Document:

Community Banks, Inc. Survivor Income Agreement

 Exhibit 10.18 
  
 COMMUNITY BANKS, INC. 
  
 SURVIVOR INCOME AGREEMENT 
  
 THIS AGREEMENT is made the          day of
                        , 199     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. 
  

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 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
abrogate 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 

  

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 Directors of the Company on the effective date hereof. Any person becoming a member of the Board of
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

  

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 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. 
  
 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. 
  

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 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 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. 
  

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 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. 
  
 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 
  

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 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 Company officer have signed this Agreement. 
  
 COMPANY: 
  

									
	COMMUNITY BANKS, INC.	 		 	THE PEOPLES STATE BANK
					
	By:	 	 /s/ Ernie Lowe
	 		 	By:	 	 /s/ Sally J. Lear

	 Title:
	 	 Chairman
	 		 	 Title:
	 	 Corporate Secretary

  

					
	EXECUTIVE:	 		 	
			
	 /s/ 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. 
  

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 1.2    “Policy” means: 
  
 West Coast Life Insurance Company policy 
  
 Transamerica Assurance Company policy 
  
 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. 
  

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 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. 
  
 3.4 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. 
  

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 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 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 
  

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 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 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.

  

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 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. 
  
 Eddie L. Dunklebarger 
  

 13Amended and Restated Salary Continuation Agreement

 Exhibit 10.19 
  
 AMENDED AND RESTATED 
  
 SALARY CONTINUATION AGREEMENT 
  
 THIS AGREEMENT is made effective this 1st
 day of JANUARY, 2004, COMMUNITY BANKS INC. a Pennsylvania corporation (the Company”) and EDDIE L. DUNKLEBARGER (the Executive”). 
  
 INTRODUCTION 
  
 To encourage the Executive to remain an employee of the Company, on JANUARY 1, 2000, the Company entered into a Salary Continuation Agreement with the
Executive. 
  
 The Company is willing to provide additional salary
continuation benefits to the Executive and the Company and Executive mutually desire to amend the Salary Continuation Agreement as hereinafter provided. 
  
 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” shall mean any of the following: 
  

 (A) An acquisition by any “person” or “group” (as those terms are defined or used in Section 13(d)
of the Exchange Act, as enacted and in force on the date hereof) of “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act, as 
  

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enacted and in force on the date hereof) of securities of Company representing 24.99% or more of the combined voting power of Company’s securities then
outstanding; 
  
 (B) A merger, consolidation or
other reorganization of Company, except where the resulting entity is controlled, directly or indirectly, by Company; 
  
 (C) A merger, consolidation or other reorganization of Company, except where shareholders of Company immediately prior to consummation of
any such transaction continue to hold at least a majority of the voting power of the outstanding voting securities of the legal entity resulting from or existing after any transaction and a majority of the members of the Board of Directors of the
legal entity resulting from or existing after a transaction are former members of Company’s Board of Directors; 
  
 (D) A sale, exchange, transfer or other disposition of substantially all of the assets of Company to another entity, except to an entity
controlled, directly or indirectly, by Company or a corporate division involving Company; 
  
 (E) A contested proxy solicitation of Company’s shareholders that results in the contesting party obtaining the ability to cast
twenty-five percent (25%) or more of the votes entitled to be cast in an election of directors of Company. 
  
 Notwithstanding anything else to the contrary set forth in this Agreement, if (i) an agreement is executed by the Company providing for any of the
transactions or events constituting a Change of Control as defined herein, and the agreement subsequently expires or is terminated without the transaction or event being consummated, and (ii) Executive’s employment did not terminate during
the period after the agreement and prior to such expiration or termination, for purposes of this Agreement it shall be as though such agreement was never executed and no Change of Control event shall be deemed to have occurred as a result of the
execution of such agreement. 
  
 1.1.2 “Code”
means the Internal Revenue Code of 1986, as amended. 
  

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 1.1.3 “Corporation” means Community Banks, Inc. 
  
 1.1.4 “Disability” means the Executive suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to the Company, prevents the Executive from performing substantially all of the Executive’s normal duties for the Company for a period of nine (9) months of any twelve
(12) consecutive month period. As a condition to any benefits, the Company may require the Executive to submit to such physical or mental evaluations and tests as the Company’s Board of Directors deems appropriate. 
  
 1.1.5 “Early Termination” means the Termination of
Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change of Control. 
  
 1.1.6 “Early Termination Date” means the month, day and year in which Early Termination occurs. 
  
 1.1.7 “Normal
Retirement Age” means the Executive’s 62nd birthday. 
  

