--------------------------------------------------------------------------------

Exhibit 10.1
 
EMPLOYMENT AGREEMENT
 
THIS AGREEMENT (“Agreement”) is made as of this 10th day of March 2015 (the
“Effective Date”), between ROYAL BANCSHARES OF PENNSYLVANIA, INC., a
Pennsylvania business corporation (the “Corporation”), ROYAL BANK AMERICA, a
Pennsylvania chartered bank (the “Bank”) and F. KEVIN TYLUS, an adult individual
(“Executive”).
 
WITNESSETH:
 
        WHEREAS, Corporation, Bank and Executive previously entered into an
employment agreement dated November 20, 2013, for Executive to serve in the
capacity of Chief Executive Officer and President of the Corporation and the
Bank; and
 
        WHEREAS, the Corporation, the Bank and Executive desire to enter into an
amended and restated agreement providing for the terms of Executive’s employment
with the Corporation and the Bank.
 
AGREEMENT
 
        NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
 
1.  Employment.  The Corporation and the Bank hereby employ Executive and
Executive hereby accepts employment with the Corporation and the Bank, on the
terms and conditions set forth in this Agreement.
 
2.  Duties of Employee.  Executive shall serve as Chief Executive Officer and
President of the Corporation and the Bank, reporting to the Board of Directors
of the Corporation (the “Board”) and the Bank (the “Bank Board”), respectively,
and shall have such powers and duties as may from time to time be reasonably
prescribed by the Board and the Bank Board, provided such powers and duties are
consistent with Executive’s position as a senior executive officer of the
Corporation and the Bank.  Executive shall upon the commencement of this
Agreement be appointed to the Board and the Bank Board as a Director.  Executive
shall devote his full time, attention and energies to the business of the
Corporation and the Bank during the Employment Period (as defined in Section 3
of this Agreement); provided, however, that this Section 2 shall not be
construed as preventing Executive from (a) engaging in activities incident or
necessary to personal investments, (b) acting as a member of the board of
directors of any non-profit association or corporation, or (c) being involved in
any other business activity with the prior approval of the Board and the Bank
Board.  Executive shall not engage in any business or commercial activities,
duties or pursuits which compete with the business or commercial activities of
the Corporation or the Bank, nor may Executive serve as a director or officer or
in any other capacity in a company which competes with the Corporation or the
Bank.
 
1

--------------------------------------------------------------------------------

3.  Term of Agreement.
 
(a)       Employment Period.  This Agreement shall be for a period (the
“Employment Period”) beginning on the Effective Date, and if not previously
terminated pursuant to the terms of this Agreement, ending December 31, 2016;
provided, however, that the Employment Period shall be automatically renewed on
January 1, 2017 (the “Renewal Date”) for a period ending one (1) year from the
Renewal Date unless either party shall give written notice of non-renewal to the
other party at least ninety (90) days prior to the Renewal Date, in which event
this Agreement shall terminate at the end of the Employment Period.  If this
Agreement is renewed on the Renewal Date, it will be automatically renewed on
the first anniversary date of the Renewal Date and each subsequent year (the
“Annual Renewal Date”) for a period ending one (1) year from each Annual Renewal
Date, unless either party gives written notice of non-renewal to the other party
at least ninety (90) days prior to the Annual Renewal Date, in which case this
Agreement shall terminate at the end of the Employment Period.
 
(b)      Continuation of Employment After Expiration.  Notwithstanding anything
herein contained to the contrary, nothing in this Agreement shall mandate or
prohibit a continuation of Executive’s employment following the expiration of
the term of this Agreement upon such terms as the Bank Board and Executive may
mutually agree.
 
