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EXHIBIT 10.1
 
Execution Version
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of March 10,
2014, by and among Royal Bancshares of Pennsylvania, Inc., a Pennsylvania
corporation (the “Company”), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).
 
RECITALS
 
A.           The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.
 
B.            Each Purchaser, severally and not jointly, wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, that aggregate number of shares of Class A common stock, $2.00 par
value per share, of the Company (the “Class A Common Stock”), set forth below
such Purchaser’s name on the signature page of this Agreement (which aggregate
amount for all Purchasers together shall be 2,400,000 shares of Class A Common
Stock and shall be collectively referred to herein as the “Shares”).
 
C.            The Company intends to effect one or more private placement
transactions of additional shares of Class A Common Stock with other accredited
investors (the “Additional Investors”), with the closing of such sale to occur
simultaneously with the Closing (the “Other Private Placements”).  The aggregate
number of shares of Class A Common Stock subscribed for by the Purchasers and
the Additional Investors collectively shall be 11,656,666 shares of Class A
Common Stock.  In connection with the Other Private Placements, the Company
shall enter into agreements with the Additional Investors (the “Additional
Agreements”).
 
E.            Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
“Registration Rights Agreement”), pursuant to which, among other things, the
Company will agree to provide certain registration rights with respect to the
Shares under the Securities Act and the rules and regulations promulgated
thereunder and applicable state securities laws.
 
F.            The Company is also conducting a shareholder rights offering
pursuant to which its shareholders of record as of a certain record date will be
permitted to purchase in the aggregate up to 5,000,000 shares of its Class A
Common Stock at the Purchase Price (the “Rights Offering”).  The Rights Offering
is being made pursuant to a registration statement on Form S-1 (No. 333- 190973)
filed by the Company with the Commission on September 4, 2013 (the “S-1
Registration Statement”).
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, intending to be legally bound, the
Company and the Purchasers hereby agree as follows:

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ARTICLE I
DEFINITIONS
 
1.1            Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
 
“Action” means any Proceeding, inquiry or notice of violation pending or, to the
Company’s Knowledge, threatened in writing against the Company, any Subsidiary
or any of their respective properties or any officer, director or employee of
the Company or any Subsidiary acting in his or her capacity as an officer,
director or employee before or by any federal, state, county, local or foreign
court, arbitrator, governmental or administrative agency, regulatory authority,
stock market, stock exchange or trading facility.

 
“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.
 
“Agency” has the meaning set forth in Section 3.1(qq).
 
“Agreement” shall have the meaning ascribed to such term in the Preamble.
 
“Bank” means Royal Bank America, a Pennsylvania banking corporation and
wholly-owned Subsidiary of the Company.
 
“Bank Regulatory Authorities” has the meaning set forth in Section 3.1(b)(ii).
 
“BHC Act” has the meaning set forth in Section 3.1(b)(ii).
 
“Board” has the meaning set forth in Section 2.2(a)(v).
 
“Business Day” means a day, other than a Saturday or Sunday, on which banks in
the City of New York and the City of Philadelphia are open for the general
transaction of business.
 
“CIBC Act” means the Change in Bank Control Act.
 
“Closing” means the closing of the purchase and sale of the Shares pursuant to
this Agreement.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or
waived, as the case may be, or such other date as the parties may agree.
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“Commission” has the meaning set forth in the Recitals.
 
“Class A Common Stock” has the meaning set forth in the Recitals, and also
includes any securities into which the Class A Common Stock may hereafter be
reclassified or changed.
 
“Company Counsel” means Stevens & Lee, P.C.
 
“Company Deliverables” has the meaning set forth in Section 2.2(a).
 
“Company Reports” has the meaning set forth in Section 3.1(mm).
 
“Company’s Knowledge” means with respect to any statement made to the knowledge
of the Company, that the statement is based upon the actual knowledge of the
executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement after reasonable investigation.
 
“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
 
“Department” has the meaning set forth in Section 3.1(b)(ii).
 
“Disclosure Materials” has the meaning set forth in Section 3.1(h).
 
“DTC” means The Depository Trust Company.
 
“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.
 
“Emerald” means Emerald Advisers, Inc.
 
“Environmental Laws” has the meaning set forth in Section 3.1(l).
 
“ERISA” has the meaning set forth in Section 3.1(ss).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
“FDIC” has the meaning set forth in Section 3.1(b)(ii).
 
“Federal Reserve” has the meaning set forth in Section 3.1(b)(ii).
 
“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.
 
“Indemnified Person” has the meaning set forth in Section 4.8(a).
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“Insurer” has the meaning set forth in Section 3.1(qq).
 
“Intellectual Property” has the meaning set forth in Section 3.1(r).
 
“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restriction of any kind.
 
“Legend Removal Date” has the meaning set forth in Section 4.1(c).
 
“Loan Investor” has the meaning set forth in Section 3.1(qq).
 
“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, properties,
business, condition (financial or otherwise) or prospects of the Company and the
Subsidiaries, taken as a whole, or (iii) any adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its obligations
under any Transaction Document.
 
“Material Contract” means any contract of the Company that was, or was required
to be, filed as an exhibit pursuant to Item 601 of Regulation S-K.
 
“Material Permits” has the meaning set forth in Section 3.1(p).
 
“Money Laundering Laws” has the meaning set forth in Section 3.1(jj).
 
“New York Courts” means the state and federal courts sitting in the State of New
York.
 
“OFAC” has the meaning set forth in Section 3.1(ii).
 
“Outside Date” means May 31, 2014; provided that if such day is not a Business
Day, the first day following such day that is a Business Day.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
“Principal Trading Market” means the Trading Market on which the Class A Common
Stock is primarily listed on and quoted for trading, which, as of the date of
this Agreement and the Closing Date, shall be the NASDAQ Global Market.
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened in writing.
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“Purchase Price” means the lesser of (i) $1.20 per Share and (ii) the
subscription price per share of Class A Common Stock offered in the Rights
Offering.
 
“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
 
“Registration Rights Agreement” has the meaning set forth in the Recitals.
 
“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).
 
“Regulation D” has the meaning set forth in the Recitals.
 
“Regulatory Agreement” has the meaning set forth in Section 3.1(oo).
 
“Required Approvals” has the meaning set forth in Section 3.1(e).
 
“Rights Offering” has the meaning set forth in the Recitals.
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“S-1 Registration Statement” has the meaning set forth in the Recitals.
 
“SEC Reports” has the meaning set forth in Section 3.1(h).
 
“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(v).
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Shares” has the meaning set forth in the Recitals.
 
“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading “Aggregate Purchase Price
(Subscription Amount)”.
 
“Subsidiary” means the Bank and any other entity in which the Company, directly
or indirectly, owns sufficient capital stock or holds a sufficient equity or
similar interest such that it is consolidated with the Company in the financial
statements of the Company.
 
“TARP Shares” means the shares of Fixed Rate Cumulative Perpetual Preferred
Stock, Series A issued by the Company.
 
“Trading Day” means (i) a day on which the Class A Common Stock is listed or
quoted and traded on its Principal Trading Market or (ii) if the Class A Common
Stock is not quoted on any Trading Market, a day on which the Class A Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by OTC Markets Group Inc. (or any similar organization or agency succeeding to
its functions of reporting prices); provided, that in the event that the Class A
Common Stock is not listed or quoted as set forth in (i) and (ii) hereof, then
Trading Day shall mean a Business Day.
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“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or the OTC Bulletin Board on which the Class A Common Stock is listed or
quoted for trading on the date in question.
 
“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Registration Rights Agreement, and any other documents or
agreements executed or delivered in connection with the transactions
contemplated hereunder.
 
“Transfer Agent” means Broadridge Financial Solutions, or any successor transfer
agent for the Company.
 
ARTICLE II
PURCHASE AND SALE
 
2.1           Closing.
 
(a)            Purchase of Shares.  Subject to the terms and conditions set
forth in this Agreement, at the Closing the Company shall issue and sell to each
Purchaser, and each Purchaser shall, severally and not jointly, purchase from
the Company, the number of Shares set forth below such Purchaser’s name on the
signature page of this Agreement at a per Share price equal to the Purchase
Price.
 
(b)            Closing.  The Closing of the purchase and sale of the Shares
shall take place remotely by facsimile transmission or other electronic means as
the parties may mutually agree on the Closing Date.
 
(c)            Form of Payment.  Unless otherwise agreed to by the Company and a
Purchaser (as to itself only), on the Closing Date, (1) the Company shall
deliver to each Purchaser one or more stock certificates, evidencing the number
of Shares set forth on such Purchaser’s signature page to this Agreement and (2)
upon receipt thereof, each Purchaser shall wire its Subscription Amount, in
United States dollars and in immediately available funds, in accordance with the
Company’s written wire transfer instructions.  In lieu of delivering physical
certificates representing the Shares issuable in accordance with the previous
sentence, and provided that the Transfer Agent then is participating in the DTC
Fast Automated Securities Transfer program, upon request of such Purchaser, the
Company shall use its commercially reasonable efforts to cause the Transfer
Agent to electronically transmit, on the Closing Date, such Purchaser’s Shares
by crediting the account of such Purchaser specified by the Purchaser with DTC
through its Deposit Withdrawal Agent Commission system, and provide proof
satisfactory to Purchaser of such delivery.  For purposes of clarity, a
Purchaser shall not be required to wire its Subscription Amount until it (or its
designated custodian per its delivery instructions) first confirms receipt of
its Shares (whether physical or electronic).
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(d)            Notwithstanding the foregoing, nothing in this Agreement shall be
construed to permit or require any Purchaser to purchase a number of Shares that
would cause such Purchaser, together with any other person whose Company
securities would be aggregated with such Purchaser’s Company securities for
purposes of any banking regulation or law, to collectively be deemed to own,
control or have the power to vote shares of Class A Common Stock which would
represent more than 9.9% of the shares of Class A Common Stock outstanding (the
“Ownership Limitation”).  If, but for this sentence, the purchase of Shares at
the Closing would otherwise cause a Purchaser to exceed the Ownership
Limitation, then the number of Shares to be purchased by such Purchaser
hereunder at the Closing shall be automatically reduced by the minimum amount
necessary to ensure that the Ownership Limitation is not exceeded by such
Purchaser at Closing (in which case such Purchaser’s Subscription Amount shall
be proportionately reduced).  To the extent the holdings of multiple Purchasers
will be aggregated for purposes of the Ownership Limitation, then such reduction
shall be applied among such Purchasers on a pro rata basis based on their
respective Share subscriptions.
 
