Exhibit 10.7

 

FULTON COUNTY NATIONAL BANK & TRUST COMPANY

 

MCCONNELLSBURG, PA

 

SURVIVOR INCOME AGREEMENT

 

THIS AGREEMENT is made this 27th day of March, 1996. by and between The Fulton
County National Bank & Trust Company ( the “Company”), and Neil L. Berkstresser
(the “Executive”).

 

INTRODUCTION

 

To encourage the Executive to remain an employee of the Company, the Company is
willing to provide benefits to the Executive’s beneficiary if the Executive dies
prior to terminating employment.  The Company will pay the benefits from its
general assets, but only so long as one of its general assets is a life
insurance policy on the Executive’s life.

 

AGREEMENT

 

The Executive and the Company agree as follows:

 

Article 1

 

Entitlement to Benefit

 

1.1           Pre-Termination Survivor Income Benefit.  If the Executive dies
before otherwise terminating employment with the Company, the Company shall pay
to the Executive’s designated beneficiary the survivor income benefit described
in Article 2.

 

1.2           Disability Continuation.  If the Executive terminates employment
due to disability and then dies before recovering from such disability, the
Company shall pay to the Executive’s designated beneficiary the survivor income
benefit described in Article 2. Whether the Executive is disabled or has
recovered from a disability shall be determined by the Company in its sole
discretion.

 

1.3           Suicide.  No benefits shall be payable if the Executive commits
suicide within twenty six months after the date of this Agreement.

 

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Article 2

 

Survivor Income Benefit

 

2.1           Amount of Benefits.  The survivor income benefit shall be one
times base annual salary at the time of death, divided by the Tax Factor.  Base
annual salary should not exceed $ 38,000 for purposes of this calculation.

 

2.1.2        Tax Factor.  One minus the Company’s marginal income tax rate for
the fiscal year in which the Executive’s death occurs.

 

2.2           Form of Benefits.  The survivor income benefit shall be paid to
the Executive’s beneficiary in a lump sum within sixty (60) days after the
Executive’s death.

 

Article 3

 

Beneficiaries

 

3.1           Beneficiary Designations.  The Executive shall designate a
beneficiary by filing a written designation with the Company.  The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive’s lifetime.  The Executive’s
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolve.  If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive’s surviving
spouse, if any, and if none, to the Executive’s surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive’s estate.

 

3.2           Facility of Payment.  If a benefit is payable to a minor, to a
person declared incompetent or to a person incapable of handling the disposition
of his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person.  The Company may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit.  Such distribution shall completely discharge the Company from all
liability with respect to such benefit.

 

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Article 4

 

Claims and Review Procedures

 

4.1           Claims Procedure.  The Company shall notify the Executive’s
beneficiary in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or noneligibility for
benefits under the Agreement.  If the Company determines that the beneficiary is
not eligible for benefits or full benefits, the notice shall set forth (l) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Agreement’s
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed.  If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.

 

4.2           Review Procedure.  If the beneficiary is determined by the Company
not to be eligible for benefits, or if the beneficiary believes that he or she
is entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company.  Said petition shall state the specific reasons which the
beneficiary believes entitle him or her to benefits or to greater or different
benefits.  Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
 The Company shall notify the beneficiary of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the beneficiary and the specific
provisions of the Agreement on which the decision is based. If, because of the
need for a hearing, the sixty-day period is not sufficient, the decision may be
deferred for up to another sixty-day period at the election of the Company, but
notice of this deferral shall be given to the beneficiary.

 

Article 5

 

Conversion to Split Dollar

 

If the Executive voluntarily terminates employment after age 59, unless the
Executive elects otherwise by written notice to the Company, the Split Dollar
Insurance Agreement attached as the Addendum to this Agreement shall
automatically take effect as of the Executive’s termination of employment.  The
Company shall take all actions necessary to implement the Split Dollar Insurance
Agreement.

 

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Article 6

 

Amendments and Termination

 

This Agreement may be amended or terminated only by a written agreement signed
by the Company and the Executive.

 

Article 7

 

Miscellaneous

 

7.1           Exclusive Agreement/Binding Effect.  This Agreement is the entire
agreement between the Company and the Executive, written or oral, related to the
Company’s obligation to pay any survivor income benefits to the Executive’s
beneficiaries or survivors.  This Agreement supersedes all prior agreements,
understandings and negotiations.  This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
transferees.

 

7.2           No Guaranty of Employment.  This Agreement is not an employment
policy or contract.  It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company’s right to
discharge the Executive.  It also does not require the Executive to remain an
employee nor interfere with the Executive’s right to terminate employment at any
time.

