**Exhibit 14.1**

 

SUN BANCORP, INC. AND SUBSIDIARIES

CODE OF ETHICS

(DIRECTORS AND OFFICERS)

PREFACE

 

Revised****January 20,2004

 

The continued success of Sun Bancorp, Inc. (“SUN”) and itssubsidiaries, SUBI Services, LLC, SunBank, Guaranty Bank, Sun Abstract andSettlement Services, LLC (“Sun Title”), Sun Investment Services, Inc. (“SunInvestment”), SunBank Wealth Management and Private Banking (“WealthManagement”), SunBank Dealer Center (“Dealer Center”), Bank Capital Leasing“(Bank Capital”), Mid-Penn Insurance Associates (“Mid-Penn”), Beacon LifeInsurance (“Beacon Life”) as well as any future subsidiaries (collectivelyherein referred to as the “SUN Companies”) is directly related to the confidence and trust our Customers andShareholders have in us.  It isimportant that all our Directors and Officers conduct their business andpersonal affairs within a framework of high ethical standards to retain suchconfidence and trust.  The accompanyingCode of Ethics (“Code”) sets forth rules governing the conduct of SUN and itssubsidiaries’ Directors and Officers. The Code is intended to guide us so that SUN and its subsidiaries’reputation for integrity and trust is preserved and strengthened.  Adherence to this Code should prevent thedevelopment of improper relationships between Directors, Officers, Employeesand Customers.

 

The basic premise of the Code is that each Director and Officerrepresents SUN and its subsidiaries and is obligated, without regard to theirpersonal or financial interests and activities, to act in SUN and itssubsidiaries’ best interest and the best interest of its Customers andStockholders.  SUN and its subsidiaries’Directors and Officers are expressly forbidden from using their associationwith SUN and its subsidiaries for personal gain or private advantage beyondauthorized compensation and benefits.

 

Directors and Officers are expected to be capable of recognizing andavoiding those situations where their financial or personal interests orrelationship might actually influence or appear to influence their judgment onmatters affecting SUN and its subsidiaries. Directors and Officers should understand that a conflict of interestarises when there is a mere appearance of a conflict.  A good rule to follow is when the activity in question might leadto a conflict (or even the appearance of a conflict) between the financial orpersonal interests of a Director or Officer or his or her Family and SUN andits subsidiaries, or its Customers, Prospective Customers, Stockholders orSuppliers, the activity must be avoided. Directors and Officers and members oftheir Families must also avoid engaging in any outside business activity whichwould result in anything more than routine and accepted business transactionswith SUN and its subsidiaries.

 

Directors, Officers and Employees are reminded of the particularimportance of the prohibitions of the Code relating to the (i) use of “insiderinformation” and (ii) the receipt of solicitation of gifts and bribes under theBank Bribery Act.  For a discussion ofthese topics, please refer to Article II and Article IV,respectively, of the Code.

 

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While it is not possible for the Code to contain all the rulesnecessary for the preservation and safeguarding of the public’s trust andconfidence in SUN and its subsidiaries and to avoid conflicts of interest, theCode is intended to provide SUN and its subsidiaries’ Directors and Officerswith the basic outline of these rules and corresponding responsibilities.  All of us at SUN and its subsidiaries mustfollow both the letter and the spirit of the Code at all times.  The Code supersedes all prior communicationsby SUN, SunBank and Sun Life, concerning the matter covered by the Code.

 

SUBI Services LLC, SunBank, Guaranty Bank, Sun Abstract and SettlementServices, LLC (“Sun Title”), Sun Investment Services, Inc. (“Sun Investment”),SunBank Wealth Management and Private Banking (“Wealth Management”), SunBankDealer Center (“Dealer Center”), Bank Capital Leasing “(Bank Capital”),Mid-Penn Insurance Associates (“Mid-Penn”), Beacon Life Insurance (“BeaconLife”) as well as any future subsidiaries (collectively herein referred to asthe “SUN Companies”) will seek to ensure continuing compliance andimplementation of the Code through audit and personnel procedures.  From time to time, the Code may also besupplemented with Code Policy Bulletins. Upon issuance, these Code Policy Bulletins will become a part of theCode. Violation of the Code is grounds for discipline ranging from reprimand toimmediate discharge.  Violation of theCode may also result in the imposition of serious civil and criminal penaltiesfor SUN and its subsidiaries and any of their Directors or Officers.

 

All Directors and Officers are asked to carefully read the Code.  Directors and Officers should complete, signand return the accompanying Director/Officer Acknowledgment andQuestionnaire.  Similar questionnaireswill be sent to all Directors and Officers on an annual basis.  Each Director and Officer is expected topromptly report, to an appropriate member of the SUN company’s SeniorManagement, the existence of any relationship or interest involving arepresentative of SUN which might involve or appear to involve a conflict ofinterest.  Bear in mind that difficultquestions of judgment may arise in determining whether a conflict of interestexists.  Any doubts should be resolvedby discussion of the question with the member of the appropriate SUN companySenior Management.

 

Your cooperation in complying with and enforcing the provisions of theCode will benefit all of us.

 

 
|                |   |
|---------------------|--------|
| President & CEO |
| SUN BANCORP, INC.   |

 

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DEFINITIONS USED IN THE CODE OF ETHICSOF SUN BANCORP, INC. AND ITS SUBSIDIARIES

1.               Auditor- The in-house auditor of SUN and SunBank

 

2.               Civic/Social/CharitableEntity -         Pennsylvania BankersAssociation, American Bankers Association, Bank Marketing Association, UnitedWay, Chamber of Commerce, Junior League, Rotary, Lions, Kiwanis, neighborhoodassociations, investment clubs, discussion groups, religious organizations,etc.