 1.1.8 “Normal Retirement Date” means the later of the Normal Retirement Age or Termination of Employment. 
  
 1.1.9 “Plan Year” means each twelve-month period commencing
with the effective date of this Agreement. 
  
 1.1.10
“Termination for Cause” See Section 5.2. 
  
 1.1.11 “Termination of Employment” means that the Executive ceases to be employed by the Company for any reason whatsoever other than by reason of a leave of absence which is approved by the Company. For purposes of this
Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive’s Termination of Employment, the Company shall have the sole and absolute right to decide the dispute. 
  

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 Article 2 
  

Lifetime Benefits 
  
 2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Company shall pay to the
Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement. 
  
 2.1.1 Amount of Benefit. The aggregate annual Normal Retirement Benefit under this Section 2.1 is One Hundred Eighty Thousand ($180,000)
Dollars. The annual benefit amounts as depicted on Schedule A and Schedule B are calculated by amortizing the annual normal retirement benefit using the interest method of accounting, a discount rate as set forth in the Schedules,
monthly compounding and monthly payments. 
  
 2.1.2 Payment of
Benefit. The Company shall pay the annual benefit to the Executive in consecutive equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date and continuing
for 239 additional months. 
  
 2.2 Early Termination Benefit. Upon Early
Termination, the Company shall pay to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement. 
  
 2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is the Early Termination Annual Benefit set forth in Schedule A
or Schedule B, as the case may be, for the Plan Year ending immediately prior to the Early Termination Date. 
  
 2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the Executive in consecutive equal monthly installments payable on the first
day of each month commencing with the month following the Executive’s Normal Retirement Age and continuing for 239 additional months. 
  

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 2.3 Disability Benefit. If the Executive terminates employment due to Disability prior to Normal Retirement Age,
the Company shall pay to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement. 
  
 2.3.1 Amount of Benefit. The annual benefit under this Section 2.3 is the Disability Annual Benefits set forth in Schedule A and
Schedule B for the Plan Year ending immediately prior to the date in which Termination of Employment occurs. 
  
 2.3.2 Payment of Benefit. The Company shall pay the Disability Annual Benefit to the Executive in consecutive equal monthly installments commencing
within 90 days after the date of the Executive’s Termination of Employment and continuing for 239 additional months. 
  
 2.4 Change of Control Benefit. If the Executive is in the active service of the Company at the time of a Change of Control, the Company shall pay to the Executive
the benefit described in this Section 2.4 in lieu of any other benefit under this Agreement. 
  
 2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is the Change of Control Benefit set forth on Schedule A and
Schedule B. 
  
 2.4.2 Payment of Benefit. The
Company shall pay the Change in Control Benefit to the Executive in consecutive equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Age and continuing for 239
additional months. 
  

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 Article 3 
  

Death 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. This benefit shall be paid in lieu of the Lifetime Benefits of Article 2. 
  
 3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is the Normal Retirement Benefit described in Section 2.1.1.

  
 3.1.2 Payment of Benefit. The Company shall pay the
annual benefit to the beneficiary in consecutive equal monthly installments payable on the first day of each month commencing with the month following the Executive’s death and continuing for 239 additional months. 
  
 3.2 Death During Benefit Period. If the Executive dies after the 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 Termination of Employment But
Before Benefits Commence. If the Executive is entitled to benefits under this Agreement, but dies prior to receiving said benefits, the Company shall pay to the Executive’s beneficiary the same benefits, in the same manner, they would have
been paid to the Executive had the Executive survived; however, said benefit payments will commence upon the Executive’s death. 
  
 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 

  

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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 estate. 
  
 4.2
Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, 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, incapacitated person or incapable person. The Company may require proof of incapacity, 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 5 
  
 General
Limitations 
  
 Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this Agreement: 
  
 5.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement, if the Company terminates the Executive’s employment for: 
  
 5.1.1 Gross negligence or gross neglect of duties; 
  
 5.1.2 Commission of a felony or of a gross misdemeanor involving moral
turpitude; or 
  
 5.1.3 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. 
  

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 5.1.4 Removal. Notwithstanding any provision of this Agreement to the contrary, the Company shall
not pay any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act. 
  
 5.2 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 conduct which is deemed to violate the non-competition clause of the Executive’s Employment Contract, which clause is
hereby incorporated herein by reference, both parties further hereby acknowledging having received, read and understood a copy of said Employment Contract. 
  
