Commerce Bancorp, Inc.
NETWORK AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1997 between Commerce
Bancorp, Inc., a New Jersey corporation ("Bancorp") and Commerce
Bank/Harrisburg, a Pennsylvania banking association ("Member").
Bancorp has expended a considerable amount of time, effort and money to
develop a system of banking (the "System") comprised of the procedures, trade
secrets and other information which relate to the banking business as either
originated or adopted by Bancorp.
Member desires to become a member of the Commerce Network and have access
to the System.
In consideration of the mutual promises contained herein and intending to
be legally bound, the parties hereto agree as follows:
1. Grant of Membership and Term.
1.1 Bancorp grants to Member a non-exclusive membership in the
Commerce Network and all of the rights and privileges of membership set forth
herein.
1.2 Subject to the termination provisions contained herein, the term of
this Network Agreement shall be perpetual.
2. Fees.
2.1 Member shall on or before the tenth day of each and every month
during the term of this Network Agreement, pay to Bancorp a monthly fee in an
amount equal to the sum of one tenth of one percent (.001) of the assets of the
Member on the last day of the immediately preceding month ("Assets") less than
or equal to
twenty-five million dollars ($25,000,000), plus five one hundredths of one
percent (.0005) of the Assets in excess of twenty-five million dollars
($25,000,000), but less than fifty million dollars ($50,000,000) plus
twenty-five one thousandths of one percent (.00025) of the Assets in excess of
fifty million dollars ($50,000,000) but less than two hundred fifty million
dollars ($250,000,000) plus one thousandths of one percent (.0001) of the Assets
in excess of two hundred fifty million dollars ($250,000,000), divided by
twelve.
3. Use of Network Proprietary Marks.
3.1 During the term of this Network Agreement, the Member shall have
the limited, nonexclusive license to use the Network's Proprietary Marks and
System within the territory described on Exhibit "A" attached to this Network
Agreement and only in connection with the operation of Member's Bank pursuant to
this Network Agreement. The limited, nonexclusive license granted herein
includes only such Network Proprietary Marks as are set forth in Exhibit "B"
attached to this Network Agreement and the Network Proprietary Marks which may
hereafter be designated in writing by Bancorp as part of the Commerce Network.
3.2 The Member will not represent in any manner that it has any
ownership in the Network Proprietary Marks. Member's use of the Network
Proprietary Marks shall not create in its favor any right, title or interest in
or to the Network Proprietary Marks but that all of such use shall inure to the
benefit of Bancorp.
-2-
3.3 Member agrees that, during the term of, and after the expiration or
termination of this Network Agreement, Member shall use its best efforts not to
commit, directly or indirectly, an act of infringement or contest or aid in
contesting the validity or ownership of the Network's Proprietary Marks, or take
any other action in derogation of the Network's Proprietary Marks.
3.4 Member shall promptly notify Bancorp of any claim, demand, or cause
of action based upon or arising from any attempt by any other person, entity,
firm or corporation to use the Network's Proprietary Marks, or any colorable
variation of the Network's Proprietary Marks, in which Bancorp has or claims a
proprietary interest. Member shall notify Bancorp promptly of any litigation
instituted by any person, entity, firm, corporation or governmental agency
against Bancorp or Member involving the Network's Proprietary Marks. Bancorp has
the right to control any administrative proceeding or litigation involving the
Network's Proprietary Marks. If Bancorp undertakes the defense or prosecution of
any proceeding or litigation involving the Network's Proprietary Marks, Member
agrees to cooperate, execute any and all documents and to do such acts as may,
in the opinion of counsel for Bancorp, be necessary to carry out such defense or
prosecution. Bancorp shall undertake the defense or prosecution of any
proceeding or litigation involving the Network's Proprietary Marks which Bancorp
shall reasonably determine to be in the best interests of Bancorp, Member and
the other members, if any, of the Commerce Network.
-3-
3.5 As each and every detail of the System is important to Member,
Bancorp and the other members, if any, of the Commerce Network, in order to
develop and maintain high standards of quality and service, and hence to protect
the reputation and goodwill of all member banks, Member shall observe such
reasonable requirements with respect to trademark, trade name or service mark
registration notices as Bancorp may from time to time direct in writing;
provided, however, that Member shall be free to use at anytime all such other
proprietary marks as it deems necessary and/or desirable.
4. Obligations of Bancorp.
4.1 Bancorp shall:
(a) at the request of Member, advise and consult with Member
during normal business hours on matters relating to the System;
(b) continue to develop, promote and protect the good will and
reputation of the System;
(c) provide Member with approved local advertising and marketing
plans and materials, including, without limitation, newspaper mats, radio
commercial tapes, television commercial prints, sales aids, and other
promotional and marketing materials.
