Exhibit
      10.39





**AMENDED**


**AND**


**RESTATED**


**EMPLOYMENT
      AGREEMENT**








**COMMERCE
      BANCORP, INC.**




**AND**




**VERNON
      W. HILL, II**

























**EFFECTIVE
      DATE JANUARY 1, 2006**


























**AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT**


**TABLE
      OF CONTENTS**





BACKGROUND
              
              11.
              Employment
                  and Term of Employment.
              21.1
              Five-Year
                  Term
              21.2
              Conditions
                  to Term.
              2(a)
              Automatic
                  Renewal and Extension.
              2(b)
              Termination
                  at Anniversary.
              2(c)
              Termination
                  for Other Reasons.
              21.3
              “Term“
                  Definition.
              21.4
              “Anniversary
                  Date“ Definition
              22.
              Services
                  and Duties.
              32.1
              Offices
              32.2
              Duties
              3(a)
              Full
                  Time and Best Efforts.
              3(b)
              Outside
                  Activities
              33.
              Compensation.
              33.1
              Compensation
                  Definition
              33.2
              Base
                  Salary
              3(a)
              Payment.
              3(b)
              Adjustment
              43.3
              Plans
                  and Programs
              4(a)
              Pro-Ration
              43.4
              Year
              43.5
              Compensation
                  Pro-Ration
              44.
              Fringe
                  and Other Benefits
              44.1
              Generally
                  Available Benefits
              44.2
              Other
                  Benefits
              44.3
              Expenses
              44.4
              Indemnity
              4
   i
  
  5.
              Disability
                  and Death Compensation.
              55.1
              Permanent
                  Disability
              55.2
              Disability
                  Compensation
              5(a)
              Monthly
                  Disability Payments
              5(b)
              Disability
                  Benefits
              5(c)
              Partial
                  Disability Compensation.
              55.3
              Death
                  Compensation
              6(a)
              Termination
                  of Employment and Regular Compensation.
              6(b)
              Death
                  Benefit.
              6(c)
              Life
                  Insurance.
              66.
              Termination
                  “For Cause” by Commerce.
              66.1
              “For
                  Cause” Termination
              6(a)
              Prior
                  Written Notice
              6(b)
              Failure
                  to Cure
              66.2
              “For
                  Cause” Definition
              6(a)
              Conviction
                  or Plea
              6(b)
              Willful
                  Violation
              66.3
              Compensation
                  on Termination “For Cause”
              77.
              Termination
                  “Without Cause” by Commerce.
              77.1
              “Without
                  Cause” Termination
              77.2
              “Without
                  Cause” Definition
              77.3
              Compensation
                  for Termination “Without Cause”
              7(a)
              Compensation
                  through Termination Date
              7(b)
              “Without
                  Cause Severance Payment”
              78.
              Termination
                  “For Good Reason” by Hill.
              88.1
              “Good
                  Reason” Termination
              8(a)
              Prior
                  Written Notice
              8(b)
              Failure
                  to Cure
              88.2
              Compensation
                  for “Good Reason” Termination
              8(a)
              Compensation
                  through Termination Date
              8(b)
              “Good
                  Reason Severance Payment”
              8
   ii
  
  9.
              “Change
                  in Control” and “Good Reason”
              89.1
              Change
                  in Control Definition
              8(a)
              Board
                  Change
              8(b)
              Beneficial
                  Ownership Change.
              99.2
              Good
                  Reason Definition
              9(a)
              Both
                  a Change in Control and Other Reductions
              9(b)
              Material
                  Breaches
              10(c)
              Non-Assumption
              1010.
              Additional
                  Payments/Excise Taxes.
              1010.1
              Gross-Up
                  Payment
              10(a)
              Tax
                  is Determined Due
              10(b)
              Interest
                  or Penalties are Incurred
              1010.2
              Gross-Up
                  Payment Determination
              11(a)
              Cooperation
              11(b)
              Calculations
              11(c)
              Fees
                  and Expenses.
              11(d)
              Payment
                  Timing
              11(e)
              Binding
                  Effect
              11(f)
              Possible
                  Underpayment
              1110.3
              Notice
                  of IRS Claim
              12(a)
              Time
                  and Content of Notice
              12(b)
              Payment
                  Timing
              12(c)
              Contest
                  Notice
              12(d)
              Other
                  Contest Terms
              1310.4
              Refund
              14(a)
              Denial
                  of Refund
              1411.
              Other
                  Rights for Termination “Without Cause” or “For Good
                  Reason”
              1411.1
              Other
                  Benefits
              14(a)
              Insurance
              1411.2
              Plans
                  and Program Rights
              1411.3
              No
                  Mitigation by Hill
              1412.
              Source
                  of Payment and Timing.
              1512.1
              Source
              1512.2
              Time
              15
   iii
  
  13.
              Interest
              1514.
              Reimbursement
                  of Enforcement Expenses
              1514.1
              Failure
                  to Pay
              1514.2
              Failure
                  to Provide
              1514.3
              Further
                  Conditions for Reimbursement
              1515.
              Confidential
                  Information and Non-Competition.
              1615.1
              Confidentiality
              16(a)
              Company
                  Information Definition
              16(b)
              Non-Disclosure
                  and Non-Use
              1615.2
              Commerce’s
                  Interests
              1615.3
              Non-Competition
                  and Time of Restrictions.
              16(a)
              Non-Competition
              16(b)
              Time
                  of Restrictions
              1715.4
              Remedies
              17(a)
              No
                  Defense or Bar
              17(b)
              Payments
                  After Breach
              1815.5
              Enforceability
              1815.6
              Commerce
                  Definition
              1816.
              Successions.
              1816.1
              Successors/Assigns/Heirs
              1816.2
              Death
              1916.3
              Combinations
              1917.
              Notices.
              1917.1
              Form
                  of Notice
              1917.2
              Place
                  of Notice
              1918.
              General
                  Provisions.
              2018.1
              Entire
                  Agreement
              2018.2
              Amendments,
                  Waivers and Termination
              2018.3
              Alternate
                  Payments
              2018.4
              Benefits
                  and Insurance
              2018.5
              “Person”
                  Definition.
              2018.6
              Counterparts
              2018.7
              No
                  Waiver
              2118.8
              Assignment
              2118.9
              New
                  Jersey Jurisdiction
              21(a)
              Courts
                  in Camden, NJ
              21(b)
              Service
                  of Process
              21
   iv
  
  18.10
              Headings.
              2118.11
              Notice
                  of Dispute and Cure
              2118.12
              New
                  Jersey Law
              22SIGNATURES
              
              22










v












**AMENDED
      AND RESTATED EMPLOYMENT AGREEMENT**




This
      Amended and Restated Employment Agreement (“ ***Agreement*** ”)
      is
      dated effective as of January 1, 2006, by and between:





Ø
            **COMMERCE
                BANCORP, INC.**(“***Commerce***”),




a
      New
      Jersey business corporation,




and




Ø
            **VERNON
                W. HILL, II**(“***Hill***”).







