Document:

EXHIBIT 10.1

FIRST AMENDMENT

to

LOAN AGREEMENT

between

U.S. BANK NATIONAL ASSOCIATION

and

PINNACLE FINANCIAL PARTNERS, INC.

First Amendment dated as of October 2, 2013

Original Agreement dated as of June 15, 2012

K&E 27903541.7

FIRST AMENDMENT TO

 LOAN AGREEMENT

This FIRST AMENDMENT TO LOAN AGREEMENT (this "First Amendment") is dated as of October 2, 2013, and is made by and between PINNACLE FINANCIAL PARTNERS, INC., a Tennessee corporation ("Borrower"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association ("Lender").

R E C I T A L S:

A.            Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of PINNACLE BANK, a Tennessee banking corporation (formerly PINNACLE NATIONAL BANK, a national banking association) with its principal banking offices in Nashville, Tennessee.

B.            The Borrower and Lender are party to a Loan Agreement dated as of June 15, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the "Original Agreement").

C.            The parties hereto desire to amend and modify the Original Agreement in accordance with the terms and subject to the conditions set forth in this First Amendment.

D.            Capitalized terms not otherwise defined in this First Amendment shall have the meanings respectively ascribed to them in the Original Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:

A G R E E M E N T:

	
SECTION 1.

	
AMENDMENTS TO THE ORIGINAL AGREEMENT

.

1.1            Restricted Payments (Section 5.2.2.).   Section 5.2.2. of the Original Agreement shall be amended in its entirety to read as follows:

"Restricted Payments.  During the continuance of any Event of Default or Unmatured Event Default, or if an Event of Default or Unmatured Event Default would result after giving effect to any such declaration, payment or distribution, Borrower shall not declare or pay any dividend on, or make any distribution with respect to, any of its capital stock without the prior written consent of Lender.  In addition, without the prior written consent of Lender, Borrower shall not redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock; provided, however, that notwithstanding the foregoing, Borrower may (a) make repurchases of its capital stock that are deemed to occur upon the exercise of stock options or warrants if the capital stock repurchased represents a portion of the exercise price of such options or warrants or withholding of shares of capital stock upon the vesting of restricted stock, restricted stock units or salary stock units, including in connection with the satisfaction of withholding taxes related to such vesting; and (b) make purchases on the open market directly, or indirectly through a plan trustee or administrator, of shares of Borrower's common stock for allocations to participants in Borrower's, or its ERISA Affiliates', Employee Benefit Plans."

	
SECTION 2.

	
REPRESENTATIONS AND WARRANTIES

.  Borrower hereby represents and warrants to Lender as of the date hereof as follows:

(i)            No Event of Default or Unmatured Event of Default has occurred and is continuing, and no Event of Default or Unmatured Event of Default would result from the amendments contemplated hereby.

(ii)            The execution, delivery and performance by the Borrower of this First Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by any Person (including any Governmental Agency) in order to be effective and enforceable.

(iii)            This First Amendment and the other Transaction Documents (as amended by this First Amendment) constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or limiting creditors' rights or equitable principles generally.

(iv)            All of the representations and warranties of Borrower in the Original Agreement are true and correct, except to the extent that such representations and warranties specifically refer to an earlier date.

(v)            Borrower's obligations under the Original Agreement and under the other Transaction Documents are not subject to any defense, counterclaim, set-off, right to recoupment, abatement or other claim.

	
SECTION 3.

	
ADDITIONAL TERMS.

3.1            Acknowledgement of Indebtedness under Agreement

.  Borrower acknowledges and confirms that, as of the date hereof, Borrower is indebted to Lender, without defense, setoff, or counterclaim, in the aggregate principal amount of [SEVENTEEN MILLION, FOUR HUNDRED THIRTY-TWO THOUSAND, TWO HUNDRED NINETY-ONE AND 67/100 DOLLARS ($17,432,291.67)]1 under the Original Agreement.

