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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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

  
					



 

















 


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

  	
   

  
						



 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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.


 

















 


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