Document:

Exhibit 10.52

BMC
INDUSTRIES, INC.

SAVINGS
AND PROFIT SHARING PLAN

2001 REVISION

 

Fourth Declaration of Amendment

 

Pursuant to the retained power of amendment contained in
Section 11.2 of the BMC Industries, Inc. Savings and Profit Sharing Plan - 2001
Revision, the undersigned hereby amends the Plan as described below:

 

1.              
Section 3.3 of the Plan is amended effective October 1, 2003
to read as follows:

 

               
"3.3     Matching Contributions.  

  
    
      

No Matching
Contributions will be made under the Plan for 401(k) Contributions made after
September 30, 2003."

      

    

  

 

2.             Section
5.1(a) of the Plan is amended effective September 1, 2003, to read as follows:

 

               
"5.1     Establishment
of Investment Funds.

  
    

(a)       In order to allow each Participant to
determine the manner in which his or her Accounts will be invested, the Trustee
will maintain, within the Trust, an investment fund designated as the BMC
Common Stock Fund and three or more separate investment funds of such nature
and possessing such characteristics as the Committee may specify from time to
time.  Each Participant's Accounts will
be invested in the investment funds in the proportions directed by the
Participant in accordance with the procedures set forth in Sections 5.2 and
5.3.  The Committee, from time to time,
will direct the Trustee to establish additional investment funds or to
terminate any existing investment fund."

    

  

3.             Section 5.4 of the Plan is amended effective September 1,  2003, to read as follows:

 

                "5.4     BMC
Common Stock Fund.

  
    

(a)       The Committee will direct the Trustee to
establish, as one of the investment funds under Section 5.1, a fund, designated
as the BMC Common Stock Fund, which will be invested in shares of Company Stock
except for such amounts of cash as the Committee determines to be necessary to
satisfy short-term liquidity requirements and cash held pending acquisition of
shares of Company Stock.

    

  

  
    

(b)       The requirement that amounts credited to
a Participant's Matching Contribution Account prior to January 1, 2002 remain
invested in the BMC Common Stock Fund is eliminated.  Effective September 1, 2003 any Participant may elect to transfer
amounts credited to the Participant's Matching Contribution Account prior to
January 1, 2002 to one or more of the investment funds maintained pursuant to
Section 5.1 other than the BMC Common Stock Fund.  The election must be made in accordance with and is subject to
Plan Rules and will be effective as soon as administratively practicable after
it is received by the Administrator or the Administrator's designate. 

    

  

  
    

(c)      The
BMC Qualified Benefits Plan Committee will direct the manner in which the
shares of Company Stock represented by Participants' interests in the BMC
Common Stock Fund will be voted in connection with any action at which holders
of Company Stock are entitled to vote. 
In the event of a public tender or exchange offer for shares of Company
Stock, the BMC Qualified Benefits Plan Committee will direct whether or not the
shares of Company Stock represented by the Participants' interests in the BMC
Common Stock Fund will be tendered or exchanged.

 

(d)       A
Participant who is subject to the reporting requirements of section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") with respect to
Company Stock may elect to make a transfer pursuant to Section 5.3, a
withdrawal or plan loan pursuant to Article 6, a distribution pursuant to
Article 8or any other "discretionary
transaction," as that term is defined under the Exchange Act, from the
portion of his or her Account invested in Company Stock only if both of the
following conditions are satisfied.

      

(i)        The
election to make such transfer or application for the withdrawal or
distribution must be made within the period between the third and twelfth days,
inclusive, following the Company's release of its quarterly or annual financial
data in the manner described in Rule 16b-3(e)(1)(ii) of the Exchange Act.  Such election or application will be given
effect at the same time as would other elections or applications made at the
same time.

 

(ii)       Such Participant has not made any
election to transfer any portion of his or her Account balance from Company
Stock or received a withdrawal or distribution from the portion of his or her
Account invested in Company Stock within the six-month period immediately
preceding the date on which such election is made."

      

    

  

4.            Section 9.2 of the Plan is amended effective January 1, 2003
to read as follows:

 

  

"9.2     Actual Deferral Percentage Limitations.

