied to the Optionee.

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8.06       Manner of Exercise.  Options may be exercised in part or in whole and at one time or from time to time.  The procedures for exercise shall be set forth in the written Stock Option Agreement provided for in Section 8.01 above.

8.07       Payment for Shares.  Payment in full of the purchase price for shares of Common Stock purchased pursuant to the exercise of any Option shall be made to the Corporation upon exercise of the Option.  All shares sold under the Plan shall be fully paid and nonassessable.  Payment for shares may be made by the Optionee (i) in cash or by check, (ii) by delivery of a properly executed exercise notice, together with irrevocable instructions to a broker to sell the shares and then to properly deliver to the Corporation the amount of sale proceeds to pay the exercise price, all in accordance with applicable laws and regulations, or (iii) at the discretion of the Committee, by delivering shares of Common Stock (including shares acquired pursuant to the exercise of an Option) equal in Fair Market Value to the purchase price of the shares to be acquired pursuant to the Option, by withholding some of the shares of Common Stock which are being purchased upon exercise of an Option, or any combination of the foregoing.  With respect to subclause (iii) hereof, the shares of Common Stock delivered to pay the purchase price must have either been (x) purchased in open market transactions or (y) issued by the Corporation pursuant to a plan thereof more than six months prior to the exercise date of the Option.

8.08      Voting and Dividend Rights.  No Optionee shall have any voting or dividend rights or other rights of a stockholder in respect of any shares of Common Stock covered by an Option prior to the time that his name is recorded on the Corporation's stockholder ledger as the holder of record of such shares acquired pursuant to an exercise of an Option.

8.09      Additional Terms Applicable to Incentive Stock Options.  All Options issued under the Plan as Incentive Stock Options will be subject, in addition to the terms detailed in Sections 8.01 to 8.08 above, to those contained in this Section 8.09.

(a)           Amount Limitation.  Notwithstanding any contrary provisions contained elsewhere in this Plan and as long as required by Section 422 of the Code, the aggregate Fair Market Value, determined as of the time an Incentive Stock Option is granted, of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year under this Plan, and stock options that satisfy the requirements of Section 422 of the Code under any other stock option plan or plans maintained by the Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.

(b)           Limitation on Ten Percent Stockholders.  The price at which shares of Common Stock may be purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the total combined voting power of all classes of stock issued to stockholders of the Corporation or any Subsidiary Company, shall be no less than one hundred and ten percent (110%) of the Fair Market Value of a share of the Common Stock of the Corporation at the time of grant, and such Incentive Stock Option shall by its terms not be exercisable after the earlier of the date determined under Section 8.04 or the expiration of five (5) years from the date such Incentive Stock Option is granted.

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(c)           Notice of Disposition; Withholding; Escrow.  An Optionee shall immediately notify the Corporation in writing of any sale, transfer, assignment or other disposition (or action constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any shares of Common Stock acquired through exercise of an Incentive Stock Option, within two (2) years after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such shares, setting forth the date and manner of disposition, the number of shares disposed of and the price at which such shares were disposed of.  The Corporation shall be entitled to withhold from any compensation or other payments then or thereafter due to the Optionee such amounts as may be necessary to satisfy any withholding requirements of federal or state law or regulation and, further, to collect from the Optionee any additional amounts which may be required for such purpose.  The Committee or the Board may, in its discretion, require shares of Common Stock acquired by an Optionee upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the purpose of enabling compliance with the provisions of this Section 8.09(c).

8.10     Stock Appreciation Rights.

(a)           General Terms and Conditions.  The Board or the Committee may, but shall not be obligated to, authorize the Corporation, on such terms and conditions as it deems appropriate in each case, to grant rights to Optionees to surrender an exercisable Option, or any portion thereof, in consideration for the payment by the Corporation of an amount equal to the excess of the Fair Market Value of the shares of Common Stock subject to the Option, or portion thereof, surrendered over the exercise price of the Option with respect to such shares (any such authorized surrender and payment being hereinafter referred to as a "Stock Appreciation Right").  Such payment, at the discretion of the Board or the Committee, may be made in shares of Common Stock valued at the then Fair Market Value thereof, or in cash, or partly in cash and partly in shares of Common Stock.