3.2            The Agreement

.  On and after the Effective Date: (i) each reference in the Original Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of like import shall mean and be a reference to the Original Agreement as amended hereby, (b) each reference to the Original Agreement in all Transaction Documents shall mean and be a reference to the Original Agreement, as amended hereby, and (c) this First Amendment shall be deemed a "Transaction Document" for the purposes of the Original Agreement.

3.3            First Amendment and Original Agreement to be Read Together

.  This First Amendment supplements and is hereby made a part of the Original Agreement, and the Original Agreement and this First Amendment shall from and after the Effective Date be read together and shall constitute one agreement. Except as otherwise set forth herein, the Original Agreement shall remain in full force and effect.

3.4            Acknowledgements

.  Borrower acknowledges that (i) it has been advised by counsel of its choice of law with respect to this First Amendment, the Original Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) any waiver of Borrower set forth herein has been knowingly and voluntarily made, and (iii) the obligations of Lender hereunder shall be strictly construed and shall be expressly subject to Borrower's compliance in all respects with the terms and conditions of the Original Agreement.

3.5            No Waiver

.            The execution, delivery and effectiveness of this First Amendment shall not operate as a waiver of any Event of Default (including without limitation any Events of Default existing on the date hereof, if any), nor operate as a waiver of any right, power or remedy of Lender (including without limitation any rights, powers or remedies of Lender with respect to any Events of Default existing on the date hereof, if any), nor, except to the extent the Original Agreement is expressly amended by this First Amendment, constitute a waiver of, or consent to any departure from, any provision of the Original Agreement, or any of the other Transaction Documents.

3.6            No Novation

.  The terms and conditions of the Original Agreement are amended as set forth in this First Amendment.  It is expressly understood and acknowledged that nothing in this First Amendment shall be deemed to cause or otherwise give rise to a novation of the indebtedness contemplated in the agreement.  All "Borrower's Liabilities" under the Original Agreement shall in all respects be continuing and this First Amendment shall not be deemed to evidence or result in a novation or repayment and re-borrowing of such "Borrower's Liabilities."

SECTION 4.                          CONDITIONS PRECEDENT

.  The amendments set forth in SECTION 1 above shall become effective as of the date (the "Effective Date") on which each of the following conditions shall have been satisfied: (i) Borrower and Lender shall have received one or more counterparts of this First Amendment duly executed and delivered by the other; (ii) Lender shall have received payment from Borrower, in immediately available funds, of an amount sufficient to reimburse Lender for all reasonable out-of-pocket costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with the negotiation, preparation and consummation of the First Amendment, and that have been invoiced as of the Effective Date, including but not limited to, reasonable attorneys' fees and expenses; and (iii) a copy, certified by the Secretary or Assistant Secretary of Borrower, of its Board of Directors' resolutions authorizing the execution, delivery, and performance, respectively, of this First Amendment and any other documents to be executed, delivered, or performed in connection with this First Amendment.

SECTION 5.                          RELEASE

.  Borrower, for itself and its successors and assigns, does hereby fully, finally and unconditionally release and forever discharge, and agrees to hold harmless, Lender and each of its equity holders and affiliates, and their respective agents, advisors, managers, parents, subsidiaries, attorneys, representatives, employees, officers and directors, and the successors, assigns, heirs and representatives of each of the foregoing, from any and all debts, claims, counterclaims, setoffs, obligations, damages, costs, attorneys' fees and expenses, suits, demands, liabilities, actions, proceedings and causes of action, in each case whether known or unknown, contingent or fixed, direct or indirect and of whatever kind, nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, that Borrower has heretofore had or now or hereafter can, shall or may have by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Effective Date arising out of, connected with or related in any way to this First Amendment, the Original Agreement, the other Transaction Documents, the transactions described therein, the Loan, Lender's administration thereof, or the financing or banking relationships of Borrower with Lender.

SECTION 6.                          Miscellaneous

.  This First Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this First Amendment by signing any such counterpart.  This First Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

[Remainder of Page Intentionally Left Blank]

	1	The amount reflected above represents the outstanding principal amount as of September 24, 2013.  The amount will be adjusted, if required, to reflect the outstanding principal on October 2, 2013.

EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS AMENDMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AMENDMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER'S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AMENDMENT AND THE TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE EFFECTIVE AS TO THE AMENDMENT AND EACH OF THE TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.

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

	
 

	
 

PINNACLE FINANCIAL PARTNERS, INC.

	
 

	
By:

	
/s/ Harold R. Carpenter

	
 

	
Name:

	
Harold R. Carpenter

	
 

	
Title:

	
Chief Financial Officer

	
 

	
 

U.S. BANK NATIONAL ASSOCIATION

	
 

	
By:

	
/s/ Mark R. Cousineau

	
 

	
Name:

	
Mark R. Cousineau

	
 

	
Title:

	
Senior Vice PresidentExhibit 10.15

 

INVESTMENT AGREEMENT

THIS INVESTMENT AGREEMENT (“Agreement”) is made as of September 4, 2013, by and between ROYAL BANCSHARES OF PENNSYLVANIA, INC., a Pennsylvania corporation (“Issuer”), and EMERALD ADVISERS, INC., a Pennsylvania business corporation (“Investor”).  Investor is entering into this agreement on behalf of accounts that it manages or advises and for which it has discretionary authority to buy or sell shares.

 

WHEREAS, the Board of Directors of Issuer (the “Board of Directors”) proposes to issue to Investor, and Investor proposes to purchase from Issuer, 3,333,333 shares of Class A common stock of Issuer, $2.00 par value per share (“Issuer Class A Common Stock”), on the Closing Date (as defined in Section 2.1 hereof) (each, a “Share”, and collectively, the “Shares”);

 

WHEREAS, the Board of Directors also proposes to issue shares of Issuer Class A Common Stock (a) in a public rights offering (the “Rights Offering”) described in the Issuer’s Registration Statement on Form S‐1 (File No. 333‐_______) as filed with the U.S. Securities and Exchange Commission (the “SEC”) on September ___, 2013, as amended from time to time (collectively, the “S‐1 Registration Statement”), and (b) pursuant to separate stock purchase agreements between Issuer, on the one hand, and other third parties, on the other hand (collectively, the “Private Placement”); and

 

WHEREAS, the Board of Directors of Issuer believes that the sale of the Shares, under the terms and conditions set forth in this Agreement, is in the best interests of Issuer;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, mutually agree as follows:

 

1.  Purchase and Sale of Shares.

 

1.1.  Subject to the terms and conditions set forth herein, on the Closing Date, Issuer shall sell, transfer, assign and deliver unto Investor, and Investor shall purchase from Issuer, the Shares.  The aggregate purchase price for the Shares is (i) $1.20 multiplied by (ii) the number of the Shares (the “Purchase Price”).  Notwithstanding the foregoing sentence, at the Closing, Issuer shall have the right to reduce proportionately (based on the total proceeds raised from other investors in the Private Placement) the number of Shares sold by Issuer to Investor, and purchased by Investor from Issuer, in the event that the aggregate proceeds necessary to repurchase shares of Issuer’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A issued to the United States Department of Treasury under the Capital Purchase Program (the “TARP Shares”) is less than an aggregate of $14,000,000.

 

1.2.  At the Closing, Investor shall pay to Issuer the Purchase Price, in cash, in consideration of its purchase of the Shares.

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2.  The Closing.

 

2.1.  The closing of the transactions contemplated under this Agreement (the “Closing”) shall take place at 10:00 a.m. at the main office of Issuer, 732 Montgomery Avenue, Narberth, Pennsylvania, or at such other place as the parties shall agree in writing, on the date following the sixth (6th) trading day after the satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in Sections 10, 11 and 12 (other than those conditions that by their nature are to be satisfied or waived at the Closing) and the completion of the Rights Offering and the Private Placement or such other date mutually agreed upon by the parties (the “Closing Date”).

 

2.2.  Immediately prior to the Closing (and as a condition of Investor’s obligations to purchase the Shares and otherwise perform its obligations under this Agreement), Issuer shall deliver to Investor a certificate executed by its Chief Executive Officer certifying that (a) as of such date, to his knowledge, the representations and warranties of Issuer set forth herein are accurate and complete in all material respects and (b) that there has not been since the execution of this Agreement any material adverse change to Issuer’s business.