**BACKGROUND**





A.  Hill
      is
      the Chairman, President and Chief Executive Officer (“ ***CEO*** ”)
      of
      Commerce and of Commerce Bank, N.A. (“ ***CB*** ”),
      a
      national banking association and a wholly-owned subsidiary of Commerce.




B.  Hill
      and
      Commerce are parties to an Employment Agreement dated January 1, 1992
      (“ ***Prior
      Agreement*** ”)
      and
      wish to amend and restate it to reflect current circumstances, including
      reduction in Hill’s base salary and to make his total compensation more
      incentive-based.




C.  The
      Board
      of Directors of Commerce (the “ ***Board*** ”)
      has
      determined that the continued and future services of Hill will be of value
      to
      Commerce, CB and Commerce’s other present and future subsidiaries, and has
      authorized this Agreement.




D.  Accordingly,
      the Board wishes to have Hill’s services available to Commerce for at least five
      (5) years and to provide supplemental benefits to Hill should his employment
      with Commerce terminate under certain circumstances or should he die or become
      disabled before the termination of this Agreement.









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**NOW** , **THEREFORE** ,
      in
      consideration of the mutual covenants and agreements contained here, and
      intending to be legally bound, Commerce and Hill agree as follows:





**1.**  **Employment
      and Term of Employment.**




1.1  **Five-Year
      Term** .
      Commerce offers, and Hill accepts employment on all the terms and conditions
      of
      this Agreement, for a term of *five
      (5) years* beginning on the date stated above.




1.2  **Conditions
      to Term** .  This
      five-year term is subject to:




(a)  ***Automatic
      Renewal and Extension*** .
      On each
      Anniversary Date, this Agreement and Hill’s employment shall automatically be
      renewed and extended (on the same terms and conditions) for a new five-year
      term *unless* written
      notice of Termination at Anniversary is given pursuant to Section 1.2(b)
      below.




(b)  ***Termination
      at Anniversary*** .
      Either
      Commerce or Hill may terminate this Agreement on any Anniversary Date by giving
      to the other party written notice of termination no later than *November
      1* ***before*** *any
      such Anniversary Date* .
      If such
      prior notice is given to either party, then the Term will have *four
      (4) years remaining* ***after*** *the
      applicable Anniversary Date* ,
      subject
      to the terms and conditions of this Agreement.




(c)  ***Termination
      for Other Reasons*** . **** This
      Agreement may be terminated on Death, “For Cause”, “Without Cause”, or for “Good
      Reason” as described in Sections 5-8 below.





1.3  **"Term"**  **Definition** .
      “ ***Term*** ”
means
      the original five-year employment period, as well as any renewed or extended
      periods as provided for in this Agreement.




1.4   **“Anniversary
      Date"**  **Definition** .
      “ ***Anniversary
      Date*** ”
means *January
      1, 2007* ,
      as well
      as *each
      annual January 1 thereafter* if this
      Agreement is automatically renewed or extended.















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**2.
      Services and Duties.**




2.1  **Offices** .
      During
      the Term, Hill shall be employed as *Chairman,
      President and CEO of Commerce* .
      Subject
      to the approval of the CB Board of Directors, during the Term, Hill shall also
      serve as the *Chairman
      of the Board, President and CEO of CB* .
      Subject
      to the approval of the respective Boards of Directors, during the Term, Hill
      shall also serve as an officer and/or director of such other subsidiaries of
      Commerce as such Board of Directors, with the consent of Hill, shall
      designate.




2.2  **Duties** .
      As the
      Chairman of the Board, President and CEO of Commerce, Hill shall have primary
      responsibility for all operations of Commerce and its subsidiaries subject
      to
      the oversight of the respective Boards of Directors, provided that such duties
      are consistent with his present duties.




(a)  ***Full
      Time and Best Efforts*** .
      Hill
      accepts such duties, will devote his full time and best efforts to the business
      and affairs of Commerce and its subsidiaries, and will use his best efforts
      to
      promote the interests of Commerce and its subsidiaries.




(b)  ***Outside
      Activities*** .
      Hill
      also has participated in and shall have discretion to participate in other
      outside activities. Such outside activities are expressly permitted, and shall
      be in addition to and notwithstanding Hill’s obligation of full time and best
      efforts as described in Section 2.2(a).







**3.**  **Compensation.**




3.1  **Compensation
      Definition** .
      “ ***Compensation*** ”
means
      the sum of the highest annual rate of base salary (described in Section 3.2)
      and
      highest cash bonus (described in Section 3.3) paid to Hill during the most
      recent twenty-four (24) months of the Term.




3.2  **Base
      Salary** .
      Commerce shall pay Hill “ ***base
      salary*** ”
at
      the
      rate of not less than *$1,000,000
      per year* for all
      services to be rendered by him under this Agreement and for all positions held
      by him during the Term.




(a)  ***Payment*** .
      Base
      salary is payable at regular intervals in accord with Commerce’s normal payroll
      practices now or later in effect. ****












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(b)
      ***Adjustment*** .
      Base
      salary is subject to an annual review and such upward adjustments as may be
      deemed appropriate by the Board or a Board-designated Committee. The Board
      or
      such Committee may recommend an increase in base salary for Hill, but shall
      have
      no obligation to do so. Base salary may not be decreased without Hill’s written
      consent.




