**Exhibit 10.5**

 

**FULTON COUNTY NATIONAL BANK & TRUST COMPANY**

 

**MCCONNELLSBURG, PA**

 

**SURVIVOR INCOME AGREEMENT**

 

THIS AGREEMENT is made this 4th day ofAugust, 2000 by and between The Fulton County National Bank and Trust Company(the “Company”), and Sharon M. Sowers (the ‘Executive”).

 

**INTRODUCTION**

 

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

 

**AGREEMENT**

 

The Executive and the Company agree as follows:

 

**Article 1**

 

**Entitlement to Benefit**

 

1.1           *Pre-Termination SurvivorIncome Benefit. *If the Executive dies before otherwiseterminating employment with the Company, the Company shall pay to the Executive’sdesignated beneficiary the survivor income benefit described in Article 2.

 

1.2           *DisabilityContinuation. *If the Executive terminates employment due todisability and then dies before recovering from such disability, the Companyshall pay to the Executive’s designated beneficiary the survivor income benefitdescribed in Article 2.  Whether theExecutive is disabled or has recovered from a disability shall be determined bythe Company in its sole discretion.

 

1.3           *Suicide. *No benefits shall be payable if the Executive commits suicide withintwenty-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 two times base annual salary atthe time of death, divided by the Tax Factor. Base annual salary should notexceed $ 117,000 for purposes of this calculation.

 

2.1.1        *Tax Factor. *One minus the Company’s marginal income taxrate 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’sbeneficiary 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 beneficiaryby filing a written designation with theCompany. The Executive may revoke or modify the designation at any time byfiling a new designation. However, designations will only be effective ifsigned by the Executive and accepted by the Company during the Executive’slifetime.  The Executive’s beneficiarydesignation shall be deemed automatically revoked if the beneficiarypredeceases the Executive, or if the Executive names a spouse as beneficiaryand the marriage is subsequently dissolved. if the Executive dies without avalid beneficiary designation, all payments shall be made to the Executive’ssurviving spouse, if any, and if none, to the Executive’s surviving childrenand the descendants of any deceased child by right of representation, and if nochildren 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, orto a person incapable of handling the disposition of his or her property, theCompany may pay such benefit to the guardian, legal representative or personhaving the care or custody of such minor, incompetent person or incapableperson. The Company may require proof of incompetency, minority or guardianshipas it may deem appropriate prior to distribution of the benefit. Suchdistribution shall completely discharge the Company from all liability withrespect to such benefit.

 

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**Article 4**

 

**Claimsand Review Procedures**

 

4.1           *Claims Procedure.  *The Company shall notify the Executive’s beneficiary in writing, withinninety (90) days of his or her written application for benefits, of his or hereligibility or noneligibility for benefits under the Agreement.  If the Company determines that the beneficiaryis not eligible for benefits or full benefits, the notice shall set forth (I)the specific reasons for such denial, (2) a specific reference to theprovisions of the Agreement on which the denial is based, (3) adescription of any additional information or material necessary for theclaimant 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 andother appropriate information as to the steps to be taken if the beneficiarywishes to have the claim reviewed.  Ifthe Company determines that there are special circumstances requiringadditional time to make a decision, the Company shall notify the beneficiary ofthe special circumstances and the date by which a decision is expected to bemade, 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 forbenefits, or if the beneficiary believes that he or she is entitled to greateror different benefits, the beneficiary shall have the opportunity to have suchclaim reviewed by the Company by filing a petition for review with the Companywithin sixty (60) days after receipt of the notice issued by the Company.  Said petition shall state the specific reasonswhich the beneficiary believes entitle him or her to benefits or to greater ordifferent benefits.  Within sixty (60)days after receipt by the Company of the petition, the Company shall afford thebeneficiary (and counsel, if any) an opportunity to present his or her positionto the Company orally or in writing, and the beneficiary (or counsel) shallhave the right to review the pertinent documents.  The Company shall notify the beneficiary ofits decision in writing within the sixty-day period, stating specifically thebasis of its decision, written in a manner calculated to be understood by thebeneficiary and the specific provisions of the Agreement on which the decisionis based. If, because of the need for a hearing, the sixty-day period is notsufficient, the decision may be deferred for up to another sixty-day period atthe election of the Company, but notice of this deferral shall be given to thebeneficiary.

 

**Article 5**

 

**Conversion to Split Dollar**

 

Ifthe Executive voluntarily terminates employment after age 59*,*unlessthe Executive elects otherwise by written notice to the Company, the SplitDollar Insurance Agreement attached as the Addendum to this Agreement shallautomatically take effect as of the Executive’s termination of employment.  The Company shall take all actions necessaryto implement the Split Dollar Insurance Agreement.

 

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**Article 6**

 

**Amendmentsand Termination**

 

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

 

**Article 7**

 

**Miscellaneous**

 

7.1           *Exclusive Agreement/BindingEffect.* This Agreement is the entire agreement between theCompany and the Executive, written or oral, related to the Company’s obligationto pay any survivor income benefits to the Executive’s beneficiaries orsurvivors.  This Agreement supersedesall, prior agreements, understandings and negotiations.  This Agreement shall bind the Executive andthe Company, and their beneficiaries, survivors, executors, administrators andtransferees.

 

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

 

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

 

7.4           *Applicable Law.*  TheAgreement and all rights hereunder shall be governed by the laws of theCommonwealth of Pennsylvania, except to the extent preempted by the laws of theUnited States of America.

 

7.5           *Unfunded Plan*.  Thebeneficiary is a general unsecured creditor of the Company for the payment ofbenefits under this Agreement.  Thebenefits represent the mere promise by the Company to pay such benefits.  The beneficiary’s rights to such benefits arenot 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 ageneral asset of the Company to which the Executive and designated beneficiaryhave no preferred or secured claim.