The terms and conditions with respect to a Stock Appreciation Right may include (without limitation), subject to other provisions of this Section 8.10 and the Plan: the period during which, date by which or event upon which the Stock Appreciation Right may be exercised; the method for valuing shares of Common Stock for purposes of this Section 8.10; a ceiling on the amount of consideration which the Corporation may pay in connection with exercise and cancellation of the Stock Appreciation Right; and arrangements for income tax withholding.  The Board or the Committee shall have complete discretion to determine whether, when and to whom Stock Appreciation Rights may be granted.

(b)           Time Limitations.  If a holder of a Stock Appreciation Right terminates service with the Corporation as an Officer or Employee, the Stock Appreciation Right may be exercised only within the period, if any, within which the Option to which it relates may be exercised.

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(c)           Effects of Exercise of Stock Appreciation Rights or Options.  Upon the exercise of a Stock Appreciation Right, the number of shares of Common Stock available under the Option to which it relates shall decrease by a number equal to the number of shares for which the Stock Appreciation Right was exercised. Upon the exercise of an Option, any related Stock Appreciation Right shall terminate as to any number of shares of Common Stock subject to the Stock Appreciation Right that exceeds the total number of shares for which the Option remains unexercised.

(d)           Time of Grant.  A Stock Appreciation Right granted in connection with an Incentive Stock Option must be granted concurrently with the Option to which it relates, and a Stock Appreciation Right granted in connection with a Non-Qualified Option must also be granted concurrently with the Option to which it relates.

(e)           Non-Transferable.  The holder of a Stock Appreciation Right may not transfer or assign the Stock Appreciation Right otherwise than by will or in accordance with the laws of descent and distribution, and during a holder's lifetime a Stock Appreciation Right may be exercisable only by the holder.

ARTICLE IX

ADJUSTMENTS FOR CAPITAL CHANGES

9.01General Adjustments.  The aggregate number of shares of Common Stock available for issuance under this Plan, the number of shares to which any outstanding Award relates, the maximum number of shares that can be covered by Awards to each Employee and each Non-Employee Director and the exercise price per share of Common Stock under any outstanding Option or Stock Appreciation Right shall be proportionately adjusted for any increase or decrease in the total number of outstanding shares of Common Stock issued subsequent to the Effective Date of this Plan resulting from a split, subdivision or consolidation of shares or any other capital adjustment, the payment of a stock dividend, or other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation.

9.02           Adjustments for Mergers and Other Corporate Transactions. If, upon a merger, consolidation, reorganization, liquidation, recapitalization or the like of the Corporation, the shares of the Corporation's Common Stock shall be exchanged for other securities of the Corporation or of another corporation, each Award shall be converted, subject to the conditions herein stated, into the right to purchase or acquire such number of shares of Common Stock or amount of other securities of the Corporation or such other corporation as were exchangeable for the number of shares of Common Stock of the Corporation which such optionees would have been entitled to purchase or acquire except for such action, and appropriate adjustments shall be made to the per share exercise price of outstanding Options and Stock Appreciation Rights, provided that in each case the number of shares or other securities subject to the substituted or assumed stock options and stock appreciation rights and the exercise price thereof shall be determined in a manner that satisfies the requirements of Treasury Regulation §1.424-1 and the regulations issued under Section 409A of the Code so that the substituted or assumed option is not deemed to be a modification of the outstanding Options or Stock Appreciation Rights.  Notwithstanding any provision to the contrary herein, the term of any Option or Stock Appreciation Right granted hereunder and the property which the Optionee shall receive upon the exercise or termination thereof shall be subject to and be governed by the provisions regarding the treatment of any such Options or Stock Appreciation Rights set forth in a definitive agreement with respect to any of the aforementioned transactions entered into by the Corporation to the extent any such Option or Stock Appreciation Right remains outstanding and unexercised upon consummation of the transactions contemplated by such definitive agreement.

