Document:

SOMERSET HILLS BANCORP

                         2001 COMBINED STOCK OPTION PLAN

     SECTION 1. PURPOSE

     The Bank of the Somerset Hills ("Bank") is the wholly-owned subsidiary of
the Somerset Hills Bancorp ("Bancorp"). This 2001 Combined Stock Option Plan of
Bancorp (the "Plan") is intended to attract and retain Bancorp's Service
Providers and to motivate them to participate in the long term growth of Bancorp
by providing for or increasing the proprietary interests of such persons in
Bancorp, thereby assisting Bancorp to achieve its long-range goals.

     SECTION 2. DEFINITIONS

     Capitalized terms not specifically defined elsewhere herein shall have the
following meanings:

     "Bancorp" shall mean Somerset Hills Bancorp and any present or future
parent or subsidiary corporations (as defined in Section 424 of the Code) or any
successor to Bancorp or to such corporations.

     "Board" shall mean the Board of Directors of Bancorp.

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and the regulations promulgated thereunder.

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     "Committee" shall mean the Board or any committee or group of people
selected by the Board to administer the Plan and perform the functions set forth
herein.

     "Common Stock" or "Stock" shall mean the common stock, $5.00 par value per
share, of Bancorp.

     "Director" shall mean a member of the Board of Directors of Bank and/or a
member of the Board of Directors of Bancorp or a member of an advisory or
business development committee of Bank or Bancorp.

     "Disability" shall mean permanent and total disability, as defined in
Section 22(e)(3) of the Code.

     "Employee Option" shall mean an Incentive Stock Option granted to an
Optionee who is a Key Employee of Bank or Bancorp.

     "Fair Market Value" shall mean, with respect to shares of Common Stock, the
fair market value as determined in good faith by the Committee and in a manner
established by the Committee from time to time using any reasonable method of
valuation; provided, that in the event the shares of Common Stock are listed for
trading on a national or regional securities exchange (including the NASDAQ
National Market System), the "fair market value" of such shares shall be, on any
date, the average closing sale price for the Common Stock for the last five (5)
market trading days prior to the day of determination.

     "Incentive Stock Option" or "ISO" shall mean an option

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to purchase shares of Common Stock granted to a Key Employee under the Plan,
which is intended to meet the requirements of Section 422 of the Code as of the
date of grant.

     "Key Employees" shall mean an employee of Bank or Bancorp (including
executive officers and Directors who are also employees of Bank and/or Bancorp)
who, in the judgment of the Committee, are considered important to the future of
Bank and/or Bancorp.

     "Non-Qualified Stock Option" shall mean an option to purchase shares of
Common Stock granted to a Service Provider under the Plan, which is not intended
to be an ISO.

     "Option" shall mean an ISO or a Non-Qualified Stock Option.

     "Option Agreement" shall mean a written or electronic agreement between
Bancorp and an Optionee evidencing the terms and conditions of an individual
option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

     "Optionee" shall mean a Key Employee or Service Provider selected by the
Committee to receive an Option under the Plan.

     "Plan" shall mean this Somerset Hills Bancorp 2001 Combined Stock Option
Plan.

     "Securities Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder, and any
successor provisions thereto.

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     "Service Provider" shall mean a Key Employee or Director.

     As used herein, the masculine gender shall include the feminine gender.

     SECTION 3. ADMINISTRATION

     (a) The Plan shall be administered by the Committee. Among other things,
the Committee shall have authority, subject to the terms of this Plan,
including, without limitation, the provisions governing participation in this
Plan by Directors, to grant Options, to determine the individuals to whom and
the time or times at which Options may be granted, and to determine the terms
and conditions of any Option granted hereunder.

     (b) Subject to the provisions of this Plan, the Committee shall have
authority to adopt, alter, and repeal such administrative rules, guidelines, and
practices governing the operation of this Plan as it shall from time to time
consider advisable, to interpret the provisions of this Plan and any Option, and
to decide all disputes arising in connection with this Plan. The Committee's
decision and interpretations shall be final and binding. Any action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by the unanimous written consent of its members.

     (c) Subject to the provisions of this Plan and applicable requirements of
Federal and state law, the Committee

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shall have authority, in its discretion, to take the following actions:

     (i) to determine the Service Providers to be granted Non-Qualified Stock
Options under this Plan;

     (ii) to determine the number of shares subject to each Option;

     (iii) to determine the time or times at which Options will be granted;

     (iv) to determine the Key Employees to be granted Employee Options under
this Plan;

     (v) to determine the Option price of the shares subject to each Option,
which price shall be not less than the minimum for Employee Options and
Non-Qualified Stock Options, respectively as specified in Sections 7 and 8 of
this Plan;

     (vi) to determine or change the time or times when each Option becomes
exercisable and the duration of the exercise period; provided, however, that no
Option, including Non-Qualified Stock Options granted to Service Providers
pursuant to this Plan, shall be exercisable until the Bancorp's stockholders,
voting as a single class, shall have approved the Plan;

     (vii) to prescribe the form or forms of the instruments evidencing any
Options granted under this Plan (which forms shall be consistent with this Plan
but need not be identical to one another);

     (viii) to adopt, amend, and rescind such rules and regulations as it
determines are necessary or advisable in the administration of this Plan;

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     (x) to construe and interpret this Plan, the rules and regulations, and
the instruments evidencing Options granted under this Plan and to make all other
determinations deemed necessary or advisable for the administration of this
Plan;

     (xi) to delegate such administrative functions as it deems appropriate; and

     (xii) in general, to exercise full and final authority (consistent with
this Plan) over all matters relating to the Plan, the powers denominated above
being by way of example and not of limitation.

     Any interpretation, determination, or other action made or taken by the
Committee shall be final, binding, and conclusive.

     (d) No member of the Committee shall be personally liable to Bancorp or its
stockholders for damages for any action taken or determination made in good
faith. The members of the Committee shall be indemnified by Bancorp for any acts
or omissions in connection with the Plan to the full extent permitted by
Bancorp's Certificate of Incorporation and New Jersey law.

     SECTION 4. SHARES OF STOCK AVAILABLE FOR OPTIONS

     (a) The aggregate number of shares of Common Stock for which Non-Qualified
Stock Options and Employee Options may be granted under this Plan shall be
200,000 shares of Common Stock,

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subject to adjustment as provided in Section 16 of this Plan. Notwithstanding
the foregoing, all of the 200,000 shares of Common Stock may be subject to
Employee Options. The 200,000 shares of Common Stock shall be reserved for
Options granted under this Plan.

     (b) The shares transferred by Bancorp upon the exercise of Options under
this Plan shall consist of authorized but unissued shares of Common Stock.

     (c) [INTENTIONALLY OMITTED.]

