**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 andbetween The Fulton County NationalBank & Trust Company *(*the “Company”), and Neil L. Berkstresser (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 theCompany agree as follows:

 

**Article 1**

 

**Entitlement to Benefit**

 

1.1           *Pre-TerminationSurvivor**IncomeBenefit. *If the Executive dies before otherwise terminating employment with the Company, the Company shall pay to the Executive’sdesignated beneficiary the survivor incomebenefit described in Article 2.

 

1.2           *DisabilityContinuation. *If the Executiveterminates employment due todisability and then dies beforerecovering from such disability, the Company shall pay to theExecutive’s designated beneficiarythe survivor income benefit described in Article 2. Whether the Executiveis disabled or has recovered from a disability shall be determined by theCompany in its sole discretion.

 

1.3           *Suicide. *No benefits shall be payable if the Executivecommits 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 $ 38,000for 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 ofBenefits. *The survivor income benefit shall be paid to the Executive’s beneficiaryin 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 writtendesignation with the Company.  TheExecutive may revoke or modify the designation at any time by filing a newdesignation. However, designations will only be effective if signed by theExecutive and accepted by the Company during the Executive’s lifetime.  The Executive’s beneficiary designation shallbe deemed automatically revoked if the beneficiary predeceases the Executive,or if the Executive names a spouse as beneficiary and the marriage issubsequently dissolve.  If the Executivedies without a valid beneficiary designation, all payments shall be made to theExecutive’s surviving spouse, if any, and if none, to the Executive’s survivingchildren and the descendants of anydeceased child by right of representation, and if no children or descendantssurvive, to the Executive’s estate.

 

3.2           *Facilityof**Payment. *If a benefit is payableto a minor, to a person declared incompetent or to a person incapable of handling the disposition of his orher property, the Company may pay such benefit to the guardian, legalrepresentative or person having the care or custody of such minor, incompetent person or incapable person.  The Companymay require proof of incompetency, minorityor guardianship as it may deem appropriate prior todistribution of the benefit.  Such distribution shall completelydischarge the Company from allliability 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 writtenapplication for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. Ifthe Company determines that thebeneficiary is not eligible for benefits or full benefits, the notice shall set forth (l) the specific reasons for suchdenial, (2) a specific reference to the provisions of the Agreement on which the denial isbased, (3) a description of anyadditional information ormaterial necessary for the claimant to perfect his or her claim, and a description of why it isneeded, and (4) anexplanation of the Agreement’s claims review procedure and other appropriateinformation as to the steps to be taken ifthe beneficiary wishes to have the claim reviewed.  If the Company determines that there arespecial circumstances requiring additional time to make a decision, the Companyshall notify the beneficiary of the special circumstances and the date by whicha decision is expected to bemade, and may extend the time for up toan 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 greater or different benefits, the beneficiaryshall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within sixty (60) daysafter receipt of the notice issued bythe Company.  Said petition shall state thespecific reasons which the beneficiarybelieves entitle him or her to benefits or to greater or different benefits.  Within sixty (60) days after receipt by theCompany of the petition, theCompany shall afford the beneficiary (and counsel, if any) an opportunity to present his or her position to theCompany orally or in writing,and the beneficiary (or counsel) shallhave the right to review the pertinentdocuments.  The Company shall notify the beneficiary of its decision in writing within the sixty-day period, statingspecifically the basis of its decision, written in a manner calculated to beunderstood by the beneficiary and the specific provisions ofthe Agreement on whichthe decision is based. If,**because of the need for a hearing, the sixty-day period is not sufficient, thedecision 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**

 

Ifthe Executive voluntarily terminates employment after age 59, unlessthe Executive elects otherwiseby written notice to theCompany, the Split Dollar InsuranceAgreement attached as the Addendum to this Agreement shall automatically take effect as of the Executive’stermination of employment.  The Company shall take all actionsnecessary to implement the Split Dollar InsuranceAgreement.

 

----

 

**Article ****6**

 

**Amendments and 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/Binding Effect. *This Agreement is the entire agreement between the Company and the Executive,written or oral, related to the Company’sobligation to pay any survivorincome benefits to the Executive’sbeneficiaries or survivors.  ThisAgreement supersedes all prior agreements, understandings and negotiations.  This Agreement shall bind the Executive andthe Company, and their beneficiaries, survivors, executors, administrators andtransferees.

 

7.2           *NoGuaranty 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 interferewith the Company’s right to discharge the Executive.  It alsodoes not require the Executive to remain an employee nor interfere with theExecutive’s right to terminateemployment at any time.

 

7.3           *Tax**Withholding. *The Company shall withhold any taxes that arerequired to be withheld from the benefitsprovided 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 tothe 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 thepayment 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 inany 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.

 

----

 

IN WITNESS WHEREOF, theExecutive 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, pleaseprovide the name of the trustee****and****the****exact********date of the****trust****agreement.**

 

I understand that Imay change these beneficiary designations by filing a new writtendesignation with the Company.  I further understand that the designations will be automatically revoked if the beneficiarypredeceases me, or, if I have named my spouse as beneficiary, in theevent of the dissolution of ourmarriage.

 
| 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 NationalBank & 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 onthe Executive’s life.