    

(a)       For each Plan Year that the design-based
safe harbor alternative described in Code section 401(k)(12) has not been
satisfied, the Plan must satisfy the requirements of Code section
401(k)(3).  

      

(i)        The Plan will satisfy the requirements
of Code section 401(k)(3) for a Plan Year if, for that Plan Year, the Plan
satisfies the requirements of Code section 410(b)(1) with respect to "eligible
employees" and either of the following tests:

        

(1)       the "actual deferral percentage"
for the Plan Year for eligible employees who are Highly Compensated Employees
for the Plan Year is not more than the product of the actual deferral
percentage for the Plan Year for all eligible employees who are not Highly
Compensated Employees for the Plan Year, multiplied by one and one-quarter; or

 

(2)       the excess of the actual deferral
percentage for the Plan Year for eligible employees who are Highly Compensated
Employees for the Plan Year over the actual deferral percentage for the Plan
Year for all eligible employees who are not Highly Compensated Employees for
the Plan Year is not more than two percentage points and the actual deferral
percentage for the Plan Year for eligible employees who are Highly Compensated
Employees for the Plan Year is not more than the product of the actual deferral
percentage for the Plan Year of all eligible employees who are not Highly
Compensated Employees for the Plan Year, multiplied by two;  provided, that for the initial Plan Year,
the actual deferral percentage for eligible employees who are not Highly
Compensated Employees is their actual deferral percentage for the initial Plan
Year.

        

(ii)       For purposes of this section and Section
9.4:

        

(1)       "eligible employee" means an
Active Participant who is eligible to make 401(k) Contributions for the Plan
Year in question or would be eligible but for a suspension imposed under
Section 3.1(b)(iv); and

 

(2)       "actual deferral percentage,"
with respect to either of the two groups of eligible employees referenced
above, is the average of the ratios, calculated separately for each eligible
employee in the particular group, of the amount of 401(k) Contributions made by
the eligible employee for the Plan Year in question, to the eligible employee's
Testing Wages for the Plan Year in question, or the portion of such Plan Year
during which he or she was an eligible employee, as specified in Plan
Rules.  In computing the actual deferral
percentage, the following rules apply:

          

(A)      any 401(k) Contributions made by an
eligible employee who is not a Highly Compensated Employee that are in excess
of the limitation described in Section 9.1 will be excluded;

 

(B)       any 401(k) Contributions made by an
eligible employee that are distributed to the eligible employee pursuant to
Section 9.6(c) will be excluded;

 

(C)       except as otherwise provided in Treasury
Regulations, 401(k) Contributions taken into account in determining the actual
contribution percentage under Section 9.3(a)(ii) will be excluded;

 

(D)      to the extent permitted by Treasury
Regulations and determined by the Administrator, all or any portion of any
other contribution to the Plan or any other qualified plan maintained by an
Affiliated Organization will be included;

 

(E)       elective contributions under any other
plan that is aggregated with this Plan to satisfy the requirements of Code
section 410(b) will be included; and

 

(F)       to the extent provided in Treasury
Regulations, elective contributions made under any other qualified cash or
deferred arrangement of any Affiliated Organization on behalf of any eligible
Employee who is a Highly Compensated Employee will be included.

          

        

      

(b)      
To the extent deemed advisable by the Administrator to comply with Code section
401(k)(3), the Administrator may, in accordance with Plan Rules, prospectively
decrease a Participant's 401(k) Contributions.

 

(c)       If, for any Plan Year, the requirements
of Subsection (a) are not satisfied, the Administrator will determine the
amount by which 401(k) Contributions made by each Highly Compensated Employee
for the Plan Year exceeds the permissible amount as determined under Subsection
(a).  The determination will be made by
successively decreasing the rate of 401(k) Contributions by the Highly
Compensated Employees who, during the Plan Year, had the greatest percentage of
401(k) Contributions to the next lower percentage, then again decreasing the
percentage of such Highly Compensated Employees' 401(k) Contributions, together
with the percentage of 401(k) Contributions by such Highly Compensated
Employees who were already at such lower percentage, to the next lower
percentage, and continuing such procedure for as many percentage decreases as
the Administrator deems necessary.  The
Administrator may make such reductions in any amount.

