Document:

Exhibit
10.5

 

THE FULTON COUNTY NATIONAL
BANK AND TRUST COMPANY

 

MCCONNELLSBURG, PA

 

SALARY CONTINUATION
AGREEMENT

 

THIS
AGREEMENT is made this 23rd day of December, 1996 by and between The
Fulton County National Bank and Trust Company, McConnellsburg, Pennsylvania (“Company”),
and Alice G. Clark (the “Executive”).

 

INTRODUCTION

 

To encourage the Executive to remain an employee of
the Company, the Company is willing to provide salary continuation benefits to
the Executive. The Company will pay the benefits from its general assets.

 

AGREEMENT

 

The Executive and the Company agree as follows:

 

Article 1

 

Definitions

 

1.1     Definitions. Whenever used
in this Agreement, the following words and phrases shall have the meanings
specified:

 

1.1.1     “Change of Control” means the
transfer of 51% or more of the Company’s outstanding voting common stock
followed within twelve (12) months by replacement of fifty percent (50%) or
more of the members of the Company’s Board of Directors (for reasons other than
death or disability).

 

1.1.2        “Code” means the
Internal Revenue Code of 1986, as amended.

 

 

1.1.3     “Company” means The
Fulton County National Bank and Trust Company, a national banking association
located in McConnellsburg, Pennsylvania.

 

1.1.4     “Early Termination Date” means the date
the Executive has terminated employment prior to attaining Normal Retirement
Age.

 

1.1.5     “Normal Retirement Age” means the
Executive’s 65th birthday.

 

1.1.6     “Normal Retirement Date” means the later
of the Normal Retirement Age or Termination of Employment

 

1.1.7     “Termination of Employment” means the
Executive’s ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of absence.

 

1.1.8     “Plan Year” means each
twelve-month period from the effective date of this Agreement.

 

Article 2

 

Retirement Benefits

 

2.1     Normal Retirement Benefit. If the Executive terminates
employment on or after the Normal Retirement Date for reasons other than death,
the Company shall pay to the Executive the benefit described in this Section
2.1.

 

2.1.1     Amount of Benefit. The annual benefit under this Section 2.1
is $24,000.  If the Executive
works past Normal Retirement Age, this amount shall be increased each month by
..67% from the Executive’s Normal Retirement Age to the Executive’s Normal
Retirement Date.

 

2.1.2     Payment of Benefit. The Company shall pay the annual benefit
in 12 equal monthly installments payable to the Executive on the first day of
each month commencing with the month following the Executive’s Normal
Retirement Date and continuing for 179 additional months.

 

2

 

2.2     Early Termination Benefit. If the
Executive terminates employment before the Normal Retirement Date, and for
reasons other than death or following a Change of Control, the Company shall
pay to the Executive the benefit described in this Section 2.2.

 

2.2.1     Amount of Benefit. The annual benefit under Section 2.2 as
set forth under Schedule A is the future value of the current year liability
amount, in which Early Termination occurs, using an 8.5% discount rate
compounded monthly, and payable as set forth in Section 2.2.2 herein.  The annual benefit shall be 0% vested prior
to age 55.

 

2.2.2     Payment of Benefit. The Company shall pay the annual benefit
in 12 equal monthly installments payable to the Executive on the first day of
each month commencing with the month following the Executive’s Normal
Retirement Date and continuing for 179 additional months

 

2.3  Change of Control Benefit. If
Executive is in active service of the Company at the time of a Change of
Control, the Executive shall be entitled to the benefit under this Section 2.3
whether or not Termination of Employment occurs.

 

2.3.1        Amount of Benefit.  The
annual benefit under Section 2.3 is the Normal Retirement Benefit that would
have been paid to the Executive under Section 2.1 calculated as if the date of
the Executives Termination of Employment were the Normal Retirement Date.

 

2.3.2        Payment of Benefit. 
The Company shall pay the annual benefit in 12 equal monthly
installments payable to the Executive on the first day of each month commencing
with the month following the Executive’s Termination of Employment and
continuing for 179 additional months.