(c)       Termination for Cause.  Notwithstanding the provisions of Section 3(a)
of this Agreement, this Agreement may be terminated by action by both of the
Board and the Bank Board for Cause (as defined herein).  Any action by the Board
and the Bank Board pursuant to this Section 3(c) shall require a seventy-five
percent (75%) vote of the total number of directors serving on each of the Board
and the Bank Board. As used in this Agreement, “Cause” shall mean any of the
following:
 
(i)  Executive’s conviction of or plea of guilty or nolo contendere to a felony,
a crime involving moral turpitude, or the actual incarceration of Executive for
a period of sixty (60) consecutive days or more;
 
(ii)  Executive’s willful failure to follow the good faith lawful instructions
of the Board or the Bank Board with respect to their operations, after written
notice from the Corporation or the Bank and a failure to cure such violation
within twenty (20) days of said written notice, unless it is apparent under the
circumstances that Executive is unable to cure such violation;
 
(iii)  Executive’s willful failure to substantially perform Executive’s duties
to the Corporation or the Bank, other than a failure resulting from Executive’s
incapacity because of physical or mental illness, as provided in subsection (e)
of this Section 3, after written notice from the Corporation or the Bank and a
failure to cure such violation within twenty (20) days of said written notice,
unless it is apparent under the circumstances that Executive is unable to cure
such violation;
 
(iv)  Executive’s intentional violation of the provisions of this Agreement,
after written notice from the Corporation or the Bank and a failure to cure such
violation within twenty (20) days of said written notice, unless it is apparent
under the circumstances that Executive is unable to cure such violation;
 
2

--------------------------------------------------------------------------------

(v)  Executive’s removal or prohibition from being an institution-affiliated
party by a final order of an appropriate federal banking agency pursuant to
Section 8(e) of the Federal Deposit Insurance Act;
 
  (vi)  the willful engaging by Executive in misconduct injurious to the
Corporation or the Bank after notice from the Corporation or the Bank, and a
failure to cure such conduct within twenty (20) days;
 
  (vii)  the breach of Executive’s fiduciary duty to the Corporation or the Bank
involving personal profit;
 
  (viii)  Executive’s willful violation of (1) any material law, rule or
regulation applicable to the Corporation or the Bank, or (2) any final cease and
desist order issued by an applicable regulatory agency;
 
  (ix)  unlawful harassment by Executive against employees, customers, business
associates, contractors or vendors of the Corporation or the Bank following an
investigation of the claims by a third party;
 
  (x)  any act of fraud or misappropriation against the Corporation or the Bank,
or its customers, employees, contractors or business associates which has been
adjudicated and proven in a court of law; or
 
  (xi)  the existence of any material conflict between the interests of the
Corporation or the Bank and Executive that is not disclosed in writing by
Executive to Corporation and the Bank prior to action and approved in writing by
the Board and the Bank Board, and, after notice from Corporation and the Bank, a
failure to cure such conflict within twenty (20) days of said notice.
 
If this Agreement is terminated for Cause, all of Executive’s rights under this
Agreement shall cease as of the effective date of such termination, except that:
 
(A)  the Bank shall pay to Executive the unpaid portion, if any, of his Annual
Salary through the date of termination; and
 
(B)  the Bank shall provide to Executive such post-employment benefits, if any,
as may be provided for under the terms of the employee benefit plans of the Bank
then in effect, provided that the cost to the Bank of such post-employment
benefits shall not exceed an amount equal to one year of Executive’s Annual
Salary.
 
(d)       Death.  Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically upon Executive’s death
and Executive’s rights under this Agreement shall cease as of the date of such
termination, except that (i) the Bank shall pay to Executive’s spouse, personal
representative, or estate the unpaid portion, if any, of his Annual Salary
through date of death and (ii) the Bank shall provide to Executive’s dependents
any benefits due under the Bank’s employee benefit plans.
 
3

--------------------------------------------------------------------------------

(e)       Disability.  Executive, the Corporation and the Bank agree that if
Executive becomes Disabled, within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder,
and becomes eligible for employer-provided short-term and/or long-term
disability benefits, or worker’s compensation benefits, then the Bank’s
obligation to pay Executive his Annual Salary shall be reduced by the amount of
the disability or worker’s compensation benefits received by Executive.
 