 

(d)       The amount of excess 401(k) Contributions
determined in accordance with Subsection (c), increased by Fund earnings or
decreased by Fund losses attributable to such excess as determined under
Section 9.5, will be distributed to affected Highly Compensated Employees, at
such time as the Administrator specifies on or following the last day of the
Plan Year for which the determination is made, but in no case later than the
last day of the following Plan Year. 
The amount to be distributed with respect to any Plan Year will be
reduced by the portion of the amount, if any, distributed pursuant to Section
9.1 that is attributable to 401(k) Contributions that relate to such Plan Year,
determined by assuming that 401(k) Contributions in excess of the limitation
described in Section 9.1 for a given taxable year are the first contributions
made for a Plan Year falling within such taxable year.  Additional amounts to be distributed to
Highly Compensated Employees will be determined by successively decreasing the
amount of 401(k) Contributions for Highly Compensated Employees who, for the
Plan Year, had the largest amount of 401(k) Contributions made on their behalf
to the next lower amount, and continuing this procedure until an amount equal
to the aggregate amount of excess 401(k) Contributions has been removed from
the Accounts of the Highly Compensated Employees.

 

(e)       To the extent required or permitted by
Treasury Regulations, the Administrator will or may, as the case may be, apply
the limitation described in this section separately to each group of eligible
employees who are included in a unit of Employees covered by a collective
bargaining agreement.

 

(f)        If the
Administrator elects to apply Code section 410(b)(4)(B) in determining whether
the Plan satisfies either of the tests described in Section 9.2(a)(i) for a
Plan Year, all eligible employees who have not met either the minimum age
and/or minimum service requirements of Code section 410(a)(1)(A) will be
considered separately in accordance with the tests described in Section
9.2(a)(i).

 

(g)       It is intended that Plan satisfy the
design-based safe harbor alternative described in Code section 401(k)(12) for
the Plan Year that begins January 1, 2002 and ends December 31, 2002.  As a result of the elimination of Matching
Contributions as of October 1, 2003, the Plan will not satisfy the design-based
safe harbor alternative described in Code section 401(k)(12) for the Plan Year
that begins January 1, 2003 and ends December 31, 2003."

    

  

5.         Section 9.3 of the Plan is amended effective January 1, 2003
to read as follows:

    "9.3.    Actual Contribution Percentage
Limitations.

  
    

(a)       For each Plan Year that the design-based
safe harbor alternative described in Code section 401(m)(11) has not been
satisfied, the Plan must satisfy the requirements of Code section 401(m)(2).

      

(i)        The Plan will satisfy the requirements
of Code section 401(m)(2) for a Plan Year if, for that Plan Year, the Plan
satisfies either of the following tests:

        

(1)       the "actual contribution percentage"
for the Plan Year for "eligible employees" who are Highly Compensated
Employees for the Plan Year is not more than the product of the actual
contribution percentage for the Plan Year for all eligible employees who are
not Highly Compensated Employees for the Plan Year, multiplied by one and
one-quarter; or

 

(2)       the excess of the actual contribution
percentage for the Plan Year for eligible employees who are  Highly Compensated Employees for the Plan
Year over the actual contribution percentage for the  Plan Year for all eligible employees who are not Highly
Compensated Employees for the Plan Year is not more than two percentage points
and the actual contribution percentage for the Plan Year for Highly Compensated
Employees for the Plan Year is not more than the product of the actual
contribution percentage for the Plan Year for all eligible employees who are
not Highly Compensated Employees for the Plan Year, multiplied by two;
provided, that for the initial Plan Year, the actual contribution percentage for
eligible employees who are not Highly Compensated Employees is their actual
contribution percentage for the initial Plan Year.

