Exhibit 10.1
 
UNITED STATES OF AMERICA
DEPARTMENT OF THE TREASURY
OFFICE OF THE COMPTROLLER OF THE CURRENCY

     
In the Matter of:
Commerce Bank, National Association
Philadelphia, Pennsylvania
)
)    AA-EC-07-44                  
)
 

 

CONSENT ORDER

The Comptroller of the Currency of the United States of America (“Comptroller”),
through his National Bank Examiners and other staff, is conducting an
investigation of Commerce Bank, National Association, Philadelphia, Pennsylvania
(“Bank”).  Certain issues arising from the investigation have been communicated
to the Bank.
 
The Bank, by and through its duly elected and acting Board of Directors
(“Board”), has executed a Stipulation and Consent to the Issuance of a Consent
Order, dated June 28, 2007 (“Stipulation and Consent”), that is accepted by the
Comptroller.  By that Stipulation and Consent, which is incorporated by
reference herein, the Bank has consented to the issuance of this Consent Order
(“Order”) by the Comptroller to ensure that actual or apparent conflicts of
interest or unsafe or unsound practices involving the construction or
acquisition of branch offices do not occur in the future.
 
Pursuant to the authority vested in him by the Federal Deposit Insurance Act, as
amended, 12 U.S.C. § 1818, the Comptroller hereby orders that:

ARTICLE I

Restrictions on Insider and Insider-Related Party Transactions

 (1) As of the effective date of this Order, the Bank shall not engage in any
transactions, including Coordinated Transactions, nor enter into any contracts
or agreements, with any Insiders or Insider-Related Parties, except as provided
in this Article and Article II.
 
 (2) The restrictions contained in paragraph (1) above apply to, but are not
limited to, any goods or services provided by Insiders or Insider-Related
Parties to the Bank, but shall not apply to any goods or services provided by
the Bank to Insiders or Insider-Related Parties which:
 
(a)  Aggregate to an amount or value of $25,000 or less per calendar year for
each Insider or Insider Related Party, if provided on non-preferential terms and
conditions; or
 
(b)  Are provided on such terms and conditions as are advertised to and
available to the general public.
 
(3) The restrictions contained in paragraph (1) above shall not apply to the
payment of compensation or other benefits to Insiders or Insider-Related Parties
as remuneration for their services as employees or directors of the Bank, if:
 
 

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(a) Such Insider or Insider-Related Party was an employee or director of the
Bank as of June 30, 2007; and
 
(b) Such payments are reasonable and appropriate and have been approved in
advance by the Board of Directors.
 
 (4) The Bank may engage in other transactions, contracts or agreements with
Insiders or Insider-Related Parties, only after receiving written notification
that the OCC does not object to the transactions, contracts or agreements, or
pursuant to a detailed policy for which the Bank has received written
notification that the OCC does not object.
 
 (5) The Bank shall require all Insiders to disclose in writing the information
required by this paragraph and shall produce a report to the OCC, within thirty
(30) days of the end of each calendar quarter:
 
(a) Listing all Insiders and all Insider-Related Parties;
 
(b) Detailing all transactions, Coordinated Transactions, contracts or
agreements conducted, entered into or outstanding during the immediately
preceding calendar quarter or proposed for the future between any Insider or
Insider-Related Party and the Bank  (other than transactions, contracts or
agreements permitted by sub-paragraph (2)(b) or paragraph (3) above);
 
(c) Detailing all transactions, Coordinated Transactions, contracts or
agreements conducted, entered into or outstanding during the immediately
preceding calendar quarter or proposed for the future between any Insider who is
an employee or director of the Bank or any such person’s Insider-Related
Parties, and any party that is, or at any time since the effective date of this
Order was, a Vendor, RE Principal, RE Principal Agent, RE Service Provider or RE
Subcontractor (other than transactions, contracts or agreements by such Insiders
or Insider-Related Parties that were on such terms and conditions as are
advertised to and available to the general public, and transactions, contracts
or agreements negotiated by the Bank which equally benefit all Bank employees);
and
 
(d) Verified in writing as accurate to the best of the knowledge and belief of
each Insider and the Bank’s Chief Financial Officer.
 
