EX-10.1






EXECUTION COPY




Exhibit 10.1




TRANSITION AND SEPARATION AGREEMENT




     This Transition and Separation Agreement (this “Agreement”) made as of this 10th day of
October 2008, between ROYAL BANCSHARES OF PENNSYLVANIA, INC., a Pennsylvania business corporation
(“Corporation”), ROYAL BANK AMERICA (“Bank” and, collectively with Corporation, “Royal”), a
Pennsylvania state-chartered bank, and JOSEPH P. CAMPBELL, an individual (“Executive”).



     WHEREAS, Executive has been employed by Corporation and Bank in the capacity of President and
Chief Executive Officer under the employment agreement dated September 11, 2006 (the “Employment
Agreement”); and



     WHEREAS, Executive has announced his intention to step down as President and Chief Executive
Officer of Corporation and Bank as of December 31, 2008, and to resign and retire from Corporation
and Bank, effective December 31, 2009; and



     WHEREAS, Corporation and Bank desire to provide for the orderly separation of Executive and a
smooth transition in the positions of President and Chief Executive Officer; and



     WHEREAS, Corporation and Bank believe it is in the best interests of Corporation, Bank, and
all of Corporation’s shareholders to enter into this Agreement.



     NOW THEREFORE, in consideration of the promises and the covenants herein, the sufficiency of
which is hereby acknowledged, Executive, Corporation, and Bank agree as follows:



     1. Cessation as President and Chief Executive Officer; Subsequent Resignation and
Retirement. The parties acknowledge that, effective as of December 31, 2008, or such earlier
date upon which Executive’s employment with Royal terminates (the “Step-Down Date”), Executive
shall no longer serve as President and Chief Executive Officer of Corporation and Bank and, unless
Executive’s employment with Royal terminates sooner, effective December 31, 2009 (the “Retirement
Date”), Executive shall resign and retire as an employee of Corporation and Bank on such date.
Executive and Royal agree that the public announcement of such transition and separation shall be
substantially similar to the form attached hereto as Exhibit B.



     2. Employment until the Step-Down Date.


          (a) Executive shall remain as a Tier 1 employee and President and Chief Executive Officer of
Corporation and Bank from the date of this Agreement through the Step-Down Date (the “Continuation
Period”) and shall assist the Chairman of the Board of Directors of Corporation in transitioning
Chief Executive Officer duties in an orderly manner to the Corporation-designated executives.


          (b) During the Continuation Period, Executive shall remain an active full-time employee of
Royal and shall continue to:



               (i) receive his current base salary in normal pay intervals (less applicable withholdings and
deductions); and



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               (ii) be eligible for and enrolled in his current benefits, on that basis, including, but not
limited to:



                    A. discretionary bonuses;



                    B. accrual of vacation and sick leave in accordance with the policies as established from time
to time by the Boards of Directors of Corporation and Bank;



                    C. participation in Corporation’s Long-Term Incentive Plan;



                    D. the ability to exercise outstanding and vested options to purchase Corporation common
stock;



                    E. continuation of all life, disability, medical insurance and other normal health and welfare
benefits;



                    F. use of existing Corporation-provided vehicle;



                    G. country club membership reimbursement of up to $5,000 per annum; and

                    H. office space and administrative and technical support at 732 Montgomery Ave., Narberth, PA
(the benefits set forth in Sections 2(b)(ii)(A) through (H), collectively, the “Executive
Benefits”).


          (c) During the Continuation Period, Executive shall perform and discharge well and faithfully
such duties as may reasonably be assigned to him from time to time by the Board of Directors or
Corporation or Bank.



          (d) Notwithstanding the previous provision of Section 2(a) of this Agreement, this Agreement
and Executive’s employment with Corporation and Bank shall terminate automatically for Cause (as
defined herein) upon written notice from the Board of Directors of Corporation and Bank to
Executive. As used in this Agreement, “Cause” shall mean any of the following:



               (i) Executive’s conviction of or plea of guilty or nolo contendere to a felony a crime of
falsehood or a crime involving moral turpitude, or the actual incarceration of Executive for a
period of sixty (60) consecutive days or more;



               (ii) Executive’s willful failure to follow the good faith lawful, written instructions of the
Board of Directors of Corporation or Bank with respect to their operations, after written notice
from Corporation or Bank and a failure to cure such violation within ten (10) days of said written
notice;



               (iii) Executive’s willful failure to substantially perform Executive’s duties to Corporation
or Bank (other than a failure resulting from Executive’s incapacity because of physical or mental
illness) after written notice from Corporation or Bank and a failure to cure such violation within
ten (10) days of said written notice, unless it is apparent under the



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circumstances that Executive is unable to cure such violation, which failure results in injury
to Corporation or Bank, monetarily or otherwise;