     (d) If an Option granted under this Plan shall expire or terminate for any
reason without having been fully exercised, then the unexercised portion of such
Option shall again be available for the grant under this Plan.

     (e) All Options granted hereunder shall be clearly identified as either an
ISO or as a Non-Qualified Stock Option.

     SECTION 5. ELIGIBILITY AND PARTICIPATION

     (a) All Service Providers to Bank or Bancorp shall be eligible to
participate in this Plan to the extent provided herein. Non-Qualified Stock
Options may be granted to Service Providers. Incentive Stock Options may be
granted only to Key Employees.

     (b) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Common Stock to which Incentive Stock Options are exercisable for the first

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time by the Optionee during any calendar year (under all plans of Bancorp)
exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the
shares of Common Stock shall be determined as of the time the Incentive Stock
Option with respect to such shares is granted.

     SECTION 6. EXERCISE PERIOD OF EMPLOYEE OPTIONS

     (a) Except as herein provided, each Employee Option granted hereunder shall
be exercisable for such period as the Committee shall determine at the time of
grant; provided, however, that (i) such period may not commence until at least
six months following the date of grant, except in the event of the death,
Disability, retirement in accordance with Bank's or Bancorp's retirement plans,
or involuntary termination of employment other than for cause of the Key
Employee before the expiration of such period; and (ii) Bancorp shall have fully
complied with the terms and provisions of the Securities Act. Options shall be
subject to earlier termination as hereinafter provided.

     (b) An Employee Option shall terminate immediately, and no rights
thereunder may be exercised, if the person to whom it is granted ceases to be
employed by Bank or Bancorp, except that:

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     (i) subject to the limitations on exercisability set forth in this Section
6 of this Plan, if the Key Employee dies while in the employ of Bank or Bancorp,
the Key Employee's rights under the Employee Option may be exercised as to all
shares of Common Stock covered thereby by his legal representative or by the
person or persons to whom such rights under the Option shall pass by will or by
the laws of descent and distribution, at any time within twelve (12) months
following his death;

     (ii) if the employment of the Key Employee is terminated because of
Disability, the Key Employee's rights under the Employee Option may be exercised
as to all shares of Common Stock covered thereby by the Key Employee or his
guardian or other legal representative, at any time within twelve (12) months
following termination of his employment because of Disability;

     (iii) if the employment of the Key Employee is terminated by reason of his
retirement in accordance with the terms of Bank's or Bancorp's retirement plans
or with the consent of the Committee or is involuntarily terminated other than
for cause, the Key Employee's rights under the Employee Option may be exercised
as to all shares of Common Stock covered thereby at any time within three (3)
months after termination of employment. Termination for cause shall mean
termination of employment by reason of habitual alcohol or drug abuse;
commission of a felony, fraud, or willful misconduct; the unauthorized
disclosure of any Bank or Bancorp data, secret, or financial information, that
has resulted, or is likely to result, in damage to Bank or Bancorp, all as the
Board in its sole and absolute discretion shall determine.

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     (c) Notwithstanding anything contained in this Section 6 to the contrary,
no Employee Option shall be exercisable by anyone after the expiration of the
term of such Option as determined by the Committee at the date of grant of such
Option.

     SECTION 7. TERM AND OPTION PRICE OF EMPLOYEE OPTIONS

     (a) The terms and conditions of Incentive Stock Options shall be subject to
and comply with Section 422 of the Code. Anything in this Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted to the Committee under this Plan be so exercised, so as to disqualify
this Plan or, without the consent of the Key Employee, any Incentive Stock
Option granted under the Plan pursuant to Section 422 of the Code.

     (b) The Option price per share of Common Stock purchasable under an
Incentive Stock Option shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of grant or the par value of the Common Stock,
whichever is higher. If the Key Employee owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than 10%
of the combined voting power of all classes of stock of Bancorp and an Incentive
Stock Option is granted to such Key Employee, the Option price shall not be less
than 110% of the Fair Market Value of the Common Stock on the date of grant or
the par value of the Common Stock, whichever is higher.

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     (c) No Employee Option shall be exercisable more than ten (10) years after
the date such Option is granted. If a Key Employee owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of Bancorp, and an
Incentive Stock Option is granted to such Key Employee, such Option shall not be
exercisable after the expiration of five (5) years from the date of grant.

     SECTION 8. TERMS AND CONDITIONS OF OPTIONS TO SERVICE PROVIDERS

     (a) The terms and conditions of each Non-Qualified Stock Option shall be
stated in the Option Agreement.

     (b) The purchase price of the shares of Common Stock subject to each
Non-Qualified Stock Option granted to a Service Provider shall be equal to at
least eighty-five percent (85%) of the Fair Market Value of the Common Stock on
the date the Option is granted; provided, however, that the exercise price of
any Non-Qualified Stock Option granted to a Service Provider as compensation for
serving as a member of the Board or as a member of the Board of Directors of
Bank shall not be less than the greater of one hundred percent (100%) of the
Fair Market Value of the Common Stock at the time of the grant of the Option and
the

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par value of the Common Stock.. Options granted to Service Providers may be
exercised by written notice of exercise accompanied by payment of the exercise
price in full for the purchased shares of Common Stock in cash or by certified
or cashier's check payable to Bancorp.

     (c) A Non-Qualified Stock Option shall only be transferable by a Service
Provider (i) by will, (ii) by the laws of descent and distribution, (iii) to the
Service Provider's spouse or issue, or (iv) to a trust established for the
benefit of a Service Provider's spouse or issue. All Non-Qualified Stock Options
shall be exercisable during a Service Provider's lifetime only by the Service
Provider or his duly appointed guardian or personal representative. The
restrictions set forth in Section 8 of this Plan shall apply to all
Non-Qualified Stock Options granted to Service Providers.

     (d) If a Service Provider dies, the Service Provider's Options shall be
exercisable by either his executor or administrator or, if not so exercised, by
the legatees or the distributees of his estate, only during the twelve (12)
months following his death. If a Director is no longer a member of either the
Board or the Board of Directors of Bank, for any reason other than death, such
Director's Options shall be exercisable only during the three (3) months
following the date the Director ceased being a member of either the Board or the
Board of Directors of Bank.

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     (e) Each Option granted to a Service Provider shall be evidenced by a
writing signed by him specifying the terms and conditions thereof in accordance
with this Section 8.

     SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS

     (a) Notwithstanding any other provision of the Plan, in order to qualify
for the exemption provided by Rule 16b-3 under the Securities Act, any Common
Stock acquired by a Optionee subject to Section 16 of the Securities Act (a
"Section 16 Optionee") upon exercise of an Option may not be sold for six (6)
months after the date of grant of the Option. The Committee shall have no
authority to take any action if the authority to take such action, or the taking
of such action, would disqualify the Plan from the exemption provided by Rule
16b-3 under the Securities Act.