 (6) Within sixty (60) days of the effective date of this Order, the Bank shall
submit a proposal to retain a third-party entity acceptable to the OCC to
perform the services described in this Article (“Investigative Service”) and
shall submit proposed engagement terms and agreed-upon procedures acceptable to
the OCC with the proposed Investigative Service.  The proposed Investigative
Service shall be independent of the Bank, of its holding company, and of any
Insiders or Insider-Related Parties.  The Bank shall provide to the OCC the name
and qualifications of the proposed Investigative Service and a history of
previous engagements by the Bank or its holding company of the proposed
Investigative Service.  The Bank shall neither propose to use nor use an
Investigative Service that has previously performed services for any Insiders or
Insider-Related Parties.  Within five (5) business days after receiving written
notification that the OCC does not object to retention of the Investigative
Service, the terms of the engagement, and the agreed-upon procedures, the Bank
shall retain the Investigative Service.
 
 (7) The duties of the Investigative Service shall be to determine whether the
Bank and Insiders have complied with the requirements of this Article.  The
Investigative Service shall prepare a report detailing the Bank’s actions with
respect to this Article, specifically noting any noncompliance.  The initial
report shall be provided to the Bank’s Board of Directors and to the OCC not
later than December 1, 2007, covering the third calendar quarter of 2007, and
thereafter within sixty (60) days of the end of each calendar year.  The Bank
shall make available to the Investigative Service all records, reports, and
other information necessary, in the judgment of the Investigative Service or the
OCC, to fulfill its duties.  The Bank shall fully and timely cooperate with the
Investigative Service and shall ensure that all Insiders fully and timely
cooperate with the Investigative Service.
 
 
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ARTICLE II
Existing Insider and Insider-Related Party Relationships
 
 (1) Only until December 31, 2007, the Bank may continue existing contracts and
agreements with Insiders and Insider-Related Parties (including, but not limited
to InterArch, Inc. and Interstate Commercial Real Estate, Inc.), but shall
neither renew any such contracts or agreements nor enter into any new contracts
or agreements with Insiders or Insider-Related Parties except those permitted by
Article I or detailed in the Transition Plan implemented by the Bank following
the procedures provided in this Article.
 
 (2) Within sixty (60) days of the effective date of this Order, the Bank shall
provide a Transition Plan acceptable to the OCC.  After receiving written
notification that the OCC does not object to the Transition Plan, the Bank shall
immediately implement and thereafter adhere to the Transition Plan.  The Bank
shall not make any changes or modifications to the Transition Plan without first
receiving written notification that the OCC does not object to such changes or
modifications.
 
(3) With respect to all contracts and agreements with Insiders or
Insider-Related Parties existing as of the effective date of this Order, except
those described in paragraph (4) below or permitted by Article I, the Transition
Plan shall:
 
                                (a) Identify and detail all such contracts and
agreements;
 
                                (b) Detail the steps the Bank shall take,
including specific timeframes, to terminate each such contract or agreement not
later than December 31, 2007;
 
(c) Detail the steps the Banks shall take, including specific timeframes, to
modify any such contracts or agreements (prior to termination of such contracts
or agreements as provided in subparagraph (3)(b) above); and
 
(d) Detail all payments made to or received from Insiders or Insider-Related
Parties pursuant to such contracts or agreements since January 1, 2007, and all
payments expected to be made to or received from Insiders or Insider-Related
Parties pursuant to such contracts or agreements, through the completion of the
Transition Plan.
 
