AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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SUN BANCORP INC /NJ/ | COMMUNITY BANCORP OF NEW JERSEY

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: New Jersey Date: 2/17/2004
Industry: Regional Banks Law Firm: Windels, Marx, Lane & Mittendorf, LLP; Malizia Spidi & Fisch, PC Sector: Financial

AGREEMENT AND PLAN OF MERGER

By and Between

SUN BANCORP, INC.

And

COMMUNITY BANCORP OF NEW JERSEY

Dated as of February 16, 2004

<PAGE>

AGREEMENT AND PLAN OF MERGER

By and Between

SUN BANCORP, INC.

AND

COMMUNITY BANCORP OF NEW JERSEY

This AGREEMENT AND PLAN OF MERGER, dated as of the 16th day of

February, 2004 (this "Agreement"), by and between Sun Bancorp, Inc., a New

Jersey corporation ("Sun"), and Community Bancorp of New Jersey, a New Jersey

corporation ("Community") collectively, the ("Parties").

WITNESSETH THAT:

WHEREAS, the Boards of Directors of Sun and Community deem it in the

best interests of Sun and Community, respectively, and of their respective

shareholders, that Sun and Community merge pursuant to this Agreement in a

transaction that qualifies as a reorganization pursuant to Section 368 of the

Internal Revenue Code of 1986 (as amended, the "Code") (the "Merger");

WHEREAS, Community owns all the issued and outstanding capital stock of

the Community Bank of New Jersey, a New Jersey-chartered commercial bank

("Community Bank"), and Sun owns all of the issued and outstanding capital stock

of Sun National Bank, a national bank ("Sun Bank"), and it is contemplated that,

in connection with the consummation of this Agreement and pursuant to the terms

of a certain Plan of Merger (the "Bank Merger Agreement"), Community Bank will

be merged with and into Sun Bank (the "Bank Merger");

WHEREAS, as an inducement and condition to Sun's entering into this

Agreement, each of the directors and executive officers of Community have

entered into Affiliate and Voting Agreements with Sun pursuant to which they

have agreed to vote their Community Shares (as defined herein) in favor of

approval of the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual

covenants, representations, warranties and agreements herein contained, the

parties agree that Community will be merged with and into Sun and that the terms

and conditions of the Merger, the mode of carrying the Merger into effect,

including the manner of converting the shares of common stock of Community, no

par value per share, into shares of common stock of Sun, par value of $1.00 per

share (the "Sun Shares"), shall be as hereinafter set forth.

<PAGE>

ARTICLE 1

THE MERGER

Section 1.1 Consummation of Merger; Closing Date.

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(a) Subject to the provisions hereof, including, without limitation,

Section 2.5 hereof respecting the possible restructuring of the transaction

under certain circumstances, Community shall be merged with and into Sun (which

has heretofore and shall hereinafter be referred to as the "Merger") pursuant to

the laws of the State of New Jersey, and Sun shall be the surviving corporation

(sometimes hereinafter referred to as "Surviving Corporation" when reference is

made to it after the Effective Time of the Merger (as defined below)). The

Merger shall become effective on the date and at the time on which the

Certificate of Merger has been duly filed with the Division of Revenue of New

Jersey, unless a later date is specified in such Certificate of Merger (such

time is hereinafter referred to as the "Effective Time of the Merger"). Subject

to the terms and conditions hereof, unless otherwise agreed upon by Sun and

Community, the Effective Time of the Merger shall occur on the tenth (10th)

business day following the later to occur of (i) the effective date (including

expiration of any applicable waiting period) of the last required Consent (as

defined herein) of any Regulatory Authority (as defined herein) having authority

over the transactions contemplated under the Merger Agreement or the Bank Merger

Agreement and (ii) the date on which the shareholders of Community approve the

transactions contemplated by this Agreement, or such other time as the parties

may agree.

(b) The closing of the Merger (the "Closing") shall take place at the

principal offices of Sun at 10:00 a.m. local time on the day that the Effective

Time of the Merger occurs, or such other date, time and place as the parties

hereto may agree (the "Closing Date"). Subject to the provisions of this

Agreement, at the Closing there shall be delivered to each of the parties hereto

the opinions, certificates and other documents and instruments required to be so

delivered pursuant to this Agreement.

Section 1.2 Effect of Merger. At the Effective Time of the Merger,

------------------

Community shall be merged with and into Sun and the separate existence of

Community shall cease. The Amended and Restated Certificate of Incorporation and

Amended and Restated Bylaws of Sun, as in effect on the date hereof and as

otherwise amended prior to the Effective Time of the Merger, shall be the

Amended and Restated Certificate of Incorporation and the Amended and Restated

Bylaws of the Surviving Corporation until further amended as provided therein

and in accordance with applicable law. The Surviving Corporation shall have all

the rights, privileges, immunities and powers and shall be subject to all the

duties and liabilities of a corporation organized under the laws of the State of

New Jersey and shall thereupon and thereafter possess all other privileges,

immunities and franchises of a private, as well as of a public nature, of each

of the constituent corporations. All property (real, personal and mixed) and all

debts on whatever account, including subscriptions to shares, and all choses in

action, all and every other

<PAGE>

interest, of or belonging to or due to each of the constituent corporations so

merged shall be taken and deemed to be transferred to and vested in the

Surviving Corporation without further act or deed. The title to any real estate,

or any interest therein, vested in any of the constituent corporations shall not

revert or be in any way impaired by reason of the Merger. The Surviving

Corporation shall thenceforth be responsible and liable for all the liabilities

and obligations of each of the constituent corporations so merged and any claim

existing or action or proceeding pending by or against either of the constituent

corporations may be prosecuted as if the Merger had not taken place or the

Surviving Corporation may be substituted in its place. Neither the rights of

creditors nor any liens upon the property of any constituent corporation shall

be impaired by the Merger.

Section 1.3 Further Assurances. From and after the Effective Time of the

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Merger, as and when requested by the Surviving Corporation, the officers and

directors of Community last in office shall execute and deliver or cause to be

executed and delivered in the name of Community such deeds and other instruments

and take or cause to be taken such further or other actions as shall be

necessary in order to vest or perfect in or confirm of record or otherwise to

the Surviving Corporation title to and possession of all of the property,

interests, assets, rights, privileges, immunities, powers, franchises and

authority of Community.

Section 1.4 Directors and Officers. Except as otherwise set forth herein,

-----------------------

from and after the Effective Time of the Merger, the directors of the Surviving

Corporation and officers of the Surviving Corporation shall be those persons

serving as directors and officers of Sun immediately prior to the Effective Time

of the Merger, and such additional persons, in each case, as Sun, at or prior to

the Effective Time of the Merger, shall designate in writing.

ARTICLE 2

CONVERSION OF CONSTITUENTS' CAPITAL SHARES

Section 2.1 Manner of Conversion of Community Shares. Subject to the

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provisions hereof, as of the Effective Time of the Merger and by virtue of the

Merger and without any further action on the part of Sun, Community or the

holder of any shares thereof, the shares of the constituent corporations shall

be converted as follows:

(a) Each share of capital stock of Sun outstanding immediately prior

to the Effective Time of the Merger shall, after the Effective Time of the

Merger, remain outstanding and unchanged.

(b) Each share of common stock of Community (the "Community Shares")

held by Community or by Sun (or any of their subsidiaries), other than such

shares the holders of which become entitled to fair value under Section 14A:11-1

of the New Jersey Business Corporation Act ("Dissenting Shares") or such shares

held in a fiduciary capacity or as a result of

<PAGE>

debts previously contracted, shall be canceled and retired and no consideration

shall be paid or delivered in exchange therefor.

