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Exhibit 10.1

EMPLOYMENT AGREEMENT
 
THIS AGREEMENT (“Agreement”) is made as of this 20th day of November, 2013 (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, the Corporation, the Bank and Executive desire to enter into an
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.
 
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, 2015; provided,
however, that the Employment Period shall be automatically renewed on January 1,
2016 (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.
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(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;
 
(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;
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(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.
 
(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.
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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 $525,000 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.  The Annual Salary shall be paid in two components: the Annual Cash
Salary and the Annual Stock Salary as follows:
 
(i)  The Annual Cash Salary shall be at the rate of $425,000 per year, minus
applicable withholdings and deductions, payable in cash at the same times as
salaries are payable to other executive employees of the Bank.
 
(ii)  The Annual Stock Salary shall be at the rate of $100,000 per year, minus
applicable withholdings and deductions, in shares of Class A common stock of
Royal Bancshares of Pennsylvania, Inc. (the “Corporation”) payable quarterly in
arrears.  The shares granted pursuant to the Annual Stock Salary shall be valued
as of the business day immediately prior to the date of grant.  Such shares
issued pursuant to the Annual Stock Salary shall be fully vested upon grant but
may not be transferred or pledged for two years following the date of grant;
however, such restrictions shall terminate immediately upon termination of
Executive’s employment by the Bank without Cause or by the Executive for Good
Reason.
 
(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.
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(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.
 
(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 and benefits set forth
below:
 
(i)  Executive shall be paid, within twenty (20) days following termination, a
lump sum cash payment equal to one year of Executive’s Annual Salary.  Such
amount shall be subject to federal, state, and local tax withholdings.
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(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 or the benefit 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.
 
(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”)), other than Corporation or
Bank or any “person” who on the date hereof is a director or officer of
Corporation or Bank, 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 twenty-five percent (25%) 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: any transfer of ownership, which would otherwise cause
the transferee to be a beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) directly or indirectly through any contract, arrangement,
understanding, relationship or otherwise, to a family member of Daniel M. Tabas,
who is not currently a director or an officer of the Corporation or the Bank, of
securities of the Corporation, which are solely or jointly owned or titled in
the name of Daniel M. Tabas, the estate of Daniel M. Tabas, or any trust, proxy,
power of attorney, pooling arrangement or any other contract or arrangement or
other special purpose entity in which Daniel M. Tabas either is the grantor,
settlor, or otherwise caused to be formed; or controls the voting rights or
disposition of shares of the Corporation (for purposes of clarification, the
foregoing proviso shall not apply to a transfer of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) to a third party who is not a
family member of Daniel M. Tabas);
 
(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
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(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.
 
(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 and benefits set forth below:
 
(i)  Executive shall be paid, within twenty (20) days following termination, a
lump sum cash payment equal to one year of 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.
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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
 
(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.
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(d)  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.
 
(e)  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 and benefits 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 and benefits will be provided or commence
being provided, if at all, in the second taxable year.
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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.
 
11.  Representations of Bank.  The Corporation and the Bank hereby represent and
warrant to Executive that, subject to receipt of applicable regulatory approvals
under 12 C.F.R. Part 359, 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.
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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.
 
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.
 
(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.   The
Bank shall reimburse Executive for up to $5,000 in legal fees in connection with
the legal review of this Agreement prior to execution.
 
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.
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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, 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.
 
(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.
 
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.
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(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.
 
(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.
 
24.  Effect of Participation in the Troubled Asset Relief Program Capital
Purchase Program.
 
(a)  The Corporation has entered into agreements with the U.S. Treasury
Department (“Treasury”) under which the Corporation issued preferred shares
(“Preferred Shares”) and other securities to Treasury as part of the Troubled
Assets Relief Program Capital Purchase Program (“CPP”) established under the
Emergency Economic Stabilization Act of 2008.
 