 

7.3           Tax Withholding.  The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

 

7.4          Applicable Law.  The Agreement and all rights hereunder shall be
governed by the laws of the State of Pennsylvania, except to the extent
preempted by the laws of the United States of America.

 

7.5          Unfunded Plan.  The beneficiary is a general unsecured creditor of
the Company for the payment of benefits under this Agreement.  The benefits
represent the mere promise by the Company to pay such benefits.  The
beneficiary’s rights to such benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors.  Any insurance on the Executive’s life
is a general asset of the Company to which the Executive and designated
beneficiary have no preferred or secured claim.

 

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IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have
signed this Agreement.

 

EXECUTIVE:

COMPANY:

 

 

 

The Fulton County National Bank & Trust Co.

 

 

/S/ Neil L. Berkstresser

 

By:

/S/ Clyde H. Bookheimer

 

Neil L. Berstresser

Title: President

 

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BENEPICIARY DESIGNATION

 

FULTON COUNT NATIONAL BANK & TRUST COMPANY

 

SURVIVOR INCOME AGREEMENT

 

I designate the following as beneficiary of benefits under the Survivor Income
Agreement

 

Primary:

Betty June Berkstresser (spouse)

 

 

 

Contingent:

 

 

 

 

 

 

Note:                   To name a trust as beneficiary, please provide the name
of the trustee and the exact date of the trust agreement.

 

I understand that I may change these beneficiary designations by filing a new
written designation with the Company.  I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary, in the event of the dissolution of
our marriage.

 

Signature:

/S/ Neil L. Berkstresser

 

 

Date:

 

3/27/96

 

 

Accepted by the Company the 27th day of March, 1996

 

By:

/S/ Clyde H. Bookheimer

 

 

Title:

 

President

 

 

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SPLIT DOLLAR ADDENDUM TO

 

MILTON COUNTY NATIONAL BARK & TRUST COMPANY

 

MCCONNELLSBURG, PA

 

SURVIVOR INCOME AGREEMENT

 

THIS ADDENDUM is part of the Survivor Income Agreement between Fulton County
National Bank & Trust Company (the “Company”), and Neil L. Berkstresser (the
“Executive”).

 

INTRODUCTION

 

Under the terms of the Survivor Income Agreement between the Executive and the
Company, the parties desire divide the death proceeds of a life insurance policy
on the Executive’s life.

 

Article 1

 

General Definitions

 

The following terms shall have the meanings specified.

 

1.1           “Insurer” means The Mutual Group insurance Company.

 

1.2           “Policy” means insurance policy number                 issued by
the Insurer.

 

Article 2

 

Policy Ownership/Interests

 

2.1           Company Ownership.  The Company owns the Policy and shall have the
right to exercise all incidents of ownership and to receive the Policy values in
excess of the Executive’s interest described in Section 2.2.

 

2.2           Executive’s Interest.  The Executive shall have the right to
designate the beneficiary of the death proceeds of the Policy in an amount equal
to the lesser of (i) one times the most recent base annual salary or (ii) the
excess of the total death proceeds over the cash surrender value of the Policy
on the day before the Executive’s death.  The Executive shall also have the
right to elect and change settlement options that may be permitted for such
beneficiaries.

 

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Article 3

 

Premiums

 

3.1           Premium Payment.  The Company shall pay any premiums due on the
Policy.

 

3.2           Imputed Income.  The Company shall then impute income to the
Executive in an amount equal to the current term rate for the Executive’s age
multiplied by the aggregate death benefit payable to the Executive’s
beneficiary.  The “current term rate” is the minimum amount required to be
imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable
authority.

 

Article 4

 

Assignment

 

The Executive may assign without consideration all interests in the Policy and
in this Addendum to any person, entity or trust.

 

Article 5

 

Insurer

 

The Insurer shall be bound only by the terms of the Policy.  Any payments the
Insurer makes or actions it takes in accordance with the Policy shall fully
discharge it from all claims, suits and demands of all persons.  The Insurer
shall not be bound by or be deemed to have notice of the provisions of this
Addendum.

 

Article 6

 

Claims Procedure

 

6.1           Claims Procedure. The Company shall notify the Executive’s
beneficiary in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or noneligibility for
benefits under the Addendum.  If the Company determines that the beneficiary is
not eligible for benefits or full benefits, the notice shall set forth (1) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Addendum on which the denial is based, (3) a description of any additional
information or material necessary for the claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Addendum’s
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed.  If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.

 

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6.2           Review Procedure.  If the beneficiary is determined by the Company
not to be eligible for benefits, or if the beneficiary believes that he or she
is entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company.  Said petition shall state the specific reasons which the
beneficiary believes entitle him or her to benefits or to greater or different
benefits.  Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent
documents.  The Company shall notify the beneficiary of its decision in writing
within the sixty-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the beneficiary and the
specific provisions of the Addendum on which the decision is based.  If, because
of the need for a hearing. the sixty-day period is not sufficient, the decision
may be deferred for up to another sixty-day period at the election of the
Company, but notice of this deferral shall be given to the beneficiary.