 

3.               Code-  Refers to the following Code ofEthics, applicable to the SUN companies and SUN officials.

 

4.               Corporation -  Refersto SUN BANCORP, INC.

 

5.               CorporationApprovals -   Means a writtenapproval issued by the Board of Directors of the Corporation, or its designatedcommittee on behalf of the Corporation or one of its subsidiaries.  Corporation approval will be requested bywritten application to the Secretary of the Corporation.  All Corporation approvals shall bedocumented in writing and submitted to the Secretary.

 

6.               Director -  Refers to aDirector of the Corporation or any of its subsidiaries.

 

7.               Employee -        Refers to and includes anyperson employed either full or part time, and where the context indicates,includes the Directors, Officers and Employees of SUN companies.

 

8.               Family Member(s)-       Means all near relativesincluding:  spouse, children, parents,grandparents, aunts, uncles, in-laws, siblings and dependents and any otherrelative or individual who is fifty percent (50%) or more financially dependenton the SUN company Director or Officer.

 

9.               Fiduciary -  Aposition of trust or special confidence.

 

10.         Gift -       The definition of gift mayinclude cash or property, special discounts, price concessions, specialpersonal items, special personal entertainment, (other than of a normal socialnature), special personal services, gratuitous personal services, personalfavors or special dispensations of any kind that could be attributed to therecipients position or responsibilities with SUN.

 

11.         Insider Information-    Material information notgenerally available to the public that could be expected to affect the judgmentof investors or any 

 

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other person as to whether or not to buy, sell or hold securities ofSUN or any other securities.

 

12.         Legal Counsel -      Refers to outside specialcounsel to the Corporation or any of its subsidiaries, as the contextindicates.

 

13.         Officer -      Refers to any Officer of anySUN company.

 

14.         Organization -     Any corporation, partnership,association, joint venture, club or other society or entity, formal orotherwise.

 

15.         Human Resource -       SUN’s or SunBank’s HumanResource Officer.

 

16.         Secretary -       Refers to the CorporateSecretary of the Corporation or as the context indicates of one of itssubsidiaries.

 

17.         Senior Management-       Any Officer who holds therank of Vice President or above of any SUN company.

 

18.         Senior ManagementApproval -      Writtenapproval issued by no less than two Senior Management personnel on behalf ofthe Corporation or one of its subsidiaries. All Senior Management approvals must be documented in writing andsubmitted to the Human Resource Officer.

 

19.         Supplier -      Any person or companysupplying goods, products, services and consulting advice (legal, accounting orany other type) to a SUN company or to a staff member in his/her capacity as aDirector or Officer of a SUN company.

 

20.         Sun Title – Refersto Sun Abstract and Settlement Services, LLC

 

21.         SunBank - Refersto SunBank and Guaranty Bank.

 

22.         Sun Investment -Refers to Sun Investment Services, Inc.

 

23.         Sun Life - Refersto Pennsylvania Sun Life Insurance Company.

 

24.         SUN - Refers toSUN BANCORP, INC.

 

25.         SUN Company(ies) -     Refers collectively to SUNBANCORP, INC. and its subsidiaries SUBI Services LLC, SunBank, Guaranty Bank,Sun Title, Sun Investment, Wealth Management, Bank Capital, Mid-Penn, BeaconLife and any other subsidiary hereafter established.

 

26.         SUN Official(s) -         Includes, where the contextindicates, collectively the Directors, Officers, Employees, Attorneys andAgents of SUN and all its subsidiaries including SUBI Services LLC, SunBank,Guaranty Bank, Sun Title, Sun Investment, Wealth Management, Bank 

 

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Capital, Mid-Penn, Beacon Life and any other subsidiary hereafterestablished.

 

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SUN BANCORP, INC. AND SUBSIDIARIES

 

CODE CONCERNING CONFLICTS OF INTEREST,

BUSINESS ETHICS AND CORPORATE PAYMENTS

 

Revised August 31, 2003

 

 

I.                                         Introductionto the Code

 

A.           Reason for Code.  The reputation of the SUN companies, forfair dealing and integrity, is invaluable. The Code is designed to preserve and enhance the SUN companies’outstanding reputation.  Each Directorand Officer is aware that their business and personal dealings reflect upon SUNcompanies’ reputation.  The Codeoutlines the basic rules which will help prevent any appearance of improprietyor any activity which would adversely reflect on the SUN companies’ reputation.

 

B.             Basic Principles Supporting the Code.  It is the basic policy of the SUN companiesthat no Director or Officer or a Family Member should have any interest orposition, financial or otherwise, should make or receive any payment, or engagein any activity which conflicts or might reasonably appear to conflict with theproper performance of the Director’s or Officer’s duties, theirresponsibilities to the SUN companies, or which may tend to affect theirobjectivity with respect to transactions between the SUN companies and itsCustomers, Prospective Customers, Stockholders, Suppliers and others with whomcontact is made in the course of SUN companies’ business.