2.2             Closing Deliveries.
 
    (a)            On or prior to the Closing, the Company shall issue, deliver
or cause to be delivered to each Purchaser the following (the “Company
Deliverables”):
 
 (i)          this Agreement, duly executed by the Company;
 (ii)        one or more stock certificates, evidencing the Shares subscribed
for by Purchaser hereunder, registered in the name of such Purchaser or as
otherwise set forth on such Purchaser’s Stock Certificate Questionnaire included
as Exhibit B-2 hereto (the “Stock Certificates”);
 (iii)        a legal opinion of Company Counsel, dated as of the Closing Date
and in the form attached hereto as Exhibit C, executed by such counsel and
addressed to the Purchasers;
 (iv)       the Registration Rights Agreement, duly executed by the Company;
 (v)        a certificate of the Secretary of the Company, in the form attached
hereto as Exhibit D (the “Secretary’s Certificate”), dated as of the Closing
Date, (a) certifying the resolutions adopted by the Board of Directors of the
Company (the “Board”) or a duly authorized committee thereof approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Shares, (b) certifying the current versions of the
articles of incorporation, as amended, and bylaws, as amended, of the Company
and (c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company;
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 (vi)       a certificate of the Chief Executive Officer, President or Chief
Financial Officer of the Company, in the form attached hereto as Exhibit E,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in Sections 5.1(a) and 5.1(b); and
 (vii)      a Certificate of Subsistence for the Company from the Secretary of
State of the Commonwealth of Pennsylvania as of a recent date.
    (b)           On or prior to the Closing, each Purchaser shall deliver or
cause to be delivered to the Company the following (the “Purchaser
Deliverables”):
 
 (i)         this Agreement, duly executed by such Purchaser;
 (ii)         its Subscription Amount, in U.S. dollars and in immediately
available funds, by wire transfer in accordance with the Company’s written
instructions;
 (iii)        the Registration Rights Agreement, duly executed by such
Purchaser; and
 (iv)       a fully completed and duly executed Accredited Investor
Questionnaire and Stock Certificate Questionnaire in the forms attached hereto
as Exhibits B-1 and B-2 , respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
 
3.1            Representations and Warranties of the Company.  The Company
hereby represents and warrants as of the date hereof and as of the Closing Date
(except for the representations and warranties that speak as of a specific date,
which shall be made as of such date), to each of the Purchasers that:
 
(a)            Subsidiaries.  The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a) hereto. Except as set forth on
Schedule 3.1(a) hereto, the Company owns, directly or indirectly, all of the
capital stock or comparable equity interests of each Subsidiary free and clear
of any and all Liens, and all the issued and outstanding shares of capital stock
or comparable equity interest of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
 
(b)            Organization and Qualification; Bank Regulations.
 
 (i)              The Company and each of its Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own or lease and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents.  The Company and each of its Subsidiaries
is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, would not be expected to have a Material Adverse Effect.
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 (ii)            The Company is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended (the “BHC Act”).  The Bank is
the Company’s only Subsidiary banking institution.  The Bank holds the requisite
authority from the Pennsylvania Department of Banking and Securities (the
“Department”) to do business as a state-chartered banking corporation under the
laws of the Commonwealth of Pennsylvania.  Each of the Company and the Bank is
in compliance with all laws administered by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance
Corporation (the “FDIC”), the Department and any other foreign, federal or state
bank regulatory authorities (together with the Department, the Federal Reserve
and the FDIC, the “Bank Regulatory Authorities”) with jurisdiction over the
Company and its Subsidiaries, except for any noncompliance that, individually or
in the aggregate, has not had and would not be reasonably expected to have a
Material Adverse Effect.  The deposit accounts of the Bank are insured up to
applicable limits by the FDIC, and all premiums and assessments required to be
paid in connection therewith have been paid when due.
 
(c)            Authorization; Enforcement; Validity.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and the Additional Agreements and otherwise to carry out its obligations
hereunder and thereunder, including, without limitation, to issue the Shares in
accordance with the terms hereof and the shares of Class A Common Stock in
accordance with the terms of the Additional Agreements. The Company’s execution
and delivery of each of the Transaction Documents and the Additional Agreements
and the consummation by it of the transactions contemplated hereby and thereby
(including, but not limited to, the sale and delivery of the Shares hereunder
and the sale and delivery of shares of Class A Common Stock under the Additional
Agreements) have been duly authorized by all necessary corporate action on the
part of the Company, and no further corporate action is required by the Company,
its Board or its shareholders in connection therewith. Each of the Transaction
Documents has been (or upon delivery will have been) duly executed by the
Company and is, or when delivered in accordance with the terms hereof or
thereof, will constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law or public policy. There are no
shareholder agreements, voting agreements, voting trust agreements or similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the Company’s Knowledge, between or among any of the Company’s
shareholders.
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(d)            No Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents and the Additional Agreements and the
consummation by the Company of the transactions contemplated hereby or thereby
(including, without limitation, the issuance of the Shares hereunder and the
issuance of shares of Class A Common Stock under the Additional Agreements) do
not and will not (i) conflict with or violate any provisions of the Company’s or
any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational documents of the Company or any Subsidiary, (ii) conflict with,
or constitute a default (or an event that with notice or lapse of time or both
would result in a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any Material Contract, or (iii) subject to
receipt of the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including federal and state securities laws and the rules and regulations
thereunder, assuming the correctness of the representations and warranties made
by the Purchasers herein, or the rules of any self-regulatory organization to
which the Company or its securities are subject, including the Principal Trading
Market), or by which any property or asset of the Company is bound or affected,
except in the case of clauses (ii) and (iii) such as would not have or
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
 
(e)            Filings, Consents and Approvals.  Neither the Company nor any of
its Subsidiaries is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority, self-regulatory
organization (including the Principal Trading Market) or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the
Shares), other than (i) the filing with the Commission of one or more
Registration Statements in accordance with the requirements of the Registration
Rights Agreement and the filing of a Current Report on Form 8-K, (ii) filings
required by applicable state securities laws, (iii) the filing of a Notice of
Exempt Offering of Securities on Form D with the Commission under Regulation D
of the Securities Act, (iv) the filings required in accordance with Section 4.6
of this Agreement; and (v) those that have been made or obtained prior to the
date of this Agreement (collectively, the “Required Approvals”).  The Company is
unaware of any facts or circumstances relating to the Company or its
Subsidiaries which would be likely to prevent the Company from obtaining or
effecting any of the foregoing.
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(f)            Issuance of the Shares.  The issuance of the Shares has been duly
authorized and the Shares, when issued and paid for in accordance with the terms
of the Transaction Documents, will be duly and validly issued, fully paid and
non-assessable and free and clear of all Liens, other than restrictions on
transfer imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights.
 
(g)            Capitalization.  The authorized common stock of the Company
consists of 40,000,000 shares of Class A Common Stock, of which 11,032,162
shares were issued and outstanding as of the date of this Agreement, and
3,000,000 shares of Class B common stock (the “Class B Common Stock”), of which
1,987,142 were issued and outstanding as of the date of this Agreement.  The
authorized preferred stock of the Company consists of 500,000 shares of
preferred stock (“Preferred Stock”), of which 30,407 shares of the Company’s
Fixed Rate Cumulative Perpetual Preferred Stock, Series A, are issued and
outstanding and held by U.S. Department of Treasury under the Capital Purchase
Program as of the date of this Agreement.  Other than the Class A Common Stock,
the Class B Common Stock, and the Preferred Stock, there are no other authorized
classes of equity securities of Issuer. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
non-assessable, have been issued in compliance in all material respects with all
applicable federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase any capital stock of the Company. No shares of the
Company’s outstanding capital stock are subject to preemptive rights or any
other similar rights; except as described in the SEC Reports, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company, other than those issued or granted pursuant to
compensatory plans, contracts or arrangements described in the SEC Reports;
except as described in the SEC Reports, there are no material outstanding debt
securities, notes, credit agreements, credit facilities or other agreements,
documents or instruments evidencing indebtedness of the Company or by which the
Company is bound; except for the Registration Rights Agreement and the
Additional Agreement with Emerald, there are no agreements or arrangements under
which the Company is obligated to register the sale of any of its securities
under the Securities Act; except as described in the SEC Reports, there are no
outstanding securities or instruments of the Company that contain any redemption
or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company is or may become bound to redeem a security
of the Company or any of its Subsidiaries; except as described in the SEC
Reports, the Company does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement; and neither the
Company nor any of its Subsidiaries have any liabilities or obligations required
to be disclosed in the SEC Reports but not so disclosed in the SEC Reports,
which, individually or in the aggregate, will have or would reasonably be
expected to have a Material Adverse Effect.  There are no securities or
instruments issued by or to which the Company is a party containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Shares hereunder or the shares of Class A Common Stock under the Additional
Agreements.
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(h)            SEC Reports; Disclosure Materials.  The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the eighteen (18) months preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”
and together with this Agreement and the schedules to this Agreement, the
“Disclosure Materials”), on a timely basis or has received a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective filing dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
 
(i)            Financial Statements.  The financial statements of the Company
and its Subsidiaries included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the balance sheet of the Company and
its Subsidiaries taken as a whole as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments, which would
not be material, either individually or in the aggregate.
 
(j)            Tax Matters.  The Company (i) has prepared and filed all foreign,
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, with respect to which adequate reserves have been
set aside on the books of the Company and (iii) has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except, in the case of clauses (i) and (ii) above, where the failure to so pay
or file any such tax, assessment, charge or return would not have or reasonably
be expected to have a Material Adverse Effect.
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(k)            Material Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in subsequent
SEC Reports filed prior to the date hereof, (i) there have been no events,
occurrences or developments that have had or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice, (B)
 deposit liabilities and borrowings under existing credit facilities incurred in
the ordinary course of business consistent with past practice, (C)  commitments
to extend credit to borrowers in the ordinary course of business, and
(D) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered materially its method of
accounting or the manner in which it keeps its accounting books and records
except as required by GAAP or Bank Regulatory Authorities, (iv) except for any
bid or other offer to purchase TARP Shares, the Company has not declared or made
any dividend or distribution of cash or other property to its shareholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock, (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except Class A Common Stock (x) issued pursuant
to existing Company stock option or stock purchase plans or executive and
director arrangements disclosed in the SEC Reports, or (y) issued pursuant to
the Additional Agreements or the Rights Offering, (vi) there has not been any
material change or amendment to, or any waiver of any material right by the
Company under, any Material Contract under which the Company or any of its
Subsidiaries is bound or subject, and (vii) to the Company’s Knowledge, there
has not been a material increase in the aggregate dollar amount of: (A) the
Bank’s nonperforming loans (including nonaccrual loans and loans 90 days or more
past due and still accruing interest) or (B) the reserves or allowances
established on the Company's or Bank's financial statements with respect
thereto.  Except for the transactions contemplated by this Agreement, no event,
liability or development has occurred or exists with respect to the Company or
its Subsidiaries or their respective business, properties, operations or
financial condition that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made that has not
been publicly disclosed at least one Trading Day prior to the date that this
representation is made.
 
(l)            Environmental Matters.  To the Company’s Knowledge, neither the
Company nor any of its Subsidiaries (i) is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any substance
that is in violation of any Environmental Laws, (iii) is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or (iv) is subject
to any claim relating to any Environmental Laws; in each case, which violation,
contamination, liability or claim has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; and, to the
Company’s Knowledge, there is no pending or threatened investigation that might
lead to such a claim.
 
