Exhibit 10.21

TRANSITION, CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT

     This Transition, Consulting, Noncompetition and Retirement Agreement (the
“Agreement”) is entered into as of March 23, 2005, by and between First Keystone
Financial, Inc. (the “Company”), First Keystone Bank (the “Bank”) and Donald S.
Guthrie (the “Consultant”).

WITNESSETH:

     WHEREAS, the Consultant currently serves as Chairman of the Board and Chief
Executive Officer of the Company and as President and Chief Executive Officer of
the Bank;

     WHEREAS, the Company and the Consultant entered into an employment
agreement as of December 1, 2004 (the “Company Employment Agreement”);

     WHEREAS, the Bank and the Consultant entered into an employment agreement
as of December 1, 2004 (the “Bank Employment Agreement”);

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

     WHEREAS, the Consultant desires to retire and to provide services to the
Company and the Bank on a part-time basis;

     WHEREAS, the Company desires to have the Consultant undertake, and the
Consultant is willing to undertake, certain consulting and noncompetition
obligations on the terms and conditions set forth herein; and

     WHEREAS, the Consultant is willing to relinquish his rights under the
Company Employment Agreement, the Bank Employment Agreement and the SERP;

     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” shall mean 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, and shall provide his personal advice
and counsel to the Company and the Bank regarding their operations, customer
relationships, growth and expansion

 

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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 from time to time (collectively, the
“Consulting Services”). It is contemplated that 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. 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. In no event shall the Consultant 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.

     (d) Directorship. The Consultant shall be 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. Subject to
compliance with its fiduciary duties, the Board of Directors of the Company
agrees to nominate the Consultant for an additional four-year term of office as
a director of the Company when his current term expires in 2007 and to elect him
as a director of the Bank during the Consulting 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”). During the Consulting Period,

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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 date of this Agreement.

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

     (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 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 Participant 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 has provided to the Company and the Bank 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.

     (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.

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     (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
Company and/or the Bank determines in good faith that the Disability of the
Consultant has occurred during the Consulting Period (pursuant to the definition
of Disability set forth below), it 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.

     (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

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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.

     (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:

     (i) any failure by the Company and/or the Bank to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company and/or the Bank within 25 days after receipt of written notice thereof
given by the Consultant; or

     (ii) any purported termination by the Company and/or the Bank of the
Consultant’s services otherwise than as expressly permitted by this Agreement.

     (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 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.

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     (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 of receipt of the Notice of
Termination or any later date specified therein within 30 days of such notice,
as the case may be, (ii) if the Consultant’s services are terminated by the
Company and/or the Bank other than for Cause or Disability, the Date of
Termination shall be the date on which the Company and/or the Bank notifies the
Consultant of such termination and (iii) if the Consultant’s services are
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Consultant or the Disability Effective Date, as the
case may be.

     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 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 of 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 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.

     (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 of 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 below, provided, however, that if the
Consultant’s services are terminated by reason of Disability prior to May 1,
2008, then the Retirement Benefits shall be calculated as if the annual benefit
was paid for 12 years rather than 10 years. In addition, the Company and the
Bank shall provide the Consultant and his spouse

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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.

     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 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

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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.

     (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 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 business day of each month, for 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 of the date the Company and/or the Bank receive notice of the
Consultant’s death, the present value of the remaining unpaid Retirement
Benefits. The present

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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.

     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.

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     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:

     (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.

     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

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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.

     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.

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     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.

     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 Company
Employment Agreement, the Bank Employment Agreement and the SERP. 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.

     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.

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     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.

     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, now has, owns or holds, or
has at any time heretofore 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 Company
Employment Agreement, the Bank Employment and the SERP, excepting only:

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     (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;

     (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 shall have a period of 21 days to consider whether to
execute this Agreement. To the extent the Consultant has executed this Agreement
within less than twenty-one (21) days after its delivery to him, the Consultant
hereby acknowledges that his decision to execute this Agreement prior to the
expiration of such twenty-one (21) day period was entirely voluntary. If the
Consultant accepts the terms hereof and executes this Agreement, he may
thereafter, for a period of 7 days following (and not including) the date of
execution, revoke this Agreement. If no such revocation occurs, this Agreement
shall become irrevocable in its entirety, and binding and enforceable against
the Consultant, on the day next following the day on which the foregoing
seven-day period has elapsed. Any revocation of this Agreement shall be deemed
for all purposes a revocation of this Agreement in its entirety.

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     (f) The Consultant acknowledges and agrees that he has not, with respect to
any transaction or state of facts existing prior to the 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 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.

     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,
now have, own or hold, or have at any time heretofore 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.

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     (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 date hereof,
filed any complaints, charges or lawsuits against any Consultant Released Party
with any governmental agency, court or tribunal.

     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.

[Signature page follows]

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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 above written.

                  /s/ Donald S. Guthrie       Name:   Donald S. Guthrie         
 

            FIRST KEYSTONE FINANCIAL, INC.
      By:   /s/ Thomas M. Kelly         Name:   Thomas M. Kelly        Title:  
President and Chief Operating Officer     

            FIRST KEYSTONE BANK
      By:   /s/ Thomas M. Kelly         Name:   Thomas M. Kelly        Title:  
Executive Vice President and Chief Operating Officer     

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