 

C.             Scope of Code.  The Code attempts to set out in broad termsthe general principles intended to govern the conduct of SUN companies’Directors and Officers.  However, it isimpossible, to explicitly delineate each and every activity which isinconsistent with SUN companies’ high ethical standards, or to set forth ruleswhich cover all conceivable situations in which an actual or are not intendedto be inclusive.  Rather, the provisionsof the Code serve as a helpful guide in applying SUN’s basic ethical principlesto a variety of situations.  A separateCode has been developed for SUN’s Employees, which is designed to address theirrelationship with SUN.  Our Directorsand Officers, by implementing the Code and adhering to its letter and spirit,will by their conduct and example accomplish the Code’s purpose.

 

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II.                                     Confidentialand Insider Information

 

A.           General.  Confidential information with respect to the SUN companies’business affairs and those of its Customers, Prospective Customers,Stockholders and Suppliers acquired in the course of business shall be usedsolely for corporate purposes and not for personal gain.  Under no circumstances should confidentialinformation be discussed with or divulged to unauthorized persons.  If you have any doubt that informationconcerning Customers should be disclosed, keep it confidential and do notdisclose it.  For example, do notdisclose that a person is a SUN Customer or has any business relationship witha SUN company unless there is a valid business reason to do so.  If you have any questions concerning thismatter of disclosure of confidential Customer information, discuss them withthe Officer to whom they report.

 

B.             Customer, Stockholder and SupplierInformation.  The relationshipbetween SUN companies and its Customers, Stockholders and Suppliers is based onmutual trust and confidence.  Customers,Stockholders and Suppliers expect SUN companies to hold information regardingtheir personal and business in strict confidence at all times.  Information concerning a Customer’s,Stockholder’s or Supplier’s business relationship, loans, accounts, balances,credit ratings, experiences, or any other transaction with SUN companies isstrictly confidential and must not be discussed or divulged in any manner tounauthorized persons.  Specific policiesand procedures have been developed for the guidance of SUN companies’ personnelwho are authorized to release or discuss Customer, Stockholder and Supplierinformation under certain circumstances. Questions regarding requests to discuss or release such informationshould be directed to the Officer designated to review such requests prior tothe discussion or release of such information.

 

C.             Corporate Affairs.  Directors and Officers must not discussconfidential matters or divulge confidential information related to the affairsof SUN companies, either inside or outside SUN companies’ offices, except tothe extent necessary for the proper conduct of SUN companies’ business.

 

D.            Customer Lists and Other ConfidentialInformation.  All records anddocuments concerning the business and affairs of SUN companies and the right touse SUN companies’ records are the confidential and the exclusive property ofSUN companies.  SUN companies’ recordsinclude, but are not limited to, their books and records; names, addresses,telephone numbers, assets and obligations carried in the accounts of SUN companies’Customers; computer software or hardware for use in computer or word processingequipment; training materials; and policy and procedure manuals, employeehandbooks and bulletins.  SUN companies’records include the originals and all copies of originals.  All SUN companies’ personnel are prohibitedfrom removing SUN companies’ records from their premises in either original orcopied form, except in the ordinary course of business for use in business orwith specific Senior Management approval. SUN companies’ personnel may not disclose 

 

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these records to any person or entity except in the ordinary course ofa SUN company’s conducting business.

 

E.              Insider Trading.  Insider trading is a crime that cancarry severe penalties.  If you knowmaterial, confidential information about Sun Bancorp, Inc. or any company withwhom Sun Bancorp, Inc. has a business relationship and you trade companysecurities, such as stocks or bonds, while in possession of that information ortell others about it before it is made public, you may have violated theinsider trading laws.  Please review theEmployee Handbook for details on our insider trading policy.

 

Material information is the type of news that would affect a reasonableinvestor’s decision on whether or not to invest in the company’s stock.  Examples include plans to issue securities,sharp changes in earnings patterns, changes in dividend rates, changes in keymanagement personnel, mergers, acquisitions, and important regulatory actionsaffecting the company.  This policyforbids you from trading not only in Sun Bancorp, Inc. stock, but also in thoseof its suppliers, customers or other companies with whom Sun Bancorp, Inc. hasa business relationship while in possession of material inside informationlearned in the course of your employment at Sun Bancorp, Inc.

 

We encourage all members of the Board of Directors and officers toinvest in Sun Bancorp, Inc. stock. However, if you have access to any information not readily available tothe public, you must be very careful when trading stock to be sure you have nottraded while in possession of material non-public information.  When you have such information:

 

•                  Do not tell anyone not authorized tohave the information.  A casual remarkto a friend may find its way to a broker and eventually to the entire financialcommunity thereby requiring the company to make a premature or unplanned publicannouncement.  This “tipping” may beillegal and damaging to the company.

 

•                  In compliance with the Sarbanes-OxleyAct of 2002, do not trade and trading is prohibited in the company’s stock (orthat of an applicable outside company) until the news has been made public fora least two full business days. Circumstances suggesting the possibility of insider trading may resultin an investigation by governmental authorities of company and stockbrokerrecords of stock trading transactions. This investigation could damage Sun Bancorp, Inc.’s reputation andresult in liability or penalties, including criminal charges and fines againstthe individual.

 

•                  This policy against insider tradingalso covers transfers into and out of company stock or savings plans andchanges in patterns involving purchases of Sun Bancorp, Inc. stock within theplans.  However, generally, regularscheduled monthly purchases of Sun Bancorp, Inc. stock within plans are notprohibited.

 

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If you are planning toeffect a transaction in Sun Bancorp, Inc. securities, contact our InsiderTrader Compliance Officer, in advance.