 

3

 

Article 3

 

Survivor Benefits

 

3.1     Death During Active Service. If the
Executive dies while in the active service of the Company, the Company shall
pay to the Executive’s beneficiary the benefit described in this Section 3.1.

 

3.1.1     Amount of Benefit. The benefit under Section 3.1 is the
lifetime benefit that would have been paid to the Executive under Section 2.1
calculated as if the date of the Executive’s death were the Normal Retirement
Date.

 

3.1.2     Payment of Benefit. The Company shall pay the annual benefit
in 12 equal monthly installments payable to the Beneficiary on the first day of
each month commencing with the month following the Executive’s death and
continuing for 179 additional months.

 

3.2     Death During Benefit Period.  If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive’s
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.

 

3.3     Death Following Active Service Before Benefits
Commence.  If the
Executive is entitled to benefit payments under this Agreement, but dies prior
to receiving said benefit payments, the Company shall pay the Executive’s
beneficiary the benefit described in this Section 3.3.

 

3.3.1     Amount of Benefit. The benefit under Section 3.3 is the
vested benefit that would have been paid to the Executive pursuant to Schedule
A.

 

3.3.2     Payment of Benefit. The Company shall pay the annual benefit
in 12 equal monthly installments payable to the Beneficiary on the first day of
each month commencing with the month following the Executive’s death and
continuing for 179 additional months.

 

4

 

3.4     Death After Change of Control.    If Executive dies following a Change of
Control, provided Executive was in active service at the time of the Change of
Control, the Company shall pay the Executive’s beneficiary the benefit
described in this Section 3.4.

 

3.4.1     Amount of Benefit. The benefit under Section 3.4 is the
lifetime benefit that would have been paid to the Executive under Section 2.1
calculated as if the date of the Executive’s death were the Normal Retirement
Date.

 

3.4.2     Payment of Benefit. The Company shall pay the benefit to the
Beneficiary on the first day of each month commencing with the month following
the Executive’s death and continuing for 179 additional months.

 

Article 4

 

Beneficiaries

 

4.1     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, the Executive’s estate.

 

4.2     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
incompetence, 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.

 

5

 

Article 5

 

General
Limitations

 

Notwithstanding any provision
of this Agreement to the contrary, the Company shall not pay any benefit under
this Agreement:

 

5.1     Excess
Parachute Payment. To the extent the benefit would be an excess parachute
payment under Section 280G of the Code.

 

5.2     Termination
for Cause. If the Company terminates the Executive’s employment for:

 

5.2.1     Gross negligence or gross neglect of duties;

 

5.2.2     Commission of a felony or of a gross misdemeanor involving moral
turpitude; or

 

5.2.3     Fraud, disloyalty, dishonesty or willful violation of any law or
significant Company policy committed in connection with the Executive’s
employment and resulting in an adverse effect on the Company.

 

5.3     Competition After Termination of Employment. No benefits
shall be payable, except for benefits paid due to a Change of Control, if the
Executive, without the prior written consent of the Company, engages in,
becomes interested in, directly or indirectly, as a sole proprietor, as a
partner in a partnership, or as a substantial shareholder in a corporation, or
becomes associated with, in the capacity of
employee, director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the trading area (a 25 mile radius) of
the business of the Company which enterprise is, or may deemed to be,
competitive with any business carried on by the Company as of the date of
termination of the Executive’s employment or his retirement.

 

5.4     Suicide.
No benefits shall be payable if the Executive commits suicide within two
years after the date of this Agreement, or if the Executive has made any material misstatement of fact on any application
for life insurance purchased by the Company.

 

6

 

Article 6

 

Claims and
Review Procedures

 

6.1     Claims Procedure. The Company shall notify the Executive or
the Executive’s beneficiary in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or ineligibility
for benefits under the Agreement.  If the
Company determines that the Executive or the Executive’s 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 Executive or the Executive’s 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 Executive or the Executive’s 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 Executive
or the Executive’s beneficiary is determined by the Company not to be eligible
for benefits, or if the Executive or the Executive’s beneficiary believes that
he or she is entitled to greater or different benefits, the Executive or the
Executive’s 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 Executive or the Executive’s
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 Executive or the Executive’s  beneficiary (and counsel, if any) an
opportunity to present his or her position to the Company orally or in writing,
and the Executive or the Executive’s 
beneficiary (or counsel) shall have the right to review the pertinent
documents. The Company shall notify the Executive or the Executive’s
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 Executive or the Executive’s 
beneficiary and the specific provisions of the Agreement on which the
decision is based. If, because

 

7

 

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 Executive or the Executive’s  beneficiary.