(m)          Litigation.  There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the issuance of the Shares or (ii) except as disclosed in the SEC
Reports, is reasonably likely to have a Material Adverse Effect, individually or
in the aggregate, if there were an unfavorable decision. Neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty.  There has not
been, and to the Company’s Knowledge there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any of its Subsidiaries under the Exchange Act or the
Securities Act.  There are no outstanding orders, judgments, injunctions, awards
or decrees of any court, arbitrator or governmental or regulatory body against
the Company or any executive officers or directors of the Company in their
capacities as such, which individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect.
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(n)           Employment Matters.  No labor dispute exists or, to the Company’s
Knowledge, is imminent with respect to any of the employees of the Company or
any Subsidiary which would have or reasonably be expected to have a Material
Adverse Effect. None of the Company’s or Subsidiaries’ employees is a member of
a union that relates to such employee’s relationship with the Company or
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and each Subsidiary believes
that its relationship with its employees is good.  To the Company’s Knowledge,
no executive officer is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or
agreement or any restrictive covenant in favor of a third party, and to the
Company’s Knowledge, the continued employment of each such executive officer
does not subject the Company or any Subsidiary to any liability with respect to
any of the foregoing matters.  The Company is in compliance with all U.S.
federal, state, local and foreign laws and regulations relating to employment
and employment practices, terms and conditions of employment and wages and
hours, except where the failure to be in compliance would not have or reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
 
(o)            Compliance.  Neither the Company nor any of its Subsidiaries
(i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a
default by the Company or any of its Subsidiaries under), nor has the Company or
any of its Subsidiaries received written notice of a claim that it is in default
under or that it is in violation of, any Material Contract (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body having jurisdiction over the Company, its
Subsidiaries or their respective properties or assets, or (iii) is in violation
of, or in receipt of written notice that it is in violation of, any statute,
rule, regulation, policy or guideline or order of any governmental authority,
self-regulatory organization (including the Principal Trading Market) applicable
to the Company or any of its Subsidiaries, or which would have the effect of
revoking or limiting FDIC deposit insurance, except in each case set forth in
(i), (ii) and (iii) of this paragraph as would not have or reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
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(p)            Regulatory Permits.  The Company and each of its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as currently conducted and as described in the SEC
Reports, except where the failure to possess such certificates, authorizations
or permits, individually or in the aggregate, has not and would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
(“Material Permits”), and (i) neither the Company nor any of its Subsidiaries
has received any notice in writing of proceedings relating to the revocation or
material adverse modification of any such Material Permits and (ii) the Company
is unaware of any facts or circumstances that would give rise to the revocation
or material adverse modification of any Material Permits.
 
(q)            Title to Assets.  Except as set forth on Schedule 3.1(q), the
Company and its Subsidiaries have good and marketable title to all real property
and tangible personal property owned by them which is material to the business
of the Company and its Subsidiaries, taken as a whole, in each case free and
clear of all Liens except such as do not materially affect the value of such
property or do not interfere with the use made and proposed to be made of such
property by the Company and any of its Subsidiaries. Any real property and
facilities held under lease by the Company and any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and facilities by the Company and its Subsidiaries.
 
(r)            Patents and Trademarks.  To the Company’s Knowledge, the Company
and its Subsidiaries own, possess, license or have other rights to use all
foreign and domestic patents, patent applications, trade and service marks,
trade and service mark registrations, trade names, copyrights, inventions, trade
secrets, technology, Internet domain names, know-how and other intellectual
property (collectively, the “Intellectual Property”) necessary for the conduct
of their respective businesses as currently conducted or as proposed to be
conducted as disclosed in the SEC Reports except where the failure to own,
possess, license or have such rights would not have or reasonably be expected to
have a Material Adverse Effect.  Except as set forth in the SEC Reports and
except where such violations or infringements would not have or reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (a) to the Company’s Knowledge, except for licensors and licensees of
such Intellectual Property, there are no rights of third parties to any such
Intellectual Property; (b) to the Company’s Knowledge, there is no infringement
by third parties of any such Intellectual Property; (c) to the Company’s
Knowledge, there is no pending or threatened Proceeding by others challenging
the Company’s and/or its Subsidiaries’ rights in or to any such Intellectual
Property; (d) to the Company’s Knowledge, there is no pending or threatened
Proceeding by others challenging the validity or scope of any such Intellectual
Property; and (e) to the Company’s Knowledge, there is no pending or threatened
Proceeding by others that the Company and/or any Subsidiary infringes or
otherwise violates any patent, trademark, service mark, trade name, copyright,
invention, trade secret, technology, Internet domain name, know-how or other
proprietary rights of others.
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(s)            Insurance.  The Company and each of the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which and where the Company and the Subsidiaries are
engaged.  All premiums due and payable under all such policies and bonds have
been timely paid, and the Company and its Subsidiaries are in material
compliance with the terms of such policies and bonds.  Neither the Company nor
any of its Subsidiaries has received any notice of cancellation of any such
insurance, nor, to the Company’s Knowledge, will it or any Subsidiary be unable
to renew their respective existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not be materially higher than
their existing insurance coverage.
 
(t)            Transactions With Affiliates and Employees.  Except as set forth
in the SEC Reports and other than the grant of stock options or other equity
awards that are not individually or in the aggregate material in amount, none of
the officers or directors of the Company and, to the Company’s Knowledge, none
of the employees of the Company, is presently a party to any transaction with
the Company or to a presently contemplated transaction (other than for services
as employees, officers and directors) that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.
 
(u)            Internal Control Over Financial Reporting.  Except as set forth
in the SEC Reports, the Company maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act)
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP and such internal control over financial reporting is
effective.
 
(v)            Sarbanes-Oxley; Disclosure Controls.  The Company is in
compliance in all material respects with all of the provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act), and such disclosure controls and
procedures are effective.
 
(w)            Certain Fees.  No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company. The Company shall indemnify, pay, and hold
each Purchaser harmless against, any liability, loss or expense (including,
without limitation, attorneys’ fees and out-of-pocket expenses) arising in
connection with any such right, interest or claim arising pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company.
 
(x)            Private Placement.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement and
the accuracy of the information disclosed in the Accredited Investor
Questionnaires, no registration under the Securities Act is required for the
offer and sale of the Shares by the Company to the Purchasers under the
Transaction Documents.  The issuance and sale of the Shares hereunder and the
issuance of shares of Class A Common Stock under the Additional Agreements does
not contravene, or require shareholder approval under, the rules and regulations
of the Principal Trading Market.
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(y)            Registration Rights.  Other than each of the Purchasers and
Emerald, except as set forth on Schedule 3.1(y), no Person has any right to
cause the Company to effect the registration under the Securities Act of any
securities of the Company.
 
(z)            [Intentionally Omitted].
 
(aa)         Listing and Maintenance Requirements.  The Company’s Class A Common
Stock is registered pursuant to Section 12(b) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the Class
A Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration.
The Company has not, in the 12 months preceding the date hereof, received
written notice from the Principal Trading Market to the effect that the Company
is not in compliance with the listing or maintenance requirements of the
Principal Trading Market. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be, in compliance in all material
respects with the listing and maintenance requirements for continued trading of
the Class A Common Stock on the Principal Trading Market.
 
(bb)         Investment Company.  The Company is not, and immediately after
receipt of payment for the Shares will not be, an “investment company,” an
“affiliated person” of, “promoter” for or “principal underwriter” for, an entity
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.
 
(cc)         Unlawful Payments.  Neither the Company nor any of its
Subsidiaries, nor any directors, officers, nor to the Company’s Knowledge,
employees, agents or other Persons acting at the direction of or on behalf of
the Company or any of its Subsidiaries has, in the course of its actions for, or
on behalf of, the Company or any of its Subsidiaries: (a) directly or
indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made any direct or indirect unlawful payments to any
foreign or domestic governmental officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (c) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made
any other unlawful bribe, rebate, payoff, influence payment, kickback or other
material unlawful payment to any foreign or domestic government official or
employee.
 
(dd)        Application of Takeover Protections; Rights Agreements.  The Company
has not adopted any stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Class A Common Stock or a change in
control of the Company.  The Company and its Board have taken all action
necessary to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s articles of
incorporation or other organizational documents or the laws of the jurisdiction
of its incorporation or otherwise (excluding the CIBC and the BHC Act) which is
or could become applicable to any Purchaser as a direct consequence of the
transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Shares and any Purchaser’s ownership of the Shares.
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(ee)         Disclosure.  The Company confirms that neither it nor any of its
officers or directors nor any other Person acting on its or their behalf has
provided any Purchaser or its respective agents or counsel with any information
that it believes constitutes or could reasonably be expected to constitute
material, non-public information except insofar as the existence, provisions and
terms of the Transaction Documents and the proposed transactions hereunder may
constitute such information, all of which will be disclosed by the Company in
the Press Release as contemplated by Section 4.6 hereof. The Company understands
and confirms that each of the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company. No event
or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, operations or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed, except for the announcement of this Agreement
and related transactions.
 
(ff)           Off Balance Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company (or any Subsidiary) and
an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed.
 
(gg)        Acknowledgment Regarding Purchase of Shares.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Shares.
 
(hh)        Absence of Manipulation.  The Company has not, and to the Company’s
Knowledge no one acting on its behalf has, taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of any
of the Shares.
 
(ii)            OFAC.  Neither the Company nor any Subsidiary nor, to the
Company’s Knowledge, any director, officer, agent, employee, Affiliate or Person
acting on behalf of the Company or any Subsidiary is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not knowingly, directly or
indirectly, use the proceeds of the sale of the Shares or the shares of Class A
Common Stock being sold pursuant to the Additional Agreements, or lend,
contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other Person or entity, towards any sales or operations in
any country sanctioned by OFAC or for the purpose of financing the activities of
any Person currently subject to any U.S. sanctions administered by OFAC.
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(jj)           Money Laundering Laws.  The operations of each of the Company and
any Subsidiary are and have been conducted at all times in compliance with the
money laundering statutes of applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any applicable governmental agency (collectively,
the “Money Laundering Laws”) and to the Company’s Knowledge, no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company and/or any Subsidiary with respect to the
Money Laundering Laws is pending or threatened.
 
(kk)        Compliance with Certain Banking Regulations.  The Company has no
knowledge of any facts and circumstances, and has no reason to believe that any
facts or circumstances exist, that would cause the Bank: (i) to be deemed not to
be in satisfactory compliance with the Community Reinvestment Act and the
regulations promulgated thereunder or to be assigned a CRA rating by federal or
state banking regulators of lower than “satisfactory”; (ii) to be deemed to be
operating in violation, in any material respect, of the Bank Secrecy Act of 1970
(or otherwise known as the “Currency and Foreign Transactions Reporting Act”),
the USA Patriot Act (or otherwise known as “Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001”), any order issued with respect to anti-money laundering by OFAC or any
other anti-money laundering statute, rule or regulation; or (iii) to be deemed
not to be in satisfactory compliance, in any material respect, with all
applicable privacy of customer information requirements contained in any federal
and state privacy laws and regulations as well as the provisions of all
information security programs adopted by the Bank.
 