     (b) Each Option under the Plan shall be evidenced by a writing delivered to
the Optionee specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan as
the Committee considers necessary or advisable to achieve the purposes of the
Plan or comply with applicable tax and regulatory laws and accounting
principles.

     (c) Each Option may be granted alone, in addition to or in relation to any
other Option. The terms of each Option need not be identical, and the Committee
need not treat Optionees

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uniformly, except as otherwise provided in Section 9. Except as otherwise
provided by the Plan or a particular Option, any determination with respect to
an Option may be made by the Committee at the time of grant or at any time
thereafter.

     (d) The Committee may amend, modify, or terminate any outstanding Option
held by a Optionee, including substituting therefor another Option of the same
or a different type, changing the date of exercise or realization, provided that
the Optionee's consent to each action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Optionee.

     (e) A Key Employee shall notify the Committee in writing in the event that
he disposes of Common Stock acquired upon exercise of an Incentive Stock Option
within the two-year period following the date the Incentive Stock Option was
granted or within the one-year period following the date he received Common
Stock upon the exercise of an Incentive Stock Option and shall comply with any
other requirements imposed by Bancorp to enable Bancorp to secure the related
income tax deduction to which it will be entitled in such event under the Code.

     (f) The vesting schedule of any Option may, in the discretion of the
Committee and as stated in the Option Agreement, be subject to acceleration in
the event of death or Disability of the Optionee, or the termination of the
Optionee's relationship with Bank or Bancorp, as the case may be. All

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Options shall automatically and immediately vest on a change in control of
Bancorp (as defined in the Option Agreement). In the event any Employee Option
granted to a Key Employee fails to satisfy the requirements of Code Section 422
due to the acceleration of the vesting schedule described in herein, such
Employee Option shall be considered a Non-Qualified Stock Option. In the event
an Employee Option is considered a Non-Qualified Stock Option pursuant to the
foregoing sentence, such Non-Qualified Stock Option shall be subject to the same
terms and conditions of the relevant Option Agreement.

     SECTION 10. NON-TRANSFERABILITY OF EMPLOYEE OPTIONS

     No Employee Option granted under this Plan shall be transferable by a Key
Employee other than by will or the laws of descent and distribution, and, except
as otherwise provided herein, such Employee Option may be exercised by the Key
Employee only during a Key Employee's lifetime and only by the Optionee or the
Key Employee's duly appointed guardian or personal representative.

     SECTION 11. OPTION AGREEMENTS

     (a) The grant of every Option shall be evidenced by and conditioned upon
the execution of a written Option Agreement between Bancorp and the Optionee.
The Option Agreement shall set forth the number of shares subject to the Option,
the Option price, the term during which the Option may be exercised, and any

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other provisions not inconsistent with the provisions of this Plan, which the
Committee may deem necessary or appropriate from time to time. With respect to
the grant of ISOs, the Option Agreement shall not contain any provision that
would cause such Option to fail to qualify as an Incentive Stock Option under
Section 422 of the Code as of the date of grant. The Committee may approve a
form or forms of Option Agreements that the Committee, in its discretion, may
specify as the sole forms of Option Agreement effective to grant Options to
Optionees under this Plan.

     (b) Notwithstanding the date on which an Option Agreement may be executed,
the date on which an Option is deemed to be granted shall be the effective date
of the approval of an Option by the Committee.

     SECTION 12. OPTION EXERCISE AND PAYMENT

     (a) Subject to Sections 5, 6, 7, 8, and 9 of this Plan, each Option granted
under this Plan shall be exercisable on such date or dates and during such
period and for such number of shares as shall be determined pursuant to the
provisions of the Option Agreement evidencing such Option.

     (b) A Optionee electing to exercise an Option shall give written notice to
the Committee of such election and of the number of full shares he elects to
purchase. Options shall be exercisable in such amounts as the Optionee may elect
subject to such restrictions as the Committee or this Plan may provide.

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     (c) Subject to the other provisions of this Plan and applicable state and
federal law, payment of the Option price shall be tendered to Bancorp (i) in
cash, including certified check, bank draft, or money order, or (ii) at the
discretion of the Committee, by delivering a promissory note, containing such
terms and conditions acceptable to the Committee, or a combination of the
foregoing, for all or a portion of the purchase price of the shares purchased.

     SECTION 13. NO RIGHTS AS STOCKHOLDER

     Neither the Service Provider nor the personal representatives, heirs, or
legatees of such Service Provider shall be, or have any rights or privileges of,
a stockholder of Bancorp with respect to any shares subject to an Option unless
and until certificates evidencing such shares shall have been issued and
delivered to the Service Provider or to such personal representatives, heirs, or
legatees.

     SECTION 14. NO RIGHTS TO CONTINUED EMPLOYMENT

     This Plan and any Option granted under the Plan shall not confer upon any
Service Provider any right with respect to continuation of employment by Bank
and/or Bancorp, nor shall they interfere in any way with the right of Bank or
Bancorp to terminate his employment at any time.

     SECTION 15. ADDITIONAL PROPERTY

     At the time any Option is exercised, the Committee, in its discretion, may
transfer to the Service Provider such

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additional property as it may determine, including, without limitation, cash or
stock appreciation rights.

     SECTION 16. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

     Except as otherwise provided herein, the instruments evidencing Options
granted hereunder shall contain such provisions as the Committee shall deem
appropriate to adjust the number and classes of shares covered thereby, or to
adjust the Option prices, or both, in the event of the sale or other disposition
or distribution by Bancorp of all or a portion of its assets or any change in
the outstanding Common Stock of Bancorp by reason of stock dividends, stock
split-ups, recapitalizations, reorganizations, mergers, consolidations,
combinations, or exchanges of shares or the like, of or by Bancorp. To prevent
dilution or enlargement of rights in the event of any such change, the aggregate
number and classes of shares for which Options thereafter may be granted under
this Plan may be appropriately adjusted as determined by the Committee to
reflect such change.

     SECTION 17. WITHHOLDING TAXES

     The Optionee shall pay to Bank or Bancorp, or make provision satisfactory
to the Committee for payment of, any taxes required by law to be withheld in
respect of Options under the Plan no later than the date of the event creating
the tax liability. In the Committee's sole discretion, an Optionee

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(other than a Section 16 Optionee, as defined above, who shall be subject to the
following sentence) may elect to have such tax obligations paid, in whole or in
part, in shares of Common Stock, including shares retained from the Option
creating the tax obligation. With respect to Section 16 Optionees, upon the
issuance of shares of Common Stock in respect of an Option, such number of
shares issuable shall be reduced, to the extent permitted under the Securities
Act, by the number of shares necessary to satisfy such Section 16 Optionee's
federal, and where applicable, state withholding tax obligations. For
withholding tax purposes, the value of the shares of Common Stock shall be the
Fair Market Value on the date the withholding obligation is incurred. Bank or
Bancorp may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to the Optionee.