 

Article 7

 

Amendments
and Termination

 

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

 

Article 8

 

Miscellaneous

 

8.1  Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.

 

8.2     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.

 

8.3  Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.

 

8.4  Tax Withholding. The Company shall withhold any taxes that
are required to be withheld from the benefits provided under this Agreement.

 

8.5  Applicable Law. The
Agreement and all rights hereunder shall be governed by the laws of
Pennsylvania, except to the extent preempted by the laws of the United States
of America.

 

8.6  Unfunded
Arrangement. The Executive and beneficiary are general unsecured creditors
of the Company for the payment of benefits under this Agreement. The benefits 

 

8

 

represent the mere promise by
the Company to pay such benefits. The rights to 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
beneficiary have no preferred or secured claim.

 

8.7  Recovery of Estate Taxes.  If
the Executive’s gross estate for federal estate tax purposes includes any
amount determined by reference to and on account of this Agreement, and if the
beneficiary is other than the Executive’s estate, then the Executive’s estate
shall be entitled to recover from the beneficiary receiving such benefit under
the terms of the Agreement, an amount by which the total estate tax due by
Executive’s estate, exceeds the total estate tax which would have been payable
if the value of such benefit had not been included in the Executive’s gross
estate. If there is more than one person receiving such benefit, the right of
recovery shall be against each such person. In the event the beneficiary has a
liability hereunder, the beneficiary may petition the Company for a lump sum
payment in an amount not to exceed the beneficiary’s liability hereunder.

 

8.8 Entire
Agreement.  This Agreement
constitutes the entire agreement between the Company and the Executive as to
the subject matter hereof.  No rights are
granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

 

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

 

8.9.1       Interpreting
the provisions of the Agreement:

 

8.9.2       Establishing
and revising the method of accounting for the Agreement;

 

8.9.3       Maintaining
a record of benefit payments; and

 

8.9.4       Establishing
rules and prescribing any forms necessary or desirable to administer the
Agreement.

 

9

 

IN WITNESS
WHEREOF, The Executive and a duly authorized Company
officer have signed this Agreement.

 

 

	
  EXECUTIVE:

  	
  COMPANY:

  
	
   

  	
  The Fulton County National
  Bank and Trust Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
   

  
	
  Alice G. Clark

  	
   

  	
  Title 

  	
   

  	
   

  
							

 

10

 

THOMAS H.
BARD

 

SCHEDULE  A

 

	
   

  	
   

  	
  Early

  	
   

  	
  Early

  	
   

  
	
  Plan

  	
   

  	
  Termination

  	
   

  	
  Termination

  	
   

  
	
  Year

  	
   

  	
  Monthly Benefit

  	
   

  	
  Annual Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1-21

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  0

  	
   

  
	
  22

  	
   

  	
  1,822

  	
   

  	
  21,859

  	
   

  
	
  23

  	
   

  	
  1,849

  	
   

  	
  22,185

  	
   

  
	
  24

  	
   

  	
  1,874

  	
   

  	
  22,485

  	
   

  
	
  25

  	
   

  	
  1,897

  	
   

  	
  22,760

  	
   

  
	
  26

  	
   

  	
  1,918

  	
   

  	
  23,013

  	
   

  
	
  27

  	
   

  	
  1,937

  	
   

  	
  23,245

  	
   

  
	
  28

  	
   

  	
  1,955

  	
   

  	
  23,458

  	
   

  
	
  29

  	
   

  	
  1,971

  	
   

  	
  23,654

  	
   

  
	
  30

  	
   

  	
  1,986

  	
   

  	
  23,835

  	
   

  
	
  31

  	
   

  	
  2,000

  	
   

  	
  24,000

  	
   

  
								

 

11

 

THE
FULTON COUNTY BANK AND TRUST COMPANY

SALARY
CONTINUATION AGREEMENT

 

BENEFICIARY
DESIGNATION

 

I designate the following
as beneficiary of any death benefits under The Fulton County National Bank and
Trust Company Salary Continuation Agreement:

 

 

	
  Primary:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Contingent:

  	
   

  	
   

  
				

 

 

Note:  To name a trust as beneficiary, please
provide the name of the trustee(s) and the exact name 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 that
the designations will be automatically revoked if the beneficiary predeceases
me, or, if I have named my spouse as beneficiary, in the event of the
dissolution of our marriage.