(ll)            No Additional Agreements.  The Company has no other agreements
or understandings (including, without limitation, side letters) with any
Purchaser or other Person to purchase shares of Class A Common Stock on terms
more favorable to such Person than as set forth herein, including, without
limitation, the Purchase Price per Share.
 
(mm)      Reports, Registrations and Statements.  Since January 1, 2012, the
Company and each Subsidiary have filed all material reports, registrations and
statements, together with any required amendments thereto, that it was required
to file with the Bank Regulatory Authorities and any other applicable federal or
state securities or banking authorities, including, without limitation, all
financial statements and financial information required to be filed by it under
the Federal Deposit Insurance Act and the BHC Act. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the “Company Reports.” All such Company Reports were filed
on a timely basis or the Company or the applicable Subsidiary, as applicable,
received a valid extension of such time of filing and has filed any such Company
Reports prior to the expiration of any such extension.  As of their respective
dates, the Company Reports complied in all material respects with all the rules
and regulations promulgated by the Bank Regulatory Authorities and any other
applicable foreign, federal or state securities or banking authorities, as the
case may be.
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(nn)        Bank Regulatory Capitalization.  As of September 30, 2013, the Bank
met or exceeded the standards necessary to be considered “well capitalized”
under the FDIC’s regulatory framework for prompt corrective action.
 
(oo)        Agreements with Regulatory Agencies; Fiduciary Obligations.  Except
for the agreements or memoranda of understanding with the FDIC, the Federal
Reserve, and the Department described in the SEC Reports filed by the Company,
neither the Company nor any Subsidiary is subject to any cease-and-desist or
other similar order or enforcement action issued by, or is a party to any
written agreement, consent agreement or memorandum of understanding with, or is
a party to any commitment letter or similar undertaking to, or is subject to any
capital directive by, or since December 31, 2010, has adopted any board
resolutions at the request of, any governmental entity that currently restricts
in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its liquidity and funding policies and
practices, its ability to pay dividends, its credit, risk management or
compliance policies, its internal controls, its management or its operations or
business (each item in this sentence, a “Regulatory Agreement”), nor has the
Company or any Subsidiary been advised since December 31, 2011 by any
governmental entity that it is considering issuing, initiating, ordering, or
requesting any such Regulatory Agreement.
 
Each of the Company and each Subsidiary has properly administered all accounts
for which it acts as a fiduciary, including accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents,
applicable federal and state law and regulation and common law.  None of the
Company, any Subsidiary or any director, officer or employee of the Company or
any Subsidiary has committed any breach of trust or fiduciary duty with respect
to any such fiduciary account and the accountings for each such fiduciary
account are true and correct and accurately reflect the assets of such fiduciary
account.
 
(pp)        No General Solicitation or General Advertising.  Neither the Company
nor any Person acting on its behalf has engaged or will engage in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in connection with any offer or sale of the Shares.
 
(qq)         Mortgage Banking Business.  Except as has not had and would not
reasonably be expected to have a Material Adverse Effect:
 
 (i)          The Company and each of its Subsidiaries has complied with, and
all documentation in connection with the origination, processing, underwriting
and credit approval of any mortgage loan originated, purchased or serviced by
the Company or any of its Subsidiaries satisfied, (A) all applicable federal,
state and local laws, rules and regulations with respect to the origination,
insuring, purchase, sale, pooling, servicing, subservicing, or filing of claims
in connection with mortgage loans, including all laws relating to real estate
settlement procedures, consumer credit protection, truth in lending laws, usury
limitations, fair housing, transfers of servicing, collection practices, equal
credit opportunity and adjustable rate mortgages, (B) the responsibilities and
obligations relating to mortgage loans set forth in any agreement between the
Company or any of its Subsidiaries and any Agency, Loan Investor or Insurer, (C)
the applicable rules, regulations, guidelines, handbooks and other requirements
of any Agency, Loan Investor or Insurer and (D) the terms and provisions of any
mortgage or other collateral documents and other loan documents with respect to
each mortgage loan; and
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 (ii)         No Agency, Loan Investor or Insurer has (A) claimed in writing
that the Company or any of its Subsidiaries has violated or has not complied
with the applicable underwriting standards with respect to mortgage loans sold
by the Company or any of its Subsidiaries to a Loan Investor or Agency, or with
respect to any sale of mortgage servicing rights to a Loan Investor, (B) imposed
in writing restrictions on the activities (including commitment authority) of
the Company or any of its Subsidiaries or (C) indicated in writing to the
Company or any of its Subsidiaries that it has terminated or intends to
terminate its relationship with the Company or any of its Subsidiaries for poor
performance, poor loan quality or concern with respect to the Company’s or any
of its Subsidiaries’ compliance with laws,
For purposes of this Section 3.1(qq):  (A) “Agency” means the Federal Housing
Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home
Administration (now known as Rural Housing and Community Development Services),
the Federal National Mortgage Association, the United States Department of
Veterans’ Affairs, the Rural Housing Service of the U.S. Department of
Agriculture or any other federal or state agency with authority to (i) determine
any investment, origination, lending or servicing requirements with regard to
mortgage loans originated, purchased or serviced by the Company or any of its
Subsidiaries or (ii) originate, purchase, or service mortgage loans, or
otherwise promote mortgage lending, including state and local housing finance
authorities; (B) “Loan Investor” means any person (including an Agency) having a
beneficial interest in any mortgage loan originated, purchased or serviced by
the Company or any of its Subsidiaries or a security backed by or representing
an interest in any such mortgage loan; and (C) “Insurer” means a person who
insures or guarantees for the benefit of the mortgagee all or any portion of the
risk of loss upon borrower default on any of the mortgage loans originated,
purchased or serviced by the Company or any of its Subsidiaries, including the
Federal Housing Administration, the United States Department of Veterans’
Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any
private mortgage insurer, and providers of hazard, title or other insurance with
respect to such mortgage loans or the related collateral.
 
(rr)            Risk Management Instruments.  Except as has not had or would not
reasonably be expected to have a Material Adverse Effect, since January 1, 2012,
all material derivative instruments, including, swaps, caps, floors and option
agreements, whether entered into for the Company’s own account, or for the
account of one or more of the Company Subsidiaries, were entered into (1) only
in the ordinary course of business, (2) in accordance with prudent practices and
in all material respects with all applicable laws, rules, regulations and
regulatory policies and (3) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of the Company Subsidiaries,
enforceable in accordance with its terms.  Neither the Company nor the Company
Subsidiaries, nor, to the Company’s Knowledge, any other party thereto, is in
breach of any of its material obligations under any such agreement or
arrangement.
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(ss)          ERISA.  The Company is in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (herein
called “ERISA”); no “reportable event” (as defined in ERISA) has occurred with
respect to any “pension plan” (as defined in ERISA) for which the Company would
have any liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “pension plan”; or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the “Code”); and each “Pension Plan” for
which the Company would have liability that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
 
(tt)            Shell Company Status.  The Company is not, and has never been,
an issuer identified in Rule 144(i)(1).
 
(uu)         [Intentionally Omitted].
 
(vv)         Change in Control.  The issuance of the Shares to the Purchasers as
contemplated by this Agreement will not trigger any rights under any “change of
control” provision in any of the agreements to which the Company or any of its
Subsidiaries is a party, including any employment, “change in control,”
severance or other compensatory agreements and any benefit plan, which results
in payments to the counterparty or the acceleration of vesting of benefits.
 
3.2           Representations and Warranties of the Purchasers.  Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
 
(a)            Organization; Authority.  If such Purchaser is an entity, it is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate, partnership,
limited liability company or other power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. If such
Purchaser is an entity, the execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate or, if such Purchaser is
not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Purchaser. If such Purchaser is an
entity, each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
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(b)            No Conflicts.  The execution, delivery and performance by such
Purchaser of this Agreement and the Registration Rights Agreement and the
consummation by such Purchaser of the transactions contemplated hereby and
thereby will not (i) result in a violation of the organizational documents of
such Purchaser (if such Purchaser is an entity), (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) assuming the accuracy of
the representations and warranties of the Company contained herein, result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Purchaser to
perform its obligations hereunder.
 
(c)            Investment Intent.  Such Purchaser understands that the Shares
are “restricted securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the Shares as
principal for its own account and not with a view to, or for distributing or
reselling such Shares or any part thereof in violation of the Securities Act or
any applicable state securities laws, provided, however, that by making the
representations herein, such Purchaser does not agree to hold any of the Shares
for any minimum period of time and reserves the right at all times to sell or
otherwise dispose of all or any part of such Shares pursuant to an effective
registration statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Such Purchaser is acquiring the Shares hereunder in the ordinary course of
its business. Such Purchaser does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Shares to or through any person or entity.
 
(d)            Purchaser Status.  At the time such Purchaser was offered the
Shares, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.
 
(e)            General Solicitation.  Such Purchaser is not purchasing the
Shares as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement and has not based its decision to purchase the Shares as a
result of reviewing the prospectus included in the S-1 Registration Statement.
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(f)            Experience of Such Purchaser.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time,
is able to afford a complete loss of such investment.
 
(g)            Access to Information.  Such Purchaser acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits
and risks of investing in the Shares; (ii) access to information about the
Company and the Subsidiaries and their respective financial condition, results
of operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents. Such
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed decision with respect to its acquisition of the
Shares.
 
(h)            Brokers and Finders.  No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Purchaser.  A Purchaser shall indemnify, pay, and
hold the Company harmless against, any liability, loss or expense (including,
without limitation, attorneys’ fees and out-of-pocket expenses) arising in
connection with any such right, interest or claim arising pursuant to any
agreement, arrangement or understanding entered into by or on behalf of such
Purchaser.
 
(i)            Independent Investment Decision.  Such Purchaser has
independently evaluated the merits of its decision to purchase Shares pursuant
to the Transaction Documents, and such Purchaser confirms that it has not relied
on the advice of any other Purchaser’s business and/or legal counsel in making
such decision. Such Purchaser understands that nothing in this Agreement or any
other materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Shares constitutes legal, tax or investment
advice. Such Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares.
 
(j)            Reliance on Exemptions.  Such Purchaser understands that the
Shares are being offered and sold to it in reliance on specific exemptions from
the registration requirements of U.S. federal and state securities laws and that
the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Shares.
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(k)            No Governmental Review.  Such Purchaser acknowledges and agrees
that the Shares are not shares of capital stock in the Bank and are not savings
accounts or deposits of the Bank and are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.  Such
Purchaser understands that no U.S. federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Shares or the fairness or suitability of the investment in
the Shares nor have such authorities passed upon or endorsed the merits of the
offering of the Shares.
 