3.3  **Plans
      and Programs** .
      During
      the Term, Hill shall be entitled to participate in any cash or other bonus
      programs, incentive compensation plans, stock option plans or similar benefit
      or
      compensation programs now or later in effect that are generally made available
      to executive officers of Commerce.




(a)  ***Pro-Ration*** .
      For any
      period less than a full year during the Term, Hill shall receive an amount
      equal
      to the prorated portion of any payment pursuant to such plan or
      program.




3.4  **Year** .
      A
“year” commences on January 1, 2006, and on January 1 of each subsequent
      calendar year.




3.5  **Compensation
      Pro-Ration** .  Compensation
      for a portion of a year shall be pro-rated.





**4.**  **Fringe
      and Other Benefits** .
      During
      the Term, Hill shall also be entitled to.




4.1  **Generally
      Available Benefits** .
      Participate in all fringe benefits as then in effect that are generally
      available to Commerce’s executive officers including, without limitation,
      medical and hospitalization coverage, life insurance coverage and disability
      coverage, and Supplemental Executive Retirement Plan (“SERP”)
      coverage ;




4.2  **Other
      Benefits** .
      Such
      other fringe benefits as the Board, or a Board-designated Committee, shall
      deem
      appropriate; provided that such benefits are consistent with those that he
      currently enjoys including, without limitation, use of an automobile, paid
      holidays and vacations, and club memberships ;




4.3  **Expenses** .
      Reimbursement by Commerce for all expenses incurred by Hill which Commerce
      determines to be reasonable and necessary (in accord with its normal
      reimbursement practices now or later in effect) for Hill to carry out his duties
      under this Agreement ;
      and




4.4  **Indemnity** .
      Indemnification by Commerce to the fullest extent permitted by governing law
      and
      in accord with Commerce’s bylaws and policies, against all claims concerning
      Hill’s status as an officer, director, employee, or agent of
      Commerce.







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**5.**  **Disability
      and Death Compensation.**




5.1  **Permanent
      Disability** .
      Hill
      shall be deemed to have become “ ***permanently
      disabled*** ”
upon
      his failure to render services of the character contemplated by this Agreement,
      because of his physical or mental illness or other incapacity beyond his
      control, other than his death, for a continuous period of 6 months, or for
      shorter periods aggregating more than 9 months in any 18 consecutive
      months.




5.2  **Disability
      Compensation** .
      Commerce shall compensate Hill for the balance of the Term at *a
      rate equal to 70% of his Compensation* at the
      time Hill becomes permanently disabled while employed during the
      Term.




(a)  ***Monthly
      Disability Payments*** .
      Commerce shall make the payments due under this Section 5.2 on the first day
      of
      each month, starting with the first day of the month following the month in
      which Hill is deemed to be permanently disabled, in an amount equal to *1/12
      of 70% of Hill’s Compensation* at the
      time he is deemed to be permanently disabled.




(i) *Insurance
      Reductions* .
      Monthly
      Disability Payments shall be reduced each month, however, by the amount of
      any
      disability payments made to Hill under any Commerce-sponsored disability
      insurance plan. The amount of the reduction under the preceding sentence shall
      be computed as if Hill had elected to receive monthly payments of disability
      benefits (regardless of the actual payment frequency).




(b)  ***Disability
      Benefits*** .
      After
      becoming permanently disabled as provided in this Section 5, Hill shall
      nonetheless continue until the end of the Term to be entitled to receive at
      Commerce’s expense such group hospitalization coverage, life insurance coverage
      and disability coverage as is generally made available from time to time to
      executive officers of Commerce, if and to the extent permitted by the respective
      insurers of such coverage.




(c)  ***Partial
      Disability Compensation*** .
      Hill
      shall continue to receive his full Compensation if he is partially disabled
      and
      until such time as Hill is deemed to be permanently disabled.












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5.3
      **Death Compensation** .
      If Hill
      dies during the Term, then:




(a)  ***Termination
      of Employment and Regular Compensation*** .
      Hill’s
      employment and rights to Compensation described above shall automatically
      terminate at the close of the calendar week in which death occurs;
      and




(b)  ***Death
      Benefit*** .
      Commerce shall pay to such person as Hill shall designate in a notice filed
      with
      Commerce or, if no such person shall be designated, to his estate, in addition
      to his full Compensation due under Section 5.3(a), a *lump
      sum “* ***Death
      Benefit*** *”* in an
      amount equal to *the
      product of three (3) times Hill’s Compensation at the time of his
      death* .




(c)  ***Life
      Insurance*** .
      The
      foregoing “Death Benefit” shall be in addition to any amount payable under any
      group life insurance program maintained by Commerce or CB.





**6.**  **Termination
      “For Cause” by Commerce.**




6.1  **** **“For
      Cause” Termination** .
      Commerce shall have the right at any time to terminate Hill’s employment
“ ***For
      Cause*** ”
only
      if:




(a)  ***Prior
      Written Notice*** .
      Commerce shall give Hill not less than thirty (30) days prior written notice
      of
      its intention to terminate his employment specifying in detail the reason(s)
      for
      such termination and the date of termination; and




(b)  ***Failure
      to Cure*** .
      After
      receipt of such notice, Hill fails to cure, cease or remedy the reason(s) for
      such termination before the date of termination stated in such
      notice.




6.2  **“For
      Cause” Definition** .
      “ ***For
      Cause*** ”
means
      only the following at any time during the Term:




(a)  ***Conviction
      or Plea*** .
      If Hill
      is convicted of or enters a plea of guilty or *nolo
      contendre* to, a
      felony, a crime of falsehood or a crime involving fraud, moral turpitude or
      dishonesty; or




(b)  ***Willful
      Violation*** .
      If Hill
      willfully violates any of the terms or provisions of this Agreement, including,
      without limitation:






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(i)
      Hill’s willful failure to perform his duties in Section 2.2 above and this
      Agreement or the Board’s instructions after written notice of such instructions
      (other than any such failure resulting from Hill’s incapacity due to illness or
      disability); or




(ii)
      Hill
      engages in any conduct materially harmful to Commerce’s business.