 

 

	
  Signature

  	
   

  	
   

  
	
   

  
	
   

  
	
  Date 

  	
   

  	
   

  
	
   

  
	
   

  
	
  Accepted by the Company
  this            day of                                              ,
               .

  
	
   

  
	
   

  
	
  By  

  	
   

  	
   

  
	
   

  
	
   

  
	
  Title  

  	
   

  	
   

  
					

 

12

 

FIRST
AMENDMENT

TO THE

THE
FULTON COUNTY NATIONAL BANK AND TRUST COMPANY

SALARY
CONTINUATION AGREEMENT

 

DATED
DECEMBER 23, 1996

FOR

ALICE G.
CLARK

 

THIS AMENDMENT executed
on this 4th day of August, 2000, by and between THE FULTON COUNTY
NATIONAL BANK AND TRUST COMPANY, a national banking association, located in
McConnellsburg, Pennsylvania (the “Company”) and ALICE G. CLARK (the “Executive”).

 

On December 23, 1996, the
Company and the Executive executed THE FULTON COUNTY NATIONAL BANK AND TRUST
COMPANY SALARY CONTINUATION AGREEMENT (the “Agreement”).

 

Pursuant to the power of
amendment reserved by Article 7 of the Agreement, the undersigned hereby
amends, in part, said Agreement to increase the Executive’s Normal Retirement
Benefit from $24,000 (Twenty Four Thousand Dollars) per year to $46,000 (Forty
Six Thousand Dollars) per year for 15 years; and to explain how the Early
Termination Benefit is calculated.  This
change will also increase the accruals in Schedule A attached to said
Agreement.  Therefore, the following
revisions shall be made:

 

Article 2.1.1 of the Agreement
shall be deleted in its entirety and replaced by Article 2.1.1 below.

 

2.1.1        Amount of Benefit. 
The annual benefit under this Section 2.1 is $46,000 (Forty Six Thousand
Dollars).  If the Executive works past
Normal Retirement Age, this amount shall be increased each month by .67% from
the Executive’s Normal Retirement Age to the Executive’s Normal Retirement
Date.

 

Article 2.2.1 of the
Agreement shall be deleted in its entirety and replaced by Article 2.2.1 below.

 

2.2.1        Amount of Benefit. 
The annual benefit under Section 2.2 as set forth under Schedule A is
the future value of the current year liability amount, in which Early
Termination occurs, using an 8.5% discount rate compounded monthly, and payable
as set forth in Section 2.2.2 herein. 
The annual benefit shall be 0% vested prior to age 55.

 

Schedule A of the Agreement shall
be deleted in its entirety and replaced by the attached First Amended Schedule
A.

 

Article
4.1 of the agreement shall be deleted in its entirety and replaced by article
4.1 below.

 

4.1Beneficiary
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 

 

13

 

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.

 

 

IN
WITNESS OF THE ABOVE, the Executive and the Company have
agreed to this First Amendment.