(l)            Residency.  Such Purchaser’s residence (if an individual) or
office in which its investment decision with respect to the Shares was made (if
an entity) is located at the address immediately below such Purchaser’s name on
its signature page hereto.
 
3.3            Sole Representations.  The Company and each of the Purchasers
acknowledge and agree that no party to this Agreement has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Article III and the
Transaction Documents.
 
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
 
4.1            Transfer Restrictions.
 
(a)            Compliance with Laws.  Notwithstanding any other provision of
this Article IV, each Purchaser covenants that the Shares may be disposed of
only pursuant to an effective registration statement under, and in compliance
with the requirements of, the Securities Act, or pursuant to an available
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state,
federal or foreign securities laws.  In connection with any transfer of the
Shares other than (i) pursuant to an effective registration statement, (ii) to
the Company or (iii) pursuant to Rule 144 (provided that the transferor provides
the Company with reasonable assurances (in the form of a seller representation
letter and, if applicable, a broker representation letter) that such securities
may be sold pursuant to such rule), the Company may require the transferor
thereof to provide to the Company and the Transfer Agent, at the transferor’s
expense, an opinion of counsel selected by the transferor and reasonably
acceptable to the Company and the Transfer Agent, the form and substance of
which opinion shall be reasonably satisfactory to the Company and the Transfer
Agent, to the effect that such transfer does not require registration of such
Shares under the Securities Act.  As a condition of transfer (other than
pursuant to clauses (i), (ii) or (iii) of the preceding sentence), any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement with respect to such transferred Shares.
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(b)            Legends.  Certificates evidencing the Shares shall bear any
legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form, until such time as they are not required
under Section 4.1(c) or applicable law:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED
THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN THE FORM
OF A SELLER REPRESENTATION LETTER AND, IF APPLICABLE, A BROKER REPRESENTATION
LETTER) THAT THE SECURITIES MAY BE SOLD PURSUANT TO SUCH RULE).  NO
REPRESENTATION IS MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE EXEMPTION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE SECURITIES.
 
(c)            Removal of Legends.  The restrictive legend set forth in Section
4.1(b) above shall be removed and the Company shall issue a certificate without
such restrictive legend or any other restrictive legend to the holder of the
applicable Shares upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at DTC, if (i) such Shares are
registered for resale under the Securities Act, (ii) such Shares are sold or
transferred pursuant to Rule 144, or (iii) such Shares are eligible for sale
under Rule 144, without the requirement for the Company to be in compliance with
the current public information required under Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) as to such securities and without volume or manner-of-sale
restrictions.  Following the earlier of (i) the Effective Date or (ii) Rule 144
becoming available for the resale of Shares, without the requirement for the
Company to be in compliance with the current public information required under
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to the Shares and without
volume or manner-of-sale restrictions, the Company shall instruct the Transfer
Agent to remove the legend from the Shares and shall cause its counsel to issue
any legend removal opinion required by the Transfer Agent.  Any fees (with
respect to the Transfer Agent, Company counsel or otherwise) associated with the
issuance of such opinion or the removal of such legend shall be borne by the
Company.  If a legend is no longer required pursuant to the foregoing, the
Company will no later than three (3) Trading Days following the delivery by a
Purchaser to the Transfer Agent (with notice to the Company) of a legended
certificate or instrument representing such Shares (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) and a representation letter to the extent
required by Section 4.1(a) (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to such Purchaser a certificate or instrument
(as the case may be) representing such Shares that is free from all restrictive
legends.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4.1(c).  Certificates for Shares free from all restrictive
legends may be transmitted by the Transfer Agent to the Purchasers by crediting
the account of the Purchaser’s prime broker with DTC as directed by such
Purchaser.
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(d)            Acknowledgement.  Each Purchaser hereunder acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
or otherwise transfer the Shares or any interest therein without complying with
the requirements of the Securities Act. Except as otherwise provided below,
while the Registration Statement remains effective, each Purchaser hereunder may
sell the Shares in accordance with the plan of distribution contained in the
registration statement and if it does so it will comply therewith and with the
related prospectus delivery requirements unless an exemption therefrom is
available or unless the Shares are sold pursuant to Rule 144.  Each Purchaser,
severally and not jointly with the other Purchasers, agrees that if it is
notified by the Company in writing at any time that the registration statement
registering the resale of the Shares is not effective or that the prospectus
included in such registration statement no longer complies with the requirements
of Section 10 of the Securities Act, the Purchaser will refrain from selling
such Shares until such time as the Purchaser is notified by the Company that
such registration statement is effective or such prospectus is compliant with
Section 10 of the Exchange Act, unless such Purchaser is able to, and does, sell
such Shares pursuant to an available exemption from the registration
requirements of Section 5 of the Securities Act.
 
4.2            Acknowledgment of Dilution.  The Company acknowledges that the
issuance of the Shares may result in dilution of the outstanding shares of Class
A Common Stock.  The Company further acknowledges that its obligations under the
Transaction Documents, including without limitation its obligation to issue the
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other shareholders of the Company.
 
4.3            Furnishing of Information.  In order to enable the Purchasers to
sell the Shares under Rule 144 of the Securities Act, for a period of one year
from the Closing, the Company shall maintain the registration of the Class A
Common Stock under Section 12(b) or 12(g) of the Exchange Act and timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act.  During such one year period, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to the Purchasers and make publicly available the information described in Rule
144(c)(2), if the provision of such information will allow resales of the Shares
pursuant to Rule 144.
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4.4            Form D and Blue Sky.  The Company agrees to timely file a Form D
with respect to the Shares as required under Regulation D.  The Company, on or
before the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an exemption from such qualification).  The Company shall
make all filings and reports relating to the offer and sale of the Shares
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.
 
4.5            No Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
will be integrated with the offer or sale of the Shares in a manner that would
require the registration under the Securities Act of the sale of the Shares to
the Purchasers, or that will be integrated with the offer or sale of the Shares
for purposes of the rules and regulations of any Trading Market such that it
would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.
 
4.6            Securities Laws Disclosure; Publicity.  The Company shall, by
9:00 a.m., New York City time, on the first (1st) Business Day immediately
following the date of this Agreement, issue one or more press releases
(collectively, the “Press Release”) reasonably acceptable to the Purchasers
disclosing all material terms of the transactions contemplated hereby and any
other material, nonpublic information that the Company may have provided any
Purchaser at any time prior to the filing of the Press Release.  On or before
9:00 a.m., New York City time, on the first (1st) Business Day immediately
following the date of this Agreement, the Company will file a Current Report on
Form 8-K with the Commission describing the terms of the Transaction Documents
(and including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement and the
Registration Rights Agreement)). If, following public disclosure of the
transactions contemplated hereby, this Agreement terminates prior to Closing,
the Company shall issue a press release disclosing such termination by 9:00
a.m., New York City time, on the first Business Day following the date of such
termination.  Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser or any Affiliate or investment adviser of any
Purchaser, or include the name of any Purchaser or any Affiliate or investment
adviser of any Purchaser in any press release or in any filing with the
Commission (other than a Registration Statement) or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except
(i) as required by the federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and
(B) the filing of final Transaction Documents with the Commission and (ii) to
the extent such disclosure is required by law, at the request of the staff of
the Commission or regulatory agency or under Trading Market regulations, in
which case the Company shall provide the Purchasers with prior written notice of
such disclosure permitted under this subclause (ii).  From and after the
issuance of the Press Release, no Purchaser shall be in possession of any
material, non-public information received from the Company, any Subsidiary or
any of their respective officers, directors or employees or the Placement Agent.
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4.7            Non-Public Information.  Except with the express written consent
of such Purchaser and unless prior thereto such Purchaser shall have executed a
written agreement regarding the confidentiality and use of such information, the
Company shall not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, and each Purchaser shall not
directly solicit the Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents to provide any Purchaser with any
material, non-public information regarding the Company or any of its
Subsidiaries from and after the filing of the Press Release.
 
4.8            Indemnification.
 
(a)            Indemnification of Purchasers.  In addition to the indemnity
provided in the Registration Rights Agreement, the Company will indemnify and
hold each Purchaser and its directors, officers, employees, general partners and
investment advisers and each Person who controls such Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act)
(each, an “Indemnified Person”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Indemnified Person may suffer or
incur as a result of any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents.    The Company will not be liable to any Indemnified
Person under this Agreement to the extent, but only to the extent that a loss,
claim, damage or liability is directly attributable to any Indemnified Person’s
breach of any of the representations, warranties, covenants or agreements made
by such Indemnified Person in this Agreement or in the other Transaction
Documents.
 
(b)            Conduct of Indemnification Proceedings.  Promptly after receipt
by any Indemnified Person of notice of any demand, claim or circumstances which
would or might give rise to a claim or the commencement of any Proceeding in
respect of which indemnity may be sought pursuant to Section 4.8(a), such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any Indemnified Person
so to notify the Company shall not relieve the Company of its obligations
hereunder except to the extent that the Company is actually and materially and
adversely prejudiced by such failure to notify (as determined by a court of
competent jurisdiction, which determination is not subject to appeal or further
review). In any such Proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Person in such Proceeding; or (iii) in the reasonable judgment of counsel to
such Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Company shall not be liable for any settlement of any Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Without the prior written consent of the
Indemnified Person, the Company shall not effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such Proceeding.
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4.9           Listing of Class A Common Stock.  The Company will use its
reasonable best efforts to list the Shares for quotation on the NASDAQ Global
Market and maintain the listing of the Class A Common Stock on the NASDAQ Global
Market.
 
4.10        Use of Proceeds.  The Company intends to use the net proceeds from
the sale of the Shares hereunder for the purpose of increasing its capital and
for general corporate purposes, including paying dividends on and redeeming or
purchasing TARP Shares.
 
4.11        Limitation on Beneficial Ownership.  No Purchaser (and its
Affiliates or any other Persons with which it is acting in concert) will be
entitled to purchase a number of Shares that would result in such Purchaser
becoming, directly or indirectly, the beneficial owner (as determined under Rule
13d-3 under the Exchange Act) of more than 9.9% of the number of shares of Class
A Common Stock issued and outstanding (based on the number of outstanding shares
as of the Closing Date).
 
4.12        Certain Transactions.  The Company will not merge or consolidate
into, or sell, transfer or lease all or substantially all of its property or
assets to, any other party unless the successor, transferee or lessee party, as
the case may be (if not the Company), expressly assumes the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
 
4.13        No Change of Control.  The Company shall use reasonable best efforts
to obtain all necessary irrevocable waivers, adopt any required amendments and
make all appropriate determinations so that the issuance of the Shares to the
Purchasers will not trigger a “change of control” or other similar provision in
any of the agreements to which the Company or any of its Subsidiaries is a
party, including without limitation any employment, “change in control,”
severance or other agreements and any benefit plan, which results in payments to
the counterparty or the acceleration of vesting of benefits.
 