(b)  The Emergency Economic Stabilization Act of 2008, as amended (together with
all associated regulations, interpretations and guidance that are now, or may in
the future be, issued, “EESA”) imposes certain restrictions on employment
agreements, severance, bonus and incentive compensation, stock options and
awards, and other compensation and benefit plans and arrangements (“Plans”)
maintained by the Corporation and its affiliates, including the Bank, and
requires that such restrictions remain in place for so long as Treasury holds
any debt or equity securities issued by the Corporation.  The parties hereby
agree that all Plans providing benefits to the Executive shall be construed and
interpreted at all times that Treasury maintains any debt or equity investment
in the Corporation in a manner consistent with EESA, and all such Plans shall be
deemed to have been amended as determined by the Corporation and the Bank so as
to comply with the restrictions imposed by EESA.  The Executive recognizes that
such changes may result in the reduction or elimination of benefits otherwise
provided to the Executive under this Agreement or any other Plan.  In the event
of such reduction or elimination of benefits, the Corporation and the Bank agree
that they shall replace such benefits with substantially comparable benefits if
and as permitted by EESA.  Nothing in this paragraph 24 shall eliminate or
interfere with Executive’s right to seek any benefits or payments due to
Employee hereunder, and, notwithstanding Paragraph 26, Executive may institute
litigation to avoid any adverse effect from EESA and to obtain such benefits and
payments.  Notwithstanding any other terms of this Agreement or any other Plan
providing benefits to the Executive, to the extent that any provision of this
Agreement or any other Plan is determined by the Bank to be subject to and not
in compliance with EESA, including the timing, amount or entitlement of the
Executive to any payment of severance, bonus or any other amounts, such
provisions shall be interpreted and deemed to have been amended to comply with
the terms of EESA.  Without limiting the foregoing, any “golden parachute
payment” or other severance payments due in connection with termination of the
Executive’s employment with the Bank provided under this Agreement or any other
Plan, as defined under Section 111 of EESA, including any benefits payable under
Sections 5 and 6, shall be prohibited if such termination occurs while the
Preferred Shares remain outstanding and held by Treasury.
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(c)  If Executive is involuntarily terminated from employment other than for
Cause or terminates for Good Reason while the Preferred Shares remain
outstanding and held by Treasury, and Executive executes and does not revoke a
release as required pursuant to Section 9, at the option of the Executive, the
Corporation and the Bank hereby agree that Executive, the Corporation and the
Bank shall enter into a Consulting and Noncompetition Agreement (the “Consulting
Agreement”), substantially in the form set forth as Exhibit A hereto, provided
that: (i) the Corporation and the Bank may not enter into the Consulting
Agreement without the prior written approval of their respective primary
regulators (including, in the case of the Corporation,  FDIC concurrence in the
primary regulator’s approval); and (ii) the rights of the Executive to severance
benefits under this Agreement (including, without limitation, any payments due
Executive under Section 5, Section 6, or Section 17), on the one hand, and the
rights of the Executive to payments under the Consulting Agreement, on the
other, shall be mutually exclusive.
 
25.  Limitation on Golden Parachute Payments.  Notwithstanding anything in this
Agreement to the contrary, the obligation to make payment of any severance
benefits as provided herein (including, without limitation, any payments due
Executive under Section 5 or Section 6 and, to the extent incurred after
termination, legal fees and expenses covered by Section 17) is conditioned upon
(i) the Corporation and the Bank obtaining any necessary approvals from each of
their primary regulators (including, where applicable, FDIC concurrence), and
(ii) compliance with applicable law, including 12 C.F.R. Part 359.  In addition,
Executive covenants and agrees that the Corporation and the Bank and their
successors and assigns shall have the right to demand the return of any “golden
parachute payments” (as defined in 12 C.F.R. Part 359) in the event that any of
them obtain information indicating that the Employee committed, is substantially
responsible for, or has violated, the respective acts or omissions, conditions,
or offenses contained in 12 C.F.R. §359.4(a)(4), and Executive shall promptly
return any such “golden parachute payment” upon such demand.
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26.  Arbitration.  Corporation, Bank and Executive recognize that in the event a
dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of time. 
Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution,
in Philadelphia, Pennsylvania, to the American Arbitration Association (the
“Association”) in accordance with the Association’s National Rules for the
Resolution of Employment Disputes or other applicable rules then in effect
(“Rules”).  Corporation, Bank or Executive may initiate an arbitration
proceeding at any time by giving notice to the other in accordance with the
Rules.  Corporation, Bank and Executive may, as a matter or right, mutually
agree on the appointment of a particular arbitrator from the Association’s
pool.  The arbitrator shall not be bound by the rules of evidence and procedure
of the courts of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement.  The decision of the arbitrator,
absent fraud, duress, incompetence or gross and obvious error of fact, shall be
final and binding upon the parties and shall be enforceable in courts of proper
jurisdiction.  Following written notice of a request for arbitration,
Corporation, Bank and Executive shall be entitled to an injunction restraining
all further proceedings in any pending or subsequently filed litigation
concerning this Agreement, except as otherwise provided herein.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
 