 

	
  Executive:

  	
  Company:

  
	
   

  	
   

  
	
   

  	
   

  	
  THE
  FULTON COUNTY NATIONAL

  BANK AND TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By 

  	
   

  	
   

  
	
  Alice Clark

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title 

  	
   

  	
   

  
							

 

14

 

FIRST
AMENDED SCHEDULE A

TO THE

THE
FULTON COUNTY NATIONAL BANK AND TRUST COMPANY

SALARY
CONTINUATION AGREEMENT

 

Alice
Clark

 

	
   

  	
   

  	
  Early

  	
   

  	
  Early

  	
   

  
	
   

  	
   

  	
  Termination

  	
   

  	
  Termination

  	
   

  
	
  Plan

  	
   

  	
  Monthly

  	
   

  	
  Annual

  	
   

  
	
  Year

  	
   

  	
  Benefit

  	
   

  	
  Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  9

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  10

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  11

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  12

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  13

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  14

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  15

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  16

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  17

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  18

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  19

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  20

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  21

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  22

  	
   

  	
  $

  	
  3,452

  	
   

  	
  $

  	
  41,427

  	
   

  
	
  23

  	
   

  	
  $

  	
  3,510

  	
   

  	
  $

  	
  42,123

  	
   

  
	
  24

  	
   

  	
  $

  	
  3,564

  	
   

  	
  $

  	
  42,763

  	
   

  
	
  25

  	
   

  	
  $

  	
  3,613

  	
   

  	
  $

  	
  43,351

  	
   

  
	
  26

  	
   

  	
  $

  	
  3,658

  	
   

  	
  $

  	
  43,891

  	
   

  
	
  27

  	
   

  	
  $

  	
  3,699

  	
   

  	
  $

  	
  44,387

  	
   

  
	
  28

  	
   

  	
  $

  	
  3,737

  	
   

  	
  $

  	
  44,843

  	
   

  
	
  29

  	
   

  	
  $

  	
  3,772

  	
   

  	
  $

  	
  45,262

  	
   

  
	
  30

  	
   

  	
  $

  	
  3,804

  	
   

  	
  $

  	
  45,646

  	
   

  
	
  31

  	
   

  	
  $

  	
  3,833

  	
   

  	
  $

  	
  46,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

15

 

THE FULTON COUNTY BANK
AND TRUST COMPANY

SALARY
CONTINUATION AGREEMENT

 

BENEFICIARY
DESIGNATION

 

I designate the following
as beneficiary of any death benefits under The Fulton County National Bank and
Trust Company Salary Continuation Agreement:

 

 

	
  Primary:

  	
   

  	
   

  
	
   

  
	
   

  
	
  Contingent:

  	
   

  	
   

  
				

 

 

Note:  To name a trust as beneficiary, please
provide the name of the trustee(s) and the exact name 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 that
the designations will be automatically revoked if the beneficiary predeceases
me, or, if I have named my spouse as beneficiary, in the event of the
dissolution of our marriage.

 

 

	
  Signature

  	
   

  	
   

  
	
   

  
	
   

  
	
  Date 

  	
   

  	
   

  
	
   

  
	
   

  
	
  Accepted by the Company
  this            day of                                              ,
               .

  
	
   

  
	
   

  
	
  By 

  	
   

  	
   

  
	
   

  
	
   

  
	
  Title  

  	
   

  	
   

  
					

 

16EXHIBIT 10.17

 

SIXTH AMENDMENT & RENEWAL OF OFFICE
BUILDING LEASE AGREEMENT

 

THIS SIXTH AMENDMENT & RENEWAL OF OFFICE BUILDING LEASE AGREEMENT
(the “Sixth Amendment”) is made and entered into by and between TA/SUGAR CREEK
PLACE, LTD. (the “Landlord”) and NEON SYSTEMS, INC. (the “Tenant”).

 

Landlord and Tenant hereby agree as follows:

 

1.             Tenant and Landlord’s
predecessor, Turner Adreac, L.C., entered into that certain Lease Agreement
dated October 23, 1997, for the Leased Premises in Landlord’s Building located
at 14100 Southwest Freeway in Sugar Land, Fort Bend County, Texas, which Lease
Agreement has been subsequently amended by those certain First, Second, Third,
Fourth and Fifth Amendments of Office Building Lease Agreement dated,
respectively, July 30, 1998, March 9, 1999, May 10, 1999, November 1, 1999, and
January 16, 2001 (the “Lease”).

 

2.             Landlord and Tenant
have agreed to amend and extend the Lease as herein provided. Except as herein
amended, the Lease shall continue in full force and effect as written. All
capitalized terms used herein, unless otherwise defined herein, shall have the
meanings and shall be defined as set out in the Lease.

