SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”) is entered into by and among Sun Bancorp, Inc. (the “Company”), Sun National Bank (the “Bank”) and Thomas A. Bracken (“Employee”) and shall be effective as of April 12, 2007 (“Agreement Effective Date”).

Employee, the Bank and the Company mutually agree as follows:

1.   Employee’s employment with the Bank and the Company, and Employee’s status as an officer of the Bank, the Company, and any subsidiary of the Bank or the Company, terminated effective February 6, 2007 (“Separation Date”). The parties agree that Employee has received all salary, other compensation, and employee benefits due Employee through the Separation Date.

2.   Employee acknowledges and agrees that prior to signing this Agreement, and as an act independent of this Agreement, Employee has executed and submitted to the Company and the Bank a letter (in the form attached hereto as Attachment A), by which Employee has irrevocably resigned as a member of the Board of Directors of the Company and the Bank, and also has resigned as a member of the Board of Directors of any subsidiaries of the Company or the Bank. Such resignations as a director of any such entities shall be effective not later than the Agreement Effective Date. As such, Employee’s status as a director, employee, officer, or agent of all such entities shall have terminated not later than the Agreement Effective Date. Employee understands and agrees that the revocation provisions in Paragraph 15 of this Agreement are not applicable to the resignation of Employee’s positions with the Company, the Bank and all related entities, and that Employee’s resignation is final and irrevocable for all purposes.

3.   Employee shall receive separation pay from the Company and the Bank in the total gross amount of One Million Seven Hundred Thousand and No/100 Dollars ($1,700,000.00), less required tax withholdings, (“Separation Payment”), provided that Employee fully complies with Employee’s obligations in Section 4(b) of the Severance Agreement as Amended entered into by and between the Company and Employee on May 20, 2006, as modified in Paragraph 11 hereof (“Severance Agreement with the Company”), Employee’s obligations in Section 4(b) of the Severance Agreement as Amended and Restated entered into by and between the Bank and Employee on May 20, 2006, as modified in Paragraph 11 hereof (“Severance Agreement with the Bank”) and Employee’s promises in this Agreement. The Separation Payment shall be paid to Employee, or in the event of his death to his estate or beneficiaries, as follows: (i) an amount equal to One Million and Fifty Two Thousand Dollars ($1,052,000), less required tax withholdings, within seven (7) days after the end of the revocation period provided under Paragraph 15 below has expired; (ii) nine (9) equal monthly installments of Sixty Six Thousand Dollars and No/100 Dollars ($66,000.00) each, less required tax withholdings, shall be paid, with the first such installment to be paid on April 15, 2007, and each additional installment to be paid on the fifteenth (15 ^th ) day of each calendar month thereafter, and (iii) an amount equal to Fifty Four Thousand Dollars ($54,000), less tax required tax withholdings, shall be paid on January 2, 2008. The period between the date this Agreement is executed and January 2, 2008 shall be the “Separation Payment Period.” Employee acknowledges and agrees that the Bank and the Company are making the Separation Payment in lieu of the salary, vacation pay, severance pay, all other compensation, and/or any other amount which may be due or owing to Employee by the Bank and/or the Company including without limitation amounts provided for in Sections 4(a) of the Severance Agreement with the Bank and/or the Severance Agreement with the Company (collectively “Severance Agreements”) or in accordance with any other agreement with the Company or the Bank which may apply whether written or oral. Employee further acknowledges and agrees that the Separation Payment is in excess of any amounts Employee may otherwise be due.

4.   All of Employee’s base salary, bonuses, vacation pay, compensation of any kind, and employee benefits (including without limitation medical insurance, life insurance, company-paid club membership, and all other benefits of employment) ceased on the Separation Date, except as otherwise provided in this Agreement or in applicable benefit plan documents, except that Employee continued to receive company paid medical insurance benefits through February 28, 2007. Employee will have the use of Employee’s Company car, at the Company’s expense for lease costs, insurance and maintenance, through March 1, 2008, at which time Employee shall return the car in good working order and condition, normal wear and tear excepted, to the Bank.

5.   Employee will be eligible to elect to extend Employee’s (and his eligible dependents’) current participation in the medical insurance coverage provided by the Company and the Bank for the benefit of its employees generally pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), and Employee shall be responsible for paying all premium costs for such coverage from and after March 1, 2007, pursuant to COBRA.

6.   On the Separation Date, Employee held certain vested and exercisable stock options to acquire Company stock which as of the Agreement Effective Date have not been exercised (the “Options”). Such Options shall remain exercisable following the Separation Date in accordance with the following provisions:

A.   The Incentive Stock Options granted to Employee on and under the Stock Option Agreements dated February 27, 2001 and January 23, 2002 shall remain exercisable for a period of three (3) months after the Separation Date, and shall cease to be exercisable at the expiration of such period, as presently provided under the terms of the applicable stock option agreements and stock option plan documents.