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
 
 
 
By:
/s/ Robert R. Tabas
 
 
 
ROYAL BANK AMERICA
 
 
 
By:
/s/ Robert R. Tabas
 
 
 
EXECUTIVE
 
 
 
/s/ F. Kevin Tylvs

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EXHIBIT A

CONSULTING AND NONCOMPETITION AGREEMENT
 
This CONSULTING AND NONCOMPETITION AGREEMENT (this “Agreement”) is being entered
into as of as of _____________, _____, by and between ROYAL BANCSHARES OF
PENNSYLVANIA, INC., a Pennsylvania business corporation (the “Corporation”),
ROYAL BANK AMERICA, a Pennsylvania chartered bank (the “Bank”) (together, the
“Employer”), and __________________________, an adult individual (the
“Consultant”).

RECITALS:
WHEREAS, the Employer desires Consultant to provide, and Consultant desires to
provide the services described herein subject to the terms and conditions set
forth below:

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:

1.  Consultancy.  During the period beginning on the date on which Consultant’s
employment with the Employer is terminated (the “Termination Date”) and for a
period of twelve (12) months thereafter (the “Consulting Period”), the
Consultant shall undertake to provide his personal advice and counsel to the
Employer and its subsidiaries and affiliates in connection with the business of
the Employer and its subsidiaries, including, but not limited to:
 
(a)  providing continued services in the same manner as when he was employed on
a permanent basis as necessary to ensure a proper transition of his former job
function to his replacement;
 
(b)  consulting with the Employer regarding the operations and customer
relationships of the Employer and its subsidiaries;
 
(c)  providing introductions to customers and providing personal services
similar to those the Consultant is currently providing the Employer;
 
(collectively the “Consulting Services”), subject to the terms and conditions
which are set forth herein.  The Consultant shall provide such Consulting
Services as may be requested from time to time by the Board of Directors of the
Employer.  During the Consulting Period, the Consultant shall be available to
devote from 25 to 32 hours per week (as determined in the discretion of the
Employer) of his business time, attention, skills and efforts (other than during
holidays, vacations (of which at least five (5) weeks will be permitted) and
periods of illness) to the business and affairs of the Employer and its
subsidiaries and affiliates and shall use his reasonable efforts to promote the
interests of the Employer and its subsidiaries and affiliates.  Such Consulting
Services may be provided in person, telephonically, electronically or by
correspondence as reasonably determined by the Employer and the Consultant.  The
Consultant shall be available for meetings at the principal executive offices of
the Employer at such times as the Employer shall reasonably require.
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(d)  During the Consulting Period, the Consultant shall be treated as an
independent contractor and shall not be deemed to be an employee of the Employer
or any subsidiary or affiliate of the Employer.
 