 

F.              Interdepartmental Use of ConfidentialInformation.  Generally,confidential information available to one department of a SUN company should becommunicated to other departments only when there exists a legitimate businessneed to do so.  Because of therequirement of the banking and securities laws, absent specific Senior Managementapproval, information unavailable to the public and confidential informationreceived either by the Investment or Loan Divisions, must not be communicatedto SunBank’s Trust Department nor shall personnel in SunBank’s Trust Departmentrequest such information from other departments of a SUN company to be used forinvestment or discretionary funds or advice of Customers and vice versa.

 

III.                                 Personal andFinancial Investment Matters

 

Section A, C, and D of this Article III of the Code applyonly to SUN companies’ Officers and not to SUN companies’ Directors.

 

A.           General.  Personal investments and finances should be managed in a mannerconsistent with employment with a banking institution or affiliate.  This obligation requires that Officers exerciseprudence in making personal investments and credit decisions and avoidsituations which might influence judgments made or advice given on behalf ofSUN companies in the course of their business.

 

B.             Investments.  No Director or Officer of a SUN companyshall purchase or sell a security or other investment for their account, theaccount of a Family Member, or any other person, on the basis of knowledge oranticipated or probable changes in a SUN company’s investment policy, on thebasis of knowledge that a SUN company is effecting or proposes to effecttransactions in a particular security or investment, or on the basis of anyother insider information.  Directorsand Officers must not use their position to obtain leverage to purchase newissues or thinly traded securities for their own account, the account of aFamily Member, or any other person. Officers who purchase or sell securities for SUN cannot engage inpersonal securities transactions with SUN Securities Dealers or accept anygratuities from such Dealers.  Thepurchase of stocks, bonds, notes, debentures, money market instruments, realestate securities or other investments which might be considered purchased forspeculative purposes, rather than for investment purposes, should always beconsistent with the Director’s or Officer’s means and ability to assume therisks involved.  In addition, Directorsand Officers are encouraged to purchase SUN stock as a long term investment inthe company they work for.

 

Officers and Employees who are directlyinvolved in purchasing and selling bank securities are prohibited, withoutspecific prior Board approval, from engaging in personal securitiestransactions with firms with whom SUN companies deal.  Directors, Officers and Employees are prohibited from

 

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receiving gifts, gratuities or travelexpenses from firms with whom SUN companies conduct business and theirpersonnel.

 

C.             Margin and Future Transactions.  Margins and future transactions, by theirvery nature, involve an element of speculation.  Margin and future accounts must be carefully maintained andutilized only where the risk is within limits which the Officer canhandle.  The opening of a margin orfuture account* requires SUN’s Board of Directors written approval.  (*All Officers who currently have such accountsshould advise the Human Resource Officer that they do have a margin account).

 

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D.            Borrowing.  Officers should borrow only from commercial banks, otherreputable companies, institutions which regularly lend money or a FamilyMember.  The terms of such borrowingsfrom banks is limited by law as may only be done on a normal basis with nofavored treatment.  Officers and theirFamily Members are not permitted to borrow from SUN Customers and Suppliers,except those who engage in lending in the usual course of their business andthen only on terms customarily offered to others under similar circumstanceswithout special concessions as to interest rate, terms, collateral, security,repayment terms and the like.  AllExecutive Officers shall report annually to the Auditor all loans on which theyare obligated aggregating in excess of Twenty-Five Thousand Dollars($25,000.00), excluding mortgage loans for their principal residence.  All Executive Officers specified under theresolution of the appropriate SUN company Board of Directors with respect tothe application of Federal Reserve Board Regulation O are reminded thatRegulation O requires them to report, within ten (10) days of the date ofborrowing, any borrowing from another bank which is in excess of the amountthat they could borrow for the same type of loan from a SUN company.

 

E.              Limits on Authority.  It is improper for Directors or Officers toexploit their position with a SUN company, or their name or property for gainor profit or to further the Directors’ or Officers’ outside business, financialor other interests, or to allow such interests to affect or impair theperformance of their responsibilities to a SUN company or its Customers,Prospective Customers, Stockholders or Suppliers.  Directors and Officers are not permitted to represent or exerciseauthority on behalf of a SUN company, grant direct or indirect creditaccommodations or make recommendations, with respect to:

 

1.               Family members;

 

2.               Any individual or organization lendingmoney to or employing Family Members; or

 

3.               Any organization with which they ortheir Family Members are associated.

 

F.              Sale and Purchase of Property.  Directors and Officers of a SUN company andtheir Family Members may not sell property or services to, or buy or invest inproperty from a SUN company, unless:

 

1.               Prior Senior Management approval hasbeen given; or

 

2.               The property is offered at public saleby a SUN company; or

 

3.               The sale is based upon independentappraisals or bids which shall have been documented in writing and submitted tothe Auditor.

 

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IV.                                 BankBribery Act - Gifts and Bequests

 

Section C of this Article IV applies only to Officers of aSUN company and not to Directors of a SUN company.

 

A.           Receiving “Gifts”.  Under the Bank Bribery Act, 18 U.S.C. 215,as amended, (the “Act”) it is a federal crime for any Officer, Director,Employee, Agent or Attorney of a SUN company to corruptly solicit or demand forthe benefit of any person, or to corruptly accept or agree to accept anythingof value, intending to be influenced or rewarded in connection with anybusiness or transaction of a financial institution, such as a SUN company.  All types of transactions are covered,including extensions of credit, investment advice, trust matters and services,checking accounts and purchases from suppliers.