 

2.3.  Immediately prior to the Closing (and as a condition of Issuer’s obligations to deliver the Shares and otherwise perform its obligations under this Agreement), Investor shall deliver to Issuer a certificate executed by its President and Chief Investment Officer certifying to Investor that as of such date, to his or her knowledge, the representations and warranties of Investor set forth herein are accurate and complete in all material respects.

 

2.4.  At the Closing, subject to the terms and conditions hereof, Issuer shall issue the Shares to Investor and deliver to Investor a certificate representing the Shares, duly registered in the name of Investor, as specified on the signature page hereto.  In lieu of delivering physical certificates representing the Shares issuable in accordance with the previous sentence, and provided that Issuer’s transfer agent for the Issuer Common Stock (the “Transfer Agent”) then is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of Investor, but subject to the applicable provisions of Sections 7 and 8 hereof, Issuer shall use its commercially reasonable efforts to cause the Transfer Agent to electronically transmit, on the Closing Date, the Shares by crediting the account of Investor’s accounts specified by the Investor with DTC through its Deposit Withdrawal Agent Commission system, and provide proof satisfactory to Investor of such delivery.

 

2.5.  At the Closing, subject to the terms and conditions hereof, Investor shall deliver to Issuer the Purchase Price by wire transfer of immediately available funds to an account designated by Issuer.

 

3.  Representations, Warranties and Covenants of Issuer.  In addition to the warranties, representations and covenants of Issuer contained elsewhere herein, Issuer hereby warrants, represents and covenants to Investor as follows:

 

3.1.  Issuer is a corporation organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania with full corporate power and authority to own and hold its properties and to carry on its business as now conducted, and is duly registered and qualified to conduct its business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except as has not had or would not reasonably be expected to have a material adverse effect upon Issuer’s ability to conduct its business or consummate the transactions contemplated hereby.

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3.2.  The authorized common stock of Issuer consists of 40,000,000 shares of Issuer Class A Common Stock, of which 10,933,150 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 2,020,499 were issued and outstanding as of the date of this Agreement.  The authorized preferred stock of Issuer consists of 500,000 shares of preferred stock (“Issuer Preferred Stock”), of which 30,407 TARP Shares, 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 Issuer Class A Common Stock, the Class B Common Stock, and the Issuer Preferred Stock, there are no other authorized classes of equity securities of Issuer.  Except as disclosed in the annual reports on Form 10- K, quarterly reports on Form 10- Q, and current reports on Form 8- K filed by the Issuer with the SEC, there are no outstanding subscriptions, options, warrants, debt instruments or other agreements obligating Issuer to issue, sell or otherwise dispose of any shares of Issuer capital stock.  As of the Closing, the Shares are being sold, and (upon receipt by Investor at the Closing) will be, free and clear of all liabilities, debts, obligations, encumbrances, leases, indebtedness, liens, charges, and pledges, of whatever nature, whether fixed or contingent, disclosed or undisclosed, foreseen or unforeseen, as of the date of this Agreement.

 

3.3.  Issuer possesses the requisite corporate power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and no additional consent or approval of any other person, entity or governmental authority is required therefor.

 

3.4.  This Agreement has been duly executed and delivered by Issuer and (assuming it has been duly authorized, executed and delivered by Investor) is a legal, valid and binding obligation of Issuer and is fully enforceable against it in accordance with its terms and conditions, 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.

 

3.5.  The execution and delivery of this Agreement by Issuer, the consummation of the transactions contemplated hereby, and the compliance by Issuer with the terms and provisions hereof, will not result in a default under (or give any other party the right, with the giving of notice or the passage of time (or both), to declare a default or accelerate any obligation under) any agreement to which Issuer is a party or by which it or its properties or assets are bound, or violate any law, regulation, decree, writ, order or injunction which, collectively, would have a material adverse effect upon Issuer’s ability to consummate the transactions contemplated hereby.