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ARTICLE X

AMENDMENT AND TERMINATION OF THE PLAN

The Board may, by resolution, at any time terminate or amend the Plan with respect to any shares of Common Stock as to which Awards have not been granted, subject to any required stockholder approval or any stockholder approval which the Board may deem to be advisable for any reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits under tax, securities or other laws or satisfying any applicable stock exchange listing requirements.  The Board may not, without the consent of the holder of an Award, alter or impair any Award previously granted or awarded under this Plan except as specifically authorized herein.

ARTICLE XI

EMPLOYMENT AND SERVICE RIGHTS

Neither the Plan nor the grant of any Awards hereunder nor any action taken by the Committee or the Board in connection with the Plan shall create any right on the part of any Employee or Non-Employee Director to continue in such capacity.

ARTICLE XII

WITHHOLDING

12.01 Tax Withholding.  The Corporation may withhold from any cash payment made under this Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount of such cash payment is insufficient, the Corporation may require the Optionee to pay to the Corporation the amount required to be withheld as a condition to delivering the shares acquired pursuant to an Award.  The Corporation also may withhold or collect amounts with respect to a disqualifying disposition of shares of Common Stock acquired pursuant to exercise of an Incentive Stock Option, as provided in Section 8.09(c).

12.02                       Methods of Tax Withholding.  The Board or the Committee is authorized to adopt rules, regulations or procedures which provide for the satisfaction of an Optionee's tax withholding obligation by the retention of shares of Common Stock to which the Employee would otherwise be entitled pursuant to an Award and/or by the Optionee's delivery of previously owned shares of Common Stock or other property.

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ARTICLE XIII

EFFECTIVE DATE OF THE PLAN; TERM

13.01                      Effective Date of the Plan.  This Plan as originally adopted became effective on the Effective Date, and Awards may be granted hereunder no earlier than the date that this Plan is approved by stockholders of the Corporation and no later than the termination of the Plan, provided that this Plan is approved by stockholders of the Corporation pursuant to Article XIV hereof.  The amendment and restatement of this Plan was adopted effective as of the date set forth in Article I hereof.

13.02                      Term of the Plan.  Unless sooner terminated, this Plan shall remain in effect for a period of ten (10) years ending on the tenth anniversary of the Effective Date.  Termination of the Plan shall not affect any Awards previously granted and such Awards shall remain valid and in effect until they have been fully exercised or earned, are surrendered or by their terms expire or are forfeited.

ARTICLE XIV

STOCKHOLDER APPROVAL

The stockholders of the Corporation approved this Plan as originally adopted at a meeting of stockholders of the Corporation held within twelve (12) months following the Effective Date in order to meet the requirements of (i) Section 422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and regulations thereunder, (iii) the Nasdaq Stock Market for continued quotation of the Common Stock on the Nasdaq National Market (now the Nasdaq Global Market) and (iv) the regulations of the Office of Thrift Supervision.

ARTICLE XV

MISCELLANEOUS

15.01                      Governing Law.  To the extent not governed by federal law, this Plan shall be construed under the laws of the Commonwealth of Pennsylvania.

15.02                      Pronouns.  Wherever appropriate, the masculine pronoun shall include the feminine pronoun, and the singular shall include the plural.

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EX-10.6

Exhibit 10.6

FIRST KEYSTONE FINANCIAL, INC.

AMENDED AND RESTATED 1995 RECOGNITION AND RETENTION

PLAN AND TRUST AGREEMENT

ARTICLE I

ESTABLISHMENT OF THE PLAN AND TRUST

1.01           First Keystone Financial, Inc. (the "Corporation") hereby amends and restates its Recognition and Retention Plan of First Keystone Federal Savings Bank (as amended and restated, the "Plan") and Trust (the "Trust") upon the terms and conditions hereinafter stated in this amended and restated 1995 Recognition and Retention Plan and Trust Agreement (the "Agreement"), with the amendment and restatement effective as of November 25, 2008.  The Plan is being amended and restated in order to comply with Section 409A of the Code, as defined herein.