               (iv) Executive’s intentional violation of the provisions of this Agreement, after written
notice from Corporation or Bank and a failure to cure such violation within ten (10) days of said
written notice;



               (v) dishonesty of Executive in the performance of his duties, as reasonably determined by a
vote of seventy-five percent (75%) of the directors of the Board of Directors;



               (vi) Executive’s removal or prohibition from being an institutional-affiliated party by a
final order of an appropriate federal banking agency pursuant to Section 9(e) of the Federal
Deposit Insurance Act or any applicable Regulatory Agency;



               (vii) the willful engaging by Executive in misconduct injurious to the Corporation or Bank
after written notice from Corporation or Bank, and a failure to cure such conduct within twenty
(20) days;



               (viii) the breach of Executive’s fiduciary duty to the Corporation or Bank involving personal
profit;



               (ix) the willful violation of (1) any material law, rule or regulation applicable to
Corporation or Bank or (2) any final cease and desist order issued by an applicable regulatory
agency;



               (x) conduct on the part of Executive that brings public discredit to Corporation or Bank or
that is clearly contrary to the best interests of Corporation or Bank as reasonably determined by a
vote of seventy-five percent (75%) of the directors of the Board of Directors;



               (xi) unlawful harassment by Executive against employees, customers, business associates,
contractors or vendors of Corporation or Bank as reasonably determined by seventy-five percent
(75%) of the disinterested members of the Board of Directors following an investigation of the
claims by a third party;



               (xii) any act of fraud or misappropriation against the Corporation, the Bank, or their
customers, employees, contractors or business associates;



               (xiii) intentional misrepresentation of a material fact, or intentional omission of
information necessary to make the information supplied materially misleading, in application or
other information provided by Executive to Corporation or Bank in connection with Executive’s
employment with Corporation or Bank; or



               (xiv) the existence of any material conflict between the interests of Corporation or Bank and
Executive that is not disclosed in writing by Executive to Corporation or Bank prior to action and
approved in writing by the Board of Directors, and, after notice from Corporation or Bank, a
failure to cure such conflict within twenty (20) days of said notice.



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     Notwithstanding the foregoing, Executive’s employment under this Agreement shall not be deemed
to have been terminated for “Cause” under this Section 2(d) above if such termination took place
solely as a result of:



               (i) questionable judgment on the part of Executive;



               (ii) any act or omission believed by Executive, in good faith, to have been in, or not opposed
to, the best interests of Corporation or Bank (or its affiliated companies); or



               (iii) any act or omission in respect of which a determination could properly be made that
Executive met the applicable standard of conduct prescribed for indemnification or reimbursement or
payment of expenses under the Charter or By-laws of Corporation or Bank or the directors’ and
officers’ liability insurance of Corporation or Bank, in each case as in effect at the time of such
act or omission.



     If this Agreement is terminated for Cause, all of Executive’s rights under this Agreement,
including, but not limited to, the benefits provided under Sections 2, 3, and 4, shall cease as of
the effective date of such termination.



          (e) Executive’s employment may be terminated at any time by mutual written agreement of
Corporation, Bank, and Executive. If this Agreement is terminated by mutual written agreement, all
of Executive’s rights under this Agreement, including, but not limited to, the benefits provided
under Sections 2, 3, and 4, shall cease as of the effective date of such termination.



     3. Recovery Services. Unless Executive’s employment with Royal terminates sooner, for
the period commencing on January 1, 2009, and ending on the earlier of: (i) the Retirement Date;
(ii) the date upon which Executive’s employment with Royal terminates for any reason; or (iii) such
other date that is mutually agreed to in writing by Executive and Royal (the “Recovery Period”),
Executive shall be employed by and provide recovery services to Corporation as follows:



          (a) Title. During the Recovery Period, Executive shall have the title of “Special
Consultant to Senior Management.”



          (b) Time of Performance. During the Recovery Period, Executive’s duties shall require
at least one hundred fifty (150) hours per annum of recovery services by Executive, which shall be
performed at such times and from such locations that are mutually acceptable to Executive and
Corporation.



          (c) Services. During the Recovery Period, Executive agrees that he shall work
directly with the Vice President of Special Assets to assist Royal in recovering all identified
impaired and special asset loans of Bank, attend at least one (1) Special Assets Committee meeting
per month (the prevailing standard Special Assets Committee fee shall be paid for such attendance),
and provide other such services that are reasonably consistent with Executive’s former status as
President and Chief Executive Officer of Corporation and Bank.