4.14        No Additional Issuances.  Between the date of this Agreement and the
Closing Date, except for the issuance of shares of Class A Common Stock pursuant
to (i) any currently outstanding options or warrants, (ii) the Additional
Agreements, (iii) the shares being offered and sold by the Company pursuant to
the S-1 Registration Statement, and (iv) the Shares being issued pursuant to
this Agreement, the Company shall not issue or agree to issue any additional
shares of Class A Common Stock or other securities which provide the holder
thereof the right to convert such securities into, or acquire, shares of Class A
Common Stock.
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4.15        [Intentionally Omitted]
 
4.16        Conduct of Business.  From the date hereof until the earlier of the
Closing Date or the termination of this Agreement in accordance with its terms,
except as contemplated by this Agreement, the Company will, and will cause its
Subsidiaries to, operate their business in the ordinary course consistent with
past practice and will not take or omit to take any action that would constitute
a breach of Section 3.1(k).
 
4.17        Avoidance of Control.  Notwithstanding anything to the contrary in
this Agreement, neither the Company nor any Subsidiary shall take any action
(including, without limitation, any redemption, repurchase, rescission or
recapitalization of Class A Common Stock, or securities or rights, options or
warrants to purchase Class A Common Stock, or securities of any type whatsoever
that are, or may become, convertible into or exchangeable into or exercisable
for Class A Common Stock in each case, where each Purchaser is not given the
right to participate in such redemption, repurchase, rescission or
recapitalization to the extent of such Purchaser’s pro rata proportion), that
would cause (a) such Purchaser’s equity of the Company (together with equity
owned by such Purchaser’s Affiliates (as such term is used under the BHC Act))
to exceed 33.3% of the Company’s total equity (provided that there is no
ownership or control in excess of 9.9% of any class of voting securities of the
Company by such Purchaser, together with such Purchaser’s Affiliates) or (b)
such Purchaser’s ownership of any class of voting securities of the Company
(together with the ownership by such Purchaser’s Affiliates (as such term is
used under the BHC Act) of voting securities of the Company) to exceed 9.9%, in
each case without the prior written consent of such Purchaser, or to increase to
an amount that would constitute “control” under the BHC Act, the CIBC Act or any
rules or regulations promulgated thereunder (or any successor provisions) or
otherwise cause such Purchaser to “control” the Company under and for purposes
of the BHC Act, the CIBC Act or any rules or regulations promulgated thereunder
(or any successor provisions).  Notwithstanding anything to the contrary in this
Agreement, no Purchaser (together with its Affiliates (as such term is used
under the BHC Act)) shall have the ability to purchase more than 33.3% of the
Company’s total equity or exercise any voting rights of any class of securities
in excess of 9.9% of the total outstanding voting securities of the Company. In
the event either the Company or a Purchaser breaches its obligations under this
Section 4.17 or believes that it is reasonably likely to breach such an
obligation, it shall promptly notify the other parties hereto and shall
cooperate in good faith with such parties to modify ownership or make other
arrangements or take any other action, in each case, as is necessary to cure or
avoid such breach.
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4.18        Most Favored Nation.  During the period from the date of this
Agreement through the Closing Date, neither the Company nor its Subsidiaries
shall enter into any additional, or modify any existing, agreements with any
existing or future investors in the Company or any of its Subsidiaries that have
the effect of establishing rights or otherwise benefiting such investor in a
manner more favorable in any material respect to such investor than the rights
and benefits established in favor of the Purchasers by this Agreement, unless,
in any such case, the Purchasers have been provided with such rights and
benefits.
 
4.19        Rights Offering.
 
(a)            In the event the Rights Offering is consummated after the
Closing, then promptly following the closing of the Rights Offering, each
Purchaser shall be afforded the opportunity to acquire from the Company, for the
same price and on the same terms as the Shares are offered hereunder, in the
aggregate up to the number of shares of Class A Common Stock required to enable
it to maintain its Percentage Interest (measured as of immediately following the
Closing) (the “Participation Right”).  “Percentage Interest” means the
percentage equal to (i) the number of shares of Class A Common Stock then held
by such Purchaser as of the date of determination, divided by (ii) the total
number of outstanding shares of Class A Common Stock as of such date.
 
(b)            Promptly following the closing of the Rights Offering (but in no
event later than five Business Days after the closing of the Rights Offering),
the Company shall deliver a written notice (the “Offer Notice”) to each
Purchaser (i) notifying such Purchaser of the total number of shares of Class A
Common Stock sold in the Rights Offering and (ii) calculating the number of
shares of Class A Common Stock that such Purchaser has the right to acquire in
order to maintain its Percentage Interest.  Such Purchaser shall then have 10
Business Days after receipt of the Offer Notice (the “Offer Period”) to notify
the Company in writing that it intends to exercise its Participation Right and
as to the number of shares of Class A Common Stock such Purchaser desires to
purchase, up to the maximum amount calculated pursuant to Section 4.19(a) (the
“Designated Securities”).  The failure to respond during the Offer Period
constitutes a waiver of such Purchaser’s Participation Right.  The sale of the
Designated Securities shall be closed not later than 10 days after the end of
the Offer Period.  The obligation of each Purchaser to acquire Designated
Securities at such closing shall be subject to the fulfillment to such
Purchaser’s satisfaction, on or prior to such closing sate, of each of the
conditions set forth in Section 5.1 hereof (as if such closing and closing date
were the “Closing” and “Closing Date”, as applicable, thereunder), any of which
may be waived by such Purchaser.
 
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
 
5.1            Conditions Precedent to the Obligations of the Purchasers to
Purchase Shares.  The obligation of each Purchaser to acquire Shares at the
Closing is subject to the fulfillment to such Purchaser’s satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by such Purchaser (as to itself only):
 
(a)            Representations and Warranties.  The representations and
warranties of the Company contained herein shall be true and correct as of the
date when made and as of the Closing Date, as though made on and as of such
date, except for such representations and warranties that speak as of a specific
date.
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(b)            Performance.  The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.
 
(c)            No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction, nor
shall there have been any regulatory communication, that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.
 
(d)            Consents.  The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Shares, all of which shall be
and remain so long as necessary in full force and effect.
 
(e)            No Suspensions of Trading in Class A Common Stock; Listing.  The
Class A Common Stock (i) shall be designated for listing and quotation on the
Principal Trading Market and (ii) shall not have been suspended, as of the
Closing Date, by the Commission or the Principal Trading Market from trading on
the Principal Trading Market nor shall suspension by the Commission or the
Principal Trading Market have been threatened, as of the Closing Date, either
(A) in writing by the Commission or the Principal Trading Market or (B) by
falling below the minimum listing maintenance requirements of the Principal
Trading Market.  The Company shall have obtained approval of the Principal
Trading Market to list the Shares.
 
(f)            Company Deliverables.  The Company shall have delivered the
Company Deliverables in accordance with Section 2.2(a).
 
(g)            [Intentionally Omitted].
 
(h)            Termination.  This Agreement shall not have been terminated as to
such Purchaser in accordance with Section 6.16 herein.
 
(i)              Absence of Bank Regulatory Issues.  The purchase of Shares by
such Purchaser shall not (i) cause such Purchaser or any of its affiliates to
violate any banking regulation, (ii) require such Purchaser or any of its
affiliates to file a prior notice under the CIBC Act, or otherwise seek prior
approval of any banking regulator, (iii) require such Purchaser or any of its
affiliates to become a bank holding company or otherwise serve as a source of
strength for the Company or any Subsidiary or (iv) cause such Purchaser,
together with any other person whose Company securities would be aggregated with
such Purchaser’s Company securities for purposes of any banking regulation or
law, to collectively be deemed to own, control or have the power to vote
securities which (assuming, for this purpose only, full conversion and/or
exercise of such securities by the Purchaser and such other Persons) would
represent more than 9.9% of any class of voting securities of the Company
outstanding at such time.
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(j)              No Burdensome Condition.  Since the date hereof, there shall
not be any action taken, or any law, rule or regulation enacted, entered,
enforced or deemed applicable to the Company or its Subsidiaries, such Purchaser
(or its Affiliates) or the transactions contemplated by this Agreement, by any
bank regulatory authority which imposes any restriction or condition on the
Company or its Subsidiaries or such Purchaser or any of its Affiliates (other
than such restrictions as are described in any passivity or anti-association
commitments, as may be amended from time to time, entered into by such
Purchaser) which such Purchaser determines, in its reasonable good faith
judgment, is materially and unreasonably burdensome on the Company’s business
following the Closing or on such Purchaser (or any of its Affiliates) or would
reduce the economic benefits of the transactions contemplated by this Agreement
to such Purchaser to such a degree that such Purchaser would not have entered
into this Agreement had such condition or restriction been known to it on the
date hereof (any such condition or restriction, a “Burdensome Condition”), and,
for the avoidance of doubt, any requirements to disclose the identities of
limited partners, shareholders or non-managing members of such Purchaser or its
Affiliates or its investment advisers shall be deemed a Burdensome Condition
unless otherwise determined by such Purchaser in its sole discretion.
 
(k)            Material Adverse Effect.  No Material Adverse Effect shall have
occurred since the date of this Agreement.
 
5.2            Conditions Precedent to the Obligations of the Company to sell
Shares.  The Company’s obligation to sell and issue the Shares to each Purchaser
at the Closing is subject to the fulfillment to the satisfaction of the Company
on or prior to the Closing Date of the following conditions, any of which may be
waived by the Company:
 
(a)            Representations and Warranties.  The representations and
warranties made by the Purchasers in Section 3.2 hereof shall be true and
correct as of the date when made, and as of the Closing Date as though made on
and as of such date, except for representations and warranties that speak as of
a specific date.
 
(b)            Performance.  Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing Date.
 
(c)            No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction, nor
shall there have been any regulatory communication, that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.
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(d)            Purchasers Deliverables.  Each Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).
 
(e)            Termination.  This Agreement shall not have been terminated as to
such Purchaser in accordance with Section 6.16 herein.
 
(f)            Purchase of TARP Shares.  The Company shall have been notified
that one or more of its bids to purchase shares of TARP Shares has been accepted
as part of an auction (the “Auction”) by the United States Department of
Treasury or its agents or representatives regarding such shares.

ARTICLE VI
MISCELLANEOUS
 
6.1            Fees and Expenses.  The Company shall pay the reasonable legal
fees and expenses of Greenberg Traurig, LLP, counsel to certain Purchasers,
incurred by such Purchasers in connection with the transactions contemplated by
the Transaction Documents, up to a maximum of $10,000, which amount shall be
paid directly by the Company to Greenberg Traurig, LLP at the Closing or paid by
the Company to Greenberg Traurig, LLP upon termination of this Agreement so long
as such termination did not occur as a result of a material breach by such
Purchasers of any of their obligations hereunder (as the case may be).  Except
as set forth above and elsewhere in the Transaction Documents, the parties
hereto shall be responsible for the payment of all expenses incurred by them in
connection with the preparation and negotiation of the Transaction Documents and
the consummation of the transactions contemplated hereby.  The Company shall pay
all Transfer Agent fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of the Shares to the Purchasers.
 