Executive, the Corporation and the Bank agree that if, in the judgment of the
Board, Executive is unable, as a result of illness or injury, to perform the
essential functions of his position on a full-time basis with or without a
reasonable accommodation and without posing a direct threat to himself or others
for a period of six months, the Bank will suffer an undue hardship in continuing
Executive’s employment as set forth in this agreement.  Accordingly, this
Agreement shall terminate at the end of the six-month period, and all of
Executive’s rights under this Agreement shall cease, with the exception of those
rights which Executive may have under the Bank’s employee benefit plans.
 
(f)       Resignation from Board of Directors.  In the event Executive’s
employment under this Agreement is terminated for any reason, if applicable,
Executive’s service as a Director of the Corporation, the Bank, and any
affiliate or subsidiary thereof shall immediately terminate.  This Section 3(f)
shall constitute a resignation notice for such purposes.
 
4.  Employment Period Compensation; Benefits and Expenses.
 
(a)       Annual Salary.  For services performed by Executive under this
Agreement, the Bank shall pay Executive an annual salary during the Employment
Period at the rate of $437,500 per year, minus applicable withholdings and
deductions (the “Annual Salary”).  The Annual Salary (including the components
discussed below) shall be reviewed annually by the Board or the Bank Board and
may, from time to time, increase Executive’s Annual Salary, and any and all such
increases shall be deemed to constitute amendments to this Section 4(a) to
reflect the increased amounts, effective as of the date established for such
increases.  In reviewing adjustments to Annual Salary, the Board or the Bank
Board shall consider relevant market data regarding executive salaries at peer
financial institutions and the performance of the Corporation and the Bank under
Executive’s leadership.
 
(b)      Bonus.  The Board or the Bank Board may provide for the payment of an
annual bonus to Executive as it deems appropriate to provide incentive to
Executive and to reward Executive for his performance.  Such bonus may, but need
not be, determined in accordance with any incentive bonus programs for executive
officers as approved by the Board or the Bank Board.  The payment of any such
bonuses will not reduce or otherwise affect any other obligation of the Bank to
Executive provided for in this Agreement.
 
(c)       Vacations, Holidays, etc.  During the term of this Agreement,
Executive shall be entitled to thirty (30) days paid time off per calendar year
in accordance with the policies as established from time to time by the Bank
Board.  Executive shall also be entitled to all paid holidays provided by the
Bank to its regular full-time employees and senior executive officers.
 
4

--------------------------------------------------------------------------------

(d)      Stock Based Incentives.  During the term of this Agreement, Executive
shall be entitled to such stock based incentives as may be granted from time to
time by the board of directors of the Corporation or by the Bank Board under the
Corporation’s or the Bank’s stock based incentive plans and as are consistent
with Executive’s responsibilities and performance.
 
(e)       Employee Benefit Plans.  During the term of this Agreement, Executive
shall be entitled to participate in or receive the benefits of any employee
benefit plan currently in effect at the Bank, subject to the eligibility and
terms of each such plan, until such time that the Bank Board authorizes a change
in such benefits.  The Corporation and the Bank shall not make any changes in
such plans or benefits which would adversely affect Executive’s rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers of the Corporation and the Bank and does not result in
a proportionately greater adverse change in the rights of or benefits to
Executive as compared with any other executive officer of the Corporation and
the Bank.  Nothing paid to Executive under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in lieu of the
Annual Salary payable to Executive pursuant to Section 4(a) hereof.
 
(f)        Business Expenses.  During the term of this Agreement, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him, that are properly accounted for, in accordance with the
policies and procedures established by the Bank or the Board or the Bank Board
for its executive officers.  In addition, Executive shall be reimbursed by the
Bank for the cost of up to fifty (50) nights per year at hotels in proximity to
the Bank, as necessary or convenient for the Bank and Executive.
 
5.  Rights in Event of Termination of Employment after a Change in Control.
 
(a)       Termination without Cause.  In the event that Executive’s employment
is involuntarily terminated by the Corporation or the Bank without Cause (other
than for death or Disability) during the term of this Agreement after a Change
in Control or if Executive’s employment is voluntarily terminated by Executive
for Good Reason after a Change in Control (defined in Section 5(d) below),
Executive shall be entitled to receive the compensation set forth below:
 
(i)  Executive shall be paid, within twenty (20) days following termination, a
lump sum cash payment equal to three (3) times Executive’s Annual Salary.  Such
amount shall be subject to federal, state, and local tax withholdings.
 
