Document:

exh105.htm

     

    
      

      

    

    Exhibit
10.5

     

     

    
      FIRST
KEYSTONE FINANCIAL, INC.

      AMENDED
AND RESTATED 1998 STOCK OPTION PLAN

       

       

      ARTICLE
I

      ESTABLISHMENT
OF THE PLAN

       

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

       

       

      ARTICLE
II

      PURPOSE
OF THE PLAN

       

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

       

       

      ARTICLE
III

      DEFINITIONS

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      ARTICLE
IV

      ADMINISTRATION OF
THE PLAN

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

       

      ARTICLE
V

      ELIGIBILITY

       

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

       

       

       ARTICLE
VI

      COMMON
STOCK COVERED BY THE PLAN

       

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

       

      
        
          
          

        

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

       

       

      ARTICLE
VII

      DETERMINATION
OF

      AWARDS,
NUMBER OF SHARES, ETC.

       

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

       

       

      ARTICLE
VIII

      OPTIONS
AND STOCK APPRECIATION RIGHTS

       

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

       

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

       

      
        
          
          

        

        
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      8.02    
Option Exercise Price.

       

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

       

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

       

      8.03   
Vesting and Exercise of Options.

       

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

       

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

       

      8.04    
Duration of Options.

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

      8.10     Stock
Appreciation Rights.

       

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

       

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

       

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

       

      
        
          
          

        

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

       

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

       

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

       

      ARTICLE
IX

      ADJUSTMENTS
FOR CAPITAL CHANGES

       

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

       

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

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      ARTICLE
X

      AMENDMENT
AND TERMINATION OF THE PLAN

       

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

       

      ARTICLE
XI

      EMPLOYMENT
AND SERVICE RIGHTS

       

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

       

      ARTICLE
XII

      WITHHOLDING

       

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

       

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

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      ARTICLE
XIII

      EFFECTIVE
DATE OF THE PLAN; TERM

       

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

       

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

       

      ARTICLE
XIV

      STOCKHOLDER
APPROVAL

       

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

       

      ARTICLE
XV

      MISCELLANEOUS

       

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

       

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

       

       

      
        
          
          

        

        
          13exh106.htm

     

    
      

      

    

    Exhibit
10.6

     

     

    
      FIRST
KEYSTONE FINANCIAL, INC.

      AMENDED
AND RESTATED 1995 RECOGNITION AND RETENTION

      PLAN
AND TRUST AGREEMENT

       

       

      ARTICLE
I

      ESTABLISHMENT
OF THE PLAN AND TRUST

       

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

       

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

       

       

      ARTICLE
II

      PURPOSE
OF THE PLAN

       

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

       

       

      ARTICLE
III

      DEFINITIONS

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      ARTICLE
IV

      ADMINISTRATION
OF THE PLAN

       

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

       

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

       

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

       

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

       

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

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      ARTICLE
V

      CONTRIBUTIONS

       

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

       

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

       

       

      ARTICLE
VI

      ELIGIBILITY;
ALLOCATIONS

       

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

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

       

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

       

       

      ARTICLE
VII

      EARNING
AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

       

      7.01     Earning
Plan Shares; Forfeitures.

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

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

       

      7.03     Distribution
of Plan Shares.

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

       

      ARTICLE VIII

      TRUST

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      ARTICLE
IX

      MISCELLANEOUS

       

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

       

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

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

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

       

       

      
         

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

        

         

      

       

       

       

      
        
          
          

        

        
          10

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