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 March 24, 2010, 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 and was received by letter dated March 4, 2010;

    


    WHEREAS, the Corporation
previously amended and restated the Prior Agreement in order to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”);

    


    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 Executive’s annual base salary in effect immediately prior to the
Date of Termination.


    
      
         


      

      
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    (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 or material breach of any provision of
this Agreement.

    


    (c)         Change in
Control.  “Change in Control” shall mean a change in the
ownership of the Corporation or the Savings Bank or a change in the effective
control 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 Section 3 hereof:

    


    (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 one (1) times the Executive’s
Annual Compensation less the value as of the Date of Termination of the benefits
to be provided to Executive pursuant to the terms of subsection (b) hereof;
and

    


    (b)         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(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.


    
      
         


      

      
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    (c)         Notwithstanding
anything to the contrary herein, the total amount of severance benefits that the
Executive receives under this Agreement and/or the Amended and Restated
Agreement between the Savings Bank and the Executive entered into concurrently
with this Agreement shall not in the aggregate exceed the amount of benefits
provided by subsections (a) and (b) of this Section 2.

    


    (d)         In
the event that the Executive’s employment is terminated by the Corporation for
Cause, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.

    


    3.           Limitation
of Benefits under such 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, would constitute a “parachute payment” under Section 280G of
the Code, then the payments and benefits payable by the Corporation 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 Corporation 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
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 Corporation and paid for by the Corporation.  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.

    


    (b)           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) 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.


    
      
         


      

      
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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 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

                
	 
      	 
      
	
                  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.


    
      
         


      

      
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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 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, at least
thirty (30) days 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 and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors, including the
Executive’s performance as an employee) the extension of the term of this
Agreement for an additional one (1) year. The term of this Agreement shall not
be extended unless the Board of Directors of the Corporation approves such
extension and provides written notice to the Executive, at least thirty (30)
days prior to the date of any such anniversary, of the Corporation’s election 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.
Furthermore, notwithstanding the Corporation’s action to extend the term, such
term shall not extend if the Executive gives notice thirty (30) days prior to
the scheduled expiration date of her election to not allow the term of the
Agreement to extend.  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.

    


    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 (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:

                	
                  /s/ Hugh J. Garchinsky

                	 	
                  By:

                	
                  /s/ Donald S.
      Guthrie

                
	
                  Name:

                	
                  Hugh J. Garchinsky

                	 	 
      	
                  Donald
      S. Guthrie

                
	
                  Title:

                	
                  President/CEO

                	 	 
      	
                  Chairman
      of the Board of Directors

                
	 
      	 	 
      
	 
      	 	
                  EXECUTIVE

                
	 
      	 	 
      
	 
      	 	
                  By:

                	
                  /s/ Carol
      Walsh

                
	 
      	 	 
      	
                  Carol
      Walsh, Individually

                


        

      

    

     

    
      
         


      

      
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