(b)      No Mitigation.  Executive shall not be required to mitigate the amount
of any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of payment provided for in this Section 5 be
reduced by any compensation earned by Executive as the result of employment by
another employer or by reason of Executive’s receipt of or right to receive any
retirement or other benefits after the date of termination of employment or
otherwise.
5

--------------------------------------------------------------------------------

(c)       Change in Control.  As used in this Agreement, “Change in Control”
shall mean:
 
(i)   (A) a merger, consolidation or division involving the Corporation or Bank,
(B) a sale, exchange, transfer or other disposition of substantially all of the
assets of Corporation or Bank, or (C) a purchase by Corporation or Bank of
substantially all of the assets of another entity, unless (y) such merger,
consolidation, division, sale, exchange, transfer, purchase or disposition is
approved in advance by seventy-five percent (75%) or more of the members of the
Board or the Bank Board who are not interested in the transaction and (z) a
majority of the members of the Board of Directors of the legal entity resulting
from or existing after any such transaction and the Board of Directors of such
entity’s parent corporation, if any, are former members of the Board or the Bank
Board; or
 
(ii)   any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)), is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Corporation or Bank representing fifty-one
percent (51%) or more of the combined voting power of Corporation or Bank’s then
outstanding securities; provided, however, that for the purposes of this
Agreement, a Change in Control shall not result from the beneficial ownership
(with the meaning of Rule 13d-3 under the Exchange Act) of securities of the
Corporation or the Bank representing fifty-one percent (51%) or more of the
combined voting power of the Corporation’s or the Bank’s then outstanding
securities by (x) any “person” who on the date hereof is a director or officer
of the Corporation or the Bank, (y) the Daniel M. Tabas Trust, the estate of
Daniel M. Tabas, or any person who is related by descent or marriage to either
Daniel M. Tabas, or any family member of any such persons, or (z) any estate or
trust of or for the benefit of any of the persons described in clause (x) or
clause (y) of this subparagraph (ii);
 
(iii)  during the period of two (2) consecutive years during the term of
Executive’s employment under this Agreement, individuals who at the beginning of
such period constitute the Board or the Bank Board cease for any reason to
constitute at least a majority thereof, unless the election of each director who
was not a director at the beginning of such period has been approved in advance
by directors representing at least sixty-seven percent (67%) of the directors
then in office who were directors at the beginning of the period; or
 
(iv)  any other transaction involving the Corporation or Bank similar in effect
to any of the foregoing and designated as a Change in Control by the Board or
the Bank Board.
 
(d)      Good Reason.  As used in this Section 5, the term “Good Reason” shall
mean (i) a material diminution in salary, (ii) a material diminution in
authority, duties or responsibilities, (iii) a reassignment which assigns
full-time employment duties to Executive at a location more than fifty (50)
miles from the Corporation’s principal executive office on the date of this
Agreement, (iv) any material violation of this Agreement by the Bank or the
Corporation (which shall include a violation of Section 11); (v) a reduction in
Executive’s title; or (vi) where following a Change in Control involving the
sale of substantially all the assets of the Bank or the Corporation this
Agreement is not assumed by the purchasing entity, in all cases after notice
from Executive to the Corporation within ninety (90) days after the initial
discovery by Executive or the imposition of the facts or condition constituting
such Good Reason and the failure of the Corporation or the Bank to cure such
situation within thirty (30) days after said notice.
 
6

--------------------------------------------------------------------------------

(e)       Exclusive Payment.  In the event Executive becomes entitled to any of
the payments set forth in this Section 5, he shall not be entitled to any of the
payments set forth in Section 6.
 