Section 2.1(b) above, each Community Share outstanding immediately prior to the

Effective Time of the Merger shall be converted into the right to receive 0.83

of a Sun Share. (Such number of Sun Shares, as may be adjusted as provided

herein, is hereinafter referred to as the "Per Share Stock Consideration").

Thereafter, subject to Sections 2.3, 2.5 and 2.7, each outstanding certificate

representing a Community Share shall represent solely the right to receive the

Per Share Stock Consideration.

(d) In the event that Sun declares a change in the number of Sun

Shares issued and outstanding prior to the Effective Time as a result of a stock

split, stock dividend, recapitalization, or similar transaction with respect to

such stock and the record date therefor (in the case of a stock dividend) or the

effective date thereof (in the case of a stock split or similar recapitalization

for which a record date is not established) shall be prior to the Effective Time

or announces a special extraordinary cash dividend with a record date prior to

the Effective Time, the Per Share Stock Consideration shall be proportionately

adjusted.

Section 2.2 Community Stock Options. As of and immediately prior to the

------------------------

Effective Time of the Merger, all rights with respect to Community Shares

issuable pursuant to the exercise of stock options ("Community Options") granted

by Community under the Community Stock Option Plans set forth in Schedule 2.2

(the "Community Stock Option Plans"), each of which are listed and described on

Schedule 2.2 and which are outstanding at the Effective Time of the Merger,

shall be exchanged as follows: such Community Options held by each individual as

detailed at Schedule 2.2 shall have all of his or her Community Options assumed

by Sun and such Community Options shall be converted into an option to purchase

a number of Sun Shares (rounded down to the nearest whole share) equal to (i)

the number of shares of Community Shares subject to such option immediately

prior to the Effective Time multiplied by (ii) the Per Share Stock

Consideration, and the per share exercise price for Sun Shares issuable upon the

exercise of such assumed stock options shall be equal to (i) the exercise price

per share of Community Shares at which such option was exercisable immediately

prior to the Effective Time divided by (ii) the Per Share Stock Consideration

(rounded to the nearest whole cent); provided, however, that in the case of any

stock option to which Section 421 of the Code applies by reason of its

qualification under Section 422 of the Code, the conversion formula shall be

adjusted, if necessary, to comply with section 424(a) of the Code. Except as

otherwise provided herein, the assumed stock options shall be subject to the

same terms and conditions (including expiration date, vesting and exercise

provisions) as were applicable to the corresponding Community Stock Options

immediately prior to the Effective Time (but taking into account any changes

thereto, including the acceleration thereof, provided for in the Community Stock

Option Plans by reason of this Agreement or the transactions contemplated

hereby); provided, however, that thereafter references to Community shall be

deemed to be references to Sun.

<PAGE>

Section 2.3 Fractional Shares. Notwithstanding any other provision of this

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Agreement, each holder of Community Shares converted pursuant to the Merger who

would otherwise have been entitled to receive a fraction of a Sun Share (after

taking into account all certificates delivered by such holder), shall receive,

in lieu thereof, cash (without interest) in an amount equal to such fractional

part (to the nearest thousandth) of such Sun Share, multiplied by the market

value of one Sun Share at the Effective Time of the Merger. The market value of

a Sun Share at the Effective Time of the Merger shall be the average of the last

sale price for the five trading days prior to the Effective Time of such Sun

Shares, as reported by The Nasdaq Stock Market ("NASDAQ") ending on the last

business day preceding the Effective Time of the Merger, or, if the Sun Shares

hereafter become listed for trading on any national securities exchange

registered under the Exchange Act, the average of the last sale price for the

five trading days prior to the Effective Time of such Sun Shares on the

applicable dates as reported on the principal securities exchange on which the

Sun Shares are then listed for trading. No such holder will be entitled to

dividends, voting rights or any other rights as a shareholder in respect of any

fractional share.

Section 2.4 Effectuating Conversion.

-----------------------

(a) Prior to the Effective Time, Sun will appoint an exchange agent

(the "Exchange Agent"). The Exchange Agent may employ sub-agents in connection

with performing its duties. As of the Effective Time of the Merger, Sun will

deliver or cause to be delivered to the Exchange Agent the consideration to be

paid by Sun for Community Shares, along with the appropriate cash payment in

lieu of fractional interests in Sun Shares. As promptly as practicable after the

Effective Time of the Merger, the Exchange Agent shall send or cause to be sent

to each former holder of record of Community Shares (other than holders of

Dissenting Shares) transmittal materials (the "Letter of Transmittal") for use

in exchanging their certificates formerly representing Community Shares for the

consideration provided for in this Agreement. The Letter of Transmittal will

contain instructions with respect to the surrender of certificates representing

Community Shares and the receipt of the consideration contemplated by this

Agreement and will require each holder of Community Shares to transfer good and

marketable title to such Community Shares to Sun, free and clear of all liens,

claims and encumbrances.

(b) At the Effective Time of the Merger, the stock transfer books of

Community shall be closed as to holders of Community Shares immediately prior to

the Effective Time of the Merger and no transfer of Community Shares by any such

holder shall thereafter be made or recognized and each outstanding certificate

formerly representing Community Shares shall, without any action on the part of

any holder thereof, no longer represent Community Shares. If, after the

Effective Time of the Merger, certificates are properly presented to the

Exchange Agent, such certificates (other than Dissenting Shares) shall be

exchanged for the consideration contemplated by this Agreement into which

Community Shares represented thereby were converted in the Merger.

<PAGE>

of the Merger of Community Shares (other than Dissenting Shares) is unable to

deliver the certificate which represents such holder's Community Shares, Sun, in

the absence of actual notice that any Community Shares theretofore represented

by any such certificate have been acquired by a bona fide purchaser shall

deliver to such holder the consideration contemplated by this Agreement and the

amount of cash representing fractional Sun Shares to which such holder is

entitled in accordance with the provisions of this Agreement upon the

presentation of all of the following:

(i) An affidavit or other evidence to the reasonable

satisfaction of Sun that any such certificate has been lost, wrongfully

taken or destroyed;

(ii) Such security or indemnity as may be reasonably requested by

Sun to indemnify and hold Sun harmless in respect of such stock

certificate(s); and

(iii)Evidence to the satisfaction of Sun that such holder is the

owner of Community Shares theretofore represented by each certificate

claimed by such holder to be lost, wrongfully taken or destroyed and that

such holder is the person who would be entitled to present each such

certificate for exchange pursuant to this Agreement.

(d) In the event that the delivery of the consideration contemplated

by this Agreement and the amount of cash representing fractional Sun Shares are

to be made to a person other than the person in whose name any certificate

representing Community Shares surrendered is registered, such certificate so

surrendered shall be properly endorsed (or accompanied by an appropriate

instrument of transfer), with the signature(s) appropriately guaranteed, and

otherwise in proper form for transfer, and the person requesting such delivery

shall pay any transfer or other taxes required by reason of the delivery to a

person other than the registered holder of such certificate surrendered or

establish to the satisfaction of Sun that such tax has been paid or is not

applicable.