 

3.6.  Issuer has made all necessary filings with all applicable federal, state and local authorities and/or regulatory bodies, and has complied with all applicable laws, in each case with respect to the transaction contemplated herein, and Issuer will take all such further actions as are necessary or appropriate to cause the transaction contemplated hereby to comply with all applicable laws.

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3.7.  The audited consolidated financial statement of Issuer and its subsidiaries at and for the periods ended December 31, 2011 and 2012 fairly present in all material respects the consolidated financial position and results of operation of Issuer and such subsidiaries as, at and for such periods, in each case, in accordance with Generally Accepted Accounting Principles in the United States consistently applied during the periods involved, except in each case, as may be noted therein.  Except as disclosed in Schedule 3.7 to this Agreement, neither Issuer nor Royal Bank America (the “Bank”) has received notice from any governmental authority that the Bank’s Reports of Condition (“CALL Reports”) submitted to its primary federal regulator and the Commonwealth of Pennsylvania under applicable law fail to conform in all material respects to the Federal Financial Institutions Examination Council’s requirements for CALL Reports or the requirements of Section 37 of the Federal Deposit Insurance Act and applicable regulations thereunder.  Except as disclosed in the Issuer’s reports filed with the SEC under the Securities Act of 1934, as amended (the “Exchange Act”), since the filing of Issuer’s most recent call report, there has been no material adverse change to Issuer’s financial condition or its results of operations of the kind which would be required to be disclosed in filings with the SEC under Exchange Act which have not been so disclosed to Investor.

 

4.  Representations, Warranties and Covenants of Investor.  In addition to the warranties, representations and covenants of Investor contained elsewhere herein, Investor hereby warrants, represents and covenants to Issuer as follows:

 

4.1.  Investor is a corporation organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania with full corporate power and authority to own and hold its properties and to carry on its business as now conducted, and is duly registered and qualified to conduct its business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except as has not had or would not reasonably be expected to have a material adverse effect upon Investor’s ability to conduct its business or consummate the transactions contemplated hereby.

 

4.2.  Investor possesses all requisite power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and no additional consent or approval of any other person, entity or governmental authority is required therefor.

 

4.3.  This Agreement has been duly executed and delivered by Investor and (assuming it has been duly authorized, executed and delivered by Issuer) is a legal, valid and binding obligation of Investor and is fully enforceable against it in accordance with its terms and conditions, 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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4.4.  Investor is a registered investment adviser, has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in Issuer Class A Common Stock and is able to bear the economic risk of loss with respect to its investment in Issuer Class A Common Stock.  Investor is not an officer, director or “affiliate” (as that term is defined in Rule 405 promulgated under the Securities Act) of Issuer.  As of the date hereof, Investor owns no shares of the Issuer Common Stock, and, prior to the completion of this private placement, Investor does not intend to acquire any additional shares of the Issuer Class A Common Stock, other than the Shares.  Investor acknowledges that Issuer will not sell Investor shares of the Issuer Class A Common Stock in the Rights Offering.

 

4.5.  The execution and delivery of this Agreement by Investor, the consummation of the transactions contemplated hereby, and the compliance by Investor with the terms and provisions hereof will not result in a default under (or give any other party the right, with the giving of notice or the passage of time (or both), to declare a default or accelerate any obligation under) any agreement to which Investor is a party or by which it or its properties or assets are bound, or violate any law, regulation, decree, writ, order or injunction which, collectively, would have a material adverse effect upon Investor’s ability to consummate the transactions contemplated hereby.

 

4.6.  The representations and warranties made herein are accurate in all material respects.  Investor will have the fiduciary and legal authority of assets under management sufficient to pay the Purchase Price as of the Closing.