6.3  **Compensation
      on Termination “For Cause”** .
      Commerce shall pay Hill *any
      prorated portion*  *of*  *his
      full Compensation that is then owed* through
      the date of termination if Hill’s employment shall terminate “For Cause” and *Commerce
      shall have no further obligations to Hill under this Agreement* other
      than to pay Hill such other plan, program, or other benefits as may be due
      Hill
      pursuant to Sections 3.3 and 4 above.





**7.**  **Termination
      “Without Cause” by Commerce.** ****




7.1  **“Without
      Cause” Termination** .
      Commerce shall have the right to terminate Hill’s employment “ ***Without
      Cause*** ”
by
      giving not less than thirty (30) days prior written notice of its intention
      to
      terminate his employment “Without Cause” pursuant to this Section 7.




7.2  **“Without
      Cause” Definition** .
      Termination “ ***Without
      Cause*** ”
means
      any reason other than by either Termination “For Cause” (Section 6 above), or
      Termination at Anniversary (Section 1.2(b) above).




7.3  **Compensation
      for Termination “Without Cause”** .
      Commerce shall pay Hill the following if Commerce terminates Hill’s employment
“Without Cause”:




(a)  ***Compensation
      through Termination Date*** .
      Any
      pro-rated portion of his full Compensation through the date of termination;
      and




(b)  “ ***Without
      Cause Severance Payment*** ”.
      A lump
      sum severance payment (the “ ***Without
      Cause***  ***Severance
      Payment*** ”)
      in
      lieu of any further Compensation payments to Hill after the date of
      termination.




(i) ** “ ***Without
      Cause Severance Payment*** ”
means
      the sum of Hill’s full Compensation that would still be remaining until the end
      of the then Term had Hill continued to be employed by Commerce to the end of
      the
      then Term.








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**8.**  **Termination
      “For Good Reason” by Hill.**




8.1  **“Good
      Reason” Termination** .
      Hill
      shall have the right to terminate his employment “ ***For***  ***Good
      Reason*** ”
(as
      defined in Section 9.2 below) if:




(a)  ***Prior
      Written Notice*** .
      Hill
      shall first give Commerce not less than thirty (30) days prior written notice
      of
      his intention to terminate his employment specifying the reason(s) for such
      termination and the date of termination; and




(b)  ***Failure
      to Cure*** .
      After
      receipt of such notice, if Commerce fails to cure, cease or remedy the reason(s)
      for such termination before the date of termination stated in such
      notice.




8.2  **Compensation
      for “Good Reason” Termination** .
      Commerce shall pay to Hill the following if Hill terminates his employment
      “ ***For***  ***Good
      Reason*** ”
      (defined in Section 9.2):




(a)  ***Compensation
      through Termination Date*** .
      Hill’s
      full Compensation through the termination date; and




(b)  “ ***Good
      Reason Severance Payment*** ” .
      A lump
      sum “ ***Good
      Reason***  ***Severance
      Payment*** ”
in
      lieu
      of any further Compensation payments to Hill after the date of
      termination.




(i)
      “ *Good
      Reason Severance Payment* ”
means
      a
      lump sum equal to four (4) times Hill’s Compensation immediately preceding such
      termination.







**9.**  **“Change
      in Control” and “Good Reason”.**




9.1  **Change
      in Control Definition** .
      “ ***Change
      in Control*** ”
or
      “ ***Change
      of Control*** ”
means
      a
      change in control of Commerce or CB of a nature that would be required to be
      reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
      under the Securities Exchange Act of 1934, as amended (the “ ***Exchange
      Act*** ”),
      or
      any successor provisions under the Exchange Act, whether or not Commerce or
      CB
      is subject to such reporting requirement; *provided
      that* ,
      without
      limitation, such a change in control shall have been deemed to occur
      conclusively when any of the following events shall have occurred without Hill’s
      prior written consent:




(a)  ***Board
      Change*** .
      Within
      any period of two (2) consecutive years during the Term, there is a change
      in at
      least a majority of the members of the Board or the addition of five or more
      new
      members to the Board, *unless* such
      change or addition occurs with the affirmative vote in writing of Hill in his
      capacity as a director or a shareholder; or






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(b)  ***Beneficial
      Ownership Change*** .
      A
      Person or group acting in concert as described in Section 13(d)(2) of the
      Exchange Act holds or acquires beneficial ownership within the meaning of Rule
      13d-3 promulgated under the Exchange Act of a number of common shares of
      Commerce which constitutes either:




(i)  more
      than
      fifty (50%) percent of the shares which voted in the election of directors
      of
      Commerce at the shareholders’ meeting immediately preceding such determination;
      or




(ii)  more
      than
      thirty (30%) percent of Commerce’s outstanding common shares. For this Section
      9.1(b)(ii), unexercised warrants or options or unconverted nonvoting securities
      shall count as constituting beneficial ownership of Commerce’s common shares
      into which the warrants or options are exercisable or the nonvoting convertible
      securities are convertible, notwithstanding anything to the contrary contained
      in Rule 13d-3 of the Exchange Act.




9.2  **Good
      Reason Definition** .
      “ ***Good
      Reason*** ”
      means:




(a)  ***Both
      a Change in Control and Other Reductions*** .
      Both a
“ ***change
      in control*** ”
of
      Commerce (as defined in Section 9.1 above); **and** if any
      of the following “ ***Other
      Reductions*** ”
occur *within
      three (3) years after such change in control* without
      Hill’s prior written consent:




(i) *Reduction
      of Authority* .
      The
      nature and scope of Hill’s authority with Commerce or a surviving or acquiring
      Person are materially reduced to a level below that which he enjoys when the
      change in control occurs;




(ii) *Materially
      Inconsistent Duties* .
      The
      duties and responsibilities assigned to Hill are materially inconsistent with
      that which he enjoys when the change in control occurs;




(iii) *Materially
      Reduced Benefits* .
      The
      fringe benefits which Commerce provides Hill are materially reduced to a level
      below that which he enjoys when the change in control occurs;




(iv) *Reduction
      of Position or Title* .
      Hill’s
      position or title with Commerce or the surviving or acquiring Person is reduced
      from his current position or title with Commerce when the change in control
      occurs; or











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(v) *Transfer
      or Offices and Relocation* .
      Any
      relocation or transfer of Commerce’s principal executive offices to a location
      more than fifty (50) miles from Hill’s principal residence on the date when the
      change in control occurs; or, if Hill is required, without his prior written
      consent, to relocate more than fifty (50) miles from his principal residence
      when the change in control occurs.