 

INWITNESS WHEREOF, the Executive and a duly authorized Company officer havesigned this Agreement.

 
| EXECUTIVE:            | COMPANY                                        |
|-----------------------|------------------------------------------------|
|                  |                                           |
|                  | The  Fulton County National Bank and Trust Co. |
|                  |                                           |
| /S/  Sharon M. Sowers |                                           | By: | Clyde  H. Bookheimer |   |
|                  |                                           |
| Sharon  M. Sowers     | Title:                                         | President |   |
|                       |                                                |  |  |  |  |

 

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**THE FULTON COUNTY NATIONA**L BANK AND TR**UST COMPANY**

 

**SURVIVOR INCOME AGREEMENT**

 

**BENEFICIARY DESIGNATION**

 

I designate the following asbeneficiary of any death benefits under The Fulton County National Bank andTrust Company Survivor Income Agreement:

 
| Primary:    | Ronald J. Sowers                 |
|-------------|----------------------------------|
|        |                             |
| Contingent: | Matthew  Sowers and Wyatt Sowers |

 

**Note:****     ****To name a trust asbeneficiary, please provide the name of the trustee(s) and the exactname and 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 thatthe designations will be automatically revoked if the beneficiary predeceasesme, or, if I have named my spouse as beneficiary, in the event of thedissolution of our marriage.

 
| Signature | /S/ Sharon M. Sowers |
|-----------|----------------------|
|      |                 |
| Date      | 8/4/00               |   |

 

Accepted by the Company this 4th dayof August, 2000.

 
| 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 NationalBank & Trust Company (the “Company”), and Sharon Sowers (the “Executive”).

 

**INTRODUCTION**

 

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

 

**Article 1**

 

**General Definitions**

 

The following terms shall have the meaningsspecified.

 

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

 

**Article ****2**

 

**Policy Ownership/Interests**

 

2.1           *CompanyOwnership. *The Company owns the Policy and shall havethe right to exercise all incidents of ownership and to receive the Policyvalues in excess of the Executive’s interest described in Section 2.2.

 

2.2           *Executive’s Interest. *The Executiveshall have the right to designate the beneficiary of the death proceeds of thePolicy in an amount equal to the lesser of (i) two times the most recentbase annual salary or (ii) the excess of the total death proceeds over thecash surrender value of the Policy on the day before the Executive’s death.  The Executive shall also have the right toelect and change settlement options that may be permitted for suchbeneficiaries.

 

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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 amountequal to the current term rate for the Executive’s age multiplied by theaggregate death benefit payable to the Executive’s beneficiary.  The “current term rate” is the minimum amountrequired 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 inthe Policy and in this Addendum to anyperson, entity or trust.

 

**Article 5**

 

**Insurer**

 

The Insurer shall be bound only by the terms of thePolicy. Any payments the Insurer makes or actions ittakes 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 deemedto have notice of the provisions ofthis Addendum.

 

**Article 6**

 

**Claims Procedure**

 

6.1           *Claims Procedure.*The Company shall notify the Executive’sbeneficiary in writing, within ninety (90) days of his or her writtenapplication for benefits, of his or her eligibility or non-eligibility forbenefits under the Addendum. If the Company determines that the beneficiary isnot eligible for benefits or full benefits, the notice shall set forth**(1) the specific reasons for such denial, (2) aspecific reference to the provisions of the Addendum on which the denial isbased, (3) a description of any additional information or materialnecessary for the claimant to perfect his or her claim, and a description ofwhy it is needed, and (4) anexplanation of the Addendum’s claims review procedure and other appropriate informationas to the steps to be taken if the beneficiary wishes to have the claimreviewed.  If the Company determines thatthere are special circumstances requiring additional time to make a decision,the Company shall notify the beneficiary of the special circumstances and thedate by which a decision is

 

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expected to be made, and may extend the time for up to an additionalninety-day period..

 

6.2           *Review Procedure. *If the beneficiary is determined by the Company not to be eligible forbenefits, or if the beneficiary believes that he or she is entitled to greateror different benefits, the beneficiary shall have the opportunity to have suchclaim reviewed by the Company by filing a petition for review with the Companywithin sixty (60) days after receipt of the notice issued by the Company.  Said petition shall state the specific reasonswhich the beneficiary believes entitle him or her to benefits or to greater ordifferent benefits.  Within sixty (60)days after receipt by the Company of the petition, the Company shall afford thebeneficiary (and counsel, if any) an opportunity to present his or her positionto the Company orally or in writing, and the beneficiary (or counsel) shallhave the right to review the pertinent documents.  The Company shall notify the beneficiary ofits decision in writing within the sixty-day period, stating specifically thebasis of its decision, written in a manner calculated to be understood by thebeneficiary and the specific provisions of the Addendum on which the decisionis based.  If; because of the need for ahearing, the sixty-day period is not sufficient, the decision may be deferredfor up to another sixty-day period at the election of the Company, but noticeof 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’sdeath by written notice to the Executive. Either party may terminate thisAddendum at any time prior to the Executive’s death by written notice to theother party.

 

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

 

**Article 8**

 

**Miscellaneous**

 

8.1           *Binding Effect.*This Addendum shall bind the Executive andthe Company, their beneficiaries, survivors, executors, administrators andtransferee; 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 toremain an employee of the Company, nor does it interfere with the Company’sright to discharge the Executive. It also does not require the Executive toremain an employee nor interfere with the Executive’s right to terminateemployment at any time.

 

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

 

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

 

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