 

4.7.  Investor has requested and received such information and has made such due diligence investigation, including having such access to the management of Issuer and the books and records of Issuer and its affiliated companies, as Investor has deemed pertinent to its consideration of the purchase of the Shares.  Investor has had the opportunity to question, and has questioned, to the extent deemed necessary or appropriate, representatives of Issuer so as to receive answers and verify information obtained in such Investor’s examination of Issuer, including the information that Investor has received and reviewed as otherwise referenced herein in relation to its investment in the Shares.  Investor has not been furnished a prospectus or any part of a registration statement filed with the SEC or state securities agency or commission.  Investor has reviewed publicly available information regarding Issuer and the information provided to Investor by Issuer in connection with Investor’s due diligence and is familiar with the existing and proposed business operations, management and financial condition of Issuer.  Investor acknowledges and understands the risks involved in and tax consequences of this investment, including the risk of losing the entire investment in the Issuer Class A Common Stock, and the tax consequences of this investment to Investor.

 

4.8.  Investor is not relying on Issuer or on any legal or other opinion in the materials reviewed by Investor with respect to the financial or tax considerations of Investor relating to its investment in the Shares, and has consulted with its own legal, accounting, tax, investment and other advisers for legal, tax treatment or investment advice with respect to the merits and risk of an investment in Issuer Class A Common Stock, the transactions contemplated by this Agreement and the securities laws of any jurisdiction applicable to Investor.  Investor has relied solely on the representations and warranties, covenants and agreements of Issuer in this Agreement and on its examination and independent investigation in making its decision to acquire the Shares.

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4.9.  No oral or written material representations have been made to Investor in connection with Investor’s acquisition of the Shares which were in any way inconsistent with the information reviewed by Investor.  Investor acknowledges that in deciding whether to enter into this Agreement and to purchase the Shares hereunder, it has not relied on any representations or warranties of any type or description made by Issuer or any of its representatives with regard to Issuer, any of its subsidiaries, any of their respective businesses or properties, or the prospects of the investment contemplated herein, other than the representations and warranties set forth in Section 3 hereof.

 

4.10.  The Shares are being purchased for accounts managed or advised by Investor, with their own funds and not the funds of any other person, for investment only and not with a view toward resale, assignment, fractionalization, or distribution thereof.  Investor acknowledges and agrees that it may not sell, transfer or otherwise dispose of the Shares unless the resale of such shares have been registered under the Securities Act and applicable state securities laws and such sale or other disposition is made pursuant to such registration, or an exemption from the registration requirements of the Securities Act and such laws is available, in which case, if reasonably requested by Issuer, such sale or other disposition can only be effected if (i) the purchaser or transferee agrees in writing to be bound by the applicable terms of this Agreement and (ii) unless effected pursuant to Rule 144 under the Securities Act, Investor shall have furnished Issuer with an opinion of counsel, reasonably satisfactory to Issuer, that such disposition will not require registration under the Securities Act.  Investor has no present arrangement (whether or not legally binding) at any time to transfer the Shares.  There are no agreements or other arrangements, written or otherwise, between Investor and any other person to act together for the purpose of acquiring, holding, voting or disposing of the Shares.  Investor also represents that each of the accounts which it manages or advises to which the Shares will be allocated is an “accredited investor,” as that term is defined in Rule 501 of Regulation D under the Securities Act, and either does not have the discretion to distribute or resell the Shares allocated to it or is not purchasing such allocation of Shares with a view toward resale, assignment, fractionalization, or distribution thereof.  Investor also represents that it has discretionary authority to act on behalf of such accounts.

 

4.11.  Investor has not incurred any obligation for any finder’s or broker’s or agent’s fees or commissions in connection with the transactions contemplated hereby.

 

4.12.  Investor 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, and that no Federal or state governmental agency has passed upon or will pass upon the offer or sale of the Shares or has made or will make any finding or determination as to the fairness of this investment.

 

5.  Confidentiality Agreement.  Investor and Issuer hereby acknowledge that the Confidentiality Agreement entered into between them remains in full force and effect until closing is complete.

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6.  Notices.  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be by United States registered or certified mail, return receipt requested, or guaranteed overnight delivery, addressed as set forth below or as may be otherwise specified by notice meeting the requirements of this paragraph.  All notices shall be deemed given when mailed pursuant to the foregoing sentence.  Notices shall be addressed as follows:

 

If to Issuer:

Royal Bancshares of Pennsylvania, Inc.