(d) provide Member with marketing assistance;
(e) conduct periodic meetings of Bancorp and its Network Members
to review and improve the System; and
(f) make available to Member, upon request, back- office and other
support services at an hourly rate equal to 1.5
-4-
times the actual salary costs to Bancorp for providing such services to Member.
5. Obligations of Member.
5.1 Member shall comply with all federal, state and local laws,
ordinances and regulations affecting the ownership or operation of Member's
Bank.
5.2 As support for the payment of the fees set forth in Section 2.1
hereof, on or before the fifth day of each month, Member shall submit to Bancorp
a report of the amount of assets of the Member on the last day of the
immediately preceding month.
5.3 Member shall submit to Bancorp, within 45 days after the end of
each calendar quarter, financial statements relating to Member's Bank for the
quarter, and consisting of at least a balance sheet, a statement of profit and
loss, and such other reports as Bancorp may from time to time reasonably
request. Said financial statement shall be certified by Member's chief executive
officer and chief financial officer and shall be prepared according to generally
accepted accounting principles consistently applied.
6. Advertising of Member's Bank.
6.1 Member shall be free to develop and use any and all advertising or
promotional materials it deems in the best interest of Member whether or not
such materials were provided to it hereunder.
7. Transfer and Assignment.
7.1 All rights and interests of Member arising from this Network
Agreement are personal to Member and Member shall not,
-5-
without Bancorp's prior written consent, voluntarily or involuntarily, by
operation of law or otherwise, transfer, sell, assign, dispose of or encumber
its interest in this Network Agreement, and any purported sale, assignment,
transfer or encumbrance shall be null and void.
7.2 This Network Agreement shall inure to the benefit of Bancorp, its
successors and assigns, and Bancorp shall have the right to sell, assign or
transfer all or any part of its interests herein to any person or legal entity.
8. Default and Termination.
8.1 The occurrence of any of the following events shall constitute a
default under this Network Agreement:
(a) If Member shall misuse the System, or otherwise materially
impair the goodwill associated therewith;
(b) If Member shall fail to remit to Bancorp any payments when
due;
(c) If Member shall fail to submit to Bancorp the financial or
other information required under this Network Agreement;
(d) If a change in control of Member shall have occurred or be
contemplated;
(e) If Member otherwise violates the terms of this Network
Agreement; and
(f) If the authority of Member or Member's Bank to engage in
banking is suspended or terminated.
-6-
Anything in this Section 8 to the contrary notwithstanding, it shall not be a
default by Member under this Network Agreement if (i) Member shall choose not to
use advertising, methods of operations and/or trademarks provided to it by
Bancorp under and/or pursuant to this Network Agreement; and/or (ii) Member
shall choose to use any advertising, methods of operations and/or trademarks not
provided to it by Bancorp under and/or pursuant to this Network Agreement.
8.2 Upon the occurrence of any of the events set forth in Section 8.1,
Bancorp may, without prejudice to any other rights or remedies contained in this
Network Agreement or provided by law or equity, terminate this Network Agreement
upon thirty days prior written notice. In addition, Bancorp may terminate this
Network Agreement without cause upon ninety days prior written notice to Member.
8.3 Member may terminate this Network Agreement upon six months prior
written notice to Bancorp by (i) making payment to Bancorp of an amount equal to
the fee due to Bancorp pursuant to Section 2.1 for the six month period
immediately preceding such notice and (ii) fulfilling all of Member's
obligations hereunder.
8.4 Member agrees that upon termination of this Network Agreement,
Member shall immediately cease to be a member of the Commerce Network and
without limitation the following shall occur:
(a) Member shall immediately cease to operate the former member
premises as a Member Bank and shall not thereafter directly or indirectly
represent to the public that it is a member
-7-
bank or hold itself out as a present or former member of the Commerce Network.
(b) Member shall immediately cease to use, by advertising or in
any manner whatsoever, any Network Proprietary Marks. In particular, without
limitation, Member shall cease to use all signs, fixtures, equipment,
advertising materials, stationery, forms, containers and any other articles
which display in any form the Network's Proprietary Marks.
(c) Member agrees, if it operates any bank or other business, not
to use any reproduction, counterfeit, copy or colorable imitation of the
Network's Proprietary Marks in conjunction with such other business which is
likely to cause confusion or mistake or to deceive, and further agrees not to
utilize any trade dress or designation of origin or description or
representation which falsely suggests or represents an association or connection
with the Commerce Network. Further, Member shall make such modifications or
alterations to the former member premises immediately upon termination of this
Network Agreement as may be necessary to prevent the operation of any business
thereon by itself or others in derogation of the Commerce Network.