6.  Rights in Event of Termination of Employment absent Change in Control or
with Good Reason.
 
(a)       Termination without Cause or for Good Reason.  If Executive’s
employment is involuntarily terminated by the Corporation or the Bank without
Cause (other than for death or Disability) absent a Change in Control or
Executive notifies the Corporation and the Bank of the existence of Good Reason,
absent a Change in Control, and voluntarily resigns or terminates his employment
(following any applicable notice and cure periods), Executive shall be entitled
to receive the compensation set forth below:
 
(i)  Executive shall be paid, within twenty (20) days following termination, a
lump sum cash payment equal to two (2) times Executive’s Annual Salary.  The
amount shall be subject to federal, state and local tax withholdings.
 
(b)      No Mitigation.  Executive shall not be required to mitigate the amount
of any payment provided for in this Section 6 by seeking other employment or
otherwise, nor shall the amount of payment or the benefit provided for in this
Section 6 be reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive’s receipt of or right
to receive any retirement or other benefits after the date of termination of
employment or otherwise.
 
(c)       Exclusive Payment. In the event Executive becomes entitled to any of
the payments set forth in this Section 6, he shall not be entitled to any of the
payments set forth in Section 5.
 
7.  Covenant Not to Compete.
 
(a)       Restrictions. Executive hereby acknowledges and recognizes the highly
competitive nature of the business of the Corporation and the Bank and
accordingly agrees that, during and for the applicable period set forth in
Section 7(c) hereof, Executive shall not:
 
(i)  enter into or be engaged (other than by the Corporation or the Bank),
directly or indirectly, as agent, consultant, employee, partner, officer,
director, proprietor, investor (except as an investor owning less than 5% of the
stock of a publicly owned company) or otherwise of any person, firm, corporation
or enterprise located within the Non-Competition Area, which is engaged in (A)
the banking (including bank holding company) or financial services industry, or
(B) any other activity within the Non-Competition Area in which the Corporation
or the Bank or any of its affiliates or subsidiaries are engaged during the
Employment Period.  The “Non-Competition Area” shall mean any county in which,
at the date of termination of Executive’s employment, a branch location, office,
loan production office, or trust or asset and wealth management office of the
Corporation, the Bank, or any of their affiliates or subsidiaries are located;
or
 
7

--------------------------------------------------------------------------------

(ii)  solicit, directly or indirectly, any “person” (as such term is defined
under Section 3 of the Employee Retirement Income Security Act of 1974, as
amended) who is, or was during the then most recent 12-month period, a customer
of the Corporation, the Bank or any of their affiliates or subsidiaries to
divert their business from the Corporation and/or the Bank; or
 
(iii)  solicit, directly or indirectly, any person who is, or was during the
then most recent 12-month period, employed by the Corporation, the Bank or any
of their affiliates or subsidiaries to leave the employ of the Corporation or
the Bank.
 
Notwithstanding the foregoing, Executive shall not be prohibited from making
personal investments, loans or real estate transactions comparable to such
transactions which would have been permitted during Executive’s employment with
the Corporation or the Bank.
 
(b)       Reasonableness.  It is expressly understood and agreed that, although
the parties consider the restrictions contained in Section 7(a) hereof
reasonable for the purpose of preserving for the Corporation, the Bank and their
affiliates and subsidiaries their good will and other proprietary rights, if a
final judicial determination is made by a court having jurisdiction that the
time or territory or any other restriction contained in this Section 7(a) hereof
is an unreasonable or otherwise unenforceable restriction against Executive, the
provisions of Section 7(a) hereof shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be reasonable.
 
(c)       Restriction Period. The provisions of this Section 7 shall be
applicable commencing on the date of this Agreement and continuing for twelve
(12) months after the effective date of the termination of Executive’s
employment; provided, however, that in the event Executive’s employment
terminates as a result of delivery of a notice of non-renewal by the Corporation
or the Bank in accordance with Section 3(a), Executive shall not be subject to
the restrictions contained in Section 7(a)(i).  Notwithstanding the above
provisions, if Executive violates the provisions of this Section 7 and the
Corporation or the Bank must seek enforcement of the provisions of Section 7 and
is successful in enforcing the provisions, either pursuant to a settlement
agreement, or pursuant to court order, the covenant not to compete will remain
in effect for one full year following the date of the settlement agreement or
court order.
 