ATTN: F. Kevin Tylus

President and Chief Executive Officer

732 Montgomery Avenue

Narberth, PA 19072

Telephone: (610) 668-4700

Facsimile No.: (610) ___-_____

 

With a copy to:

David W. Swartz, Esq.

Stevens & Lee, P.C.

111 North 6th Street

Reading, PA 19603

Telephone: (610) 478-2184

Facsimile No.: (610) 988-0815

 

If to Investor:

Kenneth G. Mertz II

President and Chief Investment Officer

Emerald Advisers, Inc.

3175 Oregon Pike

Leola, PA 17540

Telephone: (717) 396-1116

Facsimile No.: (717) 735-0088

 

7.  Issuer Covenants.  Issuer agrees to

 

7.1.  use its commercially reasonable efforts to cause all of the Shares to be listed on the NASDAQ Capital Market.

 

8.   [Intentionally Omitted].

 

9.  Mutual Conditions to Closing.  The obligation hereunder of Investor to purchase, and Issuer to sell, the Shares at the Closing is subject to the satisfaction, at or before the Closing, of each of the conditions set forth below (unless waived by Investor and Issuer):

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9.1.  All consents and approvals of any regulatory body or agency necessary to consummate the transactions contemplated by this Agreement shall have been obtained and all notice and waiting periods required by law to pass after receipt of such approvals or consents shall have passed, and all conditions to consummation of the transactions set forth in this Agreement shall have been satisfied.

 

9.2.  There shall be no actual or threatened causes of action, investigations or proceedings (i) challenging the validity or legality of this Agreement or the consummation of the transactions contemplated by this Agreement, (ii) seeking damages in connection with the transactions contemplated by this Agreement, or (iii) seeking to restrain or invalidate the transactions contemplated by this Agreement, which, in the reasonable judgment of the parties, based upon advice of counsel, would have a material adverse effect with respect to the interests of the parties to this Agreement.  No judgment, order, injunction or decree (whether temporary, preliminary or permanent) issued by any court or agency of competent jurisdiction or other legal restraints or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.  No statute, rule, regulation, order, injunction or decree (whether temporary, preliminary or permanent) shall have been enacted, entered, promulgated or enforced by any regulatory authority that prohibits, restricts, or makes illegal the consummation of the transactions contemplated in this Agreement.

 

10.    Conditions Precedent to the Obligation of Investor to Purchase the Shares.  The obligation hereunder of Investor to purchase the Shares at the Closing is subject to the satisfaction, at or before the Closing, of each of the conditions set forth below (unless waived by the Investor):

 

10.1.  Each of the representations and warranties of Issuer contained in this Agreement shall be true and correct in all material respects, and Investor shall have received the certificate executed by Issuer’s Chief Executive Officer set forth in Section 2.2 hereof.

 

10.2.  Issuer shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Issuer at or prior to the Closing.

 

10.3.  Issuer 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 by the United States Department of Treasury or its agents or representatives regarding such shares.

 

10.4.  The Issuer Class A Common Stock shall have been approved for listing on the Nasdaq Capital Market, trading of the Issuer Class A Common Stock shall not have been suspended by the SEC, the Nasdaq Capital Market or FINRA and the Issuer Class A Common Stock shall not have been delisted from the Nasdaq Capital Market.

 

11.    Conditions Precedent to the Obligation of Issuer to Sell the Shares.  The obligation hereunder of Issuer to sell the Shares at the Closing is subject to the satisfaction, at or before the Closing, of each of the conditions set forth below (unless waived by the Issuer):

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11.1.  Each of the representations and warranties of Investor contained in this Agreement shall be true and correct in all material respects, and Issuer shall have received the certificate executed by Investor’s President and Chief Investment Officer set forth in Section 2.3 hereof.

 

11.2.  Investor shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Investor at or prior to the Closing.

 

11.3.  Issuer 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 by the United States Department of Treasury or its agents or representatives regarding such shares.

 

12.    [Intentionally Omitted].