6.2            Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver to the
other such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.
 
6.3            Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile or
e-mail (provided the sender receives a machine-generated confirmation of
successful facsimile transmission or e-mail notification or confirmation of
receipt of an e-mail transmission) at the facsimile number or e-mail address
specified in this Section prior to 5:00 p.m., New York City time, on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 5:00 p.m., New
York City time, on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service with
next day delivery specified, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as follows:
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If to the Company:
Royal Bancshares of Pennsylvania, Inc.
 
732 Montgomery Avenue
 
Narberth, PA 19072   Attention:  F. Kevin Tylus, President and Chief Executive
Officer   Telephone: (610) 668-4700   Fax:  (610) 668-1185  
E-Mail:  kylus@royalbankamerica.com
  With a copy to: Stevens & Lee, P.C.   111 North 6th Street   Reading, PA 19603
  Attention:  David W. Swartz, Esq.   Telephone:  (610) 478-2184   Fax:  (610)
988-0815  
E-Mail:  dws@stevenslee.com
    If to a Purchaser: To the address set forth under such Purchaser’s name on
the signature page hereof;

 
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
 
6.4            Amendments; Waivers; No Additional Consideration.  No amendment
or waiver of any provision of this Agreement will be effective with respect to
any party unless made in writing and signed by a duly authorized representative
of such party.  No consideration shall be offered or paid to any Purchaser to
amend or consent to a waiver or modification of any provision of any Transaction
Document unless the same consideration is also offered to all Purchasers who
then hold Shares.
 
6.5            Construction.  The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents.
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6.6            Successors and Assigns.  The provisions of this Agreement shall
inure to the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the
Purchasers. Any Purchaser may assign its rights hereunder in whole or in part to
any affiliate of such Purchaser to whom such Purchaser assigns or transfers any
Shares in compliance with the Transaction Documents and applicable law, provided
such transferee shall agree in writing to be bound, with respect to the
transferred Shares, by the terms and conditions of this Agreement that apply to
the “Purchasers”.
 
6.7            No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than Indemnified Persons.
 
6.8            Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
Commonwealth of Pennsylvania, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the
interpretation, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective Affiliates, employees or agents) may be commenced on a
non-exclusive basis in the courts located in the Commonwealth of Pennsylvania.
Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction
of the courts located in the Commonwealth of Pennsylvania for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of any of the Transaction Documents), and hereby irrevocably waives,
and agrees not to assert in any Proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
 
6.9            Survival.  Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.
 
6.10            Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
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6.11            Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
6.12            Replacement of Shares.  If any certificate or instrument
evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is required by the Transfer
Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Shares. If a replacement certificate or
instrument evidencing any Shares is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.
 
6.13            Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company may be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation (other than in connection
with any action for a temporary restraining order) the defense that a remedy at
law would be adequate.
 
6.14            Payment Set Aside.  To the extent that the Company makes a
payment or payments to any Purchaser pursuant to any Transaction Document or a
Purchaser enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
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6.15            Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document.  The decision of each Purchaser to
purchase Shares pursuant to the Transaction Documents has been made by such
Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which may
have been made or given by any other Purchaser or by any agent or employee of
any other Purchaser, and no Purchaser and none of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to or
arising from any such information, materials, statements or opinions.  Nothing
contained herein or in any other Transaction Document, and no action taken by
any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents.  Each Purchaser acknowledges that no
other Purchaser has acted as agent for such Purchaser in connection with making
its investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Shares or
enforcing its rights under the Transaction Documents.  Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any Proceeding for such purpose.  It is
expressly understood and agreed that each provision contained in this Agreement
is between the Company and a Purchaser, solely, and not between the Company and
the Purchasers collectively and not between and among the Purchasers.
 
6.16            Termination.  This Agreement may be terminated and the sale and
purchase of the Shares abandoned at any time prior to the Closing by either the
Company or any Purchaser (with respect to itself only) upon written notice to
the other, if the Closing has not been consummated on or prior to 5:00 p.m., New
York City time, on the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 6.16 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time.  The Company shall give prompt notice of any such termination
to each other Purchaser, and, as necessary, work in good faith to restructure
the transaction to allow each Purchaser that does not exercise a termination
right to purchase the full number of securities set forth below such Purchaser’s
name on the signature page of this Agreement while remaining in compliance with
Section 4.11. Nothing in this Section 6.16 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents. In the event of a termination
pursuant to this Section, the Company shall promptly notify all non-terminating
Purchasers. Upon a termination in accordance with this Section, the Company and
the terminating Purchaser(s) shall not have any further obligation or liability
(including arising from such termination) to the other, and no Purchaser will
have any liability to any other Purchaser under the Transaction Documents as a
result therefrom.
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6.17            Rescission and Withdrawal Right.  Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
 
6.18            Adjustments in Class A Common Stock Numbers and Prices. In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Class A Common Stock (or other securities or rights convertible into,
or entitling the holder thereof to receive directly or indirectly shares of
Class A Common Stock), combination or other similar recapitalization or event
occurring after the date hereof and prior to the Closing, each reference in any
Transaction Document to a number of shares or a price per share shall be deemed
to be amended to appropriately account for such event.
 
6.19            Adjustment to Number of Shares.  Notwithstanding the provisions
of Section 2.1 of this Agreement, at the Closing, the Company shall have the
right to reduce proportionately (based on the total subscription amounts of the
Purchasers under this Agreement and the Additional Investors in the Other
Private Placements) the number of shares of Class A Common Stock sold by the
Company to each Purchaser and each Additional Investor, and purchased by each
Purchaser and each Additional Investor from the Company, in the event that, as a
result of the acceptance by the Treasury of one or more bids by the Company
pursuant to the Auction, the aggregate proceeds necessary for the Company to
repurchase TARP Shares issued to the United States Department of Treasury under
the Capital Purchase Program is less than the Pre-Adjustment Subscriptions (as
defined below).  By way of example, if, as a result of the acceptance by the
Treasury of one or more bids by the Company pursuant to the Auction, the
aggregate proceeds necessary for the Company to repurchase TARP Shares is
$5,000,000, then the subscription amount of each Purchaser and each Additional
Investor shall be reduced to an amount equal to such person’s subscription
amount multiplied by a fraction equal to (i) $5,000,000 divided by (ii)
Pre-Adjustment Subscriptions.  For purposes of this provision, the term
“Pre-Adjustment Subscription” with respect to a Purchaser or an Additional
Investor, as applicable, shall mean such person’s original subscription amount
under this Agreement or the Additional Agreements, as applicable, after giving
effect to any reduction at Closing resulting from the Ownership Limitation or
similar limitation in the Additional Agreements, as applicable, but prior to any
adjustment under this Section 6.19 or similar provision in the Additional
Agreements, as applicable.  For avoidance of doubt, it is the intention of the
parties that the maximum amount available to the Company from the Purchasers and
the Additional Investors under this Agreement and the Additional Agreements,
prior to any adjustment under this Section 6.19 or similar provision in the
Additional Agreements, be designated for the repurchase of TARP Shares and that,
to the extent that less than such amount is needed to repurchase TARP Shares as
a result of the Company’s success in the Auction, then all Purchasers and
Additional Investors shall be cut-back with respect to their investment on a pro
rata basis based on their respective subscription amounts otherwise available to
the Company at Closing.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOR COMPANY FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
 
ROYAL BANCSHARES OF PENNSYLVANIA, INC.
 
 
 
 
 
 
By:
 
/s/ F. Kevin Tylus
 
  Name: F. Kevin Tylus   Title: President and Chief Executive Officer

 
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]
 
[SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
 

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NAME OF PURCHASER:
 
 
 
 
 
  Ithan Creek Investors USB, LLC  
 
By:
   
 
  Name:   Title:     Aggregate Purchase Price (Subscription Amount):  
$__________

 
 
 
Number of Shares to be Acquired:
 
 
 
 

 
 
Tax ID No.:
 
 

 

 
Address for Notice:
                 

 
Telephone No.:
 
 
 
 
Facsimile No.:
 
 
 
 
E-mail Address:
 
 

 

  Attention:     

 
Delivery Instructions:
(if different than above)
 

c/o   
 
 

 

Street:    
 
 

 

City/State/Zip:     
 
 
 
Attention:    

 

Telephone No.:
 
 

 
[SIGNATURE P

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SCHEDULE 3.1(a)
 
Subsidiaries
 
Name of Subsidiary
Percentage Owned
         
Royal Bank America
100%
    
Royal Investments of Delaware, Inc.
100%
    
Royal Real Estate of Pennsylvania, Inc.
100%
     
Crusader Servicing Corporation
80%
     
Royal Investments America, LLC
100%
      
Royal Bancshares Capital Trust I
100%
     
Royal Bancshares Capital Trust II
100%
     
Royal Bank America Leasing, LP
60%
    
RBA Capital, LP
100%
    
Royal Tax Lien Services, LLC
100%
    
Royal Captive Insurance Company
100%
    
RBA Property LLC
100%
    
Narberth Property Acquisition LLC
100%
    
Rio Marina LLC
100%
    

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SCHEDULE 3.1(q)
 
Title to Assets
 
The Bank has loans from PNC Bank, N.A. that are secured by a pledge of
government agency securities and mortgage-backed securities.
 
The Federal Home Loan Bank advances to the Bank are secured by a pledge of
mortgage loans and investment securities.
 
[SIGNATURE P

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SCHEDULE 3.1(y)
 
The holder of the TARP Shares and the holder of the warrant to purchase
1,104,370 shares of Class A common stock of the Company issued by the Company to
the United States Department of Treasury (the “Warrant”) have the right to cause
the Company to register such securities under the Securities Act as provided in
the Securities Purchase Agreement dated February 20, 2009 between the Company
and the United States Department of Treasury (the “Securities Purchase
Agreement”).  Copies of the Warrant and the Securities Purchase Agreement are
filed as exhibits to the Company’s Current Report on Form 8-K filed with the
Commission on February 26, 2009.
 