        

(ii)       For purposes of this section and Section
9.4:

        

(1)       "eligible employee" means an
Active Participant who is eligible to make After-Tax Contributions, or to have
Matching Contributions made on his or her behalf for the Plan Year in question
or who would be eligible but for a suspension imposed under Section 3.1(b)(iv)
or Section 3.2(b)(iv); and 

 

(2)       the "actual contribution percentage"
with respect to either of the two groups of eligible employees referenced
above, is the average of the ratios, calculated separately for each eligible
employee in the particular group, of the aggregate amount of After-Tax
Contributions made by, and Matching Contributions made on behalf of, the
eligible employee for the Plan Year, to the eligible employee's Testing Wages
for the Plan Year, or the portion of the Plan Year during which he or she was
an eligible employee, as specified in Plan Rules.  In computing the actual contribution percentage the following
rules apply:

          

(A)      except as otherwise provided in Treasury
Regulations, Matching Contributions taken into account in determining the
actual deferral percentage under Section 9.2(a)(ii) will be excluded;  

 

(B)       Matching Contributions taken into account
for purposes of the minimum contribution required by Section 13.3(a) will be
excluded;

 

(C)       any Matching Contributions forfeited
pursuant to Section 9.6(c) will be excluded;

 

(D)      to the extent permitted by Treasury
Regulations and determined by the Administrator, all or any portion of the
401(k) Contributions made by eligible employees for the Plan Year will be
included;

 

(E)       to the extent permitted by Treasury
Regulations and determined by the Administrator, all or any portion of any
other contributions to any other qualified plan maintained by an Affiliated
Organization will be included;

 

(F)       matching contributions (within the
meaning of Code section 401(m)(4)(A)) and after-tax contributions made under
any other plan that is aggregated with this Plan to satisfy the requirements of
Code section 410(b) will be included; and

 

(G)      to the extent required by Treasury
Regulations, matching contributions (within the meaning of Code section
401(m)(4)(A)) and after-tax contributions made under any other qualified plan
of any Affiliated Organization on behalf of or by any eligible employee who is
a Highly Compensated Employee will be included.

          

        

      

(b)       If, for any Plan Year, the requirements
of Subsection (a) are not satisfied, the Administrator will determine the
amount by which After-Tax Contributions made by each Highly Compensated
Employee for the Plan Year and, if necessary, Matching Contributions made on
behalf of each Highly Compensated Employee for the Plan Year exceeds the
permissible amount as determined under Subsection (a), such determination being
made in accordance with the procedure described in Section 9.2(c) with respect
to reductions of 401(k) Contributions.  

 

(c)       The amount of excess After-Tax
Contributions and Matching Contributions determined in accordance with
Subsection (b), increased by Fund earnings or decreased by Fund losses
attributable to such excess as determined under Section 9.5, will be
distributed to affected Highly Compensated Employees at such time as the
Administrator specifies on or following the last day of the Plan Year for which
the determination is made, but in no case later than the last day of the
following Plan Year; provided, however, that to the extent the excess Matching
Contributions would not be fully vested if retained in the Plan, such excess
will be forfeited rather than distributed, and any such forfeitures will be
applied as provided in Section 3.3(d). 
Amounts to be distributed to Highly Compensated Employees or forfeited
will be determined by successively decreasing the amount of After-Tax
Contributions made by, and, if necessary, Matching Contributions made on behalf
of Highly Compensated Employees who, for the Plan Year, made the largest
After-Tax Contributions and had the largest amount of Matching Contributions
made on their behalf to the next lower amount, and continuing this procedure
until an amount equal to the aggregate amount of excess contributions has been
removed from the Accounts of the Highly Compensated Employees.

 

(d)       To the extent provided in Treasury
Regulations, the limitations described in this section do not apply to any
group of eligible employees who are included in a unit of Employees covered by
a collective bargaining agreement.

 

(e)       If the Administrator elects to apply Code
section 410(b)(4)(B) in determining whether the Plan satisfies either of the
tests described in Section 9.3(a)(i) for any Plan Year, all eligible employees
who have not met either the minimum age and/or minimum service requirements of
Code section 410(a)(1)(A) will be considered separately in accordance with the
tests described in Section 9.3(a)(i).

 

(f)        To the extent deemed necessary by the
Administrator in order to comply with such requirements, the Administrator may,
in accordance with Plan Rules, prospectively decrease the rate at which a
Participant may make After-Tax Contributions. 

 

(g)       It is intended that Plan satisfy the
design-based safe harbor alternative described in Code section 401(m)(11) for
the Plan Year that begins January 1, 2002 and ends December 31, 2002.  Notwithstanding the foregoing, After-Tax
Contributions made by Participants will satisfy the nondiscrimination tests
described in Section 9.3(a).  As a
result of the elimination of Matching Contributions as of October 1, 2003, the
Plan will not satisfy the design-based safe harbor alternative described in
Code section 401(m)(11) for the Plan Year that begins January 1, 2003 and ends
December 31, 2003."