          (d) Manner of Performance. In connection with providing recovery services during the
Recovery Period, Executive shall report directly to the Chairman of the Board of Directors of



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Corporation and shall comply in full with all applicable law, and rules and regulations and
with Royal’s Code of Conduct. Subject to the restrictive covenants set forth in the Employment
Agreement, including those described in Section 8, during the Recovery Period, Executive may: (i)
serve on a maximum of two (2) corporate, civic or charitable boards or committees; (ii) manage
personal investments; or (iii) engage in activities permitted by the policies of Royal or as
specifically permitted by Royal, so long as such activities do not significantly interfere with the
performance of Executive’s responsibilities in accordance with this Agreement. Subject to the
restrictive covenants set forth in the Employment Agreement, including those described in Section
8, Executive may also deliver lectures, fulfill speaking engagements or teach at educational
institutions; provided, however, that Royal shall partake in any remuneration received by Executive
in connection therewith in a proportion to be mutually determined by Royal and Executive.
Notwithstanding the foregoing, Royal shall not participate in any remuneration for such teaching
engagements that occur outside of normal business hours or at other mutually agreeable times that
do not otherwise conflict with Executive’s responsibilities described in this Agreement.



          (e) Compensation during Recovery Period. In consideration for Executive’s recovery
services to Corporation during the Recovery Period, Executive shall be entitled to earn a bonus
equal to five percent (5%) of any amounts recovered to Bank in excess of Bank’s “Net Book Balance”
(as defined below) on those loans designated as “Impaired Loans” or “Special Assets” (such bonus,
the “Approved Recovery Commission”). Net Book Balance as used herein is defined as the “Net Book
Balance” as is published on the “Royal Bank America Special Asset Loans” list maintained by Bank
which lists the carrying values on specifically identified “Senior Debt” and/or “Mezzanine Debt”
loans which have been reduced by the amount of a specific “Charge-Off” and/or a specific “Loss
Reserve” as published on such list and which have been approved in accordance with Bank’s policies
and procedures. Any Approved Recovery Commission shall be paid only upon the successful recovery
to Bank of those funds which are in excess of the above defined Net Book Balance and which are
collected by Bank during the Recovery Period. The Approved Recovery Commission shall apply to the
recovery by Executive of any Special Assets that were in existence prior to the Retirement Date,
provided that such recovered amounts are received by Bank by March 31, 2010. The Approved Recovery
Commission, if any, shall be paid in a lump sum no later than fifteen (15) days following receipt
of such recovered amounts by Bank. The list of “Impaired Loans” and “Special Assets” as of August
31, 2008, and related Net Book Balance for each related loan as of such date, on which the Approved
Recovery Commission shall be paid for amounts collected by the Bank during the Recovery Period has
been previously agreed to by the parties. Any additional “Impaired Loans” or “Special Assets” to
which the Approved Recovery Commission is applicable for dates after August 31, 2008, and the
amount of the specific “Charge-Off” and/or specific “Loss Reserve” applicable to each such
“Impaired Loan” or “Special Asset,” are subject to the approval of the Special Assets Committee
which includes the Chairman and Chief Executive Officer, the President and Chief Operating
Officer, the Chairman of the Special Assets Committee, the Chief Financial Officer, the Chief
Credit Officer and the Senior Vice President of Special Assets.



          (f) Continuation of Benefits. During the Recovery Period, Executive shall remain an
active employee of Royal and shall continue to receive the Executive Benefits, on that basis;
provided, however, that the office space and administrative and technical support as provided in



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Section 2(b)(ii)(H) shall be moved to 1230 Walnut Street, Philadelphia, PA or other mutually
agreeable facilities, and notwithstanding the foregoing, Executive shall no longer be eligible to:



               (i) receive discretionary bonuses;



               (ii) accrue vacation or sick leave in accordance with the policies as established from time to
time by the Boards of Directors of Corporation and Bank; and



               (iii) participate in Corporation’s Long-Term Incentive Plan.



          (g) Director Compensation. After the Step-Down Date, or such earlier date if
terminated pursuant to Sections 2(c) and (d), Executive shall be considered an outside director of
the Board of Directors of Corporation and Bank and shall be entitled to receive the same
compensation and benefits as other outside directors of the Board of Directors of Corporation and
Bank, for as long as Executive serves on the Board of Directors of Corporation and Bank.



     4. Payments and Benefits Due To Resignation and Retirement.



          (a) Severance Benefits. Unless Executive’s employment is terminated pursuant to
Sections 2(d) or (e), Executive shall receive:



               (i) a lump sum cash payment of $2,119,730, less required tax withholding, payable on or within
thirty (30) days before December 31, 2008; and;



               (ii) for a period of three (3) years, commencing on the Retirement Date, or such earlier date
upon which Executive’s employment with Royal terminates, continuation of all life, disability,
medical insurance and other normal health and welfare benefits in effect with respect to Executive
during the prior two (2) calendar years, as required under Section 7(a) of the Employment
Agreement. If, after the Retirement Date, or such earlier date upon which Executive’s employment
with Royal terminates, Corporation cannot provide any of the foregoing benefits because Executive
is no longer an employee, Executive shall receive, on or within thirty (30) days of the Retirement
Date, a lump sum cash payment equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits); provided, however, that such amount shall not exceed 120% of
Corporation’s cost to provide such benefits to an employee.