 

Article 7

 

Amendments and Termination

 

The Company may amend this Addendum at any time prior to the Executive’s death
by written notice to the Executive.  Either party may terminate this Addendum at
any time prior to the Executive’s death by written notice to the other party.

 

Upon termination of this Addendum, the Executive may purchase the Policy from
the Company for an amount equal to the Policy’s cash surrender value as of the
date of the termination.

 

Article 8

 

Miscellaneous

 

8.1           Binding Effect.  This Addendum shall bind the Executive and the
Company, their beneficiaries, survivors, executors, administrators and
transferees, and any Policy beneficiary.

 

8.2           No Guaranty of Employment.  This Addendum is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it interfere with the Company’s right to
discharge the Executive.  It also does not require the Executive to remain an
employee nor interfere with the Executive’s right to terminate employment at any
time.

 

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8.3           Applicable Law. The Addendum and all rights hereunder shall be
governed by and construed according to the laws of Pennsylvania, except to the
extent preempted by the laws of the United States of America.

 

The parties’ signatures on the Death Benefit Agreement witness their agreement
to the terms of this Addendum.

 

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SPLIT DOLLAR POLICY ENDORSEMENT

 

THE FULTON COUNTY NATIONAL BANK AND TRUST COMPANY

 

SPLIT DOLLAR ADDENDUM

 

Policy No. 594721

Insured: Neil L. Berkstresser

 

Supplementing and amending the application for insurance to Clarica Life
Insurance Company-US (formerly, The Mutual Group Life Insurance Company)
(“Insurer”) on December 22, 1995 the applicant requests and directs that;

 

BENEFICIARIES

 

1.             THE FULTON COUNTY NATIONAL BANK AND TRUST COMPANY, a
nationally-chartered commercial bank located in McConnellsburg, Pennsylvania
(the “Company”), shall be the direct beneficiary of Policy values in excess of
the Executive’s interest described in paragraph 2 below.

 

2.             The Insured or the Insured’s transferee shall be the beneficiary
of the death proceeds of the Policy in an amount equal to the lesser of (i) one
time the most recent base annual salary, or (ii) the excess of the total death
proceeds over the cash surrender value of the Policy on the day before the
Insured’s death.

 

OWNERSHIP

 

3.             The Owner of the policy shall be the Company. The Owner shall
have all ownership rights in the Policy except as may be specifically granted to
the Insured or the Insured’s transferee in paragraph (4) of this endorsement.

 

4.             The Insured or the Insured’s transferee shall have the right to
assign his or her rights and interests in the Policy with respect to that
portion of the death proceeds designated in paragraph (2) of this endorsement,
and to exercise all settlement options with respect to such death proceeds.

 

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY

 

Upon the death of the Insured, the interest of any collateral assignee of the
Owner of the Policy designated in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.

 

OWNERS AUTHORITY

 

The Insurer is hereby authorized to recognize the Owner’s claim to rights
hereunder without investigating the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient for the exercise of any rights under
this Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release therefore to the Insurer. The Insurer may rely
on a sworn statement in form satisfactory to it furnished by the Owner, its
successors or assigns, as to theft interest, and any payments made pursuant to
such statement shall discharge the Insurer accordingly. The owner accepts and
agrees to this split dollar endorsement.

 

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Any transferee’s rights shall be subject to this Endorsement.

 

The undersigned is signing in a representative capacity and warrants that he or
she has the authority to bind the entity on whose behalf this document is being
executed.

 

Signed at McConnellsburg, Pennsylvania, this 30th day of April, 2001.

 

 

THE FULTON COUNTY NATIONAL
BANK AND TRUST COMPANY

 

By:

/S/DoriAnn J. Hoffman

 

Title:

Senior Vice President

 

 

 

ACCEPTANCE AND BENEFICIARY DESIGNATION

 

The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates the following as beneficiary(s) of the
portion of the proceeds described in paragraph (2) above:

 

Primary Beneficiary:

 /S/Betty J. (R) Berkstresser

 

Relationship:

 Spouse

 

Contingent Beneficiary (if the Primary is deceased):

 

 

Relationship:

 

 

 

 

Signed McConnellsburg, Pennsylvania, this 30th day of April, 2001.

 

THE INSURED:

 

/S/Neil L. Berkstresser

 

Neil L. Berkstresser

 

RECORDED MAY 16 2001

 

CLARICA LIFE INSURANCE COMPANY-U.S.

 

 

BY:.

/S/Melody R.J. Jensen

 

 

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