 

3.             The Leased Premises
now consist of (i) Twenty-Five Thousand Eight Hundred Fourteen (25,814) square
feet of Net Rentable Area located on the 4th floor of the Building
(the “4th Floor Space”) and (ii) Twenty-Five Thousand Nine Hundred
Eighteen (25,918) square feet of Net Rentable Area located on the 5th
floor of the Building (the “5th Floor Space”), both as illustrated
on Amended Exhibit “B” attached hereto.

 

Contemporaneous with the execution of this Sixth Amendment, Landlord
has leased to Skunkware, Inc., with Tenant’s consent and approval, Thirteen
Thousand One Hundred Ninety-Eight (13,918) square feet of Net Rentable Area of
the 4th Floor Space, as illustrated on Amended Exhibit “B” attached
hereto, which lease is to commence upon the completion of construction of
certain tenant improvements estimated to be completed on or before November 30,
2004, all as provided in and pursuant to said lease (the “commencement date of
the Skunkware, Inc. lease. Tenant shall be relieved of its obligation to pay
Rent for, and the Leased Premises under the Lease shall be reduced by, such
Thirteen Thousand One Hundred Ninety-Eight (13,198) square feet of Net Rentable
Area of the 4th Floor Space which has or may hereafter accrue and
become due with respect thereto as now provided in the Lease.

 

Further, Tenant shall be relieved of its obligation to pay Rent for,
and the Leased Premises under the Lease shall be reduced by, those portions, if
any, of (i) the remaining Twelve Thousand Six Hundred Sixteen (12,616) square
feet of Net Rentable Area of the 4th Floor Space (the portion of the
4th Floor Space that is not covered by the Skunkware, Inc. lease
described above), and (ii) the Six Thousand Five Hundred Fifty-Five (6,555)
square feet of Net Rentable Area of the 5th Floor Area illustrated
on Amended Exhibit “B” attached hereto, which are relet

 

 

by Landlord effective if, as, when and to the extent Rent has begun to
accrue under the terms of any such reletting by Landlord of such areas or
portions thereof. Tenant agrees and consents to any such reletting by Landlord
of all or any part(s) of such areas within the Leased Premises. Provided,
however, that the Leased Premises under the Lease shall be reduced by, and
Tenant shall be relieved of any obligation to pay Rent which accrues with
respect to such Twelve Thousand Six Hundred Sixteen (12,616) square feet of Net
Rentable Area of the 4th Floor Space and with respect to such Six
Thousand Five Hundred Fifty-Five (6,555) square feet of Net Rentable Area of
the 5th Floor Area, effective from and after November 30, 2004.
Until such time or times, Tenant agrees to continue to pay all Rent as to such
Twelve Thousand Six Hundred Sixteen (12,616) square feet of Net Rentable Area
of the 4th Floor Space and as to such Six Thousand Five Hundred
Fifty-Five (6,555) square feet of Net Rentable Area of the 5th Floor
Area which has or may hereafter accrue and become due with respect thereto as
now provided in the Lease. Tenant acknowledges and agrees that any such
reletting by Landlord is solely an accommodation to Tenant. In no event or
circumstance shall Landlord be obligated to achieve or complete any such
reletting and Tenant’s obligations to pay Rent and/or perform any obligation
under the Lease shall not be affected or diminished by whether such reletting
is in fact achieved by Landlord or not, for any reason.

 

The Term of Tenant’s lease of the remaining Nineteen Thousand Three
Hundred Sixty-Three (19,363) square feet of Net Rentable Area of the 5th
Floor Space as illustrated on Amended Exhibit “B” attached hereto is hereby
extended for an additional sixty (60) months so as to continue through March 31,
2010, and to expire and terminate effective as of 12:01 A.M. on April 1, 2010.
Effective as of April 1, 2005, and continuing through said March 31, 2010,
Annual Base Rental as to such Nineteen Thousand Three Hundred Sixty-Three
(19,363) square feet of Net Rentable Area of the 5th Floor Space
shall accrue and be payable by Tenant to Landlord at the rate of Twenty-Two and
No/100 Dollars ($22.00) per square foot per year, so as to total $425,986.00
per year, and be due and payable in the amount of $35,498.83 on the first day
of each month during such extended Term. Until said April 1, 2005, Tenant
agrees to continue to pay all Rent as to such Nineteen Thousand Three Hundred
Sixty-Three (19,363) square feet of Net Rentable Area of the 5th
Floor Space which has or may hereafter accrue and become due with respect
thereto as now provided in the Lease.