1.02           The Trustee hereby accepts this Trust and agrees to hold the Trust assets existing on the date of this Agreement and all additions and accretions thereto upon the terms and conditions hereinafter stated.

ARTICLE II

PURPOSE OF THE PLAN

2.01           The purpose of the Plan is to retain personnel of experience and ability in key positions by providing Directors and Employees of the Bank and the Corporation with a proprietary interest in the Corporation and its Subsidiaries as compensation for their contributions to the Corporation, the Bank, and any other Subsidiaries and as an incentive to make such contributions in the future.

ARTICLE III

DEFINITIONS

The following words and phrases when used in this Agreement with an initial capital letter, unless the context clearly indicates otherwise, shall have the meanings set forth below.  Wherever appropriate, the masculine pronouns shall include the feminine pronouns and the singular shall include the plural.

3.01           "Bank" means First Keystone Bank, the wholly owned subsidiary of the Corporation.

3.02           "Beneficiary" means the person or persons designated by a Recipient to receive any benefits payable under the Plan in the event of such Recipient's death.  Such person or persons shall be designated in writing on forms provided for this purpose by the Committee and may be changed from time to time by similar written notice to the Committee.  In the absence of a written designation, the Beneficiary shall be the Recipient's surviving spouse, if any, or if none, his estate.

3.03           "Board" means the Board of Directors of the Corporation.

3.04           "Code" means the Internal Revenue Code of 1986, as amended.

3.05           "Committee" means the committee appointed by the Board pursuant to Article IV hereof.

3.06           "Common Stock" means shares of the common stock, $.01 par value per share, of the Corporation.

3.07           "Disability" means the Recipient (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Corporation or the Bank (or would have received such benefits for at least three months if he or she had been eligible to participate in such plan).

3.08           "Effective Date" means the day upon which the Board originally adopted this Plan.

3.09           "Employee" means any person who is employed by the Corporation, the Bank, or any Subsidiary, or is an officer of the Corporation, the Bank, or any Subsidiary, including officers or other employees who may be directors of the Corporation.

3.10           "Exchange Act" means the Securities Exchange Act of 1934, as amended.

3.11           "Non-Employee Director" means a member of the Board who is not an Employee of the Corporation or any Subsidiary.

3.12           "Plan Shares" or "Shares" means shares of Common Stock held in the Trust which may be distributed to a Recipient pursuant to the Plan.

3.13           "Plan Share Award" or "Award" means a right granted under this Plan to receive a distribution of Plan Shares upon completion of the service requirements described in Article VII.

3.14           "Recipient" means an Employee or a Non-Employee Director who receives a Plan Share Award under the Plan.

3.15           "Subsidiary" means First Keystone Bank and any other subsidiaries of the Corporation or the Bank which, with the consent of the Board, agree to participate in this Plan.

3.16           "Trustee" means such persons, firm or entity nominated by the Committee and approved by the Board pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan for the purposes set forth herein.

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ARTICLE IV

ADMINISTRATION OF THE PLAN

4.01           Role of the Committee.  The Plan shall be administered and interpreted by the Committee, which shall consist of two or more members of the Board, none of whom shall be an officer or employee of the Corporation and each of whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act.  The Committee shall have all of the powers allocated to it in this and other Sections of the Plan.  The interpretation and construction by the Committee of any provisions of the Plan or of any Plan Share Award granted hereunder shall be final and binding.  The Committee shall act by vote or written consent of a majority of its members.  Subject to the express provisions and limitations of the Plan, the Committee may adopt such rules, regulations and procedures as it deems appropriate for the conduct of its affairs.  The Committee shall report its actions and decisions with respect to the Plan to the Board at appropriate times, but in no event less than one time per calendar year.  The Committee shall recommend to the Board a firm or other entity or one or more person to act as Trustee in accordance with the provisions of this Plan and Trust and the terms of Article VIII hereof.