 

13.    Miscellaneous.

 

13.1.  This Agreement (including any exhibits and schedules hereto) and the other documents delivered or to be delivered hereunder set forth the entire understanding of the parties with respect to its subject matter, supersede all prior agreements and understandings between the parties in respect of its subject matter.  This Agreement shall be binding upon and inure to the benefit of the parties, their heirs, legal representatives, successors and assigns.  This Agreement is not transferable or assignable by the parties without the prior written consent of the other party.

 

13.2.  This Agreement may not be modified, amended, supplemented or altered except by written agreement executed by all parties hereto.  No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege.  No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the parties.  No extension of time for performance of any obligations or other acts hereunder or under any other agreement shall be deemed to be an extension of the time for performance of any other obligations or any other acts.  The rights and remedies of the parties under this Agreement are in addition to all other rights and remedies, at law or equity that they may have against each other.

 

13.3.  The parties shall pay their own fees and expenses, including their own counsel fees, incurred in connection with this Agreement and the transactions contemplated hereby.

 

13.4.  The representations, warranties, covenants and agreements of Issuer and Investor contained herein or made pursuant to this Agreement which by their terms are intended to survive the consummation of the transactions contemplated by this Agreement shall survive the execution and delivery of this Agreement.

 

13.5.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflicts of law principles.  Any legal proceedings with respect to this Agreement shall take place solely within the Court of Common Pleas of Montgomery County, Pennsylvania and all parties hereto consent to the jurisdiction of said Court.  THE PARTIES TO THIS AGREEMENT HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY WITH RESPECT TO DISPUTES ARISING UNDER THIS AGREEMENT AND THE RELATED AGREEMENTS AND CONSENT TO A BENCH TRIAL WITH THE APPROPRIATE JUDGE ACTING AS THE FINDER OF FACT.  Notwithstanding the foregoing, a judgment may be enforced by any court of competent jurisdiction.

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13.6.  Issuer will provide to Investor an advance copy of any proposed announcement to be made by Issuer with respect to this Agreement and/or the transactions contemplated hereby and Investor shall have the right to approve any information contained therein regarding Investor, its affiliates and the transactions contemplated hereby, which approval shall not be unreasonably withheld or delayed.  Further, Investor will not make any public announcement with respect to this Agreement and/or the transactions contemplated thereby without approval by Issuer of the content and timing of such announcement, which approval shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, (a) Issuer or the Bank may disclose information relating to the transactions contemplated by this Agreement without the consent of Investor to any regulatory agency with jurisdiction over Issuer or the Bank or as may be required by law, (b) Issuer may disclose information relating to the transactions contemplated by this Agreement in any filing required to be made by Investor with the SEC under the Exchange Act without the consent of Investor, and (c) Investor may disclose information relating to the transactions contemplated by this Agreement without the consent of Issuer in connection with any regulatory applications or notices or other filings made by Investor in connection with the transactions contemplated by this Agreement.

 

13.7.  This Agreement may be executed by facsimile signature and in any number of counterparts, each of which shall for all purposes be deemed an original but all of which together shall constitute one and the same instrument.

 

13.8.  The section and subsection headings contained in this Agreement are included for convenience only and are not to be considered in construing this Agreement.

 

13.9.  In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

13.10.  Each of Issuer and Investor shall execute and deliver such additional instruments and other documents and shall take such further actions as may be reasonably necessary or appropriate to effectuate, carry out and comply with all of the terms of this Agreement and the transactions contemplated hereby.

 

13.11.  The obligation of Investor under this Agreement shall expire on December 31, 2013.

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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as of the day and year first above written.

 

	
 

	
ROYAL BANCSHARES OF PENNSYLVANIA, INC., Issuer

	
 

	
 

	
 

	
 

	
By:

	
F. Kevin Tylus

	
 

	
 

	
President and Chief Executive Officer

	
 

	
 

	
 

	
 

	
EMERALD ADVISERS, INC., Investor

	
 

	
 

	
 

	
 

	
By:

	
/s/ Kenneth G. Mertz, II

 

 

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