(1) The officers, directors and employees of each grantee should pursue a course of conduct which will not raise the appearance of any impropriety or conflict of interest with respect to any funds awarded by the agency.

(2) No person who is a member of the governing body of the eligible applicant, an officer, or an employee or the immediate family member of such a person, or any person or business entity having a direct or indirect financial relationship with such a person, will be eligible to participate or benefit financially from the eligible applicant's project(s) or program, except that, in the case of a municipality, this provision applies only to employees or the immediate family members or employees of the departments or agencies directly involved in the municipality's project(s) or program.

(3) No individual who is an elected official at the State or local level, a paid staff person to such an official, a leader or chairman of a political party at any jurisdictional level, or an immediate family member of any such person will be eligible to participate or benefit financially from the eligible applicant's project(s) or program.

(4) Upon a written showing of good cause by an eligible applicant or a grantee, the agency may, in its discretion, grant a waiver of the prohibitions contained in paragraphs (a)(2) and (3) of this section, provided that the prohibited participation or benefit is not otherwise illegal. In the event the agency grants such a waiver, the facts and circumstances surrounding such participation or benefit shall be fully disclosed in the eligible applicant's proposal or contract and to such other persons or entities as the agency may require.