4.02           Role of the Board.  The members of the Committee and the Trustee shall be appointed or approved by, and will serve at the pleasure of, the Board.  The Board may in its discretion from time to time remove members from, or add members to, the Committee, and may remove or replace the Trustee, provided that any directors who are selected as members of the Committee shall not be officers or employees of the Corporation and shall be "Non-Employee Directors" within the meaning of Rule 16b-3 promulgated under the Exchange Act.

4.03           Limitation on Liability.  No member of the Board or the Committee shall be liable for any determination made in good faith with respect to the Plan or any Plan Shares or Plan Share Awards granted under it.  If a member of the Board or the Committee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of anything done or not done by him in such capacity under or with respect to the Plan, the Corporation shall, subject to the requirements of applicable laws and regulations, indemnify such member against all liabilities and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation and any Subsidiaries and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

4.04           Compliance with Laws and Regulations.  All Awards granted hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency or stockholders as may be required.

4.05           No Deferral of Compensation Under Section 409A of the Code.  All Awards granted under the Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the Code.  No Recipient shall be permitted to defer the recognition of income beyond the date an Award shall be deemed earned pursuant to Article VII of this Plan.

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ARTICLE V

CONTRIBUTIONS

5.01           Amount and Timing of Contributions.  The Board shall determine the amount (or the method of computing the amount) and timing of any contributions by the Corporation and any Subsidiaries to the Trust established under this Plan.  Such amounts may be paid in cash or in shares of Common Stock and shall be paid to the Trust at the designated time of contribution.  No contributions by Employees shall be permitted.

5.02           Investment of Trust Assets; Number of Plan Shares.  Subject to Section 8.02 hereof, the Trustee shall invest all of the Trust's assets primarily in Common Stock.  The aggregate number of Plan Shares initially available for distribution pursuant to this Plan shall be 54,400 shares of Common Stock, which shares shall be purchased (from the Corporation and/or, if permitted by applicable regulations, from stockholders thereof) by the Trust with funds contributed by the Corporation.

ARTICLE VI

ELIGIBILITY; ALLOCATIONS

6.01      Awards to Non-Employee Directors.  Plan Share Awards shall be made to Non-Employee Directors as follows:

(a)           Initial Allocation.  A Plan Share Award shall be allocated to each Non-Employee Director as of the day on which the Plan was initially approved by stockholders of the Corporation.  Specifically, each Non-Employee Director shall receive an initial Plan Share Award of 1,088 shares of Common Stock (except that each Non-Employee Director who has served as a director of the Bank for more than 30 years shall receive an initial Plan Share Award of 2,176 shares of Common Stock).

(b)           Subsequent Allocation.  A Plan Share Award shall be allocated to each Non-Employee Director one year from the date on which the Plan was initially approved by stockholders of the Corporation and on the next anniversary date thereafter.  Specifically, each Non-Employee Director shall receive a Plan Share Award of 136 shares of Common Stock on each of the two anniversary dates after the initial awards pursuant to Section 6.01(a) hereof (except that each Non-Employee Director who has served as a director of the Bank for more than 30 years shall receive a Plan Share Award of 272 shares of Common Stock on each of the two anniversary dates after the initial awards pursuant to Section 6.01(a) hereof).

6.02           Awards to Employees.  Plan Share Awards may be made to such Employees as may be selected by the Committee.  In selecting those Employees to whom Plan Share Awards may be granted and the number of Shares covered by such Awards, the Committee shall consider the duties, responsibilities and performance of each respective Employee, his present and potential contributions to the growth and success of the Corporation, his salary and such other factors as the Committee shall deem relevant to accomplishing the purposes of the Plan.  The Committee may but shall not be required to request the written recommendation of the Chief Executive Officer of the Corporation other than with respect to Plan Share Awards to be granted to him.

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6.03           Form of Allocation.  As promptly as practicable after a determination is made pursuant to Section 6.01 that a Plan Share Award is to be issued, the Committee shall notify the Recipient in writing of the grant of the Award, the number of Plan Shares covered by the Award, and the terms upon which the Plan Shares subject to the Award shall be distributed to the Recipient.  The date on which the Committee so notifies the Recipient shall be considered the date of grant of the Plan Share Award.  The Committee shall maintain records as to all grants of Plan Share Awards under the Plan.