     SECTION 18. NECESSITY OF STOCKHOLDER APPROVAL

     This Plan and any Options granted hereunder shall be null, void, and of no
effect unless this Plan has been previously approved by the holders of Common
Stock of Bancorp, voting as a single class, within twelve (12) months after the
date of the Plan's adoption by the Board.

     SECTION 19. DURATION AND AMENDMENT OF THE PLAN

     (a) No Option may be granted under this Plan after the expiration of ten
(10) years from the earlier of: (i) the date this Plan is adopted by the Board
or (ii) the date this Plan is approved by the holders of Common Stock of Bancorp
voting as a single class.

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     (b) The Board or, if authorized by the Board, any committee of the Board,
may amend, terminate, or suspend this Plan at any time; provided, however, that
no such amendment shall, without approval of Bancorp's stockholders, (i)
increase the aggregate number of shares as to which Options may be granted under
this Plan except as specified in Section 16 of this Plan; (ii) change the number
of shares subject to Options or the date of grant or the exercise price of such
Options; (iii) materially modify the requirements concerning eligibility for
participation in this Plan; or (iv) materially increase the benefits accruing to
Service Providers in this Plan.

     (c) No Option may be granted during any suspension of this Plan or after
this Plan has been terminated; and no amendment, suspension, or termination
shall, without the Service Provider's consent, alter or impair any of the
Service Provider's rights or obligations under any Option theretofore granted to
him under this Plan except insofar as a merger or consolidation of Bancorp or
termination of employment of a Service Provider or a liquidation or dissolution
shall affect the cancellation of an Option.

     SECTION 20. APPLICABLE LAW

     To the extent that state laws shall not have been preempted by any laws of
the United States, this Plan shall be governed by, and construed in accordance
with, the laws of the

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State of New Jersey. The Plan is intended to comply with Rule 16b-3 promulgated
under the Securities Act, and is further intended to be administered in the
manner specified in paragraph (c)(2)(ii) of that Rule, and the Committee shall
interpret and administer the provisions of the Plan or any Stock Option in a
manner consistent therewith. Any provisions inconsistent with such Rule and
paragraph shall be inoperative and shall not affect the validity of the Plan.

     SECTION 21. BINDING EFFECT

     The terms of this Plan shall be binding on its successors and assigns.

     SECTION 22. SAVINGS CLAUSE

     The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.

     SECTION 23. NO RIGHTS TO CONTINUED DIRECTORSHIP

     Nothing in this Plan or in any Stock Option granted hereunder shall confer
on any Director any right to continue to serve as a director of Bank and/or
Bancorp or shall interfere with or restrict in any way the right, which right is
hereby expressly reserved, to remove any Director as a director in accordance
with the by-laws and certificate of incorporation of Bank and Bancorp and
applicable law.

     SECTION 24. MISCELLANEOUS

     The terms of this Plan shall be binding on Bancorp, Key Employees,
Directors, and their successors and assignees.

21DRAFT

                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                             SOMERSET HILLS BANCORP
                                       AND
                            STEWART E. MC CLURE, JR.

     THIS AGREEMENT, by and between Somerset Hills Bancorp, a New Jersey
corporation, having its principal office located at 155 Morristown Road,
Bernardsville, New Jersey 07924 (hereinafter referred to as the "Employer"), and
Stewart E. McClure, Jr., residing at 90 Spring Hill Road, Mendham, New Jersey
07945 (hereinafter referred to as the "Employee").

                                    RECITALS

     WHEREAS, the Employer and the Employee have agreed upon the terms and
conditions by which the Employee will be employed; and

     WHEREAS, the Employee represents to his knowledge, that he is not
restricted from accepting employment with the Employer by any agreement,
judgment or for any other reason; and

     WHEREAS, the Employer and the Employee have agreed to formalize the terms
and conditions of the Employee's employment with the Employer.

     NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the Employer and the Employee do hereby agree as follows:

     I. TERM OF EMPLOYMENT AND DUTIES

     1.1 The Employee shall serve as Vice Chairman, President, Chief Executive
Officer and Chief Operating Officer of the Employer, as well as Vice Chairman
and Chief Executive Officer of its wholly owned subsidiary, The Bank of the
Somerset Hills (the "Bank"), and Employee hereby accepts said employment and
agrees to render such services to the Employer beginning March 19, 2001, on the
terms and conditions set forth in this Agreement. In addition, the Employer
shall cause the Employee to immediately become a member of the Board of
Directors of both the Employer and the Bank as well as a

                                      -1-
                                     DRAFT
<PAGE>
                                     DRAFT

member of the Executive Committee of each of those Boards and to remain a member
of such Boards and Executive Committees throughout the term of this Agreement,
including any Renewal Periods. The initial term of employment under this
Agreement shall commence on March 19, 2001 (the "Commencement Date"), and shall
terminate three (3) years from the Commencement Date (the "Initial Employment
Period"). Unless either party gives six (6) months prior written notice of
nonrenewal (a "Notice of Nonrenewal"), this Agreement shall automatically be
extended for an additional one (1) year period, and, for one (1) year periods
thereafter (collectively the "Renewal Period(s)"). Notices shall be sent by
Certified Mail, Return Receipt Requested as follows:

                                 To the Employer

                             Somerset Hills Bancorp
                               155 Morristown Road
                             Bernardsville, NJ 07924
                            Attn: Board of Directors

                                 To the Employee

                             Stewart E. McClure, Jr.
                               90 Spring Hill Road
                                Mendham, NJ 07945

     During the term of this Agreement the annual compensation of Employee shall
be no less than the base salary ("Base Salary") for the immediately preceding 12
months. (The Employees' Base Salary, together with any cash bonus which may be
awarded to Employee, hereafter called "Total Compensation"). References herein
to the term of this Agreement shall refer both to the Initial Employment Period
and any Renewal Periods.

     If proper Notice of Nonrenewal is sent effective at the end of the Initial
Term or any Renewal Period, this Agreement shall terminate at the end of the
then current term without any liability of the parties hereto to the other
except for performance of their respective obligations under this Agreement and
other obligations owed arising out of the employment relationship which may be
imposed and/or required by applicable law.

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                                     DRAFT
<PAGE>
                                     DRAFT

     1.2 During the term of this Agreement, the Employee shall perform such
executive services for the Employer that are consistent with his titles as may
from time to time be assigned to him by the Employer's Board of Directors.

     1.3 During the term of this Agreement, Employee shall not be engaged in
gainful employment for any other employer and shall devote his full time,
energy, skill and attention to the performance of his duties and
responsibilities and shall perform them diligently, loyally and competently.