          (b) Equity Grants. For purposes of the Royal Bancshares of Pennsylvania, Inc. Stock
Option and Appreciation Right Plan and the Royal Bancshares of Pennsylvania, Inc. 2007 Long-Term
Incentive Plan, Executive shall be considered an employee participant during the Continuation
Period and the Recovery Period. The vesting, exercisability, lapsing and forfeiture of Executive’s
options to purchase Corporation common stock shall be governed by the provisions of various equity
plans of Corporation and the equity award agreements between Executive and Corporation. Likewise,
the vesting of Executive’s restricted stock awards shall be governed by the provisions of various
equity plans of Corporation and the equity award agreements between Executive and Corporation.



          (c) Supplemental Executive Retirement Plan. Executive and Bank acknowledge and agree
that:



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               (i) Executive is fully vested under the Royal Bank America Supplemental Executive Retirement
Plan (the “SERP”);



               (ii) no additional benefits shall accrue under the SERP after the Step-Down Date; and



               (iii) in accordance with the SERP and the SERP participation agreement between Bank and
Executive dated January 1, 2007, as amended (the “SERP Participation Agreement”), commencing on
January 1, 2010, and continuing for the remainder of Executive’s lifetime, Executive shall receive
an annual benefit of $347,000 (or such lesser amount if Executive’s employment terminates prior to
December 31, 2009) payable in substantially equal monthly installments. Notwithstanding the
foregoing, if, after commencement of such benefits, Executive should die prior to the completion of
one-hundred-twenty (120) monthly payments, such monthly payments shall be continued to Executive’s
Beneficiary (as defined under the SERP) until the completion of one-hundred-twenty (120) combined
monthly payments.



          (d) Unused Vacation and Sick Leave. At the end of the Continuation Period, Executive
shall be compensated for all earned but unused vacation and sick leave, if any, consistent with
Royal’s vacation policies in a lump sum cash payment within thirty (30) days of the end of the
Continuation Period.



          (e) No Additional Benefits; No Duplication of Benefits. Executive acknowledges and
agrees that, except as expressly provided herein, Executive’s eligibility to receive additional
benefits under any benefit plan, program, policy or arrangement sponsored or maintained by Royal
shall cease and be terminated as of the Retirement Date or such earlier date upon which Executive’s
employment with Royal terminates for any reason. Executive further acknowledges and agrees that no
payment made by Royal pursuant hereto is subject to any employer matching obligation or any other
employer contribution under any benefit or deferred compensation plan, whether or not any such
payment is characterized as wages or compensation. Notwithstanding the foregoing, Corporation and
Bank shall not make any changes to any benefit plan, program, policy or arrangement sponsored or
maintained by Royal which would adversely affect Executive’s rights or benefits thereunder, unless
such change is applicable to all or substantially all of the officers of Corporation and Bank,
covered by such plans. Notwithstanding anything set forth in this Agreement to the contrary, in no
event shall the provision of any payment or benefit provided under this Agreement result in the
duplication of any such payment or benefit that may be otherwise provided under the Employment
Agreement.



          (f) Condition Precedent. Notwithstanding anything in this Agreement to the contrary,
the receipt of any benefits under this Section 4 shall be subject to the provisions of this
Agreement and to satisfaction of the condition precedent that the Executive execute a Release as
referenced in Section 5 of this Agreement.



     5. Release. Executive shall execute the release attached hereto as Exhibit A prior to
the earliest date any amounts are payable pursuant to Section 4(a) hereof, or such earlier date
upon which Executive’s employment with Royal terminates (the “Release”).



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     6. No Admissions; No Knowledge of Claim. By entering into this Agreement, neither
Royal nor Executive in any way admits that it or Executive has treated the other unlawfully or
wrongfully in any way. Neither this Agreement, nor the implementation thereof, shall be construed
to be, or shall be admissible in any proceedings as, evidence of an admission by Royal or Executive
of any violation of, or failure to comply with, any rule, regulation or order or any Royal policy
or Code of Conduct. Executive represents and warrants that, as of the date of this Agreement,
there are no facts or circumstances which require Royal to file any information required under Item
5.02(a) of Current Report on Form 8-K with the Securities and Exchange Commission under the
Securities and Exchange Act of 1934, as amended.



     7. Termination of Employment Agreement. Executive agrees that the execution of this
Agreement and payments made hereunder shall constitute satisfaction in full of Royal’s obligations
under, and the extinguishment and termination of, the Employment Agreement and, effective on the
date of this Agreement, the Employment Agreement shall terminate; provided however, that Sections 9
and 10 of the Employment Agreement shall survive and remain in force as set forth below.