6.04           Allocations Not Required to any Specific Employee.  Notwithstanding anything to the contrary in Section 6.01 hereof, no Employee shall have any right or entitlement to receive a Plan Share Award hereunder, with such Awards being at the total discretion of the Committee.

ARTICLE VII

EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

7.01     Earning Plan Shares; Forfeitures.

(a)           General Rules.  Unless the Committee shall specifically state to the contrary at the time a Plan Share Award is granted, Plan Shares subject to an Award shall be earned by a Recipient at the rate of twenty percent (20%) of the aggregate number of Shares covered by the Award as of each annual anniversary of the date of grant of the Award.  If the employment or service of the Recipient is terminated prior to the fifth (5th) annual anniversary of the date of grant of a Plan Share Award for any reason (except as specifically provided in subsections (b), (c) and (d) below), the Recipient shall forfeit the right to any Shares subject to the Award which have not theretofore been earned.  No fractional shares shall be distributed pursuant to this Plan.

(b)           Exception for Terminations Due to Death or Disability.  Notwithstanding the general rule contained in Section 7.01(a), all Plan Shares subject to a Plan Share Award held by a Recipient whose employment or service with the Corporation or any Subsidiary terminates due to death or Disability shall be deemed earned as of the Recipient's last day of employment with the Corporation or any Subsidiary and shall be distributed as soon as practicable thereafter; provided, however, that Awards shall be distributed in accordance with Section 7.03(a).

(c)           Exception for a Change in Control.  Notwithstanding the general rule contained in Section 7.01(a), all Plan Shares subject to a Plan Share Award held by a Recipient shall be deemed to be earned in the event of a "change in control of the Corporation."  A "change in control of the Corporation" is defined as a change in the ownership of the Corporation or the Bank, a change in the effective control of the Corporation or the Bank or a change in the ownership of a substantial portion of the assets of the Corporation or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

(d)           Revocation for Misconduct.  Notwithstanding anything hereinafter to the contrary, the Board may by resolution immediately revoke, rescind and terminate any Plan Share Award, or portion thereof, previously awarded under this Plan, to the extent Plan Shares have not been distributed hereunder to the Recipient, whether or not yet earned, in the case of a Recipient who is discharged from the employ or service of the Corporation or any Subsidiary for cause (as hereinafter defined).  Termination for cause shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.

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7.02      Distribution of Dividends.  Any cash dividends or stock dividends declared in respect of each Plan Share held by the Trust will be paid by the Trust, as soon as practicable after the Trust's receipt thereof, to the Recipient on whose behalf such Plan Share is then held by the Trust.

7.03     Distribution of Plan Shares.

(a)           Timing of Distributions:  General Rule.  Plan Shares shall be distributed to the Recipient or his Beneficiary, as the case may be, as soon as practicable after they have been earned, provided, however, that no Plan Shares shall be distributed to the Recipient or Beneficiary pursuant to a Plan Share Award within six months from the date on which that Plan Share Award was granted to such person.

(b)           Form of Distributions.  All Plan Shares, together with any Shares representing stock dividends, shall be distributed in the form of Common Stock.  One share of Common Stock shall be given for each Plan Share earned and distributable.  Payments representing cash dividends shall be made in cash.

(c)           Withholding.  The Trustee may withhold from any cash payment or Common Stock distribution made under this Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount of a cash payment is insufficient, the Trustee may require the Recipient or Beneficiary to pay to the Trustee the amount required to be withheld as a condition of delivering the Plan Shares.  The Trustee shall pay over to the Corporation or any Subsidiary which employs or employed such Recipient any such amount withheld from or paid by the Recipient or Beneficiary.