(4) With respect to each lease where the lessee is the Bank and the lessor is an
entity wholly or partially owned by any Insiders or Insider-Related Parties, the
Transition Plan shall:
 
(a) Identify and detail all such leases;
 
(b) Provide a cost-benefit analysis evaluating, at a minimum:
 
         (i) Continuation of each such lease, including one or more extensions
available to the Bank under the terms of the lease;
 
         (ii) Continuation of such lease only through the currently effective
term of the lease;
 
        (iii) Termination of such lease by December 31, 2007;
 
(iv) Termination of such lease at the end of the currently effective term of the
lease; and
 
 
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      (v) Purchase of the property leased by the Bank;
 
(c) Detail what steps, if any, the Bank shall take, including specific
timeframes, to terminate such lease;
 
(d) Detail what steps, if any, the Banks shall take, including specific
timeframes, to modify any such lease; and
 
(e) Detail all payments made to Insiders or Insider-Related Parties pursuant to
each such lease since January 1, 2007, and all payments expected to be made to
Insiders or Insider-Related Parties pursuant to each such lease, through the
completion of the Transition Plan.
 
ARTICLE III
Real Estate Review Committee
 
 (1) Within thirty (30) days of the effective date of this Order, the Board of
Directors shall designate at least three (3) directors to form a Real Estate
Review Committee.  None of the proposed directors shall hold a management
position with the Bank, and each of the proposed directors shall possess the
expertise necessary to assist the Committee in the performance of its
duties.  Before making such designations, the Board of Directors shall consider
any Real Estate Related Activity between the directors and the Bank during the
past ten (10) years and whether such Real Estate Related Activity would affect
the director’s ability to execute his duties as set forth in this Article.
 
 (2) Within sixty (60) days after the effective date of this Order, the Board of
Directors shall develop and provide to the OCC a Real Estate Review Committee
charter (“Charter”).  The proposed Charter shall contain the policies and
procedures of the Real Estate Review Committee, consistent with this Order.  The
proposed Charter shall ensure that the Real Estate Review Committee is provided
with adequate authority to require Bank management to produce such information,
documentation and reports as the Real Estate Review Committee deems appropriate
for its decisions.
 
(3) The Real Estate Review Committee shall be responsible for making the
following decisions, which shall be presented to the Board of Directors for
ratification at its next regular meeting:
 
      (a) All decisions relating to the purchase or lease of land or
improvements by the Bank, including negotiations with RE Principals and any
modifications to contracts or agreements for the purchase or lease of land or
improvements that amount to or involve a value of more than $100,000;
 
      (b) All decisions relating to any Coordinated Transactions that amount to
or involve a value of more than $100,000;
 
      (c) All decisions related to contracts and agreements with RE Service
Providers and RE Subcontractors that amount to or involve a value of more than
$100,000, including any modifications or change orders to such contracts or
agreements that amount to or involve a value of more than $100,000; and
 
      (d) All decisions related to approval of or amendment to budgets for all
types of Real Estate Related Activity, by individual projects, that amount to or
involve a value of more than $100,000.
 
 
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ARTICLE IV
Management Plan
 
(1) Within ten (10) days of the effective date of this Order, the Board of
Directors shall submit a proposed Management Plan acceptable to the OCC.  The
Management Plan shall include:
 
(a) The steps the Board shall take to address necessary or desirable changes to
the Bank’s management structure;
 
(b) The steps the Board shall take to address necessary or desirable changes to
the composition and membership of the Board and Board committees; and
 
(c) Specific timeframes to accomplish each such step.
 
(2) After receiving written notice that the OCC does not object to the proposed
Management Plan, the Board of Directors shall immediately implement and
thereafter adhere to the Management Plan.  The Board of Directors shall not make
any changes or modifications to the Management Plan without first receiving
written notice that the OCC does not object to such changes or modifications.

ARTICLE V
Compliance
 
(1) The Board of Directors shall be responsible for ensuring compliance with all
aspects of this Order.
 
(2) In each instance in which the Bank is required or permitted to submit a
proposal to the OCC, and each instance in which the Bank is required to obtain
notice that the OCC does not object prior to acting, any decision by the OCC
concerning such matters shall be within the sole discretion of the OCC.  Any
adjudication of OCC decisions shall be under the “abuse of discretion” standard.
 
(3) The Bank shall ensure that all applications, reports and other
communications to the OCC are accurate.  If the Bank determines that any
statement in an application, report or other communication was or has become
inaccurate, it shall promptly notify the OCC in writing.
 