     II. COMPETITIVE ACTIVITIES

     2.1 Employee agrees that during the term of his employment hereunder,
except with the express written consent of the Board of Directors of the
Employer, he will not, directly or indirectly, engage in or make any financial
investment in any firm, corporation, business entity or business enterprise
competitive with or to any business of the Employer; provided, however, that
Employee shall not thereby be precluded or prohibited from owning passive
investments, including investments in the securities of other financial
institutions of not more than five percent (5% ) of its outstanding capital
stock, so long as such ownership does not require him to devote substantial time
to management or control of the business or activities in which he has invested.

     2.2 Restrictive Covenants.

          1. Non-Solicitation of Customers. For a period of one (1) year from
     the date of termination, Employee will not actively solicit or induce any
     person, corporation, or other entity that is a customer of Employer or Bank
     to become a customer of any other person, firm, corporation, or other
     entity which directly or indirectly competes with Employer, or approach any
     such person, firm, corporation, or other entity for such purpose or
     authorize or knowingly approve the taking of such actions by other persons,
     without the prior written consent of Employer. This shall not be deemed to
     prohibit (i) responding to

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                                     DRAFT

     requests for service initiated by customers of Employer, (ii) solicitation
     of the public at large through television, radio, newspapers, magazines,
     newsletters or Internet home pages, or (iii) resolicitation by the
     competitor of persons, firms, corporations or other entities who were
     customers of both Employer and the competitor on the date hereof for those
     services provided to the customer by the competitor on the date hereof.

          2. Non-Solicitation of Employees. For a period of one (1) year from
     the date of termination, Employee will not solicit or induce any person who
     is an employee of Employer or was such at any time within three months
     prior to the date hereof to become employed by any other person, firm or
     corporation or approach any such employee for such purpose or authorize or
     knowingly approve the taking of such actions by other persons, without the
     prior written consent of Employer.

          3. Non-Disclosure of Proprietary Information. Employee acknowledges
     that during the course of Employee's employment with Employer, Employee
     received, obtained or became aware of or had access to proprietary
     information, lists and records of customers and trade secrets which are the
     property of Employer and which are not known by competitors or generally by
     the public ("Proprietary Information") and recognizes such Proprietary
     Information to be valuable and unique assets of Employer. For purposes of
     this subparagraph: (i) Proprietary Information is deemed to include,
     without limitation, (A) marketing materials, marketing manuals, policy
     manuals, procedure manuals, policy and procedure manuals, operating manuals
     and procedures and product documentation, (B) all information about
     pricing, products, procedures, practices, business methods, systems, plans,
     strategies or personnel of Employer, (C) circumstances surrounding the
     relationships with knowledge of, or information about the customers,
     clients and accounts of Employer, including, but not limited to, the
     identity of current active

                                      -4-
                                     DRAFT
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                                     DRAFT

     customers or prospects who have been contacted by Employer, the expiration
     dates and other terms of loans or deposit or other banking relationships,
     details or special product provisions or special combinations of products,
     or special prices, and (D) all other information about Employer which has
     not been disclosed in documents filed with the U.S. Securities and Exchange
     Commission or otherwise publicly disseminated by Employer, whether or not
     that information is recorded and notwithstanding the method of recordation,
     if any; and (ii) Proprietary Information is deemed to exclude all
     information legally in the public domain. Employee agrees to hold the
     Proprietary Information in the strictest confidence and agrees not to use
     or disclose any Proprietary Information, directly or indirectly, at any
     time for any purpose, without the prior written consent of Employer or to
     use for Employee's benefit or the benefit of any person, firm, corporation
     or other entity (other than Employer) any Proprietary Information, and to
     use Employee's best efforts to prevent such prohibited use or disclosure by
     any other persons. Employee has returned all Proprietary Information in
     Employee's possession or control of Employee.

     4. Remedies. Employee hereby acknowledges that Employee's duties and
responsibilities under this Paragraph 2.2 are unique and extraordinary
and that irreparable injury may result to Employee in the event of a breach of
the terms and conditions of this Paragraph 2.2, which may be difficult to
ascertain, and that the award of damages would not be adequate relief to
Employer. Employee therefore agrees that in the event of Employee's breach of
any of the terms or conditions of this Paragraph 2.2, Employer shall have the
right to such equitable relief as may be appropriate under the circumstances, in
addition to any other remedies to which the Employer may be entitled at law.

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     III. COMPENSATION AND OTHER BENEFITS

     3.1 Compensation. For the first year of the Initial Employment Period,
("IEP"), Employer shall pay Employee a Base Salary at the rate of $175,000 per
year, as well as a cash bonus in an amount to be decided by the Employer but
which shall not be less than $25,000, payable no later than the last day of the
first year of the IEP. Both Base Salary as well as the cash bonus for each
subsequent year of the IEP and the Renewal Periods shall be as determined by the
Board of Directors of the Employer but Base Salary shall always be in an amount
equal to or greater than the amount paid as Base Salary during the previous year
increased (but not decreased) by a percentage equal to the percentage increase
in the Consumer Price Index for all urban consumers for New York, New York,
Northeastern New Jersey (1982-84 = 100), as issued by the Bureau of Labor
Statistics of the U.S. Department of Labor ("CPI"), from the first day of the
immediately preceding twelve months of employment to the first day of the then
current term. The Base Salary shall be payable in equal weekly installments or
in such other installments as may be agreed upon by the Employer and Employee.

     3.2 Options. Subject to necessary approvals, the Employer shall adopt a
Stock Option Program known as the Somerset Hills Bancorp 2001 Combined Stock
Option Plan (`Program"). Pursuant to the terms of the Program, Employer shall
cause its Human Resources Committee to grant to Employee, at no cost to him,
options to purchase 100,000 shares of the Employer's common stock as of the date
of such grant, which shall be the date of this Agreement, the maximum allowable
number of which shall be incentive stock options ("ISO's"), as defined in
Section 422 of the Internal Revenue Code of 1986 as amended ("Code") and the
remainder of which shall be nonqualified stock options. Of that amount, options
for 50,000 shares (including all ISO's) will vest immediately. Options for the
remaining 50,000 shares shall vest 25,000 on the first anniversary and 25,000 on
the second anniversary of Employee's employment provided the Employee has not
been terminated for just cause as defined in this Agreement. Options will be
available after stockholder approval which is anticipated in April, 2001. The
options shall not otherwise be contingent on any event, and shall be
non-assignable and non-transferable other

                                      -6-
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                                     DRAFT

than by will or the laws of descent and distribution, but shall be subject
to the six month holding period set forth in the Program. The exercise price
shall be the price as set forth in the Program. Notwithstanding the foregoing,
the aforesaid options shall immediately vest and become exercisable on an
accelerated basis upon the occurrence of any of the following events: (i) the
death or incapacity of Employee, (ii) change of control of the Employer as
defined in Section 7.6 (b) hereof, or (iii) termination of employment by the
Employer other than for "just cause" pursuant to Section 7.1 hereof.