 

4.             The definitions of
the following terms (pursuant to Section 1.01 of the Lease) are hereby amended
to be and read as follows:

 

Landlord:               TA/Sugar Creek Place, Ltd., a
Texas limited partnership

 

Base Rental:          See Paragraph 3 of this Sixth
Amendment above.

 

Base Year:             1999; except that for calculation
of Tenant’s Additional Rental for all years after 2004, the Base Year shall be
2005.

 

2

 

Landlord’s Address for Notices:

 

TA/Sugar Creek Place, Ltd.

322 Julie Rivers Dr.

Sugar Land, Texas   77478

 

with a copy to:

 

Dwight Donaldson, Attorney at Law

10497 Town & Country Way, Suite 855

Houston, Texas   77024

 

Leased Premises:      See Paragraph 3 of this Sixth Amendment
above.

 

Minimum Leased Premises Net Rentable Area:              Deleted by this Sixth Amendment.

 

Tenant’s Address for Notices:  Until Tenant occupies the Leased Premises,
after which time Tenant’s address for notices will be the Leased Premises, the
address for notices to Tenant is:

 

Neon Systems, Inc.

14100 Southwest Freeway, Suite 500

Sugar Land, Texas  77478

Attn:  Brian D. Helman, Chief
Financial Officer

 

Termination Date:  See Paragraph 3 of this Sixth Amendment
above.

 

5.             Tenant
Improvements.  Except as to the
modifications to the Leased Premises described in Amended Exhibit “C” to the
Lease, which Landlord agrees to construct at Landlord’s cost and expense, in a
good and workmanlike manner in accordance with good industry practice, on or
before September 1, 2004, Tenant acknowledges and agrees that Landlord has
previously fulfilled and completed all of Landlord’s obligations for
construction of the Building, the Garage, the Common Areas, the Initial Tenant
Improvements and the Leased Premises as referred to in, required by and
pursuant to Sections 23.17 or 23.18, Exhibits “C” or “J” and all various other
provisions of the Lease. Further, Tenant knows of no event or condition, nor
any act or failure to act by Landlord, which would constitute, with the giving
of notice, the passage of time or cure period or otherwise, a default by
Landlord under the Lease.

 

Tenant acknowledges and agrees that the
elevator, bathroom, stair and other service areas on the 5th floor
of the Building will be renovated by Landlord to provide On-Floor Common Areas
for the use of all 5th floor tenants and their invitees, similar to
other On-Floor Common Areas in the Building. Tenant shall vacate and remove its
signage from all such areas.

 

6.             Disclaimer.  THE
LEASED PREMISES ARE HEREBY LEASED “AS IS” “WHERE IS”, WITH ALL FAULTS AND,
EXCEPT AS EXPRESSLY SET FORTH IN THIS SIXTH AMENDMENT, LANDLORD, AND ITS
SUCCESSORS, ASSIGNS, OFFICERS, DIRECTORS, SHAREHOLDERS, PRINCIPALS, TRUSTEES,
OWNERS,

 

3

 