(d)           Restrictions on Selling of Plan Shares.  Plan Share Awards may not be sold, assigned, pledged or otherwise disposed of prior to the time that they are earned and distributed pursuant to the terms of this Plan.  Following distribution, the Committee may require the Recipient or his Beneficiary, as the case may be, to agree not to sell or otherwise dispose of his distributed Plan Shares except in accordance with all then applicable federal and state securities laws, and the Committee may cause a legend to be placed on the stock certificate(s) representing the distributed Plan Shares in order to restrict the transfer of the distributed Plan Shares for such period of time or under such circumstances as the Committee, upon the advice of counsel, may deem appropriate.

7.04      Voting of Plan Shares.  After a Plan Share Award has been made, the Recipient shall be entitled to direct the Trustee as to the voting of the Plan Shares which are covered by the Plan Share Award and which have not yet been earned and distributed to him pursuant to Section 7.03, subject to rules and procedures adopted by the Committee for this purpose.Provided that the Recipient informs the Trustee how the Recipient voted Plan Shares which have been earned and distributed for and against proposals to stockholders, the Trustee shall vote all Plan Shares which have not yet been earned and distributed pursuant to Section 7.03 in the same proportion for and against proposals to stockholders as the Recipient actually votes Plan Shares which have been earned and distributed pursuant to Section 7.03. If the Recipient does not provide the Trustee with such information, Plan Shares which have not yet been earned and distributed pursuant to Section 7.03 shall not be voted by the Trustee. In the event a tender offer is made for Plan Shares, the Trustee shall tender Plan Shares held by it which have not yet been earned and distributed in the same proportion in which the Recipient actually tenders Plan Shares which have been earned and distributed.

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ARTICLE VIII

TRUST

8.01     Trust.  The Trustees shall receive, hold, administer, invest and make distributions and disbursements from the Trust in accordance with the provisions of the Plan and Trust and the applicable directions, rules, regulations, procedures and policies established by the Committee pursuant to the Plan.

8.02     Management of Trust.  It is the intent of this Plan and Trust that the Trustees shall have complete authority and discretion with respect to the arrangement, control and investment of the Trust, and that the Trustees shall invest all assets of the Trust in Common Stock to the fullest extent practicable, except to the extent that the Trustees determine that the holding of monies in cash or cash equivalents is necessary to meet the obligations of the Trust.  In performing their duties, the Trustees shall have the power to do all things and execute such instruments as may be deemed necessary or proper, including the following powers:

(a)           To invest up to one hundred percent (100%) of all Trust assets in Common Stock without regard to any law now or hereafter in force limiting investments for trustees or other fiduciaries.  The investment authorized herein may constitute the only investment of the Trust, and in making such investment, the Trustees are authorized to purchase Common Stock from the Corporation or from any other source, and such Common Stock so purchased may be outstanding, newly issued, or treasury shares.

(b)           To invest any Trust assets not otherwise invested in accordance with (a) above, in such deposit accounts, and certificates of deposit, obligations of the United States Government or its agencies or such other investments as shall be considered the equivalent of cash.

(c)           To sell, exchange or otherwise dispose of any property at any time held or acquired by the Trust.

(d)           To cause stocks, bonds or other securities to be registered in the name of a nominee, without the addition of words indicating that such security is an asset of the Trust (but accurate records shall be maintained showing that such security is an asset of the Trust).

(e)           To hold cash without interest in such amounts as may in the opinion of the Trustees be reasonable for the proper operation of the Plan and Trust.

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(f)           To employ brokers, agents, custodians, consultants and accountants.

(g)           To hire counsel to render advice with respect to their rights, duties and obligations hereunder, and such other legal services or representation as they may deem desirable.

(h)           To hold funds and securities representing the amounts to be distributed to a Recipient or his Beneficiary as a consequence of a dispute as to the disposition thereof, whether in a segregated account or held in common with other assets of the Trust.

Notwithstanding anything herein contained to the contrary, the Trustees shall not be required to make any inventory, appraisal or settlement or report to any court, or to secure any order of a court for the exercise of any power herein contained, or give bond.

