exh101.htm


     

    
      


      

    

    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.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (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

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (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

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      (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:

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (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

              


      

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        	
                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.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      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]

       

       

       

       

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      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

              


      

    

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        10