(e) Except as set forth at Section 2.1(d), no holder of Community

Shares shall be entitled to receive any dividends or distributions declared or

made with respect to the Sun Shares with a record date before the Effective Time

of the Merger. Neither the consideration contemplated by this Agreement, any

amount of cash representing fractional Sun Shares nor any dividend or other

distribution with respect to Sun Shares where the record date thereof is on or

after the Effective Time of the Merger shall be paid to the holder of any

unsurrendered certificate or certificates representing Community Shares, and Sun

shall not be obligated to deliver any of the consideration contemplated by this

Agreement, any amount of cash representing fractional Sun Shares or any such

dividend or other distribution with respect to Sun Shares until such holder

shall surrender the certificate or certificates representing Community Shares as

provided for by the Agreement. Subject to applicable laws, following surrender

of any such certificate or certificates, there shall be paid to the holder of

the certificate or certificates then representing Sun Shares issued in the

Merger, without interest at the time of such surrender, the consideration

contemplated by this Agreement, the amount of any cash representing fractional

Sun Shares and

<PAGE>

the amount of any dividends or other distributions with respect to Sun Shares to

which such holder is entitled as a holder of Sun Shares.

Section 2.5 Determination of Alternative Structures. The parties may at any

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time change the method of affecting the combination (including by providing for

the merger of Community with a wholly owned subsidiary of Sun) if and to the

extent requested by either party and consented to by the other party (such

consent not to be unreasonably withheld); provided, however, that no such

changes shall (i) alter or change the amount or kind of consideration to be

issued to holders of the capital stock of Community as provided for in this

Agreement (the "Merger Consideration"), (ii) adversely affect the tax treatment

of Community's shareholders as a result of receiving the Merger Consideration or

the tax treatment of either party pursuant to this Agreement or (iii) materially

impede or delay consummation of the transactions contemplated by this Agreement.

Section 2.6 Laws of Escheat.(a) If any of the consideration due or other

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payments to be paid or delivered to the holders of Community Shares is not paid

or delivered within the time period specified by any applicable laws concerning

abandoned property, escheat or similar laws, and if such failure to pay or

deliver such consideration occurs or arises out of the fact that such property

is not claimed by the proper owner thereof, Sun or the Exchange Agent shall be

entitled to dispose of any such consideration or other payments in accordance

with applicable laws concerning abandoned property, escheat or similar laws. Any

other provision of this Agreement notwithstanding, none of Community, Sun, the

Exchange Agent, nor any other Person acting on their behalf shall be liable to a

holder of Community Shares for any amount paid or property delivered in good

faith to a public official pursuant to and in accordance with any applicable

abandoned property, escheat or similar law.

Section 2.7 Dissenting Shares.

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(a) Any holders of Dissenting Shares shall be entitled to payment for

such shares only to the extent permitted by and in accordance with the

provisions of the New Jersey Business Corporation Act ("NJBCA"); provided,

however, that if, in accordance with the NJBCA, any holder of Dissenting Shares

shall forfeit such right to payment of the fair value of such shares, such

shares shall thereupon be deemed to have been converted into and to have become

exchangeable for, as of the Effective Time, the right to receive the Per Share

Stock Consideration without interest from Sun. Dissenting Shares shall not,

after the Effective Time, be entitled to vote for any purpose or receive any

dividends or other distributions and shall be entitled only to such rights as

are afforded in respect of Dissenting Shares pursuant to the NJBCA.

(b) Community shall give Sun (i) prompt notice of any written

objections to the Merger and any written demands for the payment of the fair

value of any shares, withdrawals of such demands, and any other instruments

served pursuant to the NJBCA received by Community and (ii) the opportunity to

participate in all negotiations and proceedings with respect to such demands

under the NJBCA. Community shall not voluntarily make any payment

<PAGE>

with respect to any demands for payment of fair value and shall not, except with

the prior written consent of Sun, settle or offer to settle any such demands.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF COMMUNITY

Community hereby represents and warrants to Sun as follows as of the date hereof

and as of all times up to and including the Effective Time of the Merger (except

as otherwise provided):

Section 3.1 Corporate Organization.

----------------------

(a) Community is a corporation duly organized, validly existing and

in good standing under the laws of the State of New Jersey. Community has the

corporate power and authority to own or lease all of its properties and assets

and to carry on its business as such business is now being conducted, and is

duly licensed or qualified to do business in all such places where the nature of

the business conducted by it or the character or location of the properties and

assets owned or leased by it make such qualification necessary, except where the

failure to be so licensed or qualified would not have a Material Adverse Effect

(as defined herein) on the business, assets, operations, financial condition or

results of operations (such business, assets, operations, financial condition or

results of operations hereinafter collectively referred to as the "Condition")

of Community on a consolidated basis. Community is duly registered as a bank

holding company under the Bank Holding Company Act of 1956, as amended (the "BHC

Act"). True and correct copies of the Certificate of Incorporation and the

Bylaws of Community, each as amended to the date hereof, have been delivered to

Sun.

(b) Community Bank is a commercial bank, duly organized, validly

existing and in good standing under the laws of the state of New Jersey.

Community Bank has the corporate power and authority to own or lease all of its

properties and assets and to carry on its business as such business is now being

conducted, and Community Bank is duly licensed or qualified to do business in

New Jersey and in each jurisdiction in which the nature of the business

conducted by it or the character or location of the properties and assets leased

by it makes such licensing or qualification necessary, except where the failure

to be so licensed or qualified would not have a Material Adverse Effect on

Community Bank. True and correct copies of the Certificate of Incorporation and

the Bylaws of Community Bank, each as amended to the date hereof, have been

delivered to Sun.

limited liability company or partnership duly organized, validly existing and in

good standing under the laws of its jurisdiction of incorporation or

organization. Each subsidiary has the corporate or requisite power and authority

to own or lease all of its properties and assets and to carry on its business as

such business is now being conducted, and is duly licensed or qualified to do

business in all such places where the nature of the business being conducted by

each

<PAGE>

subsidiary or the character or location of the properties and assets owned or

leased by each subsidiary make such qualification necessary, except where the

failure to be so licensed or qualified (or steps necessary to cure such failure)

would not have a Material Adverse Effect on the Condition of Community on a

consolidated basis.

(d) Community and each of its subsidiaries has in effect all federal,

state, local and foreign governmental, regulatory and other authorizations,

permits and licenses necessary for each of them to own or lease its properties

and assets and to carry on its business as now conducted, the absence of which,

either individually or in the aggregate, would have a Material Adverse Effect on

the Condition of Community on a consolidated basis.

(e) Schedule 3.1(e) lists all subsidiaries and all entities (whether

corporations, limited liability companies, partnerships or similar

organizations) of Community (other than Community Bank) and Community Bank,

including the corresponding percentage ownership, in which Community or

Community Bank, as appropriate, owns, directly or indirectly, five percent (5%)

or more of the ownership interests as of the date of this Agreement and

indicates for each of Community's or Community Bank's subsidiaries as of such

date, its jurisdiction of organization and the jurisdiction(s) wherein it is

qualified to do business. All of such subsidiaries and ownership interests are

in compliance with all applicable laws, rules and regulations relating to direct

investment in equity ownership interests. Community or Community Bank, as

appropriate, owns either directly or indirectly, all of the outstanding capital

stock of each of its subsidiaries. No subsidiary of Community (other than

Community Bank) or Community Bank is an "insured depositary institution" as

defined in the Federal Deposit Insurance Act, as amended, and the applicable

regulations thereunder. All of the shares of capital stock of each of the

subsidiaries of Community and Community Bank are duly authorized, validly

issued, fully paid and nonassessable and not subject to any preemptive rights

and are owned by Community or Community Bank, as appropriate, free and clear of

any claims, liens, encumbrances or restrictions (other than those imposed by

applicable federal and state securities laws), and there are no agreements or

understandings with respect to the voting or disposition of any such shares.

(f) The minute books of Community and Community Bank contain complete

and accurate records in all material respects of all meetings and other

corporate actions held or taken by their respective shareholders and Boards of

Directors (including all committees thereof).