 

Liability under the Act also extends to any person who corruptly gives,offers or promises anything of value to any person, with intent to influence orreward an Officer, Director, Employee, Agent or Attorney of a SUN company inconnection with any business or transaction of such financial institution.  In other words, the Act applies not only tothe person receiving or asking for a bribe but also to any person who gives,offers or promises a bribe.

 

The penalty for a violation of the Act depends on whether the violationis a misdemeanor or felony.  If thevalue of the thing offered does not exceed One Hundred Dollars ($100.00), theoffense is a misdemeanor, punishable by up to one (1) year imprisonment and amaximum fine of One Thousand Dollars ($1,000.00) or both.  If the value of the thing offered orreceived exceeds One Hundred Dollars ($100.00), the offense is a felonypunishable by up to five (5) years imprisonment and a fine of not more thanFive Thousand Dollars ($5,000.00) or three (3) times the value of the bribe orgratuity, whichever is greater.

 

Pursuant to the Act, SUN company Directors and Officers are presentlyprohibited form (1) soliciting for themselves or a third party (other than aSUN company) anything of value from any Customer, Prospective Customer,Competitor, Supplier or any other person in return for any business service orconfidential information of a SUN company; and (2) accepting anything of value(other than normal authorized compensation from a SUN company) from anyCustomer, Prospective Customer, Competitor, Supplier or any other party inconnection with the business of a SUN company either before or after atransaction is discussed or consummated.

 

Acceptance of the following is permissible:

 

1.               Gifts, gratuities, amenities or favorsbased on obvious family or personal relationships (such as those betweenparents, children or spouse of a SUN company official) where the circumstancesmake it clear that it is those relationship rather than the business of the SUNcompany concerned, which are the motivating factors for such gifts, gratuities,amenities or favors.

 

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2.               Acceptance of meals, refreshments,entertainment, accommodations or travel arrangements, all of reasonable value, inthe course of a meeting or other occasion, the purpose of which is to hold bonafide business discussions or to foster better business relations, if theexpense would be treated as a reasonable business expense paid for by SUN, andprovided that SUN can properly reciprocate in a like manner considering allrelevant circumstances.  Anyquestionable circumstances must be reported immediately.

 

3.               Acceptance of loans from other banks orfinancial institutions on customary terms to finance proper and usual activitiesof SUN company officials such as home mortgage loans, except where prohibitedby law or regulation.

 

4.               Acceptance of advertising or promotionalmaterial of reasonable value, such a pens, pencils, note pads, key chains,calendars and similar items.

 

5.               Acceptance of discounts or rebates onmerchandise or services that do not exceed those available to other Customers.

 

6.               Acceptance of gifts of reasonable valuethat are related to commonly recognized events or occasions, such as apromotion, new job, wedding, retirement, holiday or birthday provided that suchexpenses do not in the aggregate exceed One Hundred Dollars ($100.00).

 

7.               Acceptance of civic, charitable,educational or religious organization awards for recognition of service orother accomplishments.

 

On a case-by-case basis, Senior Management may approve othercircumstances, not described above, in which an Officer or Director, as well asEmployees, Agents or Attorneys may accept something of value in connection withSUN’s business.  Senior Management,after fully considering all circumstances and consultation with Legal Counsel,may give such approvals.  However, suchapproval will only be given in writing on the basis of a full writtendisclosure of all relevant facts and circumstances and provided acceptance isconsistent with the Act and the Code. Regardless of the source or value of any gift or favor, any Official ofa SUN company or their Family Members must decline any gift offered under circumstancesindicating or appearing to indicate that its purpose is to influence a SUNcompany’s Official in the performance of his or her duties, or any gift thatmight have, or reasonably appear to have, such an effect.

 

Gifts of cash in any amount are prohibited by the Code, as well as anygifts which would be viewed as lavish or expensive by a reasonable person, suchas the use of a vacation home or hunting lodge for other than businesspurposes.  SUN company Officials mustalso refuse any gifts of nominal value if they are part of a pattern or practicewhich, when viewed as a whole, would be considered lavish or expensive.  Such would be the case with a pattern ofvery expensive meals or entertainment.

 

Any time a SUN company Official is offered, receives or anticipatesreceiving something of value from a Customer, Prospective Customer, Competitor,

 

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Stockholder or Supplier beyond what is expressly authorized in theCode, the SUN company Official is required to disclose this fact in writing tothe Human Resource Officer.  The HumanResource Officer will discuss this matter with the appropriate members ofSenior Management and will maintain a file of all such disclosures for a periodof five (5) years from the date of the discussion.  When questions arise as to the legality of a gift, SUN companyOfficials are urged to seek the advice of their Superior, who will discuss thequestions with a member of the appropriate SUN company Senior Management.

 

B.             Gift Giving.  A SUN company Official may not, on behalf ofa SUN company in connection with any transaction or business of a SUN company,except when authorized by law, directly or indirectly, give, offer or promiseany gift, bribe, kickback, favor, discount, price concession, loan, service oranything else of value to any individual, business entity, organization,governmental unit, public official, political party or other person for thepurpose of influencing the action of the recipient.  This standard of conduct is not intended to prohibit normalbusiness practices such as providing meals, entertainment, tickets to culturaland sporting events, promotional gifts, favors, discounts, and priceconcessions.  Tickets for sporting,cultural, or other events purchased by SUN are to be used in entertainingPotential Customers or existing Customers, Vendors, or others for businesspurposes only.  If it is determinedthree or four days before the sporting event that the tickets will not be used,the President & CEO may offer them to someone else at his or her discretion.  Gifts given as a token of friendship orspecial occasion gifts (such as Christmas) are permissible so long as they areof a nominal and reasonable value under the circumstances and promote a SUNcompany’s legitimate business development.

