Royal Bancshares of Pennsylvania, Inc.
732 Montgomery Avenue
Narberth, Pennsylvania 19072
  VIA HAND DELIVERY
 c/o Royal Bancshares of Pennsylvania, Inc.732 Montgomery AvenueNarberth, Pennsylvania 19072Dear
    
    
    
    :
 Company Participation Agreement Treasury CPP
  (1)
    
    No Golden Parachute Payments. The Company is prohibiting any golden parachute
payment to you during any CPP Covered Period only to the extent required by EESA.(2)
    
    Recovery of Bonus and Incentive Compensation.Any bonus and incentive compensation
paid to you during a CPP Covered Period is subject to recovery or clawback by the
Company if the payments were based on materially inaccurate financial statements or any
other materially inaccurate performance metric criteria.(3)
    
    Compensation Program Amendments.Each of the Companys compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, Benefit Plans) with
respect to you is hereby amended to the extent necessary to give effect to provisions (1)
and (2). For reference, certain affected Benefit Plans are set forth in Appendix
A to this letter.




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In addition, the Company is required to review its Benefit Plans to ensure that they do not
encourage senior executive officers to take unnecessary and excessive risks that threaten
the value of the Company. To the extent any such review requires revisions to any Benefit
Plan with respect to you, you and the Company agree to negotiate such changes promptly and
in good faith.(4)
    
    Definitions and Interpretation. This letter shall be interpreted as follows:
 
    
    Senior executive officer means the Companys senior executive officers as
defined in Section 111 of the Emergency Economic Stabilization Act of 2008, as amended
(collectively, EESA).
    
    Golden parachute payment is used with same meaning as in Section 111 of EESA.
    
    The term Company includes any entities treated as a single employer with the
Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You are also
delivering a waiver pursuant to the Participation Agreement, and, as between the
Company and you, the term employer in that waiver will be deemed to mean the Company
as used in this letter.
    
    The term CPP Covered Period shall mean the period identified in subsection
111(a)(5) of EESA.
    
    Provisions (1) and (2) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to the maximum
extent consistent with the preceding, to permit operation of the Benefit Plans in
accordance with their terms before giving effect to this letter).
 (5)
    
    Miscellaneous.Capitalized terms used but not defined herein have the meaning
ascribed to them in the Participation Agreement. To the extent not subject to federal
law, this letter will be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania. This letter may be executed in two or more counterparts,
each of which will be deemed to be an original. A signature transmitted by facsimile will
be deemed an original signature.




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Very truly yours,ROYAL BANCSHARES OF PENNSYLVANIA, INC.By:Name:
    
    James J. McSwiggan, Jr.Title:
    
    President and
Chief Operating Officer
 
 Name:




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Appendix A
 Certain Affected Benefit Plans
 
    
    Royal Bancshares of Pennsylvania, Inc. 2007 Long-Term Incentive Plan
    
    Royal Bancshares of Pennsylvania, Inc. Bonus Plan