ex10-1.htm


    Exhibit
10.1

    


    


    United
States Department of the Treasury

    1500
Pennsylvania Avenue, NW

    Washington,
D.C. 20220

    


    


    May 20,
2009

    


    Ladies
and Gentlemen:

    


    Reference
is made to that certain Letter Agreement incorporating the Securities Purchase
Agreement – Standard Terms (the “Securities Purchase
Agreement”), dated as of the date set forth on Schedule A hereto, between
the United States Department of the Treasury (the “Investor”) and the company
set forth on Schedule A hereto (the “Company”).  Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Securities Purchase Agreement.  Pursuant to the Securities
Purchase Agreement, at the Closing, the Company issued to the Investor the
number of shares of the series of its preferred stock set forth on Schedule A
hereto (the “Preferred
Shares”) and a warrant to purchase the number of shares of its common
stock set forth on Schedule A hereto (the “Warrant”).

    


    In
connection with the consummation of the repurchase (the “Repurchase”) by the Company
from the Investor, on the date hereof, of the number of Preferred Shares listed
on Schedule A hereto (the “Repurchased Preferred
Shares”), as permitted by the Emergency Economic Stabilization Act of
2008, as amended by the American Recovery and Reinvestment Act of
2009:

    


    (a)           The
Company hereby acknowledges receipt from the Investor of the share
certificate(s) set forth on Schedule A hereto representing the Preferred
Shares;

    


    (b)           The
Investor hereby acknowledges receipt from the Company of a wire transfer to the
account of the Investor set forth on Schedule A hereto in immediately available
funds of the aggregate purchase price set forth on Schedule A hereto,
representing payment in full for the Repurchased Preferred Shares at a price per
share equal to the Liquidation Amount per share, together with any accrued and
unpaid dividends to, but excluding, the date hereof; and

     

    The
Investor and the Company hereby agree that, notwithstanding Section 4.4 of the
Securities Purchase Agreement, immediately following consummation of the
Repurchase, but subject to compliance with applicable securities laws, the
Investor shall be permitted to Transfer all or a portion of the Warrant or
Substitute Warrant (as defined below) with respect to, and/or exercise the
Warrant or Substitute Warrant for, all or a portion of the number of shares of
Common Stock issuable thereunder, at any time and without limitation, and
Section 4.4 of the Securities Purchase Agreement shall be deemed to be amended
in order to permit the foregoing.  The Company shall take all steps as
may be reasonably requested by the Investor to facilitate any such
Transfer.


    
      
         


      

      
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    In
addition, the Company agrees that within 15 calendar days of the date hereof the
Company shall either (a) deliver to the Investor a notice of intent to
repurchase the Warrant in accordance with Section 4.9(b) of the Securities
Purchase Agreement (the “Warrant Repurchase Notice”),
or (b) issue and deliver to the Investor a new warrant, in substantially the
form of the Warrant, except with the deletion of Section 13(H) thereof, to
purchase the number of shares of Common Stock into which the Warrant is then
exercisable (the “Substitute
Warrant”), which Substitute Warrant shall be deemed the “Warrant” for all purposes
under the Securities Purchase Agreement.

    


    In the
event that the Company delivers a Warrant Repurchase Notice and the Company and
the Investor fail to agree on the Fair Market Value of the Warrant pursuant to
the procedures (including the Appraisal Procedure), and in accordance with the
time periods, set forth in Section 4.9(c) of the Securities Purchase Agreement
or the Company revokes the delivery of such Warrant Repurchase Notice, then the
Company shall deliver a Substitute Warrant to the Investor within 5 calendar
days of the earlier of the failure to agree on the Fair Market Value and the
revocation of the Warrant Repurchase Notice.

    


    Effective
as of the date of receipt of the Substitute Warrant, if applicable, the Investor
hereby provides notice, pursuant to Section 4.5(p) of the Securities Purchase
Agreement, of its intention to sell the Substitute Warrant.

    


    This
letter agreement will be governed by and construed in accordance with the
federal law of the United States if and to the extent such law is applicable,
and otherwise in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.

    


    This
letter agreement may be executed in any number of separate counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement.  Executed
signature pages to this letter agreement may be delivered by facsimile and such
facsimiles will be deemed sufficient as if actual signature pages had been
delivered.

    


    


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    In
witness whereof, the parties have duly executed this letter agreement as of the
date first written above.

    


    
      
        
          	 
      	
                  UNITED
      STATES DEPARTMENT OF

                
	 
      	
                  THE
      TREASURY

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Duane Morse

                
	 
      	 
      	
                  Name:

                	
                  Duane
      Morse

                
	 
      	 
      	
                  Title:

                	
                  Chief
      Risk and Compliance Officer

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  COMPANY: Somerset Hills
      Bancorp

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Stewart E. McClure, Jr.

                
	 
      	 
      	
                  Name:

                	
                  Stewart
      E. McClure, Jr.

                
	 
      	 
      	
                  Title

                	
                  President,
      Chief Executive Officer, and Chief Operating Officer

                
	 
      	 
      	 
      	 
      


        

      

    

     

     

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