 

C.             Bequests, Devises or Benefits UnderWills and Trusts.  No Officer of aSUN company or Member of an Officer’s or Employee’s Family (excluding aunts,uncles and in-laws), unless such relative is fifty percent (50%) or morefinancially dependent on the Officer, may accept a bequest, devise or any otherbenefit under a will or trust instrument of a Customer of SunBank or anotherSUN company which has a value in excess of Five Hundred Dollars ($500.00),unless the Customer is a relative of the Officer’s Family Member or SeniorManagement approval has been obtained, after consultation with LegalCounsel.  No Officer shall, under anycircumstances, demand, request or solicit a bequest, devise, or any otherbenefit under a will or trust instrument from a SunBank or other SUN companyCustomer.  No Officer or their FamilyMembers may act as a personal representative, executor, administrator, trustee,custodian, guardian or in any other fiduciary capacity under a will, trust orother instrument of SunBank, or other SUN company unless:

 

1.               Prior Senior Management approval, afterconsultation with Legal Counsel, has been obtained; and

 

2.               The Officer turns over to SunBank or anyother SUN company, any commissions or fees for so acting, unless otherwiseauthorized by the Senior Management approval.

 

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The above prohibitions shall not prohibit any Officer of a SUN companyor their Family Members from acting as a personal representative, executor,administrator, trustee, custodian, guardian or other fiduciary capacity under awill, trust or other instrument established by a relative of the Officer’sFamily.  No Officer of a SUN company ortheir Family Members may act with Sun Bank or any other SUN company as aco-personal representative or co-trustee under a will, trust or other instrumentestablished by a customer of SunBank or any other SUN company unless:

 

1.               The Officer waives any commissions orfees for so acting; and

 

2.               Prior Senior Management approval, afterconsultation with Legal Counsel, is obtained.

 

V.                                     OutsideActivities

 

This Article V applies only to Officers of a SUN company and notto SUN Directors.

 

A.           General.  No outside activity of any Officer shall interfere or conflictwith the interest of a SUN company. Officers must recognize that acceptance of outside employment, electionto directorships of other organizations, participation in the affairs ofoutside organizations and political activities represent a potentialconflict of interest with the affairs of SUN and its subsidiaries.

 

B.             Outside Employment.  The SUN companies discourage outsideemployment which divides the loyalty of SUN’s Officers, creates an actual orapparent conflict of interest or exposes the Officer of a SUN company topossible criticism or adverse publicity. Officers are not permitted to engage in any business activity oremployment which interferes with their duties to a SUN company or itsStockholders.  Officers must discloseall outside employment to the Chairman or President of the appropriate SUNcompany.  Officers must obtain priorSenior Management approval of all outside employment, business activities,directorships or fiduciary appointments.

 

C.             Political Activities.  SUN companies encourage Officers to beinformed about and participate in the political process and politicalactivities, provided such participation does not unduly interfere with theirduties or embarrass or discredit the SUN companies.  SUN companies further encourage all Officers to vote in electionsand, if Officers so choose, to make voluntary contributions of time and/ormoney to political and governmental activities.  Officers must, however, engage in such activities as individualsrather than as representatives of a SUN company.  Officers must further avoid any appearance of corporatesponsorship or endorsement in connection with any election.  Officers must not use the SUN companycorporate name in any connection with any political fund-raising activity or inany printed material for use in political fund-raising activity.  Officers must obtain the appropriate SUN company’sapproval before becoming a candidate for public office, accepting anynomination or appointment to a public office or agreeing to serve as an officer(such as a campaign manager, chairman or treasurer) in a political campaign.

 

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D.            Other Activities.  SUN companies encourage Officers to participatein worthwhile civic, social, educational and charitable organizations andactivities.  No activity, however,should interfere with their regular duties to their SUN company, unreasonableencroach upon working time, or necessitate such long hours as to impair workingeffectiveness of the Officer.  Officersare not to act, without prior Senior Management approval, in any of thefollowing capacities:

 

1.               As an agent, deputy or in any signingcapacity on any account of another held in a SUN company, excepting FamilyMembers; or

 

2.               As an official of any organization withthe following exceptions:social, religious, philanthropic or civic organizations; colleges or schools;neighborhood associations, clubs or trade or professional organizations associatedwith banking or business.

 

VI.                                 Antitrust Policy

 

A.           General.  Directors and Officers must be able to recognize situations,transactions, and activities which actually or may potentially be subject tothe antitrust laws.  All Officers shouldbe aware of the seriousness of allegations of violations of the antitrustlaws.  Antitrust questions are notlimited to any particular aspect of a SUN company’s business but can extend toall areas of operations.  Strictcompliance with the following guidelines are required.  Questions relating to matters of competitionand the antitrust laws that are not answered by the following guidelines shouldbe brought to the attention of the President of the appropriate SUN company whowill consult Legal Counsel.

 

B.             Loans.  With respect to all loans, the rate of interest and other termsand conditions of the loans must be decided independently.  Directors and Officers must not enter intoany agreement or understanding with personnel of any other financialinstitution regarding setting interest rates, terms and conditions of loans,either generally or with reference to a particular loan.