[SIGNATURE P

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EXHIBITS

A:            Form of Registration Rights Agreement
 
B-1:       Accredited Investor Questionnaire
 
B-2:       Stock Certificate Questionnaire
 
C:            Form of Opinion of Company Counsel
 
D:            Form of Secretary’s Certificate
 
E:            Form of Officer’s Certificate
 
[SIGNATURE P

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EXHIBIT A
 
Form of Registration Rights Agreement
Exhibit A| Page 1

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EXHIBIT B-1
 
ACCREDITED INVESTOR QUESTIONNAIRE
 
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)
 
To:            Royal Bancshares of Pennsylvania, Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of shares of Class A
common stock, $2.00 par value per share (the “Shares”), of Royal Bancshares of
Pennsylvania, Inc., a Pennsylvania corporation (the “Company”).  The Shares are
being offered and sold by the Company without registration under the Securities
Act of 1933, as amended (the “Act”), and the securities laws of certain states,
in reliance on the exemptions contained in Section 4(a)(2) of the Act and on
Regulation D promulgated thereunder and in reliance on similar exemptions under
applicable state laws.  The Company must determine that a potential investor
meets certain suitability requirements before offering or selling Shares to such
investor.  The purpose of this Questionnaire is to assure the Company that each
investor will meet the applicable suitability requirements.  The information
supplied by you will be used in determining whether you meet such criteria, and
reliance upon the private offering exemptions from registration is based in part
on the information herein supplied.
 
This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security.  Your answers will be kept strictly confidential. 
However, by signing this Questionnaire, you will be authorizing the Company to
provide a completed copy of this Questionnaire to such parties as the Company
deems appropriate in order to ensure that the offer and sale of the Shares will
not result in a violation of the Act or the securities laws of any state and
that you otherwise satisfy the suitability standards applicable to purchasers of
the Shares.  All potential investors must answer all applicable questions and
complete, date and sign this Questionnaire.  Please print or type your responses
and attach additional sheets of paper if necessary to complete your answers to
any item.
 
PART A.                     BACKGROUND INFORMATION
 

Name of Beneficial Owner of the Shares:   

      
                        

Business Address:    
(Number and Street)

 
  
(City) (State) (Zip Code)

 

Telephone Number: (___)      

 
If a corporation, partnership, limited liability company, trust or other entity:

Exhibit B-1| Page 1

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Type of entity:  

 
Were you formed for the purpose of investing in the securities being offered?

Yes ____                                      No ____

If an individual:
 

Residence Address:    
(Number and Street)

 
  
(City) (State) (Zip Code)

 

Telephone Number: (___)

 
Age: _____________
Citizenship: ____________  
Where registered to vote: ____________ 

  
If an individual, set forth in the space provided below the state in the United
States in which you maintain your residence:

If an entity, set forth in the space provided below the state in the United
States in which you made your investment decision:

Are you a director or executive officer of the Company?

Yes ____                                      No ____
 

Social Security or Taxpayer Identification No.    

 
PART B.                      ACCREDITED INVESTOR QUESTIONNAIRE
 
In order for the Company to offer and sell the Shares in conformance with state
and federal securities laws, the following information must be obtained
regarding your investor status.  Please initial each category applicable to you
as a Purchaser of Shares.
 

__ (1) A bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity;

 

__ (2) A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;

 

__ (3) An insurance company as defined in Section 2(13) of the Securities Act;

Exhibit B-1| Page 2

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__ (4) An investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that Act;

 

__ (5) A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;

 

__ (6) A plan established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political subdivisions, for
the benefit of its employees, if such plan has total assets in excess of
$5,000,000;

 

__ (7) An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;

 

__ (8) A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940;

 

__ (9) An organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the Shares, with total assets
in excess of $5,000,000;

 

__ (10) A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a
sophisticated person who has such knowledge and experience in financial and
business matters that such person is capable of evaluating the merits and risks
of investing in the Company;

 

___ (11) A natural person whose individual net worth, or joint net worth with
that person’s spouse, at the time of his or her purchase exceeds $1,000,000
(excluding in such calculation the value of your primary residence and the
related amount of indebtedness secured by your primary residence up to its fair
market value and including in such calculation, if applicable, the related
amount of indebtedness secured by your primary residence that exceeds its fair
market value and the amount of any increase on the related indebtedness secured
by your primary residence incurred within 60 days prior to your purchase of the
Company’s securities);

 

___ (12) A natural person who had an individual income in excess of $200,000 in
each of the two most recent years, or joint income with that person’s spouse in
excess of $300,000, in each of those years, and has a reasonable expectation of
reaching the same income level in the current year;

 

___ (13) An executive officer or director of the Company;

 

___ (14) An entity in which all of the equity owners qualify under any of the
above subparagraphs. If the undersigned belongs to this investor category only,
list the equity owners of the undersigned, and the investor category which each
such equity owner satisfies.

Exhibit B-1| Page 3

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A.            FOR EXECUTION BY AN INDIVIDUAL:
 
 
  
By
   
 
Date
 

 
 
 
Print Name:     
   

 
B.            FOR EXECUTION BY AN ENTITY:
 
 
 
Entity Name:    
  

                                                                         
 
      
By
     
 
Date

 
 
 
Print Name:  
  

 
 
Title:     
      

 
C.            ADDITIONAL SIGNATURES (if required by partnership, corporation or
trust document):
 
 
 
Entity Name:    
  

 
 
 
By
     
 
Date

 
 
 
Print Name:  
  

 
 
Title:   
       

 
 
 
Entity Name:     
           

 
 
 
By
 
 
Date

 
 
 
Print Name:  
  

 
 
Title:  
 

Exhibit B-1| Page 4

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EXHIBIT B-2
 
Stock Certificate Questionnaire
 
Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:

1.
The exact name that the Shares are to be registered in (this is the name that
will appear on the stock certificate(s)).  You may use a nominee name if
appropriate:
 
 
2.
The relationship between the Purchaser of the Shares and the Registered Holder
listed in response to Item 1 above:
 
 
3.
The mailing address, telephone and telecopy number of the Registered Holder
listed in response to Item 1 above:
 
 
 
 
 
 
 
 
 
 
 
 
 
4.
The Tax Identification Number (or, if an individual, the Social Security Number)
of the Registered Holder listed in response to Item 1 above:
 

Exhibit B-2| Page 1

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EXHIBIT C
 
Form of Opinion of Company Counsel*
 
1.
The Company is validly existing and subsisting as a corporation under the laws
of the Commonwealth of Pennsylvania.

 
2.
The Company has the corporate power and authority to execute and deliver and to
perform its obligations under the Transaction Documents, including, without
limitation, to issue the Shares under the Purchase Agreement.

 
3.
The Company is a registered bank holding company under the Bank Holding Company
Act of 1956, as amended.

 
4.
The deposit accounts of the Bank are insured by the Federal Deposit Insurance
Corporation under the provisions of the Federal Deposit Insurance Act.

 
5.
Each of the Transaction Documents has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Purchasers (to the extent they are a party), each of the Transaction
Documents constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.

 
6.
The execution and delivery by the Company of each of the Transaction Documents
and the performance by the Company of its obligations under such agreements,
including its issuance and sale of the Shares, do not and will not: (a) require
any consent, approval, license or exemption by, order or authorization of, or
filing, recording or registration by the Company with any federal or state
governmental authority, except (1) as may be required by federal securities laws
with respect to the Company’s obligations under the Registration Rights
Agreement, (2) the filing of Form D pursuant to Securities and Exchange
Commission Regulation D and (3) the filings required in accordance with Section
4.6 of the Purchase Agreement, (b) violate any federal or state statute, rule or
regulation, or any rule or regulation of the NASDAQ Global Market, or any court
order, judgment or decree, if any, listed in Exhibit A hereto, which Exhibit
lists all court orders, judgments and decrees that the Company has certified to
us are applicable to it, or (c) result in any violation of the Articles of
Incorporation, as amended, or Bylaws, as amended, of the Company.

 
7.
Assuming the accuracy of the representations, warranties and compliance with the
covenants and agreements of the Purchasers and the Company contained in the
Purchase Agreement, it is not necessary, in connection with the offer, sale and
delivery of the Shares to the Purchasers to register the Shares under the
Securities Act.

 
8.
The Shares being delivered to the Purchasers pursuant to the Purchase Agreement
have been duly and validly authorized and, when issued, delivered and paid for
as contemplated in the Purchase Agreement, will be duly and validly issued,
fully paid and non-assessable, and free of any preemptive right or similar
rights contained in the Company’s Articles of Incorporation, as amended, or
By-laws, as amended.

 
* The opinion letter of Company Counsel will be subject to customary limitations
and carveouts.
Exhibit C| Page1

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EXHIBIT D
 
Form of Secretary’s Certificate
 
The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of Royal Bancshares of Pennsylvania, Inc., a Pennsylvania
corporation (the “Company”), and that as such he is authorized to execute and
deliver this certificate in the name and on behalf of the Company and in
connection with the Securities Purchase Agreement, dated as of March 7, 2014, by
and among the Company and the investors party thereto (the “Purchase
Agreement”), and further certifies in his official capacity, in the name and on
behalf of the Company, the items set forth below.  Capitalized terms used but
not otherwise defined herein shall have the meaning set forth in the Purchase
Agreement.
 
1.
Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company at a meeting
held on _____, 2014, which represent all of the resolutions approving the
transactions contemplated by the Purchase Agreement and the issuance of the
Shares.  Such resolutions have not in any way been amended, modified, revoked or
rescinded, have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect.

 
2.
Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate of Incorporation of the Company, together with any and all
amendments thereto currently in effect, and no action has been taken to further
amend, modify or repeal such Certificate of Incorporation, the same being in
full force and effect in the attached form as of the date hereof.

 
3.
Attached hereto as Exhibit C is a true, correct and complete copy of the Bylaws
of the Company and any and all amendments thereto currently in effect, and no
action has been taken to further amend, modify or repeal such Bylaws, the same
being in full force and effect in the attached form as of the date hereof.

 
4.
Each person listed below has been duly elected or appointed to the position(s)
indicated opposite his name and is duly authorized to sign the Purchase
Agreement on behalf of the Company, and the signature appearing opposite such
person’s name below is such person’s genuine signature.

Name
Position
Signature
 
F. Kevin Tylus
President and Chief Executive Officer
    
Robert A. Kuehl
Chief Administrative and Risk Officer
         

Exhibit D| Page 2

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IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day
of __________, 2014.
                                                                      

 
   
    
 
[_____________]
Secretary

 
I, [_____________], Chief [______] Officer of the Company, hereby certify that
[_____________] is the duly elected, qualified and acting Secretary of the
Company and that the signature set forth above is his true signature.
 
                                                                      

 

    
 
[_____________]
Chief [______] Officer

Exhibit D| Page 3

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EXHIBIT E
 
Form of Officer’s Certificate

The undersigned, the [_______________] of Royal Bancshares of Pennsylvania,
Inc., a Pennsylvania corporation (the “Company”), pursuant to Section 2.2(a)(vi)
of the Securities Purchase Agreement, dated as of March 7, 2014, by and among
the Company and the investors signatory thereto (the “Securities Purchase
Agreement”), hereby represent, warrant and certify as follows (capitalized terms
used but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement):
 
1.            The representations and warranties of the Company contained in the
Securities Purchase Agreement are true and correct as of the date when made and
as of the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.
 
2.            The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

IN WITNESS WHEREOF, the undersigned have executed this certificate this ___ day
of _______________, 2014.

 
   
  
 
[___________]
  [___________]

 
Exhibit E| Page 1

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