(d) Member shall immediately pay all sums owing to Bancorp
hereunder.
(e) Member shall pay to Bancorp all damages, costs and expenses,
including attorneys' fees and costs, incurred by Bancorp subsequent to the
termination or expiration of this Network
-8-
Agreement, in obtaining injunctive or other relief for the enforcement of any
portion of this Network Agreement.
8.5 Upon termination of this Network Agreement, Bancorp shall have the
right to purchase at a mutually agreed price, but in no event less than Member's
book value, in whole or in part, at any time for thirty days after termination,
any or all signs, fixtures, equipment, advertising materials, stationery, forms
and any other articles which display in any form the Network's Proprietary Marks
or indicia of origin associated with the System.
9. Arbitration of Disputes.
9.1. Any controversy or claims arising out of or relating to this
Network Agreement shall be subject to arbitration in Camden, New Jersey
conducted by three arbitrators pursuant to the Rules of the American Arbitration
Association. The judgment of the arbitrators may be entered in any court having
jurisdiction. Each party shall be responsible for the payment of his or its
legal expenses and the fees and expenses of arbitration except that the
arbitrators shall be paid by the party selected by the arbitrators as a part of
their judgment. The arbitrators shall have no authority to alter or modify any
provision of this Network Agreement or to render an award which by its terms
results in such an alteration or modification.
10. Independent Contractors and Indemnification.
10.1 This Network Agreement does not constitute Member an agent, legal
representative, joint venturer, partner, employee or servant of Bancorp for any
purpose whatsoever. It is understood
-9-
and agreed that Member shall be an independent contractor and is in no way
authorized to make any contract, agreement, warranty or representation on behalf
of Bancorp or to create any obligation, express or implied, on behalf of
Bancorp.
10.2 Under no circumstances shall Bancorp be liable for any act,
omission, contract, debt or other obligation of Member. Member shall indemnify
and hold harmless Bancorp against any such claim and the cost (including
attorneys' fees and costs) of defending against such claims arising from, as a
result of, or in connection with, Member's operation as a member of the Commerce
Network.
11. Effect of Waiver.
No failure to exercise any power reserved to it in this Network Agreement,
or to insist upon compliance by Member with any obligation or condition of this
Network Agreement, and no custom or practice of the parties at variance with the
terms hereof, shall constitute a waiver of Bancorp's right to demand exact
compliance with the terms of this Network Agreement at any time or from time to
time. Waiver by Bancorp of any particular default by Member shall not affect or
impair Bancorp' s right in respect of any subsequent default of the same or of a
different nature nor shall any delay, forbearance, or omission of Bancorp to
exercise any power or right arising out of any breach or default by Member of
any of the terms, provisions, or covenants of this Network Agreement, affect or
impair Bancorp's right, nor shall such constitute a waiver by Bancorp of any
preceding breach by Member of
-10-
any terms, provisions, conditions or covenants of this Network Agreement.
12. Notices.
Any notices required hereunder shall be in writing and shall be sent by
personal delivery or by certified or registered mail, return receipt requested,
directed to the address of the addressee listed on the signature page of this
Network Agreement.
13. Entire Agreement.
This Network Agreement constitutes the entire agreement between Bancorp and
Member concerning the grant and conditions of membership in the Commerce Network
and supersedes all prior agreements. There are no oral representations,
inducements, promises or agreements between the parties not embodied herein
which are of any force or effect with reference to this Network Agreement or
otherwise. No amendment, change or variance from this Network Agreement shall be
binding on either party unless executed in writing by both parties.
14. Captions.
The captions to each Section herein are used for convenience only and shall
not be considered part of this Network Agreement nor used in interpreting the
provisions contained herein.
15. Applicable Laws and Regulations.
Bancorp and Member acknowledge that they are both subject to numerous
federal and state laws and regulations. Furthermore, Bancorp and Member
acknowledge that anything in this Network Agreement to the contrary
notwithstanding, it is the intent of the
-11-
parties to this Network Agreement that Bancorp shall not exercise or attempt to
exercise a controlling influence over the management or policies of Member or
any of its subsidiaries; or attempt to influence Member's or any of its
subsidiaries' dividend policies, loan, credit or investment decisions; pricing
of services; personnel decisions; operations activities, including the location
of any offices or branches or their hours of operation, etc; or any similar
activities or decisions of Member or any of its subsidiaries; and to the extent
necessary, the parties hereby agree to amend this Network Agreement so that at
all times during the term of this Network Agreement, Bancorp shall not be deemed
to "control" or "be in control of" Member within the meaning of the Federal Bank
Holding Company Act of 1956, as amended, or any other similar federal, state or
local law, rule or regulation.