     8. Restrictive Covenants. Pursuant to the terms of the Employment Agreement, during
the Continuation Period and the Recovery Period, if any, Executive shall be bound by the terms of
the restrictive covenants set forth in Section 9 of the Employment Agreement. In addition to the
preceding sentence, Executive shall also be bound by the terms of the restrictive covenants set
forth in Section 9 of the Employment Agreement from the Retirement Date, or such earlier date upon
which Executive’s employment with Royal terminates for any reason, through December 31, 2012.
Executive shall also be bound by the covenants set forth in Section 10 of the Employment Agreement
from the date of this Agreement.



     9. Mutual Non-Disparagement. Royal agrees, except as may be required by law, to
refrain from making or publishing any statements, claims, allegations or assertions which it
believes have or may reasonably be expected to have the effect of demeaning the name or business
reputation of Executive and shall cause its employees, officers, directors, agents or advisors to
be similarly bound when serving in such capacity. Executive understands and agrees that he shall
not make any false, disparaging or derogatory statements to any third party, including, without
limitation, any media outlet, industry group, financial institution or current or former employee,
consultant, client or customer of Royal regarding Royal (and any of its officers, directors,
stockholders, agents and employees, corporate affiliates, subsidiaries, and parent companies) or
about Royal’s business affairs and financial condition. Executive agrees further that he will not
at any time speak or act in any manner that is intended to, or does in fact, damage the goodwill or
the business of Royal.



     10. Cooperation. Executive agrees to cooperate with Royal with respect to all matters
arising during or related to Executive’s employment about which he has personal knowledge because
of such employment with Royal, including but not limited to all matters (formal or informal) in
connection with any government investigation, internal investigation, litigation (potential or
ongoing), administrative, regulatory, or other proceeding which currently exists, or which may have
arisen prior to or arise following the signing of this Release. Such cooperation will include, but
not be limited to, Executive’s willingness to be interviewed by representatives of Royal, and to
participate in such proceedings by deposition or testimony. Executive understands that Royal
agrees



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to reimburse him for his reasonable out-of-pocket expenses (not including attorney’s fees,
legal costs or lost time or opportunity) incurred in connection with such cooperation.



     11. Return of Property. Executive agrees to return all property and documents
belonging to Royal that are in Executive’s possession or within Executive’s control by no later
than the Retirement Date, or such earlier date upon which Executive’s employment with Royal
terminates, or such other date that may be agreed to in writing by Royal. The Royal property to be
returned includes, but is not limited to, Executive’s Royal-provided automobile, identification
badge, keys, computer, corporate credit cards, pagers, telephones, and the original and all copies
of any written, recorded, or computer-readable information about Royal’s practices, procedures,
trade secrets, customer lists or product marketing associated with the Royal’s business.



     12. Royal’s Default in Payment. If Royal defaults in timely payment on the due date
of any payment or amount due under this Agreement, Executive shall give written notice of such
default to the person specified in or pursuant to this Agreement to receive notice on behalf of
Royal. Royal shall have thirty (30) days after the receipt of such a notice of default to cure any
payment default.



     13. Arbitration. Royal and Executive recognize that in the event a dispute should
arise between them concerning the interpretation or implementation of this Agreement, lengthy and
expensive litigation will not afford a practical resolution of the issues within a reasonable
period of time. Consequently, each party agrees that all disputes, disagreements and questions of
interpretation concerning this Agreement are to be submitted for resolution to the American
Arbitration Association (“Association”) in Philadelphia, Pennsylvania. Royal or Executive, may
initiate an arbitration proceeding at any time by giving notice to the others in accordance with
the rules of the Association. The Association shall designate a single arbitrator to conduct the
proceeding, but Royal, and Executive, may, as a matter of right, require the substitution of a
different arbitrator chosen by the Association. Each such right of substitution may be exercised
only once. The arbitrator shall not be bound by the rules of evidence and procedure of the courts
of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this
Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious
error of fact, shall be final and binding upon the parties and shall be enforceable in courts of
proper jurisdiction. Following written notice of a request for arbitration, Royal, and Executive,
shall be entitled to an injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except as otherwise provided herein.



     14. Assignment. This Agreement shall not be assignable by any party hereto, except by
Royal to any successor in interest to the business of Royal.



     15. Entire Agreement. This Agreement, together with Exhibits A and B attached hereto
and such portions of the Employment Agreement that expressly survive the execution hereof, sets
forth the entire agreement between the parties, and, except as otherwise provided herein, fully
supersedes any and all prior agreements, understandings, or representations between the parties
pertaining to the subject matter of this Agreement.