Section 3.2 Capitalization.

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(a) The authorized capital stock of Community consists of 10,000,000

Community Shares, of which 3,407,847 Community Shares are issued and outstanding

as of the date hereof (22,357 of which is held in the treasury of Community).

All of the issued and outstanding Community Shares have been duly authorized and

validly issued and all such shares are fully paid and nonassessable. As of the

date hereof, there are no outstanding options, warrants, commitments, or other

rights or instruments to purchase or acquire any shares of

<PAGE>

capital stock of Community, or any securities or rights convertible into or

exchangeable for shares of capital stock of Community, except for options to

purchase 549,821 Community Shares (which are described in more detail in

Schedule 3.2).

(b) The authorized capital stock of Community Bank consists of

5,000,000 shares of common stock, no par value per share of which 1,796,917

shares as of the date hereof are issued and outstanding (none of which is held

in the treasury of Community Bank) (the "Community Bank Shares"). All of the

issued and outstanding Community Bank Shares have been duly authorized and

validly issued and all such shares are fully paid and nonassessable. As of the

date hereof, there are no outstanding options, warrants, commitments or other

rights or instruments to purchase or acquire any shares of capital stock of

Community Bank, or any securities or rights convertible into or exchangeable for

shares of capital stock of Community Bank.

Community Bank:

(i) are owned by Community; and

(ii) are so owned free and clear of all liens and encumbrances

and adverse claims thereto.

Section 3.3 Financial Statements; Filings.

------------------------------

(a) Community has previously delivered to Sun copies of the audited

consolidated financial statements of Community as of and for the years ended

December 31, 2002, December 31, 2001 and December 31, 2000 and unaudited

consolidated financial statements for the quarters ended March 31, 2003, June

30, 2003 and September 30, 2003 and Community shall deliver to Sun, as soon as

practicable following the preparation of additional financial statements for

each subsequent calendar quarter (or other reporting period) or year of

Community, the additional consolidated financial statements of Community as of

and for such subsequent calendar quarter (or other reporting period) or year

(such financial statements, unless otherwise indicated, being hereinafter

referred to collectively as the "Financial Statements of Community").

(b) Community has previously delivered to Sun copies of the call

reports of Community Bank as of and for each of the years ended December 31,

2003, December 31, 2002 and December 31, 2001 and call reports for the quarters

ended March 31, 2003, June 30, 2003 and September 30, 2003 and Community Bank

and Community shall deliver to Sun, as soon as practicable following the

preparation of additional call reports for each subsequent calendar quarter (or

other reporting period) or year, the call reports of Community Bank as of and

for such subsequent calendar quarter (or other reporting period) or year (such

Call Reports, unless

<PAGE>

otherwise indicated, being hereinafter referred to collectively as the

"Financial Regulatory Reports of Community Bank").

Financial Regulatory Reports of Community Bank (including the related notes,

where applicable) have been or will be prepared in all material respects in

accordance with generally accepted accounting principles or regulatory

accounting principles, whichever is applicable, which principles have been or

will be consistently applied during the periods involved, except as otherwise

noted therein, and the books and records of Community and Community Bank have

been, are being, and will be maintained in all material respects in accordance

with applicable legal and accounting requirements and reflect only actual

transactions. Each of the Financial Statements of Community and each of the

Financial Regulatory Reports of Community Bank (including the related notes,

where applicable) fairly present or will fairly present the financial position

of Community on a consolidated basis, as applicable, and the financial position

of Community Bank (as the case may be) as of the respective dates thereof and

fairly present or will fairly present the results of operations of Community on

a consolidated basis, as applicable, and the results of operations of Community

Bank (as the case may be) for the respective periods therein set forth.

(d) To the extent not prohibited by law, Community has heretofore

delivered or made available, or caused to be delivered or made available, to Sun

all reports and filings made or required to be made by Community, Community Bank

or any of their respective subsidiaries with the Regulatory Authorities, and

will from time to time hereafter furnish, or cause Community Bank to furnish to

Sun, upon filing or furnishing the same to the Regulatory Authorities, all such

reports and filings made after the date hereof with the Regulatory Authorities.

As of the respective dates of such reports and filings, all such reports and

filings did not and shall not contain any untrue statement of a material fact or

omit to state a material fact required to be stated therein or necessary to make

the statements therein, in light of the circumstances under which they were

made, not misleading.

(e) Except as set forth in Schedule 3.3(e), since December 31, 2002,

none of Community, Community Bank or any of their respective subsidiaries has

incurred any obligation or liability (contingent or otherwise) that has or might

reasonably be expected to have, individually or in the aggregate, a Material

Adverse Effect on the Condition of Community on a consolidated basis, except

obligations and liabilities (i) which are accrued or reserved against in the

Financial Statements of Community or the Financial Regulatory Reports of

Community Bank, or reflected in the notes thereto, or (ii) which were incurred

after December 31, 2002, in the ordinary course of business consistent with past

practices. Since December 31, 2002, neither Community nor Community Bank have

incurred or paid any obligation or liability which would be material to the

Condition of Community on a consolidated basis, except as may have been incurred

or paid in the ordinary course of business, consistent with past practices.

Section 3.4 Loan Portfolio; Reserves. Except as set forth in Schedule 3.4,

-------------------------

(i) all evidences of indebtedness in original principal amount in excess of

$500,000 reflected as assets

<PAGE>

in the Financial Statements of Community and the Financial Regulatory Reports of

Community Bank as of September 30, 2003 were as of such dates in all respects

the binding obligations of the respective obligors named therein in accordance

with their respective terms, and were not subject to any defenses, setoffs, or

counterclaims, except as may be provided by bankruptcy, insolvency or similar

laws or by general principles of equity; and (ii) the allowances for possible

loan losses shown on the Financial Statements of Community and the Financial

Regulatory Reports of Community Bank as of September 30, 2003 were, and the

allowance for possible loan losses to be shown on the Financial Statements of

Community and the Financial Regulatory Reports of Community Bank as of any date

subsequent to the execution of this Agreement will be, as of such dates,

adequate to provide for possible losses, net of recoveries relating to loans

previously charged off, in respect of loans outstanding (including accrued

interest receivable) of Community and Community Bank and other extensions of

credit (including letters of credit or commitments to make loans or extend

credit);

Section 3.5 Certain Loans and Related Matters. Except as set forth in

------------------------------------

Schedule 3.5, none of Community, Community Bank or their respective subsidiaries

is a party to any written or oral: (i) loan agreement, note or borrowing

arrangement, other than credit card loans and other loans the unpaid balance of

which does not exceed $25,000 per loan, under the terms of which the obligor is

sixty (60) days delinquent in payment of principal or interest or in default of

any other provision as of the date hereof; (ii) loan agreement, note or

borrowing arrangement which has been classified or, in the exercise of

reasonable diligence by Community, Community Bank or any Regulatory Authority,

should have been classified by any bank examiner (whether regulatory or

internal) as "substandard," "doubtful," "loss," "other loans especially

mentioned," "other assets especially mentioned," "special mention," "credit risk

assets," "classified," "criticized," "watch list," "concerned loans" or any

comparable classifications by such persons; (iii) loan agreement, note or

borrowing arrangement, including any loan guaranty, with any director or

executive officer of Community, Community Bank or any Community subsidiary or

any five percent (5%) shareholder of Community, Community Bank or any Community

subsidiary, or any person, corporation or enterprise controlling, controlled by

or under common control with any of the foregoing; or (iv) loan agreement, note

or borrowing arrangement in violation of any law, regulation or rule applicable

to Community, Community Bank or any Community subsidiary including, but not

limited to, those promulgated, interpreted or enforced by any Regulatory

Authority and which violation could have a Material Adverse Effect on the

Condition of Community.