16. Applicable Law.
16.1 This Network Agreement shall be interpreted and construed under
the laws of the state of New Jersey and considered as a contract made and to be
performed in the state of New Jersey.
16.2 No right or remedy herein conferred upon or reserved to Bancorp is
exclusive of any other right or remedy herein or by law or equity provided or
permitted but each shall be cumulative of any other right or remedy provided in
this Network Agreement.
17. Representations.
NO REPRESENTATION, PROMISE, GUARANTEE OR WARRANTY WAS MADE TO INDUCE THE
EXECUTION HEREOF OR IN CONNECTION HEREWITH WHICH IS NOT EXPRESSLY CONTAINED
HEREIN. MEMBER RECOGNIZES THAT NEITHER
-12-
BANCORP NOR ANY OTHER PERSON CAN GUARANTEE MEMBER'S SUCCESS. BY THE EXECUTION
AND ACCEPTANCE OF THIS NETWORK AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE THAT
THEY HAVE READ THE SAME AND UNDERSTAND EACH PROVISION HEREOF.
IN WITNESS WHEREOF, the parties intending to be legally bound, have duly
executed, sealed and delivered this Network Agreement.
MEMBER:
COMMERCE BANK/HARRISBURG
BY: /s/ James T. Gibson
James T. Gibson, President
Address of Member:
100 Senate Avenue
East Pennsboro Township
Camp Hill, PA 17011
APPROVED AND ACCEPTED:
COMMERCE BANCORP, INC.
By: /s/ Vernon W. Hill
Vernon W. Hill, II, President
-13-
EXHIBIT "A"
The territory currently covered by telephone area code 717 as it exists on
the date hereof regardless of whether or not such territory shall be changed
and/or modified after the date hereof.
EXHIBIT "B"
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
AMENDMENT TO NETWORK AGREEMENT
This Amendment to Network Agreement, dated as of April [ ], 2002 (this
"Amendment"), is by and between Commerce Bancorp, Inc., a New Jersey corporation
("Bancorp"), Commerce Bank/Harrisburg, N. A., a national banking association
("Commerce Harrisburg"), and Pennsylvania Commerce Bancorp, Inc., a Pennsylvania
corporation ("PA Bancorp"). (PA Bancorp and Commerce Harrisburg are hereinafter
both individually and collectively referred to as a "Member").
RECITALS
Since its formation Commerce Harrisburg has been a member of Bancorp's
network of banks (the "Commerce Network") and obtained access to Bancorp's
system of banking comprised of the procedures, trade secrets and other
information which related to the banking business as either originated or
adopted by Bancorp (the "System"). On January 1, 1997, Bancorp and Commerce
Harrisburg entered into a Network Agreement (the "Network Agreement") by which
Commerce Harrisburg continued its status as a member of the Commerce Network.
The parties hereto now wish to add PA Bancorp as a party to the Network
Agreement and to amend the Network Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises, covenants and agreements
set forth in this Amendment, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agree
as follows:
1. Amendment to Exhibit "A" set forth in Section 3.1. Exhibit "A" set forth
in Section 3.1 of the Network Agreement is hereby amended and restated in its
entirety as follows:
EXHIBIT "A"
The territory shall consist of the Pennsylvania counties of Adams; Berks;
Bradford; Carbon; Centre; Clinton; Columbia; Cumberland; Dauphin; Franklin;
Fulton; Huntingdon; Juniata; Lackawanna; Lancaster; Lebanon; Luzerne;
Lycoming; Mifflin; Monroe; Montour; Northumberland; Perry; Pike; Potter;
Schuylkill; Snyder; Sullivan; Susquehanna; Tioga; Union; Wayne; Wyoming;
and York.
2. Amendment to Section 3.5. Section 3.5 of the Network Agreement is hereby
amended as follows: the "provided, however" clause set forth in the last
sentence of Section 3.5 of the Network Agreement is hereby deleted in its
entirety.
3. New Section 3.6. New Section 3.6 of the Network Agreement is hereby
added to read in its entirety as follows:
3.6 Member shall not, without the express prior written consent of Bancorp,
display any trademark, service mark, trade name, insignia or logotype not
expressly authorized by Bancorp for use by Member in connection with the
use or operation of
the System, including, without limitation, those of any other person, firm
or corporation.