    

  

 

IN WITNESS
WHEREOF, the undersigned has caused this instrument to be executed this
29th day of August, 2003.

 

                                                                           
BMC INDUSTRIES, INC.

 

 

Attest:  /s/Bradley
D. Carlson                             By:  /s/Susan J. Linzmeier                               

           
Treasurer                                                 Its:
Vice President, Human ResourcesExhibit 10.16

                             COMMUNITY BANKS, INC.
                            SURVIVOR INCOME AGREEMENT

     THIS  AGREEMENT  is made  this  5th day of  February,  1999 by and  between
COMMUNITY BANKS, INC.,  Millersburg,  Pennsylvania,  and THE PEOPLES STATE BANK,
East  Berlin,   Pennsylvania,   (collectively  the  "Company"),   and  EDDIE  L.
DUNKLEBARGER (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.

<PAGE>

     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 two years after the date of this Agreement.

     1.4  Change  of  Control.  Notwithstanding  any  other  provision  of  this
Agreement,  in the event of a Change of Control (as defined below),  the Company
or its successor  shall maintain in full force and effect this Agreement and the
related  life  insurance  policy that is in  existence on the date the Change of
Control occurs and, in no event shall the Company or its successor  terminate or
otherwise  abbrogate  the  Executive's  interest in the life  insurance  policy;
provided,  however, that at all times the life insurance policy shall be subject
to the claims of the Company's creditors.

     Change of Control shall mean:

     (a) A reorganization, merger, consolidation or sale of substantially all of
the assets of the Company,  or a similar transaction in which the Company is not
the resulting entity; or

     (b)  Individuals  who constitute the Incumbent Board (as herein defined) of
the  Company  cease for any  reason to  constitute  a  majority  of the Board of
Directors.  For these purposes,  "Incumbent Board" shall mean the members of the
Board of  Directors  of the Company on the  effective  date  hereof.  Any person
becoming a member of the Board of

<PAGE>

Directors  subsequent to such effective  date,  whose election was approved by a
vote of at least  three-quarters  (3/4) of the members of the Board of Directors
comprising the Incumbent  Board, or whose  nomination for election by members or
shareholders  was approved by the same  nominating  committee  serving under the
Incumbent  Board,  shall be  considered as though he or she were a member of the
Incumbent Board.

                                    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+T%x
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.

<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
<PAGE>

     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  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.
<PAGE>

                                    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  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.
<PAGE>

                                    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 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

<PAGE>

Company officer have signed this Agreement.

COMPANY:
COMMUNITY BANKS, INC.                            THE PEOPLES STATE BANK

By: /s/ Ernest L. Lowe                          By: /s/ Sally J. Leas
   -----------------------------------            ------------------------------

Title   Chairman                                Title  Corporate Secretary
     ---------------------------------               ---------------------------

EXECUTIVE:

/s/ Eddie L. Dunklebarger
--------------------------
Eddie L. Dunklebarger

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

     THIS ADDENDUM is part of the Survivor Income  Agreement  between  COMMUNITY
BANKS, INC., Millersburg, Pennsylvania, and THE PEOPLES STATE BANK, East Berlin,
Pennsylvania  (collectively  the  "Company"),  and  EDDIE L.  DUNKLEBARGER  (the
"Executive").

                                  INTRODUCTION

     Under the terms of the Survivor Income Agreement  between the Executive and
the Company, the parties desire to 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 WEST COAST LIFE  INSURANCE  COMPANY,  or  TRANSAMERICA
ASSURANCE COMPANY, as the case may be.

     1.2 "Policy" means:
     West Coast Life Insurance Company policy # ULA904798 - $90,000
     Transamerica Assurance Company policy # 50328267 - $110,000

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                                    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 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 Revenue
Rulings 64-328 and 66-110, 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

<PAGE>

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.

     3.2 Company Portion. The Company shall then pay to the Insurer any premiums
due.

                                    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

<PAGE>

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.

<PAGE>

                                    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.
<PAGE>

     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.

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

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