2.  Non-Disclosure of Confidential Information. Except in the course of
performing the Consulting Services hereunder, and in the pursuit of the business
of the Employer or any of its affiliates, the Consultant shall not, except as
required by law, at any time during or following the Consulting Period, disclose
or use any confidential information or proprietary data of the Employer or any
of its affiliates or predecessors, unless such confidential information or
proprietary data become publicly known through no fault of the Consultant. 
Without limiting the generality of the foregoing, the Consultant agrees that all
information concerning the identity of the customers of the Employer and its
affiliates and the relations of such entities with their customers is
confidential information.  This Section 2 shall survive the termination or
expiration of the Consulting Period.
 
3.  Non-Competition Provisions.
 
(a)  The Consultant hereby acknowledges and recognizes the highly competitive
nature of the business of the Bank and accordingly agrees that, during and for
the Consulting Period, the Consultant will not:
 
(i)  enter into or be engaged (other than by the Bank), directly or indirectly,
either for his own account or 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 engaged in (A) the banking (including bank holding company) or
financial services industry, or (B) any other activity in which the Bank or any
of its affiliates or subsidiaries are engaged during the Consultant’s prior
employment with the Employer or during the Consulting Period, in 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 Bank, or any of its affiliates or subsidiaries are located
(“Non-Competition Area”); or
 
(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 Bank or any of its affiliates or subsidiaries to divert their business
from 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 Bank or any of its affiliates
or subsidiaries to leave the employ of the Bank.
 
(b) It is expressly understood and agreed that, although the Consultant and the
Bank consider the restrictions contained in Subsection (a) reasonable for the
purpose of preserving for the Bank and its affiliates and subsidiaries their
goodwill 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 Subsection (a) is an unreasonable or otherwise
unenforceable restriction against the Consultant, the provisions of Subsection
(a) will not be rendered void but will 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.
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4.  Compensation.  In consideration of the obligations and commitments of the
Consultant under this Agreement, including Sections 1, 2 and 3 hereof, the
Employer shall pay to the Consultant twelve equal installment payments in
amounts equal to eighty-percent (80%) of the highest Annual Salary during the
year of termination or the immediately preceding two calendar years, provided
that the aggregate amount of such payments shall not exceed one year of
Executive’s Annual Salary on the Termination Date.  Such installment payments
shall be paid on the last business day of each month during the Consulting
Period.
 
5.  Successors and Assigns.
 
(a)  During the Consulting Period, the Employer will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its business and/or assets, by
agreement in form and substance satisfactory to the Consultant, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Employer would be required to
perform it if no such succession or assignment had taken place.  Any failure of
the Employer to obtain such agreement prior to the effectiveness of any such
succession or assignment during this twelve-month period shall be a material
breach of this Agreement.
 
(b)  This Agreement and all rights of the Consultant shall inure to the benefit
of and be enforceable by the Consultant’s personal or legal representatives,
estate, executors, administrators, heirs and beneficiaries.  In the event of the
Consultant’s death, any amounts accrued and unpaid through the date of death
shall be paid to the Consultant’s estate, heirs and representatives.  Except as
provided in this Section 6, no party may assign this Agreement or any rights,
interests, or obligations hereunder without the prior written approval of the
other party.  Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
 
6.  Enforcement.  This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the Commonwealth of Pennsylvania,
without reference to its principles of conflict of laws, except to the extent
that federal law shall be deemed to preempt such state laws.
 
7.  Legal Expenses.  The Bank will pay to the Consultant all reasonable legal
fees and expenses when incurred by the Consultant in seeking to obtain or
enforce any right or benefit provided by this Agreement, provided he brings the
action in good faith, and he prevails.
 
8.  Amendment.  This Agreement may be amended or modified at any time by a
written instrument executed by the parties.
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9.  Waiver.  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.
 
10.  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.
 
11.  Headings and Construction.  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.
 
12.  Entire Agreement.  This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and supersedes in its entirety
any and all prior agreements, understandings or representations relating to the
subject matter hereof.
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
 
ATTEST:
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
 
 
 
By:
Secretary
 
 
 
ATTEST:
ROYAL BANK AMERICA
 
 
 
By:
Secretary
 
 
 
WITNESS:
[CONSULTANT]
 
 

 
 
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