(b)  ***Material
      Breaches*** .
      Commerce materially breaches this Agreement; or




(c)  ***Non-Assumption*** .
      There
      is a failure or refusal of any successor to Commerce to assume all duties and
      obligations of Commerce under this Agreement.





**10.**  **Additional
      Payments/Excise Taxes.**




10.1  **Gross-Up
      Payment** .
      Notwithstanding anything in this Agreement to the contrary or any termination
      of
      this Agreement, *Hill
      shall be entitled to receive an additional payment* (a
“ ***Gross-Up
      Payment*** ”)
      if:




(a)  ***Tax
      is Determined Due*** .
      It
      shall be determined that any payment or distribution or benefit made or provided
      by Commerce or its affiliates to or for the benefit of Hill, whether pursuant
      to
      this Agreement or some other plan or otherwise, including income recognized
      by
      the exercise of options to buy Commerce stock, and determined without regard
      to
      any additional payments required under this Section 10 (a “ ***Payment*** ”),
      would
      be an excess Parachute Payment that is not deductible by Commerce for federal
      income tax purposes and subject to an excise tax; or




(b)  ***Interest
      or Penalties are Incurred*** .
      Any
      interest or penalties are incurred by Hill concerning such excise
      tax.




(i) ****** *Excise
      Tax Definition* . ****** “ ***Excise
      Tax*** ”
means
      both: any excise tax imposed on any Compensation payments due to Hill -
      including Death Benefit, Compensation for Termination “Without Cause” or “For
      Good Reason” under Sections 5.3(b), 7.3 or 8.2 above - because of Section 280G
      and Section 4999 of the Internal Revenue Code of 1986 as amended (the
“ ***Code*** ”)
      or any
      successor Code provision, or any state or local law; and interest or penalties
      incurred concerning such excise tax.











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******(ii) *Gross-Up
      Payment Definition* .
      “ ***Gross-Up
      Payment*** ”
means
      any amount of additional payments to Hill that are needed so that Hill incurs
      no
      out-of-pocket expense for Excise Taxes, and to place Hill in the same position
      after all federal and state taxes - including all income tax, Excise Tax,
      employment or other tax or any penalties and interest - that Hill would have
      been in if: (a) Hill did not have to pay the Excise Tax; (b) the Excise Tax
      did
      not apply for reasons other than Sections 280G and 4999 of the Code; and (c)
      Hill did not have to pay any interest or penalty charge for the imposition
      of
      any portion of the Excise Tax.




10.2  **Gross-Up
      Payment Determination** .
      All
      determinations required to be made under this Section 10, including whether
      and
      when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the
      calculations under Section 280G and 4999 of the Code, and the assumptions to
      be
      used in arriving at such determination, shall be made by Commerce’s independent
      auditor or another nationally recognized accounting firm chosen by the auditor
      with the consent of Commerce and Hill (the “ ***Accounting
      Firm*** ”).




(a)  ***Cooperation*** .
      Commerce and Hill shall cooperate with Accounting Firm and provide information
      needed for the determination.




(b)  ***Calculations*** .
      Accounting Firm shall provide detailed supporting calculations both to Commerce
      and Hill *within
      fifteen (15) business days* of the
      receipt of notice from Hill that there has been a Payment or receipt of Notice
      of IRS claim under Section 10.3, or such earlier time as is requested by
      Commerce.




(c)  ***Fees
      and Expenses*** .
      Commerce shall pay all fees and expenses of the Accounting Firm for services
      for
      this determination.




(d)  ***Payment
      Timing*** .
      Commerce shall pay any Gross-Up Payment, as determined pursuant to this Section
      10, to Hill *within
      five (5) days* of the
      receipt of the Accounting Firm’s determination.




(e)  ***Binding
      Effect*** .
      Any
      determination by the Accounting Firm shall be binding upon Commerce and
      Hill.




(f)  ***Possible
      Underpayment*** .
      As a
      result of the uncertainty in the application of Section 4999 of the Code at
      the
      time of the initial determination by the Accounting Firm, it is possible that
      Commerce may not make Gross-Up Payments that should be made (“ ***Underpayment*** ”).











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(i) *Determination* .
      If
      Commerce exhausts its remedies pursuant to Section 10.3 and Hill is later
      required, directly or indirectly, to make a payment of any Excise Tax, then
      the
      Accounting Firm shall determine the amount of the Underpayment that has
      occurred. Such amount shall be sufficient to put Hill in the same position
      after
      all federal and state taxes - including all income tax, Excise Taxes,
      employment, or other taxes, and all penalties and interest on such taxes -
      as
      Hill would have been in if there had been no Underpayment and Commerce had
      made
      appropriate Gross-Up Payment in the first instance.




(ii) *Payment* .
      Commerce shall promptly pay to Hill or for the benefit of Hill any amounts
      determined by Accounting Firm to be needed to satisfy any
      Underpayment.




10.3  **Notice
      of IRS Claim** .
      Hill
      shall notify Commerce in writing of any claim by the Internal Revenue Service
      (“ ***IRS*** ”)
      that,
      if successful, would require the payment by Commerce of the Gross-Up
      Payment.




(a)  ***Time
      and Content of Notice*** .
      Such
      notification shall be given as soon as practicable but not later than *ten
      (10) business days* after
      Hill is informed in writing of such claim and shall apprise Commerce of the
      nature of such claim and the date on which such claim is requested to be
      paid.




(b)  ***Payment
      Timing*** .
      Hill
      shall not pay such IRS claim until thirty (30) days after the date on which
      he
      gives such notice to Commerce (or such shorter period ending on the date that
      any payment of taxes on such claim is due).




(c)  ***Contest
      Notice*** .
      If
      Commerce notifies Hill in writing before the expiration of such thirty (30)
      day
      period that it desires to contest such IRS claim, then Hill shall:




(i)
      Give
      Commerce any information reasonably requested by Commerce relating to such
      IRS
      claim;




(ii)
      Take
      such action in connection with contesting such IRS claim as Commerce shall
      reasonably request in writing, including, without limitation, accepting legal
      representation for such IRS claim by an attorney reasonably selected by
      Commerce;




(iii)
      Cooperate with Commerce in good faith in order to effectively contest such
      IRS
      claim; and




(iv)
      Permit Commerce to participate in any proceedings on such IRS claim.