B.   With respect to the Non-Incentive Stock Options granted to Employee under the Company’s 2002 Stock Option Plan (the “2002 Non-Incentive Options”), as evidenced by the Stock Option Agreement for Non-Incentive Options between the Company and Employee dated January 23, 2002 (the “2002 Non-Incentive Option Agreement”), the first sentence of the last paragraph of Section 2(a) of the 2002 Non-Incentive Option Agreement is hereby amended to read in its entirety as follows:

“Upon termination of service for any reason, other than Disability or death, such Options shall continue to be exercisable until March 31, 2009.”

The Company represents and warrants to Employee that its Board of Directors and the “Committee” as defined in the Company’s 2002 Stock Option Plan (if other than the Board of Directors of the Company) have taken all of the actions necessary to authorize and approve the amendment of the 2002 Non-Incentive Option Agreement provided for in this subparagraph B.

C.   With respect to the Non-Incentive Stock Options granted to Employee on February 27, 2001 (the “2001 Non-Incentive Options”), as evidenced by the Stock Option Agreement for Non-Incentive Options between the Company and Employee dated February 27, 2001, (the “2001 Non-Incentive Option Agreement”), Section 4 of such Stock Option shall be amended to read in its entirety as follows:

“This Options may not be exercised after March 31, 2009, and may be exercised only in accordance with the Plan and the terms of this Option Agreement.”

Employee authorizes the Company to make any amendments to applicable plan documents that are necessary to reflect the terms of this Paragraph. The remaining terms of the applicable plan documents shall govern such Employee’s Options. Employee acknowledges that the foregoing are all of his outstanding stock options and/or equity awards from the Company.

7.   In consideration jointly and severally for the Separation Payment provided in Paragraph 3 and the performance of the other obligations of the Company and the Bank under this Agreement, Employee voluntarily and knowingly waives, releases, and discharges the Company and the Bank, and their predecessors, successors, parent companies, subsidiaries, and in their capacities as such and/or otherwise arising from or relating to their relationships with the Company and/or the Bank, their respective investors, affiliates, assigns, officers, administrators, employees, former employees, directors, former directors, trustees, plan administrators, plans, fiduciaries, shareholders, partners, representatives, attorneys, agents, and insurers (other than in respect of applicable directors’ and officers’ liability coverage and medical/dental coverage under the Company’s employee benefit plans) (collectively, “Released Parties”) from all claims, liabilities, demands, and causes of action, known or unknown by Employee, fixed or contingent, which Employee may have or claim to have against any of them as a result of Employee’s employment and/or termination from employment and/or as a result of any other matter, action, or inaction concerning or relating to any of them arising through the date of Employee’s signature on this Agreement. Employee agrees not to file a lawsuit or commence an arbitration to assert any such claims, but Employee is not waiving any right to file a complaint with a government agency or to seek unemployment compensation or workers’ compensation benefits, if any. Employee’s waiver, release and discharge includes, but is not limited to: (a) claims arising under federal, state, or local laws prohibiting employment discrimination such as, without limitation, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the Age Discrimination in Employment Act (for claims arising through the date of Employee’s signature on this Agreement), the National Labor Relations Act, Section 1981 of the Civil Rights Act of 1866, the Americans with Disabilities Act, the Worker Adjustment and Retraining Notification Act, and the New Jersey Law Against Discrimination, (b) claims for breach of contract, (c) claims for personal injury, harm, or other damages (whether intentional or unintentional including, without limitation, negligence, defamation, misrepresentation, fraud, intentional infliction of emotional distress, invasion of privacy, and other such claims), (d) claims growing out of any legal restrictions on the Bank or the Company’s right to terminate their employees, (e) claims for wages or any other compensation, including but not limited to any claim for severance pay, other compensation, and/or any other amounts under the Severance Agreements or any other policy, plan or arrangement of the Bank or the Company, whether written or oral, (f) claims for benefits or compensation under any Supplemental Executive Retirement Plan, deferred compensation arrangement or similar plan of the Bank or the Company that may have been proposed or discussed from time to time but was never executed in written form by the parties and reflected in the Company’s financial statements as set forth in the Company’s reports as filed with the Securities and Exchange Commission in accordance with the Securities Exchange Act of 1934, as amended, (g) any other claims for benefits (except for vested benefits under the Company’s qualified retirement plans, continuation benefits as permitted by COBRA under the Company’s group health plan and stock options under the agreements referenced in Section 6 (collectively, the “Plan Documents”)) including, without limitation, those arising under the Employee Retirement Income Security Act of 1974, as amended, (h) claims arising under the Sarbanes-Oxley Act, or (i) claims relating to or arising under any laws of any governmental body in the United States or elsewhere. To the extent permitted by law, Employee agrees that Employee will not cause or encourage any future legal proceedings to be maintained or instituted against any of the Released Parties, and will not participate in any manner in any legal proceedings against any of the Released Parties, with respect to any c