     16. Successors, Binding Agreement.



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          (a) Royal will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or assets of
Corporation and/or the Bank to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Royal would be required to perform it if no such succession had
taken place. Failure by Royal to obtain such assumption and agreement prior to the effectiveness
of any such succession shall constitute a material breach of this Agreement.



          (b) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or
legal representatives, executors, administrators, heirs, distributees, devisees, or legatees. If
Executive should die while any amount is payable to Executive under this Agreement if Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there
is no such designee, to Executive’s estate.



     17. Severability. If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless
continue in full force and effect.



     18. Notices. All notices and other communications hereunder shall be in writing. Any
notice or other communication hereunder shall be deemed duly given if it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient
at the addresses maintained in Royal’s records. Notices sent to Royal should be directed to the
attention of its General Counsel.



     19. Counterpart Agreements. This Agreement may be executed in multiple counterparts,
whether or not all signatories appear on these counterparts, and each counterpart shall be deemed
an original for all purposes.



     20. Governing Law. This Agreement shall be governed by and construed under the
internal laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws
principles.



     21. Jurisdiction and Venue. This Agreement shall be deemed performable by all parties
in, and venue shall exclusively be in the state or federal courts located in Pennsylvania.
Executive and Royal hereby consent to the personal jurisdiction of these courts and waive any
objection that such venue is objectionable or improper.



     22. No Waiver. Royal’s waiver or failure to enforce any term of this Agreement on one
instance shall not constitute a waiver of its rights under this Agreement with respect to any other
violations.



     23. Binding Effect of Agreement. This Agreement shall be binding upon Executive,
Royal and their heirs, administrators, representatives, executors, successors and permitted
assigns. Notwithstanding the foregoing, the payment obligations of Corporation hereunder shall be
limited to its obligations set forth in the Employment Agreement.



     24. Taxes and Withholding. To the extent required by the federal and applicable state
income tax laws and regulations, Royal shall withhold and deduct from compensation during the
Recovery Period all required withholding and deductions.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.



	 	 	 	 	 
	 	ROYAL BANCSHARES OF PENNSYLVANIA, INC.

 	 
	 	By  	/s/ Robert R. Tabas
 	 
	(SEAL) 	 	Robert R. Tabas 	 
	 	 	Chairman 	 
	 
	 	

EXECUTIVE

 	 
	 	By  	/s/ Joseph P. Campbell
 	 
	 	 	Joseph P. Campbell 	 



	 	 	 	 	 
	Agreed to the 10th day of October, 2008.	 	 
	 
	 	 	 	 
	ROYAL BANK AMERICA	 	 
	 
	 	 	 	 
	By

	 	/s/ Robert R. Tabas
 

Robert R. Tabas

Chairman
	 	  






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Exhibit A


ACCORD AND SATISFACTION AND RELEASE




          This ACCORD AND SATISFACTION AND RELEASE (“Release”) is entered into as of this 10th day of
October, 2008 (the “Effective Date”), by and between ROYAL BANCSHARES OF PENNSYLVANIA, INC., a
Pennsylvania business corporation (“Corporation”), ROYAL BANK AMERICA (“Bank” and, collectively,
with Corporation and its subsidiaries, “Royal”), a Pennsylvania state-chartered bank, and JOSEPH P.
CAMPBELL, an individual (the “Executive”). Capitalized terms not defined in this Agreement shall
have the meanings ascribed to them in the Agreement (as defined below).



          WHEREAS, this Release is executed pursuant to Section 5 of the Transition and Separation
Agreement dated as of October 10, 2008, by and between Royal and Executive (the “Agreement”).



     1. General Release.



          a. In consideration of Executive’s receipt of the benefits under Section 4 of the Agreement,
Executive hereby fully, irrevocably and unconditionally releases any and all known claims, actions,
causes of action, rights, judgments, obligations, damages, demands, accountings, or liabilities of
whatever kind or character (collectively, “Claims”) that Executive presently has against Royal, its
officers, directors, stockholders, agents and employees, corporate affiliates, subsidiaries, and
parent companies (the “Royal Group”) as of the date of execution of this Release.



               This release shall cover, but not be limited to:




	 	i.	 	all employment discrimination Claims under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act (“ADEA”), the Americans With Disabilities Act of 1990 (“ADA”), the
Rehabilitation Act of 1973, and any similar federal, state or local laws,
including without limitation, the Pennsylvania Human Relations Act, and
any other non-discrimination and fair employment practices laws of any
state and/or locality in which Executive works or resides, all as
amended;
	 
	 	ii.	 	all Claims under the Fair Credit Reporting Act
(“FCRA”), the Employee Retirement Income Security Act of 1974 (“ERISA”),
the Worker Adjustment and Retraining Notification Act (“WARN”); and
	 
	 	iii.	 	all common law Claims including, but not limited
to, actions in tort and for breach of contract.