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(d)  ***Other
      Contest Terms*** .
      Without
      limitation on the foregoing provisions of this Section 10.3:




(i)
      Commerce shall bear and pay directly all costs and expenses (including
      additional interest and penalties) incurred in connection with such contest
      and
      shall indemnify and hold Hill harmless, on an after-tax basis, for any Excise
      Tax or income tax (including interest and penalties with respect thereto)
      imposed as a result of such representation and payment of costs and expenses.




(ii)
      Commerce shall control all proceedings taken in connection with such contest
      and, at its sole option, may pursue or forgo any and all administrative appeals,
      proceedings, hearing and conferences with the taxing authority in respect of
      such claim and may, at its sole option, either direct Hill to pay the tax
      claimed and sue for a refund or contest the IRS claim in any permissible manner;




(iii)
      Hill agrees to prosecute such contest to a determination before any
      administrative tribunal, in a court of initial jurisdiction and in one or more
      appellate courts, as Commerce shall determine;




(iv)
      If
      Commerce directs Hill to pay such IRS claim and sue for a refund, then Commerce
      shall advance the amount of such payment to Hill on an interest-free basis
      and
      shall indemnify and hold Hill harmless, on an after-tax basis, from any Excise
      Tax or income tax (including interest penalties) imposed regarding such advance
      or regarding any imputed income with respect to such advance;




(v)
      Any
      extension of the statute of limitations relating to payment of taxes for the
      taxable year of Hill with respect to which such contested amount is claimed
      to
      be due is limited solely to such contested amount.




(vi)
      Commerce’s control of the contest shall be limited to issues with respect to
      which a Gross-Up Payment would be payable under this Section 10 and Hill shall
      be entitled to settle or contest, as the case may be, any other issue raised
      by
      the Internal Revenue Service or any other taxing authority.












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10.4**Refund** .
      Hill
      shall [subject to Commerce’s complying with the requirements of Section 10.3]
      promptly pay to Commerce the amount of any refund actually received, including
      any interest paid or credited after applicable taxes if, after the receipt
      by
      Hill of an amount advanced by Commerce pursuant to Section 10.3, Hill becomes
      entitled to receive any refund for such IRS claim.




(a)   ***Denial
      of Refund*** .
      If,
      after the receipt by Hill of an amount advanced by Commerce pursuant to Section
      10.3, a determination is made that Hill shall not be entitled to any refund
      for
      such IRS claim and Commerce does not notify Hill in writing of its intent to
      contest such denial of refund before the expiration of thirty (30) days after
      such determination, then such advance shall be forgiven and shall not be
      required to be repaid and the amount of such advance shall offset the amount
      of
      Gross-Up Payment required to be paid.





**11.**  **Other
      Rights for Termination “Without Cause” or “For Good
      Reason”.**




11.1  **Other
      Benefits** .
      Hill
      shall be entitled to the following from Commerce, in addition to the other
      Compensation stated in either Section 7.3 or 8.2 above, if Hill’s employment is
      terminated either “ ***Without
      Cause*** ”
or
      “ ***For
      Good Reason*** ”
as
      set
      forth in either Section 7.1 or 8.1 above:




(a)  ***Insurance*** .
      Following the date of termination, Hill shall be entitled to participate in
      all
      Commerce medical, disability, hospitalization and life insurance benefits for
      a
      period of three (3) years:




(i) *Exception* .
      If Hill
      accepts subsequent employment during the three-year period following the date
      of
      termination, then continuation of any medical, disability, hospitalization
      and
      life insurance benefits will be offset by coverages provided through Hill’s
      subsequent employer.




(b)  ***Options
      Vest*** .
      Any
      outstanding options held by Hill to purchase Commerce stock shall vest as of
      the
      date of termination of Hill’s employment.




11.2  **Plans
      and Program Rights** .
      Nothing
      in this Agreement shall affect or have any bearing on Hill’s entitlement to
      other benefits under any plan or program providing benefits by reason of
      termination of employment.




11.3  **No
      Mitigation by Hill** .
      Hill
      shall not be required, under any circumstance including provision in this
      Agreement, to mitigate the amount of any Compensation or payment provided for
      in
      this Agreement by seeking other employment.







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            22








**12.**  **Source
      of Payment and Timing.**




12.1  **Source** .
      All
      payments under this Agreement shall be paid in cash from the general funds
      of
      Commerce.




(a)  No
      special or separate fund shall be required to be established and Hill shall
      have
      no right, title or interest whatsoever in or to any investment which Commerce
      may make to aid Commerce in meeting its obligations here, *except* to the
      extent that Commerce shall, in its sole and absolute discretion, choose to
      designate any of its rights it may have under one or more life insurance
      policies it may obtain to cover any of its obligations under this
      Agreement.




(b)  Nothing
      in this Agreement, and no action taken pursuant to it,  shall
      create or be construed to create a trust of any kind or fiduciary relationship
      between Commerce and Hill or any other Person.




12.2  **Time** .
      All
      payments due Hill under Sections 5.2, 6.3, 7.3 or 8.2 above shall be made not
      later than the thirtieth (30 th )
      day
      following the date of termination of employment.





**13.**  **Interest.** Hill
      shall be entitled (in addition to his other rights and remedies) to interest
      on
      past due amounts at a rate equal to two percentage points (2%) above the prime
      rate charged from time to time by CB if any benefits due to Hill are not paid
      when due with such interest to commence on the date a benefit was
      due.





**14.**  **Reimbursement
      of Enforcement Expenses.** Hill
      shall be entitled to full reimbursement from Commerce for all costs and expenses
      (including reasonable attorneys’ fees, costs, and interest as stated in Section
      13) incurred by Hill in enforcing his rights under this Agreement if the
      following exist:




14.1  **Failure
      to Pay** .
      Commerce fails to pay or provide Hill any of the amounts due him under this
      Agreement; or




14.2  **Failure
      to Provide** .
      Commerce fails to provide Hill with any of the other benefits due him under
      this
      Agreement; and




14.3  **Further
      Conditions for Reimbursement** . *Provided
      that:*




(a)   Commerce
      does not cure any such failure within thirty (30) days after having received
      written notice from Hill of such failure; and












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(b)
      there
      is an adjudication that Hill’s action in enforcing his rights are not
      frivolous.