 

**Article 1**

 

**General Definitions**

 

The following terms shall have the meaningsspecified.

 

1.1           *“Insurer”*means The MutualGroup insurance Company.

 

1.2           *“Policy”*meansinsurance policy number                 issuedby 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) one 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’sdeath.  The Executive shall also have theright to elect and change settlement options that may be permitted for suchbeneficiaries.

 

----

 

**Article 3**

 

**Premiums**

 

3.1           *PremiumPayment. *The Company shall pay any premiums due on thePolicy.

 

3.2           *ImputedIncome. *The Company shall then impute income to theExecutive in an amount equal to the current term rate for the Executive’s agemultiplied by the aggregate death benefit payable to the Executive’sbeneficiary.  The “current term rate” isthe 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 assignwithout consideration all interests in thePolicy and in this Addendum to any person, entity or trust.

 

**Article ****5**

 

**Insurer**

 

The Insurer shall be boundonly by the terms of the Policy.  Any payments the Insurer makes or actions it takes in accordancewith the Policy shall fullydischarge 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 of thisAddendum.

 

**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 noneligibility forbenefits under the Addendum.  If theCompany determines that the beneficiary is not eligible for benefits or fullbenefits, the notice shall set forth (1) the specific reasons for suchdenial, (2) a specific reference to the provisions of the Addendum onwhich the denial is based, (3) a description of any additional informationor material necessary for the claimant to perfect his or her claim, and adescription of why it is needed, and (4) an explanation of the Addendum’sclaims review procedure and other appropriate information as to the steps to betaken if the beneficiary wishes to have the claim reviewed.  If the Company determines that there arespecial circumstances requiring additional time to make a decision, the Companyshall notify the beneficiary of the special circumstances and the date by which a decision is expected to bemade, and may extend the time for up to an additional ninety-dayperiod.

 

----

 

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, thebeneficiary shall have the opportunityto have such claim reviewed by the Company by filing a petition for review with the Company within sixty (60) days after receiptof the notice issued by the Company.  Said petition shall state the specific reasons which the beneficiary believesentitle him or her to benefits orto greater or different benefits. Within sixty (60) daysafter receipt by the Company of the petition, the Company shall afford thebeneficiary (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 Companyshall notify the beneficiary of itsdecision in writing within the sixty-dayperiod, stating specifically the basis ofits decision, written in amanner calculated to be understood by the beneficiary and thespecific provisions of the Addendumon which the decision is based.  If, becauseof the need for a hearing.the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-dayperiod at the election of the Company, butnotice of this deferral shall be given to the beneficiary.

 

**Article 7**

 

**Amendments and Termination**

 

TheCompany may amend this Addendum at any time prior to the Executive’s death by written notice to the Executive.  Either party may terminate thisAddendum at any time prior tothe Executive’s death by writtennotice to the other party.

 

Upontermination of thisAddendum, the Executive maypurchase the Policy from the Companyfor an amount equal to thePolicy’s cash surrender value asof the date of the termination.

 

**Article 8**

 

**Miscellaneous**

 

8.1           *BindingEffect. *This Addendum shall bind the Executive andthe Company, their beneficiaries, survivors, executors, administrators andtransferees, and any Policy beneficiary.

 

8.2           *NoGuaranty 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 interferewith the Company’s right to discharge the Executive.  It also does not require the Executive to remainan employee nor interfere with the Executive’s right to terminateemployment at any time.

 

----

 

8.3           *ApplicableLaw.*The Addendum and allrights hereunder shall be governed byand construed according to thelaws of Pennsylvania, except tothe extent preempted by the lawsof 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 amendingthe application for insurance to Clarica Life Insurance Company-US (formerly,The Mutual Group Life Insurance Company) (“Insurer”) on December 22, 1995the applicant requests and directs that;

 

**BENEFICIARIES**

 

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

 

2.             The Insured or the Insured’s transferee shallbe the beneficiary of the death proceeds of the Policy in an amount equal tothe lesser of (i) one time the most recent base annual salary, or (ii) theexcess of the total death proceeds over the cash surrender value of the Policyon 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 bespecifically granted to the Insured or the Insured’s transferee in paragraph (4) ofthis endorsement.

 

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

 

**MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY**

 

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

 

**OWNERS AUTHORITY**

 

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

 

----

 

Any transferee’s rights shall be subject tothis Endorsement.

 

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

 

Signed at McConnellsburg, Pennsylvania, this 30th**dayof April, 2001.

 

 

**THE FULTON COUNTY NATIONALBANK AND TRUST COMPANY**

 
| By:    | /S/DoriAnn J. Hoffman |   |
|--------|-----------------------|--------|
| Title: | Senior Vice President |   |
|        |                       |        |  |  |

 

 

**ACCEPTANCE AND BENEFICIARY DESIGNATION**

 

The Insured accepts and agrees to theforegoing and, subject to the rights of the Owner as stated above, designatesthe following as beneficiary(s) of the portion of the proceeds described inparagraph (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 |   |
|                                                                     |                                     |        |  |  |  |  |  |  |  |

 

----