4. Amendment to Section 4.1(f). Section 4.1(f) of the Network Agreement is
hereby amended and restated in its entirety as follows:
(f) Upon Member's request, Bancorp may (but is not obligated to) provide
additional support services including, without limitation, data processing,
facilities management, and such other support services upon which Member
and Bancorp may from time to time mutually agree; provided, however, that
additional support services not provided by Bancorp may be provided by
third parties subject to the prior approval of Bancorp, which approval
shall not be unreasonably withheld. Fees for such additional services shall
be negotiated in good faith and may be subject to separate agreements or
may be agreed-upon amendments to this Network Agreement.
5. New Section 5.4. New Section 5.4 of the Network Agreement is hereby
added to read in its entirety as follows:
5.4 Member shall operate its business in strict compliance with standard
procedures, polices, rules and regulations established by Bancorp
("Operating Procedures"), as the same may be amended and revised from time
to time, including without limitation, the offering of similar products and
services, the operation of all branch offices and facilities consistent
with the System (including without limitation the hours of operations) and
the making of all interbank transfers between Member and Bancorp's bank
subsidiaries transparent so as to make the operations of Member's branch
offices appear to the public to be identical to those of Bancorp. Bancorp
may at any time and from time to time modify the Operations Procedures by
the addition, deletion or other modification to the provisions thereof,
provided that such modifications shall be made to the extent necessary or
desirable in the sole judgment of Bancorp to protect the Proprietary Marks,
comply with any applicable statute or judicial or administrative decision,
improve the quality of service furnished to customers or to improve the
operational efficiency of the Network and/or the System. Unless otherwise
specified, modifications to Operating Procedures shall become effective
fifteen days after delivery of written notice thereof to Member.
6. Delete Section 6. Section 6 of the Network Agreement is hereby deleted
in its entirety.
7. Amendment to Section 8.1. The last paragraph of Section 8.1 of the
Network Agreement which begins with "Anything in this Section 8 etc." is hereby
deleted in its entirety.
8. Amendment to Section 8.2. Section 8.2 of the Network Agreement is
hereby amended and restated in its entirety as follows:
8.2 Upon the occurrence of any of the events set forth in Section 8.1,
Bancorp may, without prejudice to any other rights or remedies contained in
this Network Agreement or provided by law or equity, terminate this Network
Agreement upon 90 days prior written notice, provided, however, that if the
event of default is under Sections 8.1(a), (b), (c) and/or (e), Bancorp
shall give Member written notice of the event of default and provide Member
with 15 days to cure such event of default. In addition, Bancorp may
terminate this Network Agreement without cause upon 180 days prior written
notice to Member.
9. New Section 8.4(f). A new section 8.4(f) is hereby added to read in its
entirety as follows:
(f) Member shall promptly execute and file with applicable government
agencies or offices a notice of its intent to cease conducting its business
under the name "Commerce Bank", or any colorable variation thereof, and
shall revoke and cancel any registration of such name with relevant
government agencies.
10. New Section 8.6. A new Section 8.6 is hereby added to read in its
entirety as follows:
1 Member acknowledges and agrees that the System is comprised of valuable trade
secrets and confidential information of Bancorp, the unauthorized disclosure or
use of which could harm Bancorp such that money damages could not reasonably
compensate it. Accordingly, upon termination of this Agreement and for a period
of five years thereafter, Member shall not, nor shall its officers, directors,
principal stockholders, employees, agents or representatives:
(i) disclose, directly or indirectly, in whole or in part, any aspect
or methodology of the System without Bancorp's express, prior
written permission; or
(ii) use, without Bancorp's express, prior written permission, any
aspect or feature (or portion thereof) of the System in
connection with the banking business throughout the world.
1. Member. For all purposes, the term "Member" contained in the Network
Agreement, as amended by this Amendment, shall be deemed to include Commerce
Harrisburg and PA Bancorp, and each of them hereby agrees to be so bound.
2. Counterparts. This Amendment may be executed in several counterparts,
and all such executed counterparts will constitute the same agreement.
3. Defined Terms. Initially capitalized terms used and not defined in this
Amendment have the meanings ascribed to them in the Network Agreement.
4. Full Force and Effect. Except as amended hereby, the Network Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties to this Amendment have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.
Commerce Bancorp, Inc.
By: /s/ Vernon W. Hill
Vernon W. Hill, II, President
Pennsylvania Commerce Bancorp, Inc.
By: /s/ Gary L. Nalbandian
Gary L. Nalbandian, President
Commerce Bank/Harrisburg, N. A.
Address of Member
By: /s/ Gary L. Nalbandian
Gary L. Nalbandian, President
100 Senate Avenue
East Pennsboro Township
Camp Hill, PA 17011