**15.**  **Confidential
      Information and Non-Competition.**




15.1  **Confidentiality** .




(a)  ***Company
      Information Definition*** .
      “ ***Company
      Information*** ”
means
      all data relating to Commerce’s business that is not generally published or
      available to the public, including writings, equipment, processes, drawings,
      strategic plans, reports, manuals, inventions, records, financial information,
      business plans, customer lists, the identity of and other facts concerning
      prospective customers, inventory lists, arrangements with suppliers and
      customers, computer programs, or other materials embodying trade secrets,
      customer product information, or technical or business information of
      Commerce.




(b)  ***Non-Disclosure
      and Non-Use*** *.* During
      the Term or any later time, except with the prior written consent of Commerce’s
      Board, Hill shall not, directly or indirectly:




(i) *Non-Disclosure* .
      Disclose, communicate or divulge Company Information to any Person other than
      authorized Commerce personnel;




(ii) *Non-Use* .
      Use
      Company Information for the benefit of himself or any other Person, other than
      authorized Commerce personnel.




15.2  **Commerce’s
      Interests** .
      Hill
      will not, during the Term, except with the express prior written consent of
      Commerce’s Board, directly or indirectly, in any capacity (including but not
      limited to employee, owner, partner, consultant, agent, director, officer,
      shareholder or in any other capacity) engage in or assist any Person to engage
      in any act or action which he, acting reasonably, believes or should believe
      would be harmful or inimical to the interests of Commerce.




15.3  **Non-Competition
      and Time of Restrictions.**




(a)  ***Non-Competition*** .
      Hill
      will not, except with the express prior written consent of Commerce’s Board, in
      any capacity (including, but not limited to, owner, partner, shareholder,
      consultant, agent, employee, officer, director or otherwise), directly or
      indirectly, for his own account or for the benefit of any Person:











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(i) *Business
      and Geographic Restriction* .
      Establish, engage or participate in or otherwise be connected with any
      commercial banking business which conducts business in any geographic area
      in
      which Commerce and its subsidiaries is then conducting such business.




(ii) *Exception* .
      The
      foregoing shall not prohibit Hill from owning as a shareholder less than 5%
      of
      the outstanding voting stock of an issuer engaged in the commercial banking
      business.




(b)  ***Time
      of Restrictions*** .
      The
      non-competition restrictions in Section 15.3 shall start on the effective date
      of this Agreement and end as stated below for the appropriate
      circumstance.




(i)  *Hill’s
      Termination at Anniversary or Voluntary* .
      If this
      Agreement is terminated by Hill in accord with the Termination at Anniversary
      in
      Section 1.2(b) of this Agreement or if Hill voluntarily terminates his
      employment, *then*  *the
      non-competition restriction ends*  *one
      year following the effective date of termination of Hill’s employment under this
      Agreement* ;





(ii)  **** *Commerce’s
      Termination at Anniversary* .
      If this
      Agreement is terminated by Commerce in accord with the provisions of Section
      1.2(b) of this Agreement, *then*  *the
      non-competition restriction ends on*  *the
      effective date of termination of Hill’s employment under this
      Agreement* ;





(iii) *Termination
      “For Cause”* .
      If
      Commerce terminates this Agreement “For Cause” in accord with Section 6 of this
      Agreement, *then
      the non-competition restriction ends on the effective date of termination of
      Hill’s employment under this Agreement* ;
      or




(iv) *Termination
      “Without Cause” and “For Good Reason”* .
      If this
      Agreement is terminated “Without Cause” or “For Good Reason” in accord with
      either Section 7.1 or 8.1 above, *then
      the non-competition restriction ends on the effective date of termination of
      Hill’s employment under this Agreement* .





15.4  **Remedies** .
      Any
      breach by Hill of any of the terms in this Section 15 will result in irreparable
      injury to Commerce for which money damages could not adequately compensate
      Commerce; and, thus, in the event of any such breach, Commerce shall be entitled
      (in addition to any other rights and remedies which it may have at law or in
      equity) to have an injunction issued by any competent court enjoining and
      restraining Hill and/or any other Person involved from continuing such
      breach.




(a)  ***No
      Defense or Bar*** .
      The
      existence of any claim or cause of action which Hill may have against Commerce
      or any other Person (other than a claim for Commerce’s breach of this Agreement
      for failure to make payments) shall not constitute a defense or bar to the
      enforcement of the terms in this Section 15.






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(b)  ***Payments
      After Breach*** .
      In the
      event of any alleged breach by Hill of any of the terms in this Section 15,
      Commerce shall continue any and all of the payments due Hill under this
      Agreement until such time as a Court shall enter a final and unappealable order
      finding such a breach.




(i) *Exception.* The
      foregoing shall not preclude a Court from ordering Hill to repay such payments
      made to him for the period after the breach is determined to have occurred
      or
      from ordering that payments under this Agreement be permanently terminated
      in
      the event of a material and willful breach.




15.5  **Enforceability** .
      If any
      portion of the terms in this Section 15, or their application, is construed
      to
      be invalid or unenforceable, then the other portions of such terms or their
      application shall not be affected and shall be given full force and effect
      without regard to the invalid or unenforceable portions to the fullest extent
      possible.




(a)  If
      any
      term in this Section 15 is held to be unenforceable because of the area covered,
      duration, or scope, then Hill and Commerce expressly and intentionally authorize
      the court making such determination to reduce the area and/or duration and/or
      limit the scope to an enforceable term, so that the term shall then be
      enforceable in its reduced form.




15.6  **Commerce
      Definition** .
      For
      this Section 15, the term “ ***Commerce*** ”
means
      Commerce, any successor of Commerce under Section 16 below, and all present
      and
      future direct and indirect subsidiaries and affiliates of Commerce including,
      but not limited to, CB.