(d)      Reasonable and Necessary.  Executive acknowledges that the terms and
conditions of Section 7 are reasonable and necessary to protect the Corporation
and the Bank, their subsidiaries, and affiliates, and that Corporation and the
Bank’s tender of performance under this Agreement, including the payment of the
amounts under Section 5 or 6, is fair, adequate and valid consideration in
exchange for his promises under this Section 7 of this Agreement.
 
(e)       Assignment.  Executive hereby agrees that the provisions of this
Section 7 are fully assignable by the Corporation and the Bank to any
successor.  Executive also acknowledges that the terms and conditions of this
Section 7 will not be affected by the circumstances surrounding his termination
of employment, absent a breach of this Agreement by the Corporation or the Bank
or as otherwise provided in this Agreement.
 
8

--------------------------------------------------------------------------------

(f)        Irreparable Harm.  Executive acknowledges and agrees that any breach
of the restrictions set forth in this Section 7 will result in irreparable
injury to the Corporation and the Bank for which they shall have no meaningful
remedy at law, and the Corporation and the Bank shall be entitled to injunctive
relief in order to enforce provisions hereof.  Upon obtaining any such final and
nonappealable injunction, the Corporation and the Bank shall be entitled to
pursue reimbursement from Executive and/or Executive’s employer of attorney’s
fees and costs reasonably incurred in obtaining such final and nonappealable
injunction.  In addition, the Corporation and the Bank shall be entitled to
pursue reimbursement from Executive and/or Executive’s employer of costs
reasonably incurred in securing a qualified replacement for any employee enticed
away from the Corporation or the Bank by Executive.  Further, the Corporation
and the Bank shall be entitled to set off against or obtain reimbursement from
Executive of any payments owed or made to Executive hereunder.
 
8.  Unauthorized Disclosure.  During the term of his employment hereunder, or at
any later time, Executive shall not, without the written consent of the Board
and the Bank Board or a person authorized thereby (except as may be required
pursuant to a subpoena or other legal process), knowingly disclose to any
person, other than an employee of the Bank or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive of the Corporation and the Bank, any
material confidential information obtained by him while in the employ of the
Corporation and the Bank with respect to any of the Corporation’s and the Bank’s
or any of their affiliates or subsidiaries’ services, products, improvements,
formulas, designs or styles, processes, customers, methods of business or any
business practices the disclosure of which could be or will be damaging to the
Corporation and the Bank; provided, however, that confidential information shall
not include any information known generally to the public (other than as a
result of unauthorized disclosure by Executive or any person with the
assistance, consent or direction of Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Corporation or the Bank or any
information that must be disclosed as required by law.
 
9.  Requirement of Release; Cessation and Recovery on Competition. 
Notwithstanding anything herein to the contrary, Executive’s entitlement to any
payments under Sections 5 and 6 shall be contingent upon Executive’s prior
agreement with and signature to a complete mutual release agreement in the form
as mutually agreed by the parties.  Such release agreement shall be executed, if
at all, and the applicable payments contingent upon the execution of such
agreement shall be provided or commence being provided, if at all, within sixty
(60) days following the date of termination; provided, however, that if such
sixty (60) day period begins in one taxable year and ends in a second taxable
year, the payments will be provided or commence being provided, if at all, in
the second taxable year.
 
10.  Indemnification; Liability Insurance.  The Corporation and the Bank shall
indemnify, defend and hold Executive harmless, to the fullest extent permitted
by Pennsylvania law, with respect to any costs, suits, damages, actions,
administrative proceedings, losses, claims, including reasonable attorney’s
fees, related to or arising from any threatened, pending or contemplated action,
suit or proceeding brought against him as a result of Executive’s position as a
present or past director, officer, employee or agent of the Corporation and the
Bank or as a result of Executive serving at the written request of the
Corporation or the Bank as a director, officer, employee or agent of another
person or entity.  Executive’s right to indemnification provided herein is not
exclusive of any other rights to which Executive may be entitled under any
bylaw, agreement, vote of shareholders or otherwise, and shall continue beyond
the term of this Agreement.
9