     If the Program is never adopted for any reason, or if the options to be
granted to Employee hereunder are otherwise unavailable to Employee, the
Employer shall grant Employee other nonqualified stock options under the same
pricing and other terms as the options which would have been available under the
Program.

     The exercise price for any shares shall be paid in full in cash at the time
an option is exercised or by such other method as may be permitted by the
Program from time to time. Promptly after the exercise of an option and the
payment of the full option price, Employee shall be entitled to the issuance of
a stock certificate evidencing his ownership of such shares. Employee shall have
none of the rights of a shareholder until shares are issued to him.

     The shares subject to the options and the price per share shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of stock subsequent to the date hereof resulting from (1) a subdivision
or consolidation of shares or any other capital adjustment, (2) the payment of a
stock dividend, or (3) any other increase or decrease in the number of such
issue of shares effected without receipt of consideration by Employer. If
Employer shall be the surviving corporation in any merger or consolidation, any
such option shall pertain, apply, and relate to the securities to which a holder
of the number of shares of stock subject to the option would have been entitled
to receive in exchange for his shares of stock in the Employer in such merger or
consolidation.

     3.3 Life Insurance. Employer shall maintain at its sole expense one or more
life insurance

                                      -7-
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                                     DRAFT

policies on Employee's life with a face value totaling two (2) times Employee's
Base Salary for the most recently completed year of employment, with the
beneficiary or beneficiaries to be selected by Employee. Such policy or policies
shall be in addition to any life insurance provided as part of the fringe
benefits to which Employee is entitled pursuant to Section IV of this Agreement.

     3.4 401(K) Plan. Employee shall become eligible for full participation in
Employer's 401(K) Plan in accordance with the terms of such plan and, if
permitted under such plan, Employer will waive any waiting periods for
participation.

     IV. PARTICIPATION IN RETIREMENT AND MEDICAL PLANS; FRINGE BENEFITS,
VACATIONS

     4.1 The Employee shall be entitled to participate in all plans and benefit
programs of the Employer in effect for its executive personnel from time to
time, including, but not limited to pension, profit-sharing, or other retirement
benefits and life, medical, dental and disability insurance and hospitalization
or reimbursement plans, or other plans that the Employer may hereafter adopt for
the benefit of their employees. The foregoing notwithstanding, Employee's
severance benefits shall be limited solely to those severance benefits expressly
provided for in this Agreement.

     4.2 Employee shall be entitled to five (5) weeks' vacation each year, three
floating holidays plus reasonable sick days. Employee shall be permitted to
carry over any vacation time that was not taken during the preceding calendar
year for one additional year.

     4.3 (a) If the Employee shall become disabled or incapacitated to the
extent that he is unable to perform any of his material duties, he shall
nevertheless continue to receive the following percentages of his Base Salary,
in addition to any benefits which may be in effect for employees of the Employer
under Section 4.1 of this Agreement, for the following periods of his
disability: 100% for the first 6 months, 60% for the next 6 months, and 50%
thereafter for the remaining portion of the current employment term (Employee
may also purchase increased benefits at his own expense). Upon returning

                                      -8-
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                                     DRAFT

to active duty, the Employee's full Base Salary as set forth in this Agreement
shall be reinstated. In the event that said Employee returns to active
employment on other than a full-time basis, then his Base Salary (as set forth
in Section 3.1 of this Agreement) shall be reduced in proportion to the time
spent in said employment.

     4.3 (b) There shall be deducted from the amounts paid to Employee hereunder
during any period of disability, as described in Section 4.3(a) hereof, any
amounts actually paid to Employee pursuant to any disability insurance or other
similar such program which the Employer has instituted or may institute on
behalf of their employees for the purpose of compensating Employee in the event
of disability, including workmen's compensation benefits and social security
disability benefits and for which the Employer has paid. Employee shall have the
duty to apply for such benefits and shall provide to the Employer the right to
set off from any amounts so received the amount of payments made hereunder.

     4.3 (c) For purposes of this Agreement, Employee shall be deemed disabled
or incapacitated if the Employee, due to physical or mental illness, shall have
been absent from his duties with the Employer on a full-time basis for six
consecutive months during which time Employee will be paid in full; provided,
that if Employee shall not agree with a determination to terminate him because
of disability or incapacity, the question of the Employee's ability shall be
submitted to an impartial and reputable physician selected by the parties hereto
and such physician's determination on the question of disability or incapacity
shall be binding.

     4.4 If Employee's employment hereunder is terminated by reason of his
death, then:

         (a) The Employer will pay Employee's beneficiary or beneficiaries, or
his estate, as the case may be, the Employee's Base Salary for a period equal to
the longer of (a) 60 days or (b) the end of the calendar quarter in which the
death occurs.

         (b) The Employer will cause to be continued, at the Employer's expense,
medical and

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                                     DRAFT

dental insurance, hospitalization and reimbursement plans, and other health
plans adopted by the Employer for the benefit of its Employees from time to
time, substantially identical to the coverage maintained by the Employee, for
the members of Employee's immediate family. This coverage will cease twelve (12)
months from the date of death.

         (c) Employee's beneficiary or beneficiaries, or his estate, as the case
may be, will have a period of up to twelve (12) months (or such longer period as
may be specified in the Program or applicable option agreement) from the date of
death within which to exercise any outstanding options Employee held at the time
of his death for the purchase of any securities of the Employer, all of which
options will become fully vested and exercisable by said beneficiary,
beneficiaries or estate on the date of his death. Such options will expire at
the end of the twelve (12) month period (or such longer period as may be
specified in the Program or applicable option agreement).

     V. ADDITIONAL COMPENSATION AND BENEFITS

     5.1 During the term of the Agreement, Employee will be entitled to
participate in and receive the benefits of any stock option, profit sharing, or
other plans, benefits and privileges given to employees and executives of the
Employer or their subsidiaries and affiliates which may come into existence
hereafter, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employer or any Committee of such
Board or of the Employer selected for such purpose; and, to the extent Employee
is otherwise eligible and-qualifies, to so participate in and receive such
benefits or privileges. The Employer shall not make any changes in such plans,
benefits or privileges which would adversely affect Employee's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers (Senior Vice President or above) of the Employer and
does not result in a proportionately greater adverse change in the rights of or
benefits to Employee as compared with any other executive officer of the
Employer. Nothing paid to Employee under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in lieu of Total
Compensation payable to Employee pursuant to Section 3.1 hereof.