               This release shall not cover any Claims:




	 	iv.	 	Executive may have for breach of the provisions of
the Agreement or any applicable plan, policy, program or arrangement of,
or other agreement with Royal or to enforce the Agreement or any
applicable plan, policy, program or arrangement of, or other agreement
with Royal;





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	 	v.	 	that arise after the date Executive signs this
Release; or
	 
	 	vi.	 	to challenge the validity of Executive’s release of
ADEA Claims.





          b. In consideration of the release of Claims and other covenants of Executive herein, and
after consultation with counsel, the Royal Group hereby irrevocably and unconditionally releases
and forever discharges Executive from any and all known Claims, including, without limitation, any
known Claims under any federal, state, local, or foreign law, that the Royal Group may have, or in
the future may possess, arising out of (i) Executive’s employment relationship with and service as
an employee, officer, or director of Royal, or the termination of Executive’s service in any and
all of such relevant capacities, (ii) the Employment Agreement, or (iii) any event, condition,
circumstance, or obligation that occurred, existed, or arose on or prior to the date hereof.



     2. No Assignment of Claims. Executive represents and warrants that he has not
assigned any of the Claims being released hereunder.



     3. Complaints. Executive affirms that he has not filed any complaint against any
Royal Group member with any local, state or federal court and agrees not to do so in the future,
except for Claims challenging the validity of the release of ADEA Claims. Executive affirms
further that he has not filed any claim, charge or complaint with the United States Equal
Employment Opportunity Commission (“EEOC”) or any state or local agency authorized to investigate
charges or complaints of unlawful employment discrimination (together, “Agency”). Furthermore, if
any Agency or court has now assumed or later assumes jurisdiction of any claim, charge or complaint
on Executive’s behalf against any Royal Group member, Executive will disclaim entitlement to any
relief.



     4. Revocation. This Release may be revoked by Executive within the seven (7) day
period commencing on the date Executive signs this Release (the “Revocation Period”). In the event
of any such revocation by Executive, all obligations of the parties under the Agreement and this
Release shall terminate and be of no further force and effect as of the date of such revocation.
No such revocation by Executive shall be effective unless it is in writing and signed by Executive
and received by Royal prior to the expiration of the Revocation Period. If this Release is
revoked, Executive agrees to return to Royal any payments made to Executive in connection with the
Release other than compensation theretofore earned in the ordinary course. In the event of
revocation, Executive shall not be entitled to the benefits under Section 4 of the Agreement, the
receipt of which is conditioned on Executive’s execution of this Release.



     5. Representations and Warranties. Executive acknowledges and agrees that (i) he is
not aware of nor has he reported any conduct by any of the Releasees that violates any federal,
state, or local law, rule, or regulation, (ii) he has not been denied any rights or benefits under
the Family and Medical Leave Act of 1993 (“FMLA”) or any state or local law, act, or regulation
providing for family and/or medical leave or been discriminated against in any way for exercising
his rights under these laws, and (iii) in connection with offering the benefits provided in Section
4 of the Agreement, Royal has not provided to Executive, and has no obligation to provide to
Executive, any material non-public information as defined in applicable federal securities laws,
concerning Royal.



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     6. Violation. If Executive violates any provisions of this Release, Royal will be
entitled to the immediate repayment of all benefits paid under Section 4 of the Agreement.
Executive agrees that repayment will not invalidate this Release and acknowledges that he will be
deemed conclusively to be bound by the terms of this Release and to waive any right to seek to
overturn or avoid it. If Executive violates any provisions of this Release before all of the
benefits under Section 4 of the Agreement have been provided, Royal may discontinue any unpaid
conditional payments and benefits.



     7. Additional Damages Available for Violation. Executive agrees that Royal will
maintain all rights and remedies available to it at law and in equity in the event Executive
violates any provision of this Release. These rights and remedies may include, but may not be
limited to, the right to bring court action to recover all consideration paid to Executive pursuant
to the Agreement and this Release and any additional damages Royal may suffer as a result of such a
breach. Executive also specifically recognizes and agrees that Royal will suffer irreparable
injury in the event Executive violates or threatens to violate Section 8 of the Agreement.
Therefore, Executive agrees that in addition to any other remedies Royal may be entitled to receive
for such violation, Royal also will be entitled to temporary, preliminary and/or permanent
injunctive relief to restrain any such violation or threat of violation by Executive, and by any
persons acting for and/or in concert with Executive. If Royal seeks injunctive relief pursuant to
this Section, then Executive expressly waives any requirement that Royal post bond.



     8. Entire Agreement and Amendment. This Release contains and constitutes the entire
understanding and agreement between the parties hereto with respect to Executive’s severance
benefits and waiver and release of Claims against Royal and cancels all previous oral and written
negotiations, agreements, commitments and writings in connection therewith. This Release shall be
binding upon the parties and may not be modified in any manner, except by an instrument in writing
of concurrent or subsequent date signed by a duly authorized representative of the parties and
their respective agents, assign, heirs, executors, successors, and administrators. No delay or
omission by Royal in exercising any right under this Release shall operate as a waiver of that or
any other right. A waiver or consent given by Royal on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any other occasion.