Section 3.6 Authority; No Violation.

-----------------------

(a) Community has full corporate power and authority to execute and

deliver this Agreement and, subject to the approval of the shareholders of

Community and to the receipt of the Consents of the Regulatory Authorities, to

consummate the transactions contemplated hereby. The Board of Directors of

Community has duly and validly approved this Agreement and the transactions

contemplated hereby, has authorized the execution and delivery of this

Agreement, has directed that this Agreement and the transactions contemplated

hereby be submitted to Community's shareholders for approval at a meeting of

such shareholders and,

<PAGE>

except for the adoption of such Agreement by its shareholders and the execution

and filing of the Certificate of Merger, no other corporate proceeding on the

part of Community is necessary to consummate the transactions so contemplated.

This Agreement, when duly and validly executed by Community and delivered by

Community (and assuming due authorization, execution and delivery by Sun), will

constitute a valid and binding obligation of Community, and will be enforceable

against Community in accordance with its terms, except as such enforceability

may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,

receivership or similar laws affecting the enforcement of creditors' rights

generally and except that the availability of the equitable remedy of specific

performance or injunctive relief is subject to the discretion of the court

before which any proceeding may be brought.

(b) Neither the execution and delivery of this Agreement by Community

nor the consummation by Community of the transactions contemplated hereby, nor

compliance by Community with any of the terms or provisions hereof, will (i)

violate any provision of the Certificate of Incorporation or Bylaws of

Community, or the Certificate of Incorporation or Bylaws of any Community

subsidiary, (ii) assuming that the Consents of the Regulatory Authorities and

approvals referred to herein are duly obtained, violate any statute, code,

ordinance, rule, regulation, judgment, order, writ, decree or injunction

applicable to Community, Community Bank or any of their respective properties or

assets, or (iii) violate, conflict with, result in a breach of any provisions

of, constitute a default (or an event which, with notice or lapse of time, or

both, would constitute a default) under, result in the termination of,

accelerate the performance required by or result in the creation of any lien,

security interest, charge or other encumbrance upon any of the respective

properties or assets of Community or Community Bank under, any of the terms,

conditions or provisions of any material note, bond, mortgage, indenture, deed

of trust, license, permit, lease, agreement or other instrument or obligation to

which Community or Community Bank is a party, or by which any of them or any of

their respective properties or assets may be bound or affected.

Section 3.7 Consents and Approvals. Except for (i) the approval of the

------------------------

shareholders of Community pursuant to the proxy statement of Community relating

to the meeting of the shareholders of Community at which the Merger is to be

considered (the "Joint Proxy Statement/Prospectus"); (ii) the Consents of the

Regulatory Authorities; (iii) the filing of Certificate of Merger with the State

New Jersey; and (iv) as set forth in Schedule 3.7, no Consents of any person are

necessary in connection with the execution and delivery by Community of this

Agreement, and the consummation of the Merger and the other transactions

contemplated hereby.

Section 3.8 Broker's Fees. Except for Ryan Beck & Co., whose engagement

--------------

letter is set forth in Schedule 3.8, neither of Community or Community Bank, nor

any of their respective officers or directors, has employed any broker or finder

or incurred any liability for any broker's fees, commissions or finder's fees in

connection with any of the transactions contemplated by this Agreement.

<PAGE>

Section 3.9 Absence of Certain Changes or Events. Except as set forth in

-------------------------------------

Schedule 3.9, since December 31, 2002, there has not been (a) any declaration,

payment or setting aside of any dividend or distribution (whether in cash, stock

or property) in respect of Community Shares or (b) any change or any event

involving a prospective change in the Condition of Community on a consolidated

basis, or a combination of any such change(s) and any such event(s) which has

had, or is reasonably likely to have, a Material Adverse Effect on the Condition

of Community on a consolidated basis or on Community or Community Bank

generally, including, without limitation any change in the administration or

supervisory standing or rating of Community or Community Bank with any

Regulatory Authority, and no fact or condition exists as of the date hereof

which might reasonably be expected to cause any such event or change in the

future.

Section 3.10 Legal Proceedings; Etc. Except as set forth in Schedule 3.10,

-----------------------

neither Community nor Community Bank is a party to any, and there are no pending

or, to the knowledge of Community and each Community subsidiary, threatened,

judicial, administrative, arbitral or other proceedings, claims, actions, causes

of action or governmental investigations against Community or Community Bank

challenging the validity of the transactions contemplated by this Agreement and,

to the knowledge of Community and each Community subsidiary as of the date

hereof, there is no proceeding, claim, action or governmental investigation

against Community or Community Bank; no judgment, decree, injunction, rule or

order of any court, governmental department, commission, agency, instrumentality

or arbitrator is outstanding against Community or Community Bank which has had,

or is reasonably likely to have, a Material Adverse Effect on the Condition of

Community on a consolidated basis; there is no default by Community or Community

Bank under any material contract or agreement to which Community or Community

Bank is a party; and none of Community or Community Bank is a party to any

agreement, order or memorandum in writing by or with any Regulatory Authority

restricting the operations of Community or Community Bank and none of Community

or Community Bank has been advised by any Regulatory Authority that any such

Regulatory Authority is contemplating issuing or requesting the issuance of any

such order or memorandum in the future.

Section 3.11 Taxes and Tax Returns.

---------------------

(a) Community has previously delivered or made available to Sun

copies of the federal, state and local income tax returns of Community and, if

consolidated returns do not exist for all periods, of Community Bank and each of

its respective subsidiaries, for the years 2000, 2001 and 2002 and all schedules

and exhibits thereto, and such returns have not been examined by the Internal

Revenue Service or any other taxing authority. Except as reflected in Schedule

3.11, Community, Community Bank and their respective subsidiaries have duly

filed in correct form all federal, state and local information returns and tax

returns required to be filed on or prior to the date hereof, and Community,

Community Bank and any of their respective subsidiaries have duly paid or made

adequate provisions for the payment of all taxes and other governmental charges

which are owed by Community, Community Bank or any of their respective

subsidiaries to any federal, state or local taxing authorities, whether or not

reflected in such returns (including, without limitation, those owed in respect

of the properties, income,

<PAGE>

business, capital stock, deposits, franchises, licenses, sales and payrolls of

Community, Community Bank and any of their respective subsidiaries), other than

taxes and other charges which (i) are not yet delinquent or are being contested

in good faith or (ii) have not been finally determined. The amounts set forth as

liabilities for taxes on the Financial Statements of Community and the Financial

Regulatory Reports of Community Bank are sufficient, in the aggregate, for the

payment of all unpaid federal, state and local taxes (including any interest or

penalties thereon), whether or not disputed, accrued or applicable, for the

periods then ended, and have been computed in accordance with generally accepted

accounting principles. None of Community, Community Bank nor any of their

respective subsidiaries is responsible for the taxes of any other person other

than Community, Community Bank and any of their respective subsidiaries, under

Treasury Regulation 1.1502-6 or any similar provision of federal, state or

foreign law.

(b) Except as disclosed in Schedule 3.11, neither of Community,

Community Bank nor any of their respective subsidiaries has executed an

extension or waiver of any statute of limitations on the assessment or

collection of any federal, state or local taxes due that is currently in effect,

and deferred taxes of Community, Community Bank or any of their respective

subsidiaries, have been adequately provided for in the Financial Statements of

Community.