**16.**  **Successions.**




16.1  **Successors/Assigns/Heirs** .
      This
      Agreement shall inure to the benefit of and be binding on:




(a)  Commerce
      and Hill and their respective heirs, executors, administrators, successors
      and
      assigns; and




(b)  Any
      corporate or other successor of Commerce that acquires, directly or indirectly,
      by combination, merger, consolidation, purchase, or otherwise, all or
      substantially all of the assets of Commerce.












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16.2
      **Death** .
      On
      Hill’s death, except for the ”Death Benefit” governed by payment described in
      Section 5.3 above, any payments or benefits otherwise due Hill shall be paid
      to
      or be for the benefit of Hill’s legal representatives for his
      estate.




16.3  **Combinations** .
      Nothing
      in the Agreement shall preclude Commerce from combining, consolidating or
      merging into or with or transferring all or substantially all of its assets
      to
      another Person (“ ***Combination*** ”).




(a)  In
      the
      event of a Combination, such other Person shall be deemed to assume this
      Agreement and all obligations of Commerce in this Agreement.




(b)  Upon
      such
      a Combination, the term “Commerce” shall mean such other Person and this
      Agreement shall continue in full force and effect.





**17.**  **Notices.**




17.1  **Form
      of Notice** .
      All
      notices, requests, demands and other communications under this Agreement shall
      be in writing and shall be deemed to have been duly given if delivered by:
      hand
      with delivery receipt; or certified or registered mail, return receipt
      requested, with postage prepaid; or overnight or express courier with a
      receipt-for-delivery tracking system.




17.2  **Place
      of Notice** .
      All
      notices are to be delivered to the following addresses or to such other address
      as either party may designate in writing by like notice:




A.
            If
                to Hill, to the address on file with the
                Company.




B.
            If
                to Commerce, to:





Commerce
      Bancorp, Inc.


Commerce
      Atrium


1701
      Route 70 East


Cherry
      Hill, New Jersey 08034-5400





Attn:
            Chairman,
                Compensation Committee


Board
      of
      Directors








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**18.**  **General
      Provisions.**




18.1  **Entire
      Agreement** .
      This
      Agreement constitutes the entire agreement between Commerce and Hill concerning
      its subject matter. It supersedes and replaces all prior discussions,
      representations, promises or agreements, whether written or oral, express or
      implied, between Hill and Commerce or their representatives, including the
      Prior
      Agreement.




18.2  **Amendments,
      Waivers and Termination** .
      No
      amendment, waiver or termination of any of the provisions of this Agreement
      shall be effective unless in writing and signed by the party against whom it
      is
      sought to be enforced. Any written amendment, waiver or termination of this
      Agreement executed by Commerce and Hill (or his legal representatives) shall
      be
      binding upon them and upon all other Persons, without the necessity of securing
      the consent of any other Person including, but not limited to, Hill’s wife, and
      no Person shall be deemed to be a third party beneficiary under this Agreement
      except as provided under Section 16 above.




18.3  **Alternate
      Payments** .
      Instead
      of Commerce, either CB or any other subsidiary of Commerce may make payments
      to
      Hill and, to the extent such payments are so made, Commerce shall be released
      of
      its obligations to make such payments.




18.4  **Benefits
      and Insurance** .
      The
      benefits provided under this Agreement shall be in addition to and shall not
      affect the proceeds payable to Hill’s beneficiaries under group life insurance
      policies which Commerce may be carrying on Hill’s life.




18.5   “ **Person** ” **Definition** .
      “ ***Person*** ”
means
      a
      natural person, joint venture, corporation, sole proprietorship, trust, estate,
      partnership, cooperative, association, non-profit organization or any other
      legal entity.




18.6  **Counterparts** .
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which taken together shall constitute one and
      the
      same Agreement.












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            22












18.7
      **No Waiver** .
      Except
      as otherwise expressly stated in this Agreement, no failure on the part of
      any
      party to this Agreement to exercise and no delay in exercising any right, power
      or remedy under this Agreement shall operate as a waiver; nor shall any single
      or partial exercise of any right, power or remedy under this Agreement preclude
      any other or further exercise of any of or the exercise of any other right,
      power or remedy.




18.8  **Assignment** .
      Without
      Commerce’s prior written consent and approval, neither this Agreement nor any of
      its rights to receive payments shall be voluntarily or involuntarily:




(a)  Assigned,
      transferred, alienated, encumbered or disposed of, in whole or in part;
      or




(b)  Subject
      to anticipation, levy, execution, garnishment, attachment by, or interference
      or
      control of, any creditor.




18.9  **New
      Jersey Jurisdiction** .
      Commerce and Hill irrevocably, voluntarily, knowingly and expressly consent
      to:




(a)  ***Courts
      in Camden, NJ*** .
      The
      exclusive jurisdiction of the Superior Court, Law Division, Camden County,
      New
      Jersey or the United States District Court for the District of New Jersey,
      Camden Vicinage, to enforce this Agreement, or to resolve any claim, controversy
      or dispute involving it; and




(b)  ***Service
      of Process*** .
      Service
      of process as set forth in the Notice stated in Section 17 above.




18.10  **Headings** .
      The
      headings of the sections of this Agreement have been inserted for convenience
      and clarity. They do not restrict or modify any of the terms or provisions
      of
      this Agreement.




18.11  **Notice
      of Dispute and Cure** .
      If
      Commerce or Hill has a dispute or claim under this Agreement, then that dispute
      or claim shall be described with specificity in writing; and, the party
      receiving such written notice shall have thirty (30) business days to cure
      the
      dispute or claim.












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            22










18.12
      **New Jersey Law** .
      This
      Agreement shall be governed and construed, and the legal relationships of the
      parties determined, in accordance with the laws of the State of New Jersey
      applicable to contracts executed and to be performed solely in the State of
      New
      Jersey.













**COMMERCE
      BANCORP, INC.**











By: /s/
      Douglas J. Pauls


Title: Senior Vice-President and Chief Financial Officer





Attest: 
      /s/ Alexander D. Bono


Title:
      Senior Vice-President and General
      Counsel








/s/
      Vernon W. Hill, II


**Vernon
      W. Hill, II**




March
      14, 2006


Date








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