 

C.             Service Charges and Fees.  Directors and Officers must not enter intoany agreement or understanding with the personnel of any other financialinstitution or organization regarding setting service charges or themaintenance of minimum balances or other fees.

 

D.            Interest-Bearing Account Rates.  Directors and Officers must not enter intoany agreement or understanding with personnel of any other financialinstitution or organization with respect to setting interest rates on savingsaccounts, NOW accounts, money market certificates, time certificates ofdeposit, or any other interest-bearing account.

 

E.              Advertising.  Directors and Officers must not enter intoany agreement or understanding with personnel of any other financialinstitution or organization with respect to advertising information such asinterest rates on loans, charges for services rendered or interest-bearingaccount rates by a SUN company.

 

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F.              Dealing with Correspondent Banks.  Directors and Officers must not enter intoany agreement or understanding with any other financial institution that mighteliminate or restrain competition between the SUN companies and other financialinstitutions in obtaining Correspondent Customers or in dealing withCorrespondent Customers.  Suchagreements contravene the policy of SUN against entering into any discussionsor agreements that might restrain competition. Directors and Officers are free to borrow funds and engage in any otherbona fide business transactions, including those which involve all types ofaccounts, advertising, dealing with bank correspondents and with otherfinancial institutions which do not violate the antitrust or other laws andregulations.

 

G.             Competition and Advertising.  It is the SUN companies’ policy to competevigorously but fairly for business. Directors, Officers and Employees should emphasize the quality of itsservices and the competence of its staff.

 

VII.                             Political Contributionsand Corporate Payments

 

Corporate disbursements of money, property or services to anygovernment official, political party or candidate, either domestic or foreign,are strictly prohibited, even in those jurisdictions where such contributionsare legally permissible.  At no time mayEmployees solicit other Employees for political contributions or coerce othersinto contributing to any organization. Conduct must not give the perception that benefit to SUN or connectionsare sought or desired.  No offer,promise of payment or payment shall be made to any person, corporate entity,official of any government or government agency, either directly or indirectly,to win preferential treatment in securing business or obtaining special concessionsfor any SUN company.  It should beemphasized that a corporate payment need not be illegal to be prohibited.  Payments should be broadly defined toinclude property or services.

 

VIII.                         Properand Accurate Books and Records

 

It is corporate policy that all of the SUN companies’ books and recordsbe kept so that they fully and fairly reflect all of their receipts,expenditures, assets and liabilities. Federal law also requires accurate record keeping and accounting andimposes civil and criminal penalties on any individuals and companies whoviolate these requirements.  Anyattempts to create false or misleading records are forbidden.  Both federal law and corporate policy requirethat no “off book” or undisclosed funds or accounts shall be established forany purpose.  It is corporate policy tocomply fully with the record keeping and accounting control requirements of theForeign Corrupt Practices Act.

 

IX.                                Beinga Director or Officer of an Organization Other Than a SUN Company

 

This Article IX applies only to Officersof a SUN company and not to SUN’s Directors.

 

A.  General Rule. Serviceas a Director or Officer of any organization requires prior approval of thePresident of SUN and of the appropriate subsidiary.  Approval does not necessarily carry with it the right toindemnification pursuant to the provisions of 

 

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SUN or one of its subsidiaries’ By-Laws (see Article X hereofbelow). Indemnification against liability and expense in connection withservice as a Director or Officer of another organization will be available onlyif all of the conditions set forth in Article X hereof are satisfied.  One of the necessary incidents of suchindemnification is that the Officer of a SUN company is serving at the requestof a SUN company rather than merely with its approval.  Whether or not an individuals service withthe organization is at the request of a SUN company or merely with theirapproval, if the organization is a Customer of a SUN company, any Officer in chargeof a Customer’s business affairs with a SUN company cannot simultaneously serveas a Director or Officer of the Customer’s business.

 

Any SUN company Officer who normally reports to or through channels toan individual who is a Director, Officer or Employee of a SUN company Customerbusiness shall, in respect of SUN business affairs with such Customer, reportto another individual selected for this purpose by the President of the SUNcompany involved.  When an individual isserving as a Director or Officer of another organization, at the request of aSUN company, the Director’s fees and other remuneration received by theindividual for his or her service as a Director or Officer of that organizationmust be paid over to the corporation. When the individual is serving with the approval, but not at the requestof a SUN company, such fees and other remuneration may be retained.

 

B.             Exceptions.

 

1.               Personal Businesses.  An Officer of a SUN company serving as anOfficer, Director or Trustee of, or holding a partnership interest in, aFamily-Owned business or investment or other organization need not obtain SUN’sprior approval.  Disclosure of suchstatus is, however, required if a banking or business relationship exists orcomes into existence between the organization and a SUN company.

 

2.               Not-For-Profit Organization.  Unless indemnification is requested inconnection with such service, approval is not required to serve as an Officer,Director or Trustee of a not-for-profit entity or a community organization.  Although disclosure of participation incommunity activities is not required unless a banking or business relationshipexists or comes into existence between the organization and a SUN company,Directors and Officers are requested to list their positions with communityorganizations on the appropriate attachments to their questionnaire.