--------------------------------------------------------------------------------

11.  Representations of Bank.  The Corporation and the Bank hereby represent and
warrant to Executive that, as of the date hereof, this Agreement and the
Corporation and the Bank’s performance of their covenants and obligations
hereunder: (i) do not violate, breach or cause a default under any agreement,
order, law, rule or regulation applicable to the Bank or the Corporation or to
which either the Bank or the Corporation are bound or are a party; and (ii) that
the persons executing this Agreement on behalf of the Corporation and the  Bank
are duly authorized by the Board and the Bank Board, respectively, to bind the
Corporation and the Bank to the terms by a valid resolution of the Board and the
Bank Board, respectively.
 
12.  Notices.  Except as otherwise provided in this Agreement, any notice
required or permitted to be given under this Agreement shall be deemed properly
given if in writing and hand delivered, mailed by registered or certified mail,
postage prepaid with return receipt requested or if sent via commercial
overnight courier, to Executive’s address or sent by facsimile with written
confirmation (in the case of notices to Executive) and to the principal
executive office of the Bank or by facsimile, in the case of notices to the
Bank.  All notices shall be effective upon receipt.
 
13.  Waiver.  No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and an executive officer specifically designated by the
Board and the Bank Board.  No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
 
14.  Assignment.  This Agreement shall not be assignable by any party, except by
the Corporation or the Bank to any successor in interest to its business.
 
15.  Entire Agreement.  This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement and supersedes and
replaces any prior written or oral agreements between them respecting the within
subject matter, including, but not limited to, the prior employment agreement
dated November 20, 2013.
 
16.  Successors; Binding Agreement.
 
(a)       The Corporation and the Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Corporation and/or the
Bank to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Corporation and the Bank would be required to
perform it if no such succession had taken place.  As used in this Agreement,
“Corporation” and “Bank” shall mean the Corporation and the Bank as defined
previously and any successor to its respective business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.
 
10

--------------------------------------------------------------------------------

(b)       This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators, heirs,
distributees, devisees or legatees.  If Executive should die following
termination of Executive’s employment without Cause, and any amounts would be
payable to Executive under this Agreement if Executive had continued to live,
all such amounts shall be paid in accordance with the terms of this Agreement to
Executive’s devisee, legatee, or other designee, or, if there is no such
designee, to Executive’s estate.
 
17.  Legal Expenses.  The Bank shall reimburse Executive for all reasonable
legal fees and expenses he may incur in seeking to obtain or enforce any right
or benefit provided by this Agreement, but only with respect to such claim or
claims upon which Executive prevails (including by reason of negotiated
settlement). Such payments shall be made within fourteen (14) days after
delivery of Executive’s written request for payment accompanied with such
evidence of fees and expenses incurred as the Bank may reasonably require.
 
18.  Validity.  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
 
19.  Applicable Law.  This Agreement shall be governed by and construed in
accordance with the domestic, internal laws of the Commonwealth of Pennsylvania,
without regard to its conflicts of laws principles.
 
20.  Headings.  The section headings of this Agreement are for convenience only
and shall not control or affect the meaning or construction or limit the scope
or intent of any of the provisions of this Agreement.
 
21.  Limitations on Payments.
 
(a)  Notwithstanding anything in this Agreement to the contrary, in the event
the payments and benefits payable hereunder to or on behalf of Executive (which
the parties agree will not include any portion of payments allocated to the
non-compete provisions of Section 7 which are classified as payments of
reasonable compensation for purposes of Section 280G of the Code), when added to
all other amounts and benefits payable to or on behalf of Executive, would
result in the imposition of an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), the amounts and benefits payable
hereunder shall be reduced to such extent as may be necessary to avoid such
imposition.  All calculations required to be made under this subsection will be
made by the Bank’s independent public accountants, subject to the right of
Executive’s representative to review the same.  The parties recognize that the
actual implementation of the provisions of this subsection are complex and agree
to deal with each other in good faith to resolve any questions or disagreements
arising hereunder.
 
11

--------------------------------------------------------------------------------

(b)       All payments made to the Executive pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with applicable
laws and any regulations promulgated thereunder, including, but not limited to
12 C.F.R. Part 359.
 