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     VI. EXPENSES

     6.1 Employer shall at its sole expense provide Employee with an automobile,
or an appropriate allowance. Maintenance, taxes, insurance and all other
operating costs shall be paid by Employer. Employer shall reimburse the Employee
or otherwise provide for or pay for all reasonable expenses incurred by Employee
in furtherance or in connection with the business of the Employer including, but
not by way of limitation, traveling expenses, and all reasonable entertainment
expenses (whether incurred at the Employee's residence, while traveling, or
otherwise) subject to such reasonable limitations as may be established by the
Board of Directors of the Employer. Employer shall also, at its expense, pay the
Employee's reasonable annual membership dues and business-related expenses at
the Employee's golf club. If such expenses are paid in the first instance by
Employee, Employer will reimburse the Employee therefor. The Employee shall be
entitled to receive reimbursement for such expenses incurred by him in
connection with the performance of his duties herein within fifteen (15) days
after delivery by him of an itemized statement.

     VII. TERMINATION

     7.1 The Employer shall have the right, at any time upon prior written
Notice of Termination satisfying the requirements of Section 7.6(c) hereunder,
to terminate Employee's employment hereunder, for just cause. For the purpose of
this Agreement, "termination for just cause" shall mean termination for willful
misconduct, breach of fiduciary duty to the Employer or the Bank involving
personal profit, conviction of a felony, or willful violation of any material
law, rule or regulation (other than traffic violations or similar offenses),
removal of the Employee from office and/or permanent prohibition of Employee
from participating in the conduct of the Employer's affairs by an order issued
by the FRB or by the Department, willful violation of a final cease-and-desist
order, willful or intentional breach by Employee of his duties hereunder, or
persistent negligence or misconduct in the performance of such

                                      -11-
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                                     DRAFT

duties, all of which conduct must be significantly and demonstrably injurious to
the Employer. For purposes of this paragraph, no act or failure to act on
Employee's part shall be considered "willful" unless done or omitted to be done
by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Employer; provided, however, that any
act or omission to act on the Employee's part in reliance upon an opinion of
counsel to the Employer or counsel to the Employee shall not be deemed to be
willful. Employee shall not be deemed to have been terminated for just cause
unless and until there shall have been delivered to him a copy of a
certification by a majority of the non-officer members of the Board of Directors
of Employer finding that, in the good faith opinion of such majority, Employee
was guilty of conduct which was deemed to be just cause and specifying the
particulars thereof in detail, after reasonable notice to Employee and an
opportunity for him, together with counsel to Employee, to be heard before such
majority and to cure any such breach or failure to the reasonable satisfaction
of the Employer.

     7.2 In the event employment is terminated for just cause pursuant to
Section 7.1 hereof, Employee shall have no right to compensation or other
benefits for any period after such date of termination. If Employee is
terminated by the Employer other than for just cause pursuant to Section 7.1
hereof and prior to a change in control of the Employer as defined in Section
7.6(b) hereof, Employee's right to compensation and other benefits under this
Agreement shall be as set forth in Sections 7.7(a) and (c) hereof. If Employee
is terminated by the Employer other than for just cause pursuant to Section 7.1
hereof or Employee's employment is terminated by death, and after a change in
control of the Employer as defined in Section 7.6(b) hereof, Employee's right to
compensation and other benefits under this Agreement shall be as set forth in
Sections 7.7(b) and (c) hereof.

     7.3 Employee shall have the right, upon prior written Notice of Termination
of not less than thirty (30) days satisfying the requirements of Section 7.6(c)
hereof, to terminate his employment hereunder, but in such event, Employee shall
have no right after the date of termination to compensation

                                      -12-
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                                     DRAFT

or other benefits as provided in this Agreement, unless such termination is for
Good Reason, as defined pursuant to Section 7.6(a) hereof. If Employee provides
a Notice of Termination for Good Reason, as defined, the date of termination
shall be the date on which a Notice of Termination is given.

     7.4 If Employee is suspended from office and/or temporarily prohibited from
participating in the conduct of the Employer's affairs pursuant to notice served
by the Federal Reserve Board ("FRB") or by the Department of Banking and
Insurance of the State of New Jersey ("Department"), the Employer's obligations
under this Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. Total Compensation and benefits, however, shall
continue to be paid to Employee unless FRB or Department cites personal conduct
of Employee which would permit termination for just cause. If the charges in the
notice are dismissed, and/or the notice from FRB or Department is rescinded,
Employer shall: (i) pay Employee all of the benefits withheld while contract
obligations were suspended and (ii) reinstate any of its obligations which were
suspended.

     7.5 In the event that Employee is terminated in a manner which violates the
provisions of Section 7.1, as determined by a court of competent jurisdiction,
Employee shall be entitled to reimbursement for all reasonable costs, including
attorneys' fees, incurred by Employee in challenging such termination. Such
reimbursement shall be in addition to all rights to which Employee is otherwise
entitled under this Agreement.

     7.6 (a) Employee may terminate his employment hereunder for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean (A) a proven failure by
Employer to comply with any material provision of this Agreement, which failure
has not been cured within ten (10) days after a notice of such noncompliance has
been given by Employee to the Employer, or without Employee's express written
consent, the assignment to Employee of any duties inconsistent with Employee's
positions, duties, responsibilities and status with the Employer; (B) subsequent
to a change in control of the Employer as defined in Section 7.6(b) hereof and
without Employee's express written consent, the

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                                     DRAFT

assignment to Employee of any duties inconsistent with Employee's positions,
duties, responsibilities and status with the Employer immediately prior to a
change in control of the Employer, or a change in Employee's reporting
responsibilities, titles or offices as in effect immediately prior to a change
in control of the Employer, any removal of Employee from, or any failure to
re-elect Employee to, any of the positions held by Employee, except in
connection with a termination of employment for just cause, disability, death or
retirement or pursuant to Section 7.1 hereof, a reduction by the Employer in
Employee's Total Compensation as in effect immediately prior to a change in
control or as the same may be increased from time to time, or the requirement
that Employee be relocated to an office which is more than 25 miles from the
current principal executive office of the Employer, or the failure of the
Employer to continue in effect any bonus, benefit or compensation plan, life
insurance plan, health and accident plan or disability plan in which Employee is
participating at the time of a change in control of the Employer, or the taking
of any action by the Employer which would adversely affect Employee's
participation in or materially reduce Employee benefits under any of such plans
unless specifically agreed by Employee in writing; (C) subsequent to a Change in
Control, service on the Employee by the Employer of a Notice of Nonrenewal
pursuant to Section 1.1; or (D) any purported termination of Employee's
employment which is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (c) hereof (and for purposes of this Agreement, no
such purported termination shall be effective).

