Document:

exh103.htm

     

    
      

      

    

    Exhibit
10.3

     

    
      FIRST
KEYSTONE FINANCIAL, INC.

      FIRST
KEYSTONE BANK

       

      AMENDED
AND RESTATED

      TRANSITION,
CONSULTING, NONCOMPETITION AND RETIREMENT AGREEMENT

       

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

       

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

       

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

       

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

       

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Agreement”), which superseded the Company Employment Agreement, the Bank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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

      3.           Consulting
Services.

       

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

       

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

       

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

       

      
        
           

        

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

       

      4.           Compensation.

       

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

       

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

       

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

       

      
        
           

        

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

       

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

       

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

       

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

       

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

       

       

      5.           Termination
of Consulting Services.

       

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

       

      
        
           

        

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

       

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

       

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

       

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

       

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

       

      
        
           

        

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

       

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

       

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

       

      
        
           

        

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

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

       

      
        	
                 
      

              	
                8.

              	
                Non-Compete;
      Confidentiality.

              

      

       

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

       

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

       

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

       

      
        
           

        

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

       

      9.           Retirement
Benefits.

       

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

       

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

       

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

       

      
        
           

        

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

       

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

       

      
        	
                 
      

              	
                (a)

              	
                the
      specific reason or reasons for the
denial;

              

      

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (a)          review
pertinent documents, and

       

      (b)          submit
issues and comments in writing.

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

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

       

      If to the
Consultant:

       

      Donald S.
Guthrie

      At the
address last appearing on the

      personnel
records of the Bank

       

      If to the
Company and the Bank:

       

      First
Keystone Financial, Inc.

      First
Keystone Bank

      22 West
State Street

      Media,
Pennsylvania  19063

      Attention: President

       

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

       

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

       

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

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      19.           Entire
Agreement; Severability.

       

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

       

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

       

      20.           Amendment;
Waiver.

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

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

       

      24.           Release of
the Company and Related Parties.

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

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

       

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

       

      
        	
                 

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

              

      

       

      
        	
                 
      

              	
                 
      

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

              

      

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

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

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

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

       

       

      ATTEST:                                                                   
EXECUTIVE

       

       

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

      Name:  Carol
Walsh                                                     Name:  Donald
S. Guthrie

      Title:  Senior
Vice President and Secretary

       

      FIRST
KEYSTONE FINANCIAL, INC.

       

       

      By: /s/ Hugh
J. Garchinsky                

      Name:  Hugh J. Garchinsky

      Title:  Chief Financial
Officer

       

       

      FIRST
KEYSTONE BANK

       

       

      By: /s/ Hugh
J. Garchinsky                

      Name:  Hugh J. Garchinsky

      Title:  Chief Financial
Officer

       

       

      
 

      
        
           

        

        
          18exh104.htm

     

    
      

      

    

    Exhibit
10.4

     

     

    
      FIRST
KEYSTONE FINANCIAL, INC.

      AMENDED
AND RESTATED 1995 STOCK OPTION PLAN

       

      ARTICLE
I

      ESTABLISHMENT
OF THE PLAN

       

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

       

       

      ARTICLE
II

      PURPOSE
OF THE PLAN

       

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

       

       

      ARTICLE
III

      DEFINITIONS

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

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

       

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

       

       

      ARTICLE
IV

      ADMINISTRATION
OF THE PLAN

       

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

       

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

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

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

       

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

       

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

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

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

       

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

       

       

      ARTICLE
V

      ELIGIBILITY

       

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

       

       

      ARTICLE
VI

      COMMON
STOCK COVERED BY THE PLAN

       

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

       

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

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      ARTICLE
VII

      DETERMINATION
OF

      AWARDS,
NUMBER OF SHARES, ETC.

       

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

       

       

      ARTICLE
VIII

      OPTIONS
AND STOCK APPRECIATION RIGHTS

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

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

       

      8.03     Option Exercise
Price.

       

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

       

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

       

      8.04     Vesting and Exercise of
Options.

       

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

       

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

       

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

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      8.05     Duration of
Options.

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

      8.11     Stock Appreciation
Rights.

       

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

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

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

       

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

       

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

       

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

       

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

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

       

      ARTICLE
IX

      ADJUSTMENTS
FOR CAPITAL CHANGES

       

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

       

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

       

       

      ARTICLE
X

      AMENDMENT
AND TERMINATION OF THE PLAN

       

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

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      ARTICLE
XI

      EMPLOYMENT
RIGHTS

       

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

       

       

      ARTICLE
XII

      WITHHOLDING

       

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

       

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

       

       

      ARTICLE
XIII

      EFFECTIVE
DATE OF THE PLAN; TERM

       

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

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

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

       

      ARTICLE
XIV

      MISCELLANEOUS

       

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

       

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

       

       

       

       

       

       

       

       

      
 

      
        
           

        

        
          13

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