22.  Recovery of Bonuses and Incentive Compensation.  Notwithstanding anything
in this Agreement to the contrary, all bonuses and incentive compensation, but
not Annual Salary or payments due Executive under Section 5 or Section 6, paid
hereunder (whether in equity or in cash) shall be subject to recovery by the
Corporation or the Bank in the event that such bonuses or incentive compensation
are based on materially inaccurate financial statements or other materially
inaccurate performance metric criteria; provided that a determination as to the
recovery of a bonus or incentive compensation shall be made within twelve (12)
months following the date such bonus or incentive compensation was paid.  In the
event that the Board or the Bank Board determines by a vote of at least 75% of
the directors of the Board or the Bank Board that a bonus or incentive
compensation payment to Executive is recoverable, Executive shall reimburse all
or a portion of such bonus or incentive compensation, to the fullest extent
permitted by law, as soon as practicable following written notice to Executive
by the Corporation or the Bank of the same.
 
23.  Application of Code Section 409A.
 
(a)       Notwithstanding anything in this Agreement to the contrary, the
receipt of any benefits under this Agreement as a result of a termination of
employment shall be subject to satisfaction of the condition precedent that
Executive undergo a “separation from service” within the meaning of Treas. Reg.
§ 1.409A-1(h) or any successor thereto.  In addition, if Executive is deemed to
be a “specified employee” within the meaning of that term under Code Section
409A(a)(2)(B), then with regard to any payment or the provisions of any benefit
that is required to be delayed pursuant to Code Section 409A(a)(2)(B), such
payment or benefit shall not be made or provided prior to the earlier of (i) the
expiration of the six (6) month period measured from the date of Executive’s
“separation from service” (as such term is defined in Treas. Reg. §
1.409A-1(h)), or (ii) the date of Executive’s death (the “Delay Period”). 
Within ten (10) days following the expiration of the Delay Period, all payments
and benefits delayed pursuant to this Section (whether they would have otherwise
been payable in a single sum or in installments in the absence of such delay)
shall be paid or reimbursed to Executive in a lump sum, and any remaining
payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein. 
Notwithstanding the foregoing, to the extent that the foregoing applies to the
provision of any ongoing welfare benefits to Executive that would not be
required to be delayed if the premiums therefore were paid by Executive,
Executive shall pay the full costs of premiums for such welfare benefits during
the Delay Period and the Bank shall pay Executive an amount equal to the amount
of such premiums paid by Executive during the Delay Period within ten (10) days
after the conclusion of such Delay Period.
 
(b)      Except as otherwise expressly provided herein, to the extent any
expense reimbursement or other in-kind benefit is determined to be subject to
Code Section 409A, the amount of any such expenses eligible for reimbursement or
in-kind benefits in one calendar year shall not affect the expenses eligible for
reimbursement or in-kind benefits in any other taxable year (except under any
lifetime limit applicable to expenses for medical care), in no event shall any
expenses be reimbursed or in-kind benefits be provided after the last day of the
calendar year following the calendar year in which Executive incurred such
expenses or received such benefits, and in no event shall any right to
reimbursement or in-kind benefits be subject to liquidation or exchange for
another benefit.
 
12

--------------------------------------------------------------------------------

(c)       Any payments made pursuant to Sections 5 and 6, to the extent of
payments made from the date of termination through March 15th of the calendar
year following such date, are intended to constitute separate payments for
purposes of Treas. Reg. §1.409A-2(b)(2) and thus payable pursuant to the
“short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the
extent such payments are made following said March 15th, they are intended to
constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) made
upon an involuntary termination from service and payable pursuant to Treas. Reg.
§1.409A-1(b)(9)(iii), to the maximum extent permitted by said provision.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
 
ATTEST:
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
 
 

By:
     
Secretary
 
 
 
ATTEST:
ROYAL BANK AMERICA
 
 

By:
     
Secretary
 
 
 
WITNESS:
EXECUTIVE
 

 
F. KEVIN TYLUS

 
 
13

--------------------------------------------------------------------------------