Community Bank nor any of their respective subsidiaries has made any payment, is

obligated to make any payment or is a party to any contract, agreement or other

arrangement that could obligate it to make any payment that would be disallowed

as a deduction under Section 280G or 162(m) of the Code.

(d) There has not been an ownership change, as defined in Section

382(g) of the Code, of Community, Community Bank or any of their respective

subsidiaries that occurred during or after any taxable period in which

Community, Community Bank or any of their respective subsidiaries incurred an

operating loss that carries over to any taxable period ending after the fiscal

year of Community immediately preceding the date of this Agreement.

(e) (i) Proper and accurate amounts have been withheld by Community,

Community Bank and their respective subsidiaries from their employees and others

for all prior periods in compliance in all material respects with the tax

withholding provisions of all applicable federal, state and local laws and

regulations, and proper due diligence steps have been taken in connection with

back-up withholding; (ii) federal, state and local returns have been filed by

Community, Community Bank and their respective subsidiaries for all periods for

which returns were due with respect to withholding, Social Security and

unemployment taxes or charges due to any federal, state or local taxing

authority; and (iii) the amounts shown on such returns to be due and payable

have been paid in full or adequate provision therefor have been included by

either Community or Community Bank in the Financial Statements of Community.

<PAGE>

Section 3.12 Employee Benefit Plans.

-----------------------

(a) None of Community, Community Bank or any of their respective

subsidiaries has or maintains any "employee benefit plan," as defined in Section

3(3) of the Employee Retirement Income Security Act of 1974, as amended

("ERISA"), except as described in Schedule 3.12(a) (the "Employee Benefit

Plans"). Community, Community Bank and their respective subsidiaries have, with

respect to each such plan, delivered to Sun true and complete copies of: (i) all

plan texts and agreements and related trust agreements or annuity contracts and

any amendments thereto; (ii) all summary plan descriptions and material employee

communications; (iii) the Form 5500 filed in each of the most recent three plan

years (including all schedules thereto and the opinions of independent

accountants); (iv) the most recent actuarial valuation (if any); (v) the most

recent annual and periodic accounting of plan assets; (vi) if the plan is

intended to qualify under Section 401(a) or 403(a) of the Code, the most recent

determination letter received from the Internal Revenue Service; and (vii) all

material communications with any governmental entity or agency (including,

without limitation, the Department of Labor, Internal Revenue Service and the

Pension Benefit Guaranty Corporation ("PBGC")).

(b) Except as described in Schedule 3.12(b), no Employee Benefit Plan

is a defined benefit plan. None of Community, Community Bank or any of their

respective subsidiaries (or any pension plan maintained by any of them) has

incurred any liability to the PBGC or the Internal Revenue Service with respect

to any pension plan qualified under Section 401 of the Code, except liabilities

to the PBGC pursuant to Section 4007 of ERISA, all which have been fully paid.

No reportable event under Section 4043(b) of ERISA (including events waived by

PBGC regulation) has occurred with respect to any such pension plan.

subsidiaries has incurred any liability under Section 4201 of ERISA for a

complete or partial withdrawal from, or agreed to participate in, any

multi-employer plan as such term is defined in Section 3(37) of ERISA.

(d) All Employee Benefit Plans comply with the applicable provisions

of ERISA and the Code that are applicable, or intended to be applicable,

including, but not limited to, COBRA, HIPAA and any applicable, similar state

law. None of Community, Community Bank or any of their respective subsidiaries

has any material liability under any such plan that is not reflected in the

Financial Statements of Community or the Financial Regulatory Reports of

Community Bank. Neither Community, Community Bank, any Employee Benefit Plan nor

any employee, administrator or agent thereof, is or has been in violation of the

transaction code set rules under HIPAA ss.ss. 1172-1174 or the HIPAA privacy

rules under 45 CFR Part 160 and subparts A and E of Part 164. No penalties have

been imposed on Community, Community Bank, any Employee Benefit Plan, or any

employee, administrator or agent thereof, under HIPAA ss. 1176 or ss. 1177.

<PAGE>

For purposes of this Agreement, "COBRA" means the provision of Section

4980B of the Code and the regulations thereunder, and Part 6 of the Subtitle B

of title I of ERISA and any regulations thereunder, and "HIPAA" means the

provisions of the Code and ERISA as enacted by the Health Insurance Portability

and Accountability Act of 1996.

(e) No prohibited transaction (which shall mean any transaction

prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)

has occurred with respect to any Employee Benefit Plan which would result in the

imposition, directly or indirectly, of an excise tax under Section 4975 of the

Code or a civil penalty under Section 502(i) of ERISA; and no actions have

occurred which could result in the imposition of a penalty under any section or

provision of ERISA.

(f) No Employee Benefit Plan which is a defined benefit pension plan

has any "unfunded current liability," as that term is defined in Section

302(d)(8)(A) of ERISA, and the present fair market value of the assets of any

such plan exceeds the plan's "benefit liabilities," as that term is defined in

Section 4001(a)(16) of ERISA, when determined under actuarial factors that would

apply if the plan terminated in accordance with all applicable legal

requirements.

(g) Except as described in Schedule 3.12(g), neither the execution

and delivery of this Agreement nor the consummation of the transactions

contemplated hereby will (i) result in any payment or obligation (including,

without limitation, 9everance, bonus, deferred compensation, retirement,

unemployment compensation, golden parachute or otherwise) becoming due to any

director or any officer or employee of Community, Community Bank or any of their

respective subsidiaries under any Employee Benefit Plan or otherwise, (ii)

increase any benefits or obligations otherwise payable under any benefit plan or

(iii) result in any acceleration of the time of payment or vesting of any such

benefits or obligations.

(h) No Employee Benefit Plan is a multiemployer plan as defined in

Section 414(f) of the Code or Section 3(37) or 4001(a)(3) of ERISA. Community,

Community Bank and their respective subsidiaries have never been a party to or

participant in a multiemployer plan.

(i) There are no actions, liens, suits or claims pending or

threatened (other than routine claims for benefits) with respect to any Employee

Benefit Plan or against the assets of any Employee Benefit Plan. No assets of

Community, Community Bank or their respective subsidiaries are subject to any

lien under Section 302(f) of ERISA or Section 412(n) of the Code.

(j) Each Employee Benefit Plan which is intended to qualify under

Section 401(a) or 403(a) of the Code so qualifies and its related trust is

exempt from taxation under Section 501(a) of the Code. No event has occurred or

circumstance exists that will or could give rise to a disqualification or loss

of tax-exempt status of any such plan or trust.

<PAGE>

(k) No Employee Benefit Plan is a multiple employer plan within the

meaning of Section 413(c) of the Code or Section 4063, 4064 or 4066 of ERISA. No

Employee Benefit Plan is a multiple employer welfare arrangement as defined in

Section 3(40) of ERISA.

(l) Each employee pension benefit plan, as defined in Section 3(2) of

ERISA , that is not qualified under Section 401(a) or 403(a) of the Code is

exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded plan that is

maintained primarily for the purpose of providing deferred compensation for a

select group of management or highly compensated employees, pursuant to Section

201(2), 301(a)(3) and 401(a)(1) of ERISA. Except as disclosed on Schedule

3.12(l), no assets of Community, Community Bank or their respective subsidiaries

are allocated to or held in a grantor trust or "rabbi trust" or similar funding

vehicle.

(m) Except as set forth on Schedule 3.12(m), no Employee Benefit Plan

provides benefits to any current or former employee of Community, Community Bank

or their respective subsidiaries following the retirement or other termination

of service (other than coverage mandated by COBRA, the cost of which is fully

paid by the current or former employee or his or her dependents). Any such plan

may be amended or terminated at any time by unilateral action of Community,

Community Bank or their respective subsidiaries.