(4) The Bank shall fully and timely comply with any OCC request for information,
and shall ensure that each Insider fully and timely complies with any OCC
request for information.
 
(5) The Bank shall comply with all applicable laws and regulations, including,
but not limited to, 12 U.S.C. § 29, 12 U.S.C. § 161, 12 C.F.R. Part 5 and 12
C.F.R. § 7.1000.
 
(6) The Bank shall implement and adhere to the recommendations contained in OCC
Bulletin OCC 2001-47.
 
(7) The Bank shall not take any action or make, nor permit any Bank officer,
director, employee or agent, to take any action or to make, any public statement
denying, directly or indirectly, the specific acts, omissions, or violations
referenced in this Order or otherwise creating the impression that this Order is
without factual basis, other than in defense to any charges made in any
administrative, criminal, or civil proceeding.

ARTICLE VI
Definitions
 
(1) The term “Coordinated Transaction” means any transaction involving the
sharing or division of costs or benefits with the Bank.
 
 
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(2) The term “Insider” means any Bank director or senior executive officer.  The
terms “director” and “senior executive officer” shall have the same meanings as
the definitions of those terms in 12 C.F.R. § 5.51.
 
(3) The term “Insider-Related Party” means Vernon W. Hill, II, John P.
Silvestri, Kenneth E. Lowther, Nickolas W. Jekogian, III, Shirley Hill, Robert
Hill, Vernon W. Hill, III, or any member of their Immediate Family; any member
of the Immediate Family of an Insider; and any entity in which an Insider,
Vernon W. Hill, II, John P. Silvestri, Kenneth E. Lowther, Nicholas W. Jekogian,
III, Shirley Hill, Robert Hill, Vernon W. Hill, III, or any member of their
Immediate Family is a partner, officer, director, employee, agent, shareholder,
member or holder of some other financial interest.  Notwithstanding anything in
this Order to the contrary, the term “Insider-Related Party” does not include
Commerce Bank/Harrisburg, N.A. or Pennsylvania Commerce Bancorp Inc.
 
(4) Any shareholder, member or holder of some other financial interest in an
entity that controls a second entity shall be considered a holder of a financial
interest in that second entity.  The term “control” has the same meaning as that
term is given in 12 U.S.C. § 371c.
 
(5) For purposes of this Order, the term "Immediate Family" means (a) any
spouse, parents, children, brothers, sisters, mother-in-law, father-in-law,
sons-in-law, daughters-in-law, brothers-in-law and sisters-in-law, and (b)
anyone (other than domestic employees) who shares the person’s home.
 
(6) The term “Investigative Service” means that entity which is described in
Article I of this Order.
 
(7) The term “Vendor” means any entity or individual that the Bank has
contracted with or otherwise retained, or is contemplating contracting with or
otherwise retaining, to provide any goods or services to the Bank, and is
expected to receive more than $100,000 from the Bank in a calendar year, or who
received more than $100,000 from the Bank in the immediately preceding calendar
year.  Provided, however, the term “Vendor” does not include entities or
individuals that are RE Principals, RE Principal Agents, RE Service Providers or
RE Subcontractors.
 
(8) The term “Real Estate Related Activity” means any transaction by or with the
Bank involving real estate or real estate improvements, whether relating to new
or existing facilities, and includes, but is not limited to, the purchase by or
lease to the Bank of land or real estate improvements, the sale by or lease from
the Bank of land or real estate improvements, real estate brokerage activity,
work relating to obtaining local approvals and permits, construction management,
site development, real estate consulting services, all aspects of construction
(e.g., carpentry, roofing, electricity, lighting, water, sewage, utilities,
painting, roads, driveways, sidewalks, parking lots), architecture, interior
design, interior decoration, landscaping, surveys, appraisal services, escrow
services, title services, real estate legal services, procurement and
maintenance of furniture or fixtures, space planning and management and
renovations.
 
(9) The term “RE Principal” means, with respect to any land or real estate
improvements, each entity that is the actual or proposed seller, buyer, lessor
or lessee, and any party to a Coordinated Transaction involving Real Estate
Related Activity.
 