         (b) For purposes of this Agreement, a "Change in Control" of the
Employer shall be deemed to occur (i) upon a Change in Control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A or Item 1a of Form 8-K promulgated under the Securities Exchange
Act of 1934 ("Exchange Act"); or (ii) if any "person" (including as such term is
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act, but excluding the
Employer and its subsidiaries or an employee benefit plan of the Employer (or
any fiduciary thereof) or a corporation

                                      -14-
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                                     DRAFT

controlled by the Employer's shareholders in substantially the same character
and proportions as their ownership of stock of the Employer, or an underwriter
temporarily holding securities pursuant to an offering of such securities) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Employer representing twenty-five percent (25%) or more of the combined voting
power of the Employer's outstanding securities then entitled to vote for the
election of directors; or (iii) if during any period of two (2) consecutive
years, individuals who at the beginning of such period constitute the Board the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof (excluding, for purposes of this calculation, any director who dies
during such period); provided, however, if the election or appointment of any
new director was approved by the Incumbent Board, such new director shall
constitute a member of the Incumbent Board; or (iv) if the Employer shall meet
the delisting criteria of any exchange on which its shares are or become listed,
or any successor exchange in respect of the number of publicly-held shares or
the number of shareholders holding one hundred (100) shares or more; (v) if the
Board shall approve any merger, consolidation, issuance of securities or
purchase of assets, the result of which would be the occurrence of any event
described in clause (i), (ii), (iii) or (iv) above or that the shareholders of
the Employer receive or retain stock having less than 51% combined voting power
of the company resulting from such transaction in substantially the same
proportions as their prior ownership of the Employer.

         (c) Any termination of Employee's employment by the Employer or by
Employee shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a dated notice which shall (i) indicate the specific termination provision
in this Agreement relied upon; (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment under the provision so indicated (if applicable); (iii) specify a
date of termination, which shall be not less than thirty (30) nor more than
ninety (90) days after such Notice of Termination is given, except in the case
of the

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                                     DRAFT

Employer's termination of Employee's employment for just cause pursuant to
Section 7.1 hereof, in which case the Notice of Termination may specify a date
of termination as of the date such Notice of Termination is given, or, in the
case of Employee's termination of his employment pursuant to Section 7.3, in
which case the date of termination shall be thirty (30) days from the date of
notice; and (iv) be given in the manner specified in Section 8.3 hereof.

         (d) Employee shall not be required to mitigate the amount of any
payment provided for in Section 7.7 by seeking other employment or otherwise.

     7.7 (a) In the event the Employee is terminated (including, without
limitation, service by the Employer of a Notice of Nonrenewal pursuant to
Section 1.1), and it is finally determined that it was without just cause, or
the Employee shall terminate his employment for Good Reason pursuant to Section
7.6, in each case prior to a Change in Control, Employee will immediately
receive a lump sum payment equal to the greater of the remaining amount due him
for the remaining term of the IEP, or two (2) times Base Salary plus two (2)
times the bonus he received in the preceding contract year;

         (b) If Employee is terminated (including, without limitation, service
by the Employer of a Notice of Nonrenewal pursuant to Section 1.1), other than
for just cause, or Employee terminates his employment for Good Reason, in each
case after a Change in Control occurs, Employee will immediately be entitled to
a lump sum payment of three (3) times Base Salary and three (3) times the bonus
he received in the preceding contract year provided however that if the Employee
is employed by the Acquirer in a position and on terms acceptable to him after
the change of control for at least 2 years, he shall only be immediately
entitled to two and one-half (2 1/2) times Base Salary and bonus;

         (c) In the event the Employee is terminated without just cause, or
there is a change of control and the Employee is not employed in a position and
on terms acceptable to him after the change of control for at least two years,
or Employee terminates his employment for Good Reason, Employee will be entitled
to continue his medical and insurance coverage for two (2) years from

                                      -16-
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                                     DRAFT

termination, or until he receives medical or insurance coverage from a new
employer; and will be entitled to continue receiving all automobile and club
membership perquisites for a period of one (1) year.

     VIII. MISCELLANEOUS

     8.1 Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any rights or privileges to
Employee as provided in this Agreement shall not be in lieu or derogation of the
rights and privileges that Employee now has under any plan or benefit presently
outstanding.

     8.2 This Agreement may not be modified, changed, amended, or altered except
in a writing signed by the Employee or by his duly authorized representative and
by a duly authorized officer of the Employer.

     8.3 All notices given or required to be given herein shall be in writing or
sent by United States first-class certified or registered mail, postage prepaid,
to Employee (or to Employee's spouse or estate upon Employee's death) at
Employee's last known address, and to the Employer at their principal offices.
All such notices shall be effective when deposited in the mail in the manner
specified in this Section 8.3. Either party by a notice in writing may change or
designate the place for receipt of all such notices.

     8.4 No course of conduct between Employer and Employee and no delay or
omission of Employer or Employee to exercise any right or power given under this
Agreement shall: (i) impair the subsequent exercise of any right or power or
(ii) be construed to be a waiver of any default or any acquiescence in or
consent to the curing of any default while any other default shall continue to
exist, or be construed to be a waiver of such continuing default or of any other
right or power that shall theretofore have arisen; and every power and remedy
granted by law and by this Agreement to any party hereto may be exercised from
time to time and as often as may be deemed expedient. All such rights and powers
shall be cumulative to the fullest extent permitted by law.

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                                     DRAFT

     IX. SUCCESSORS, NON-ASSIGNABILITY OF THE AGREEMENT

     9.1 This Agreement shall inure to the benefit of and be binding upon
Employee and to the extent applicable, his heirs, assigns, executors, and
personal representatives and Employer, and their respective successors and
assigns, including, without limitation, any person, partnership, or corporation
which may acquire all or substantially all of Employer's assets and business, or
with or into which Employer may be consolidated or merged, and this provision
shall apply in the event of any subsequent merger, consolidation, or transfer.

     9.2 This Agreement is personal to each of the parties and none of the
parties may assign or delegate any of its rights or obligations under this
Agreement without the prior written consent of the other parties.

     X. APPLICABLE LAW

     10.1 This Agreement shall be governed in all respects and be interpreted by
and under the laws of the State of New Jersey, except to the extent that such
law may be preempted by applicable Federal law, including regulations, opinions
or orders duly issued by the FRB ("Federal Law"), in which event this Agreement
shall be governed and be interpreted by and under Federal Law.

     10.2 In the event of any disputes concerning the interpretation,
application or the performance or nonperformance of any rights or duties under
this Agreement, the parties agree and hereby exclusively submit to the
jurisdiction of the Superior Court of New Jersey.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the ____ day of ____________, 2001.

WITNESS: SOMERSET HILLS BANCORP

______________________________              By:_________________________________
                                            Name:
                                            Title:

WITNESS:

______________________________              ____________________________________
                                                    Stewart E. McClure, Jr.

                                      -18-
                                     DRAFT

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