(n) With respect to each Employee Benefit Plan, there are no funded

benefit obligations for which contributions have not been made or properly

accrued and there are no unfunded benefit obligations that have not been

accounted for by reserves or otherwise properly footnoted in accordance with

generally accepted accounting principles on the Financial Statements of

Community.

(o) Set forth at Schedule 3.12(o) is a true and complete copy of the

Community Bank Directors Deferred Compensation Plan and related Trust Agreement

and all amendments and restatements of such plan from the date of first adoption

of such plan and trust and implementation; a certified copy of all minutes of

the Board of Directors approving such plan and all amendments and restatements

thereto, all plan participant joinder agreements related to such plan,

information related to any life insurance contracts and agreements whereby

parties other than Community or Community Bank have an ownership interest in the

assets of such policies or related death benefits, copies of all correspondence

related to such plan and all amendments thereto with the FDIC and the New Jersey

Department of Banking and Insurance related to such plan implementation and any

amendments and restatements thereto, and copies of any correspondence related to

such plan with respect to compliance with ERISA filed with any federal or state

governmental entity. The Directors Deferred Compensation Plan, as amended, set

forth at Schedule 3.12(o), has been duly and validly authorized by all necessary

corporate action on the part of Community Bank, has been duly and validly

executed by Community Bank, is a valid and binding obligation of Community Bank,

and has been adopted, implemented and administered in compliance with all

applicable federal and state laws, including but not limited to the applicable

provisions of the Banking Act of 1948 of the State of New Jersey.

<PAGE>

Section 3.13 Title and Related Matters.

-------------------------

(a) Each of Community, Community Bank and their respective

subsidiaries has good title, and as to owned real property, has good and

marketable title in fee simple absolute, to all assets and properties, real or

personal, tangible or intangible, reflected as owned by or leased or subleased

by or carried under the name of any of them on the Financial Statements of

Community or the Financial Regulatory Reports of Community Bank or acquired

subsequent thereto (except to the extent that such assets and properties have

been disposed of for fair value in the ordinary course of business since

December 31, 2002), free and clear of all liens, encumbrances, mortgages,

security interests, restrictions, pledges or claims, except for (i) those liens,

encumbrances, mortgages, security interests, restrictions, pledges or claims

reflected in the Financial Statements of Community and the Financial Regulatory

Reports of Community Bank or incurred in the ordinary course of business after

December 31, 2002, (ii) statutory liens for amounts not yet delinquent or which

are being contested in good faith, and (iii) liens, encumbrances, mortgages,

security interests, pledges, claims and title imperfections that are not in the

aggregate material to the Condition of Community on a consolidated basis.

(b) All agreements pursuant to which Community, Community Bank or any

of their respective subsidiaries leases, subleases or licenses material real or

material personal properties from others are valid, binding and enforceable in

accordance with their respective terms, and there is not, under any of such

leases or licenses, any existing default or event of default, or any event which

with notice or lapse of time, or both, would constitute a default or force

majeure, or provide the basis for any other claim of excusable delay or

nonperformance, except for defaults which individually or in the aggregate would

not have a Material Adverse Effect on the Condition of Community on a

consolidated basis. Community, Community Bank and their respective subsidiaries

have all right, title and interest as a lessee under the terms of each lease or

sublease, free and clear of all liens, claims or encumbrances (other than the

rights of the lessor) as of the Effective Time of the Merger, and shall have the

right to transfer each lease or sublease pursuant to this Agreement.

buildings, structures and fixtures owned, leased or subleased by Community,

Community Bank and their respective subsidiaries are in good operating condition

and repair, subject only to ordinary wear and tear and/or minor defects which do

not interfere with the continued use thereof in the conduct of normal

operations, and (ii) all of the material personal properties owned, leased or

subleased by Community, Community Bank and their respective subsidiaries are in

good operating condition and repair, subject only to ordinary wear and tear

and/or minor defects which do not interfere with the continued use thereof in

the conduct of normal operations.

Section 3.14 Real Estate.

-----------

(a) Schedule 3.14(a) identifies each parcel of real estate or

interest therein owned, leased or subleased by Community, Community Bank or

their respective subsidiaries or

<PAGE>

in which Community, Community Bank or their respective subsidiaries has any

ownership or leasehold interest.

(b) Schedule 3.14(b) lists or otherwise describes each and every

written or oral lease or sublease, together with the current name, address and

telephone number of the landlord or sublandlord and the landlord's property

manager (if any), under which Community or Community Bank is the lessee of any

real property and which relates in any manner to the operation of the businesses

of Community or Community Bank.

subsidiaries has violated, or is currently in violation of, any law, regulation

or ordinance relating to the ownership or use of the real estate and real estate

interests described in Schedules 3.14(a) and 3.14(b) including, but not limited

to any law, regulation or ordinance relating to zoning, building, occupancy,

environmental or comparable matter.

(d) As to each parcel of real property owned or used by Community,

Community Bank or any of their respective subsidiaries, none of Community or

Community Bank has received notice of any pending or, to the knowledge of

Community and each Community subsidiary, threatened condemnation proceedings,

litigation proceedings or mechanic's or materialmen's liens.

Section 3.15 Environmental Matters.

---------------------

(a) Each of Community, Community Bank, the Participation Facilities

(as defined below), and the Loan Properties (as defined below) are, and have

been, in material compliance, and there are no present circumstances that would

prevent or interfere with the continuation of such material compliance with all

applicable federal, state and local laws, including common law, rules,

regulations and ordinances, and with all applicable decrees, orders and

contractual obligations relating to pollution or the protection of the

environment or the discharge of, or exposure to, Hazardous Materials (as defined

below) in the environment or workplace.

(b) There is no litigation pending or, to the knowledge of Community,

Community Bank or any of their respective subsidiaries, threatened before any

court, governmental agency or board or other forum in which Community, Community

Bank or any Participation Facility has been or, with respect to threatened

litigation, may be, named as defendant (i) for alleged noncompliance (including

by any predecessor), with respect to any Environmental Law (as defined below) or

(ii) relating to the release into the environment of any Hazardous Material (as

defined below), whether or not occurring at, on or involving a site owned,

leased or operated by Community, Community Bank or any Participation Facility.

Community Bank or any of their respective subsidiaries, threatened before any

court,

<PAGE>

governmental agency or board or other forum in which any Loan Property (or

Community or Community Bank in respect of such Loan Property) has been or, with

respect to threatened litigation, may be, named as a defendant or potentially

responsible party (i) for alleged noncompliance (including by any predecessor)

with any Environmental Law or (ii) relating to the release into the environment

of any Hazardous Material, whether or not occurring at, on or involving a Loan

Property.

(d) To the knowledge of Community, Community Bank or any of their

respective subsidiaries, there is no reasonable basis for any litigation of a

type described in Section 3.15(b) and Section 3.15(c) of this Agreement.

(e) During the period of (i) ownership or operation by Community or

Community Bank of any of their respective current properties, (ii) participation

by Community or Community Bank in the management of any Participation Facility,

or (iii) holding by Community or Community Bank of a security interest in any

Loan Property, there have been no releases of Hazardous Material in, on, under

or affecting such properties.

(f) Prior to the period of (i) ownership or operation by Community or

Community Bank of any of their respective current properties, (ii) participation

by Community or Community Bank in the management of any Participation Facility,

or (iii) holding by Community or Community Bank of a security interest in any

Loan Property, to the knowledge of Community, Community Bank or any of their

respective subsidiaries, there were no releases of Hazardous Material or oil in,

on, under or affecting any such property, Participation Facility or Loan

Property.