     9. Applicable Law. This Release shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania without regard to choice of law principles, and except
as preempted by federal law. Should any provision of this Release be declared or be determined by
any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts,
terms or provisions shall not be affected thereby and the illegal or invalid part, term, or
provision will be deemed not to be a part of this Release.



     10. Successors; Assignment. Executive’s rights and obligations under this Release
shall inure to Executive’s benefit and shall bind Executive, his heirs, administrators,
representatives, executors, successors, beneficiaries and assigns. Royal’s rights and obligations
under this Release shall inure to the benefit of and shall bind Royal, its successors and assigns.
Executive may not assign this Release. Royal may assign this Release, but it may not delegate the
duty to make any payments hereunder without Executive’s written consent, which shall not be
unreasonably withheld.



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     11. Severability. If any provision of this Release is held unenforceable by a court
of competent jurisdiction, all remaining provisions shall continue in full force and effect without
being impaired or invalidated in any way.



          a. Notices. All notices required by this Release shall be in writing and shall be
deemed to have been duly delivered in person or when mailed by certified mail, return receipt
requested, and addressed to the intended recipient at the addresses maintained in Royal’s records.
Notices sent to Royal should be directed to the attention of its General Counsel.



     By signing this Release, Executive hereby acknowledges and confirms the following: (i)
Executive was advised by Royal or his then employer in connection with his termination of
employment or retirement to consult with an attorney of his choice prior to signing this Release
and to have such attorney explain to Executive the terms of this Release, including, without
limitation, the terms relating to Executive’s release of Claims arising under this Section, and
Executive has in fact consulted with an attorney; (ii) Executive was given a period of not fewer
than twenty-one (21) days to consider the terms of this Release prior to its signing; and (iii)
Executive knowingly and voluntarily accepts the terms of this Release.



     IN WITNESS WHEREOF, Royal and Executive, intending to be legally bound have executed this
Release on the day and year first above written.



	 	 	 	 	 	 	 
	 	 	ROYAL BANCSHARES OF PENNSYLVANIA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ROYAL BANK AMERICA	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Joseph P. Campbell






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Exhibit B

PUBLIC ANNOUNCEMENT OF TRANSITION AND SEPARATION




Joseph P. Campbell To Retire From Royal Bank America



NARBERTH, PA -Royal Bancshares of Pennsylvania, Inc. (“Royal”) (NASDAQ: RBPAA), parent
company of Royal Bank America, announced that Joseph P. Campbell, President and Chief Executive
Officer (CEO) will retire from his current position effective December 31, 2008 after a 27-year
career with Royal. Mr. Campbell will continue to serve on the company’s Board of Directors.


On January 1, 2009, following a transition period, Robert R. Tabas, currently Royal’s
Chairman, will assume the role of CEO and James J. McSwiggan, currently Royal’s Chief
Operating Officer (COO), will become President and COO.


Significant accomplishments during Mr. Campbell’s leadership tenure include:




	 	•	 	The growth of the organization in asset size from $427 million to a high of $1.3 billion
	 
	 	•	 	The growth of the bank branch network, both organically and via acquisition
	 
	 	•	 	The concept and launch of the Royal Asian Bank brand, the organization’s first major
foray into niche banking (currently operating in 3 states)
	 
	 	•	 	Expansion of the organization’s divisions to include RBA Leasing, Royal Tax Liens and
RBA Capital Group




Chairman Robert R. Tabas stated, “Our Company has grown significantly under the guidance of Joe
Campbell and we wish him the best in retirement. Having continued access to his insight and
expertise as a member of our Board of Directors will benefit our organization as we grow.”


About Royal Bancshares of Pennsylvania, Inc.


Royal Bancshares of Pennsylvania, Inc., headquartered in Narberth, Pennsylvania, is a two-bank
holding company operating the Royal Bank America and Royal Asian Bank brands throughout
Pennsylvania, New Jersey and New York. As The Region’s Premier Commercial Real Estate Lender, Royal
Bank America has played a lead role in the growth and development of our area for the past 40+
years. Royal Asian Bank enjoys a distinctive niche serving the financing and banking needs of the
growing Asian-American population. Additional subsidiaries include RBA Leasing, engaged in
equipment leasing solutions for small and mid-sized businesses, and RBA Capital, a lender finance
company. More information on Royal Bancshares of Pennsylvania, our banks and subsidiaries is
available at www.royalbankamerica.com.




			
	Media Contact:	 	Marc Sanders

Director of Marketing

610.668.4700






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