8.03     Records and Accounts.  The Trustees shall maintain accurate and detailed records and accounts of all transactions of the Trust, which shall be available at all reasonable times for inspection by any legally entitled person or entity to the extent required by applicable law, or any other person determined by the Committee.

8.04     Expenses.  All costs and expenses incurred in the operation and administration of this Plan shall be borne by the Corporation.

8.05     Indemnification.  Subject to the requirements of applicable laws and regulations, the Corporation shall indemnify, defend and hold the Trustees harmless against all claims, expenses and liabilities arising out of or related to the exercise of the Trustees' powers and the discharge of their duties hereunder, unless the same shall be due to their gross negligence or willful misconduct.

ARTICLE IX

MISCELLANEOUS

9.01     Adjustments for Capital Changes.  The aggregate number of Plan Shares available for distribution pursuant to the Plan Share Awards and the number of Shares to which any Plan Share Award relates shall be proportionately adjusted for any increase or decrease in the total number of outstanding shares of Common Stock issued subsequent to the Effective Date of the Plan resulting from any split, subdivision or consolidation of shares or other capital adjustment, or other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation.

9.02     Amendment and Termination of Plan.  The Board may, by resolution, at any time amend or terminate the Plan, subject to any required stockholder approval or any stockholder approval which the Board may deem to be advisable for any reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits under tax, securities or other laws or satisfying any applicable stock exchange listing requirements.  The Board may not, without the consent of the Recipient, alter or impair his Plan Share Award except as specifically authorized herein. Notwithstanding any other provision of the Plan, this Plan may not be terminated prior to such time as all outstanding Plan Share Awards granted to Recipients have been earned or forfeited in accordance with the Plan.

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9.03           Nontransferable.  Plan Share Awards and rights to Plan Shares shall not be transferable by a Recipient, and during the lifetime of the Recipient, Plan Shares may only be earned by and paid to a Recipient who was notified in writing of an Award by the Committee pursuant to Section 6.03.  No Recipient or Beneficiary shall have any right in or claim to any assets of the Plan or Trust, nor shall the Corporation or any Subsidiary be subject to any claim for benefits hereunder.

9.04           Employment or Service Rights.  Neither the Plan nor any grant of a Plan Share Award or Plan Shares hereunder nor any action taken by the Trustee, the Committee or the Board in connection with the Plan shall create any right on the part of any Employee or any Non-Employee Director to continue in such capacity.

9.05           Voting and Dividend Rights.  No Recipient shall have any voting or dividend rights or other rights of a stockholder in respect of any Plan Shares covered by a Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above, prior to the time said Plan Shares are actually earned and distributed to him.

9.06           Governing Law.  To the extent not governed by federal law, the Plan and Trust shall be governed by the laws of the Commonwealth of Pennsylvania.

9.07           Effective Date.  This Plan as originally adopted shall be effective as of the Effective Date, and Awards may be granted hereunder no earlier than the date the Plan was approved by the requisite vote of the holders of outstanding voting shares of the Corporation at a meeting of stockholders of the Corporation and no later than the termination of the Plan. The Plan, as originally adopted, was approved by stockholders at a meeting thereof.

9.08           Term of Plan.  This Plan shall remain in effect until the earlier of (1) ten (10) years from the Effective Date, (2) termination by the Board, or (3) the distribution to Recipients and Beneficiaries of all assets of the Trust.

9.09           Tax Status of Trust.  It is intended that the trust established hereby be treated as a Grantor Trust of the Corporation under the provisions of Section 671 et seq. of the Code, as the same may be amended from time to time.

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IN WITNESS WHEREOF, the Corporation has caused this amended and restated Agreement to be executed by its duly authorized officer and the corporate seal to be affixed and duly attested, and the Trustees of the Trust established pursuant hereto have duly and validly executed this Agreement, all on this 25th day of November 2008.

FIRST KEYSTONE FINANCIAL, INC.
By:	/s/Donald S. Guthrie
	Donald S. Guthrie
	Interim Chief Executive Officer
TRUSTEES:
/s/ Donald S. Hosier
/s/William J. O'Donnell

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