 

## X.                                    Financial Reporting Obligations of the Chief ExecutiveOfficer (i.e., principal executive officer), Chief Financial Officer (i.e.,principal financial officer), Principal Accounting Officer or Controller, or AnyOther Person Performing Similar Functions (“Senior Financial Officers”)

 

SeniorFinancial Officers are charged with the ultimate responsibility of ensuringthat the financial statements, reports and other documents filed or submittedto the SEC as well as other public communications made by the Corporation(collectively, “SEC Reportsand Public Documents”) are accurateand fairly disclose the Corporation’s assets, liabilities and other materialtransactions engaged in by the Corporation. SEC Reports and Public Documents must meet the following requirements:

 

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•                                          SEC Reports andPublic Documents must, in reasonable detail, accurately and fairly reflect thetransactions engaged in by the Corporation and acquisitions and dispositions ofthe Corporation’s assets.

 

•                                          SEC Reports andPublic Documents must not contain any untrue statement of material fact thatwould make the statements in the SEC Reports and Public Documents misleading.

 

•                                          Financialreports must be prepared in accordance with, or reconciled to, GenerallyAccepted Accounting Principles and applicable SEC rules, including the SECaccounting rules.

 

•                                          SEC Reports andPublic Documents must contain full, fair, accurate, timely and understandabledisclosure.

 

Senior Financial Officers are required to respect the confidentialityof information acquired in the course of the performance of theirresponsibilities.

 

XI.                                Indemnification

 

In no event will indemnification by a SUN company be available inconnection with the services of a Director or Officer of a SUN company as anOfficer or Director of another organization unless such service as a Directoror Officer of the other organization is at the request of a SUN company.  No one will be deemed to be serving at therequest of a SUN company unless all of the following conditions aresatisfied:

 

1.               The Chairman or President of SUN and thePresident of the subsidiary granting indemnification specifically and inwriting request the individual to serve as a Director or officer of the otherorganization; and

 

2.               Such request shall have been approved bythe Board of Directors of SUN and the subsidiary granting the indemnificationfollowing the review and recommendation of such service by the Audit Committeeof SUN’s Board of Directors.  Eachrequest will be presented to the Boards of SUN and its subsidiary for itsapproval and a report of the action taken recorded in the minutes of themeeting of each Board.  In thisconnection, it should be noted that a list of persons serving at a SUNcompany’s request shall be reviewed by the Audit Committee of SUN and submittedto SUN’s Board of Directors at least once each calendar year.  All such action is subject to revocation bySUN’s Board of Directors at its discretion between annual reviews or at theannual review; and

 

3.               Arrangements for prompt transfer to SUNof all fees and other remuneration for such service shall have been made andsuch fees are transferred to SUN promptly upon receipt.

 

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XII.         Implementationand Administration of Code

 

Each Director and Officer of a SUN company must read the Code and signa statement acknowledging that he/she has received, read and is in compliancewith the Code.  Each Director andOfficer shall review the Code annually and complete and sign a Director/OfficerAcknowledgment and Questionnaire. Completed questionnaires must be returned by each Director and Officerto the Human Resource Officer.

 

Difficult questions of judgment may arise in connection with completionof the questionnaire.  Any doubts shouldbe resolved by disclosure. Notwithstanding the disclosure required by Directors and Officers in theannual questionnaire, all personnel of SUN and its subsidiaries are expected toreport promptly the existence of any relationship or interest which mightviolate or appear to violate the Code. Whenever there is any doubt as to the propriety of a particular action,the SUN company’s personnel should disclose the action and seek approval of theaction.

 

The President of SUN and its subsidiaries are responsible foradministering the Code for their respective entities, and questions which ariseunder the Code should be directed to SUN’s President

 

XIII.                        Amendments or Waivers

 

Any amendment to the Code or waiver (including an implicit waiver) withrespect to any Director or Executive Officer requires the approval of theCorporation’s Board of Directors. Unless the SEC rules and regulations and the applicable rules of anational securities exchange or a national securities association otherwise provide,amendments and waivers of any provision of the Code applicable to Directors andExecutive Officers must be promptly disclosed in accordance with applicablerules and regulations.  Waivers include,among other things, a material departure from a provision of this Code.  Implicit waivers include the Corporation’sfailure to take action with respect to violations of Code provisions within areasonable time following an Executive Officer’s receipt of notice of theviolation.

 

XIV.                        Consultation

 

Refer any questions regarding proper Code ofConduct to an immediate supervisor. Actions or acceptance of gifts that are not specifically mentioned abovemust be reviewed as to intent and purpose. Employees should ask themselves: “If a situation were to be made public, would my conduct be embarrassingor come into question?”

 

XV.                            ApprovalProcedures

 

Unless otherwise stated, when approval is required by the Code, requestshould be submitted in writing to the Senior Officer of the SUN company havingadministrative responsibility for the personnel involved.  When such Senior Officer recommendsapproval, the request will be forwarded to the President of SUN who will obtainthe appropriate written approval required by the Code.  All approval and requests shall contain allinformation required for an informed decision. To be effective, all approvals must be documented in writing.

 

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XVI.                        Violations of the Code

 

Any violations of the Code will be referred to the President of SUN andto the Audit Committee of the Board of Directors of SUN and may be grounds fordisciplinary action up to and including immediate termination ofemployment.  Such disposition is inaddition to any civil or criminal liability which might be imposed by federalor state regulatory bodies or courts.

 

XVII.                    Audit of the Program

 

The Audit Department will test for compliance with this policy on anannual basis and report its findings to the Audit Committee of the Board ofDirectors.

 

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