Exhibit 10.6

                              COMMUNITY BANKS, INC.
                            SURVIVOR INCOME AGREEMENT


     THIS  AGREEMENT  is made  this  29th day of  August  , 2002 by and  between
COMMUNITY BANKS, INC., Millersburg,  Pennsylvania, , (the "Company"), and DONALD
F. HOLT (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,  and if the Company owns a
life insurance  policy on the  Executive's  life at the time of such death,  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.


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     1.3 Suicide.  No benefits shall be payable if the Executive commits suicide
within two years after the date of this Agreement.



                                    Article 2
                             Survivor Income Benefit

     2.1 Amount of Benefits.  The survivor income benefit shall be determined in
accordance with the following formula:

                  x = y/(1 - t%)
wherein
                  x    =   the survivor income benefit payable hereunder
                  T% =     the Company's projected marginal tax rate for federal
                           income
                           tax purposes for the year in which the Executive's
                           death
                           occurs and
                  y        = the lesser of (1) three times the
                           Executive's base salary as established by
                           the Company's Board of Directors for the
                           calendar year in which the Executive's death
                           occurs or (2) the life insurance policy
                           proceeds the Company receives due to the
                           Executive's death less the cash surrender
                           value of such policy on the day before the
                           Executive's death

     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.


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<PAGE>



                                    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  dissolved.  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 (1) 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

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<PAGE>

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 attaining the age
of  sixty-five  (65) and  completes  ten (10) years of  service,  or  terminates
employment  subsequent  to a change of control (as defined  herein),  unless the
Executive  elects  otherwise by written notice to the Company,  the Split Dollar
Insurance Agreement attached as the Addendum to this

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<PAGE>

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

     Except as provided in Section 1.4 of this Agreement,  the Company may amend
or  terminate  this  Agreement  at any time  prior to the  Executive's  death by
written notice to 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.

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<PAGE>

     7.4  Applicable  Law.  The  Agreement  and all  rights  hereunder  shall be
governed by the laws of the Commonwealth 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:
                                                 COMMUNITY BANKS, INC.

                                                 By: /s/ Eddie L. Dunklebarger
                                                     --------------------------
/s/ Donald F. Holt                              Title Chairman, President & CEO
-------------------
Donald F. Holt




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<PAGE>




                            SPLIT DOLLAR ADDENDUM TO
                              COMMUNITY BANKS, INC.
                            SURVIVOR INCOME AGREEMENT


     THIS ADDENDUM is part of the Survivor Income Agreement  between,  COMMUNITY
BANKS, INC., Pennsylvania (the "Company"), DONALD F. HOLT (the "Executive").

                                  INTRODUCTION

     Under the terms of the Survivor Income Agreement  between the Executive and
the Company,  effective  29th day of August,  2002, the parties desire to divide
the death  proceeds of a life  insurance  policy on the  Executive's  life if he
voluntarily  terminates  employment  after age 65 and  completes  (10)  years of
service.

                                    Article 1
                               General Definitions

     The following terms shall have the meanings specified:

     1.1 "Insurer" means the insurance company issuing the life insurance policy
on the life of the insured.

     1.2  "Policy"  or  "Policies"  means the  individual  insurance  policy (or
policies)  adopted  by the  Board of  Directors  for  purposes  of  insuring  an
Executive's life under this plan.

                                    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.

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<PAGE>

     2.2 Executive's  Interest.  The Executive shall have the right to designate
the  beneficiary  of the death proceeds of the Policy to the extent the proceeds
exceed 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 beneficiary.

                                    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 Internal
Revenue Notice 2002-8, or any subsequent applicable authority.

     3.3 Cash Payment. If the Executive's termination of employment occurs after
the Normal  Retirement Date, the Company shall annually pay to the Executive the
amount  necessary to pay the federal and state income taxes  attributable to the
imputed  income and to the  additional  cash payments  under this  sentence.  In
calculating the cash payments, the Company shall use the highest marginal income
tax brackets. The cash payments shall continue until the Executive's death.

                                    Article 4
                                   Assignment

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


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<PAGE>

                                    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 and Review Procedures

     6.1 Claims Procedure. An Executive or beneficiary  ("claimant") who has not
received  benefits  under this Addendum  that he or she believes  should be paid
shall make a claim for such benefits as follows:

          6.1.1  Initiation - Written Claim.  The claimant  initiates a claim by
     submitting to the Company a written claim for the benefits.

          6.1.2 Timing of Company  Response.  The Company  shall respond to such
     claimant  within  90  days  after  receiving  the  claim.  If  the  Company
     determines  that  special   circumstances   require   additional  time  for
     processing  the claim,  the  Company can extend the  response  period by an
     additional 90 days by notifying  the claimant in writing,  prior to the end
     of the initial  90-day  period that an additional  period is required.  The
     notice of extension must set forth the special  circumstances  and the date
     by which the  Company  expects  to render  its  decision.  6.1.3  Notice of
     Decision. If the Company denies part or all of the claim, the Company shall
     notify the claimant in writing of such denial.  The Company shall write the
     notification in a manner  calculated to be understood by the claimant.  The
     notification shall be set forth:

               6.1.3.1 The specific reasons for the denial,


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<PAGE>

               6.1.3.2 A reference to the specific  provisions  of the Agreement
          on which the denial is based,

               6.1.3.3 A description of any  additional  information or material
          necessary for the claimant to perfect the claim and an  explanation of
          why it is needed,

               6.1.3.4 An explanation of the Agreement's  review  procedures and
          the time limits applicable to such procedures, and

               6.1.3.5  A  statement  of the  claimant's  right to bring a civil
          action  under  ERISA  section  502(a)  following  an  adverse  benefit
          determination on review.


                                    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,  provided the  purchase is completed  within sixty
(60) days of notification by the Company.



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<PAGE>




                                    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 the  Commonwealth  of  Pennsylvania,
except to the extent preempted by the laws of the United States of America.

     8.4 Administration. The Company shall have powers which are
necessary to administer this plan, including but not limited to:

          (a)  Interpreting  the  provisions of the Agreement and Addendum;

          (b)  Establishing  and  revising  the  method  of  accounting  for the
     Agreement and Addendum;

          (c) Maintaining a record of benefit payments; and

          (d)  Establishing   rules  and  prescribing  any  forms  necessary  or
     desirable to administer the Agreement and Addendum.

     8.5  Named  Fiduciary.  The  Company  shall  be  named  fiduciary  and plan
administrator  under this Plan. It may delegate to others certain aspects of the
management and



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operational   responsibilities   including  the  service  of  advisors  and  the
delegation of ministerial duties to qualified individuals.

     The parties'  signatures  on the Survivor  Income  Agreement  witness their
agreement to the terms of this Addendum.


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