EMPLOYEES, AGENTS, ATTORNEYS, CORPORATE
PARENTS, MEMBERS, SUBSIDIARIES, PARTNERS, CONTRACTORS AND ALL RELATED AND
AFFILIATED PERSONS AND ENTITIES (LANDLORD AND ITS RELATED PARTIES BEING
HEREINAFTER COLLECTIVELY REFERRED TO AS THE “LANDLORD RELATED PARTIES”) MAKE NO
WARRANTIES, EXPRESSED OR IMPLIED, WITH RESPECT TO THE LEASED PREMISES OR ITS
CONDITION. EXCEPT AS EXPRESSLY SET FORTH IN THIS SIXTH AMENDMENT, NO WARRANTY
OR REPRESENTATION OF MATERIALS, WORKMANSHIP OR EQUIPMENT HAS BEEN MADE OR IS
EXPRESSED OR IMPLIED BY THIS SIXTH AMENDMENT. LANDLORD AND THE LANDLORD RELATED
PARTIES EXPRESSLY DISCLAIM ANY AND ALL WARRANTIES OF HABITABILITY, GOOD AND
WORKMANLIKE CONSTRUCTION, SUITABILITY, DESIGN OR FITNESS FOR A PARTICULAR PURPOSE
OR USE, AND ALL OTHER WARRANTIES WHETHER EXPRESS OR IMPLIED, EXCEPT THOSE
WARRANTIES EXPRESSLY SET FORTH IN THIS SIXTH AMENDMENT, AND EXPRESSLY DISCLAIM
ANY WARRANTY WITH RESPECT THERETO. EXCEPT AS EXPRESSLY SET FORTH IN THIS SIXTH
AMENDMENT, TENANT IS NOT RELYING ON ANY REPRESENTATIONS MADE BY LANDLORD OR ANY
OTHER PARTY.

 

7.                                       Exhibits “H” and
“J” are hereby deleted from the Lease.

 

8.                                       Right of
Refusal.  In addition to the foregoing,
Tenant is hereby granted a right of refusal to lease additional space on the
fourth floors of the Building, which and if such space shall become available
(the “Refusal Space”), subject to the superior and prior rights granted to
Fairfield Industries Incorporated and its successors and assigns (“Fairfield”)
pursuant to Fairfield’s lease of portions of the Building.  Within a reasonable period of time from the
date upon which Landlord shall become aware of a bona fide offer that is
acceptable to Landlord to lease any portion of the Refusal Space (other than an
offer by Tenant), Landlord shall advise Tenant of said offer and of the
identity of the third-party prospect and the material business terms of the
offer.  Within five (5) business days
after Tenant has received such information from Landlord, Tenant may, at its
option, give Landlord written notice of the exercise of its first right of
refusal.  If Tenant exercises its right
of refusal under this provision, Tenant shall be entitled to take possession of
said Refusal space, which shall become part of the Leases Premises and subject
to the terms of this Lease, effective upon the same terms and conditions as to
that of the offer which Landlord had provided notice of the terms and
conditions of to Tenant.

 

If Tenant fails to timely provide Landlord
with notice of its election to lease the Refusal Space within said five (5)
business days, all rights and options of Tenant as to the Expansion Option Area
shall immediately and permanently cease, terminate and expire automatically
without further notice, provided the Landlord leases the Expansion Option Are
to the third party substantially on the same terms and conditions in the bona
fide offer.

 

Tenant recognizes and agrees that the right
of refusal herein granted is second, subordinate and inferior to the rights
previously granted by Landlord to Fairfield pursuant to

 

4

 

Fairfield’s lease of portions of the
Building.  In the event Fairfield
exercises any such rights, the right of refusal herein granted to Tenant shall
immediately and permanently cease, terminate and expire automatically without
further notice as to any such space by Fairfield.

 

Executed by Landlord and Tenant effective as
of this 20th day of October, 2004.

 

 

	
  Landlord:

  	
   

  	
  Tenant:

  
	
  TA/SUGAR CREEK PLACE, LTD.

  	
   

  	
  NEON SYSTEMS, INC.

  
	
  a Texas limited partnership

  	
   

  	
  a Delaware corporation

  
	
  By its General Partner:

  	
   

  	
   

  
	
  Turner Adreac Management, L.C.

  	
   

  	
   

  
	
  a Texas limited liability company

  	
   

  	
   

  
	
   

  
	
   

  
	
  By:

  	
         /s/ Michael Van

  	
   

  	
  By:

  	
         /s/ Brian D. Helman

  	
   

  
	
  Name:

  	
  Michael Van

  	
   

  	
  Name:

  	
  Brian D. Helman

  	
   

  
	
  Title:

  	
    Chief Operating Officer

  	
   

  	
  Title:

  	
    Chief Financial Officer

  	
   

  
										

 

 

6th Amendment - Neon Systems, Inc.

 

5

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