Section 3.16 Commitments and Contracts.

-------------------------

(a) Except as set forth in Schedule 3.16, none of Community,

Community Bank or their respective subsidiaries is a party or subject to any of

the following (whether written or oral, express or implied):

(i) Any employment contract or understanding (including any

understandings or obligations with respect to severance or

termination pay liabilities or fringe benefits) with any

present or former officer, director, employee, including in

any such person's capacity as a consultant (other than those

which either are terminable at will without any further

amount being payable thereunder or as a result of such

termination by Community or Community Bank);

(ii) Any labor contract or agreement with any labor union;

<PAGE>

(iii)Any contract covenants which limit the ability of Community

or Community Bank to compete in any line of business or

which involve any restriction of the geographical area in

which Community or Community Bank may carry on its

businesses (other than as may be required by law or

applicable regulatory authorities);

(iv) Any lease (other than real estate leases described on

Schedule 3.14(b)) or other agreements or contracts with

annual payments aggregating $25,000 or more; or

(v) Any other contract or agreement which would be required to

be disclosed in reports filed by Community with the Federal

Reserve Board, the New Jersey Department of Banking and

Insurance or the FDIC and which has not been so disclosed.

(b) Except as set forth in Schedule 3.16(b), there is not, under any

agreement, lease or contract to which Community, Community Bank or any of their

respective subsidiaries is a party, any existing default or event of default, or

any event which with notice or lapse of time, or both, would constitute a

default or force majeure, or provide the basis for any other claim of excusable

delay or non-performance.

execution of this Agreement nor the consummation of the transactions

contemplated hereby will result in termination of any of the material service

contracts (including leases, agreements or licenses) to which Community or

Community Bank is a party ("Service Contracts"), or modification or acceleration

of any of the terms of such Service Contracts; and (ii) no consents are required

to be obtained and no notices are required to be given in order for the Service

Contracts to remain effective, without any modification or acceleration of any

of the terms thereof, following the consummation of the transactions

contemplated by this Agreement.

(d) Schedule 3.16(d) lists the deadlines for extensions or

terminations of any material leases, agreements or licenses (including

specifically data processing agreements) to which Community or Community Bank is

a party.

Section 3.17 Regulatory, Accounting and Tax Matters. None of Community,

----------------------------------------

Community Bank or any of their respective subsidiaries has taken or agreed to

take any action or has any knowledge of any fact or has agreed to any

circumstance that would (i) materially impede or delay receipt of any Consents

of any Regulatory Authorities referred to in this Agreement including, matters

relating to the Community Reinvestment Act and protests thereunder; or (ii)

prevent the transactions contemplated by this Agreement from qualifying as a

reorganization within the meaning of Section 368(a) of the Code.

<PAGE>

Section 3.18 Registration Obligations. Except with respect to obligators

-------------------------

set forth on Schedule 3.18, neither of Community or Community Bank is under any

obligation, contingent or otherwise, which will survive the Merger to register

any of its securities under the Securities Act of 1933 or any state securities

laws.

Section 3.19 Antitakeover Provisions. Community, Community Bank and their

-----------------------

respective subsidiaries have taken all actions required to exempt Community,

this Agreement, the Merger, the Bank Merger Agreement and the Bank Merger from

any provisions of an antitakeover nature contained in their organizational

documents, and the provisions of any federal or state "antitakeover," "fair

price," "moratorium," "control share acquisition" or similar laws or

regulations.

Section 3.20 Insurance. Community, Community Bank and their respective

---------

subsidiaries are presently insured as set forth on Schedule 3.20, and during

each of the past three calendar years have been insured, for such amounts

against such risks as companies or institutions engaged in a similar business

would, in accordance with good business practice, customarily be insured. To the

knowledge of Community and Community Bank, the policies of fire, theft,

liability and other insurance maintained with respect to the assets or

businesses of Community and each Community subsidiary provide adequate coverage

against loss, and the fidelity bonds in effect as to which Community or

Community Bank is named an insured are sufficient for their purpose. Such

policies of insurance are listed and described in Schedule 3.20.

Section 3.21 Labor.

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(a) No work stoppage involving Community, Community Bank or any of

their respective subsidiaries is pending as of the date hereof or, to the

knowledge of Community, Community Bank and their respective subsidiaries,

threatened. None of Community, Community Bank or any of their respective

subsidiaries is involved in, or, to the knowledge of Community, Community Bank

and their respective subsidiaries, threatened with or affected by, any

proceeding asserting that Community, Community Bank or any of their respective

subsidiaries has committed an unfair labor practice or any labor dispute,

arbitration, lawsuit or administrative proceeding which might reasonably be

expected to have a Material Adverse Effect on Community. No union represents or

claims to represent any employees of Community, Community Bank or their

respective subsidiaries, and, to the knowledge of Community, Community Bank and

their respective subsidiaries, no labor union is attempting to organize

employees of Community, Community Bank or their respective subsidiaries.

(b) Community, Community Bank or their respective subsidiaries have

made available to Sun a true and complete list of all employees of Community,

Community Bank and their respective subsidiaries as of the date hereof, together

with the employee position, title, salary and date of hire, and all information

with respect to all benefit plans or policies, bonus arrangements, commissions,

severance plans or policies, compensation arrangements or other benefits

provided to such employees. Except as set forth on Schedule 3.21(b), the

consummation of the transactions contemplated hereby will not cause Sun to incur

or suffer any liability relating

<PAGE>

to, or obligation to pay, severance, termination or other payments to any person

or entity. Except as set forth on Schedule 3.16(a) hereto, no employee of

Community, Community Bank or their respective subsidiaries has any contractual

right to continued employment by Community.

in compliance with all applicable laws and regulations relating to employment or

the workplace, including, without limitation, provisions relating to wages,

hours, collective bargaining, safety and health, work authorization, equal

employment opportunity, immigration and the withholding of income taxes,

unemployment compensation, workers compensation, employee privacy and right to

know and social security contributions.

(d) Except as set forth on Schedule 3.21(d) hereto, there has not

been, there is not presently pending or existing and there is not threatened any

proceeding against or affecting Community, Community Bank or their respective

subsidiaries relating to the alleged violation of any legal requirement

pertaining to labor relations or employment matters, including any charge or

complaint filed by an employee or union with the National Labor Relations Board,

the Equal Employment Opportunity Commission or any comparable governmental body,

organizational activity, or other labor or employment dispute against or

affecting Community, Community Bank or their respective subsidiaries.

Section 3.22 Compliance with Laws. Each of Community, Community Bank and

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their respective subsidiaries has conducted its business in accordance with all

applicable federal, foreign, state and local laws, regulations and orders, and

each is in material compliance with such laws, regulations and orders. Except as

disclosed in Schedule 3.22, none of Community or Community Bank:

(a) is in violation of any laws, orders or permits applicable to its

business or the employees or agents or representatives conducting its business

(other than where such violation will not, alone or in the aggregate, have a

Material Adverse Effect on Community), and

(b) has received a notification or communication from any agency or

department of any federal, state or local governmental authority or any

Regulatory Authority or the staff thereof (i) asserting that Community or

Community Bank is not in compliance with any laws or orders which such

governmental authority or Regulatory Authority enforces (other than where such

non-compliance will not, alone or in the aggregate, have a Material Adverse

Effect on Community), (ii) threatening to revoke any permit or license (other

than licenses or permits the revocation o

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