(10) The term “RE Principal Agent” means each entity acting on behalf of a RE
Principal in a transaction, including, but not limited to, each real estate
agent or broker acting on behalf of a RE Principal, or expected to be paid by a
RE Principal in a transaction.
 
 
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(11) The term “RE Service Provider” means any entity, which, pursuant to a
contract, agreement or understanding with the Bank, performs or is proposed to
perform work relating to Real Estate Related Activity and is expected to receive
more than $100,000 from the Bank in a calendar year, or who received more than
$100,000 from the Bank in the immediately preceding calendar year.
 
(12) The term “RE Subcontractor” means any entity, which, pursuant to a
contract, agreement or understanding with a RE Service Provider relating to Real
Estate Related Activity, is expected to receive more than $100,000 in a calendar
year, or who received more than $100,000 in the immediately preceding calendar
year.
 
(13) The term “InterArch, Inc.” means InterArch, Inc., any other names by which
InterArch, Inc. is known, and all successor entities to InterArch, Inc.
 
(14) The term “Interstate Commercial Real Estate, Inc.” means Interstate
Commercial Real Estate, Inc., any other names by which Interstate Commercial
Real Estate, Inc. is known, and all successor entities to Interstate Commercial
Real Estate, Inc.
 
(15) The term “Transition Plan” means that plan described in Article II of this
Order.
 
(16) The term “Real Estate Review Committee” means that committee which is
described in Article III of this Order.
 
(17) The term “Charter” means that charter which is described in Article III of
this Order.
 
(18)  The term “Management Plan” means that plan which is described in Article
IV of this Order.
 
ARTICLE VII
Closing
 
(1) Although the Bank is required to submit certain proposed actions, policies
and procedures for the review by the OCC, and the OCC may provide written notice
to the Bank that it does not object to such proposed actions, policies or
procedures, the Board has the ultimate responsibility for proper and sound
management of the Bank.
 
(2) It is expressly and clearly understood that if at any time the Comptroller
deems it appropriate in fulfilling the responsibilities placed upon him by the
several laws of the United States of America to undertake any action affecting
the Bank, nothing in this Order shall in any way inhibit, estop, bar or
otherwise prevent the Comptroller from doing so.
 
(3) Any time limitations imposed by this Order shall begin to run from the
effective date of this Order, unless otherwise stated.  All submissions required
to be made pursuant to this Order shall be addressed to:
 
    Jennifer C. Kelly
    Deputy Comptroller
    Mid-Size Bank Supervision
    Office of the Comptroller of the Currency
    250 E. Street, S.W.
    Washington, D.C.  20219
 
(4) The provisions of this Order are effective upon issuance of this Order by
the Comptroller, through his authorized representative whose hand appears below,
and shall remain effective and enforceable, except to the extent that, and until
such time as, any provisions of this Order shall have been amended, suspended,
waived, or terminated in writing by the Comptroller.
 
 
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(5) In each instance in this Order in which the Bank or the Board is required to
ensure adherence to, and undertake to perform certain obligations of the Bank,
it is intended to mean that the Board shall:
 
 
(a) Authorize and adopt such actions on behalf of the Bank as may be necessary
for the Bank to perform its obligations and undertakings pursuant to the terms
of this Order;

   

 
(b) Require the timely reporting by Bank management of such actions directed by
the Board to be taken pursuant to the terms of this Order;

   

 
(c) Follow-up on any non-compliance with such actions in a timely and
appropriate manner; and

   

 
(d) Require corrective action be taken in a timely manner of any non-compliance
with such actions.

 
(6) This Order is intended to be, and shall be construed to be, a final order
issued pursuant to 12 U.S.C. § 1818(b), and expressly does not form, and may not
be construed to form, a contract binding on the Comptroller or the United
States.
 
(7) The terms of this Order, including this paragraph, are not subject to
amendment or modification by any extraneous expression, prior agreements or
prior arrangements between the parties, whether oral or written.
 
IT IS SO ORDERED, this __ day of June, 2007.

Timothy W. Long
Senior Deputy Comptroller
Mid-Size/Community Bank Supervision
 
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