 5.3 Suicide or Misstatement. If the Executive commits suicide within two years after the date of this Agreement, or if the insurance company denies coverage for
material misstatements of fact made by the Executive on any application for life insurance purchased by the company, or any other reason, provided however that the Company shall evaluate the reason for denial, and upon advice of Counsel and in its
sole discretion, consider judicially challenging any denial. 
  
 Article 6 
  
 Claims and Review Procedures 

  
 6.1 Claims Procedure. The Company shall notify any person or entity
that makes a claim against the Agreement (the “Claimant”) in writing, within ninety (90) days of Claimant’s written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. If the
Company determines that the Claimant 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 Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances 

  

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requiring additional time to make a decision, the Company shall notify the Claimant 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 Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant 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 Claimant 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 Claimant (and counsel, if any) an opportunity to present his or her position
to the Company orally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant 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 Claimant 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 Claimant. 
  
 Article 7 
  
 Amendments and Termination 
  
 This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive. 
  

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 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 Guarantee 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 the Commonwealth 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 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 

  

 10 

 
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 the 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. 
  

 11 

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

  

									
		 		 	COMPANY:
			
		 		 	COMMUNITY BANKS, INC.
				
	/s/ Kaye Williams	 		 	By	 	/s/ Patricia E. Hoch
				
	Witness	 		 	Name:	 	Patricia E. Hoch
				
		 		 	Title:	 	Corp. Secretary
			
		 		 	EXECUTIVE:
			
	/s/ Kaye Williams	 		 	/s/ Eddie L. Dunklebarger
			
	Witness	 		 	Eddie L. Dunklebarger

  

 12 

 Schedule A 
  
 Community Banks, Inc. 
 Salary Continuation
Agreement 
  
 Lifetime Benefits 
  
 Eddie L. Dunklebarger 
  

																
	 Plan Year
 Ending Jan 1
	    	Vesting
Schedule	 	    	Accrued
Benefit	    	Early
Termination
Annual Benefit	    	Disability
Annual Benefit	    	Change of
Control Annual
Benefit
	 2005
	    	100	%	    	$	305,125	    	$	57,811	    	$	29,497	    	$	80,000
	 2006
	    	100	%	    	$	347,376	    	$	61,075	    	$	33,581	    	$	80,000
	 2007
	    	100	%	    	$	392,907	    	$	64,104	    	$	37,983	    	$	80,000
	 2008
	    	100	%	    	$	441,973	    	$	66,914	    	$	42,726	    	$	80,000
	 2009
	    	100	%	    	$	494,848	    	$	69,522	    	$	47,838	    	$	80,000
	 2010
	    	100	%	    	$	551,828	    	$	71,942	    	$	53,346	    	$	80,000
	 2011
	    	100	%	    	$	613,231	    	$	74,188	    	$	59,282	    	$	80,000
	 2012
	    	100	%	    	$	679,401	    	$	76,272	    	$	65,678	    	$	80,000
	 2013
	    	100	%	    	$	750,708	    	$	78,206	    	$	72,572	    	$	80,000
	 2014
	    	100	%	    	$	827,551	    	$	80,000	    	$	80,000	    	$	80,000

  

 13 

 Schedule B 
  
 Community Banks, Inc. 
  
 Salary Continuation Agreement 
  
 Lifetime Benefits 
  
 Eddie L.
Dunklebarger 
  

																
	 Plan Year
 Ending Jan 1
	    	Vesting
Schedule	 	    	Accrued
Benefit	    	Early
Termination
Annual Benefit	    	Disability
Annual Benefit	    	Change of
Control Annual
Benefit
	 2005
	    	100	%	    	$	63,949	    	$	11,548	    	$	5691	    	$	100,000
	 2006
	    	100	%	    	$	132,180	    	$	22,371	    	$	11,762	    	$	100,000
	 2007
	    	100	%	    	$	204,982	    	$	32,514	    	$	18,241	    	$	100,000
	 2008
	    	100	%	    	$	282,659	    	$	42,021	    	$	25,153	    	$	100,000
	 2009
	    	100	%	    	$	365,538	    	$	50,931	    	$	32,528	    	$	100,000
	 2010
	    	100	%	    	$	453,967	    	$	59,282	    	$	40,397	    	$	100,000
	 2011
	    	100	%	    	$	548,319	    	$	67,108	    	$	48,793	    	$	100,000
	 2012
	    	100	%	    	$	648,990	    	$	74,444	    	$	57,752	    	$	100,000
	 2013
	    	100	%	    	$	756,403	    	$	81,319	    	$	67,310	    	$	100,000
	 2014
	    	100	%	    	$	871,009	    	$	87,762	    	$	77,508	    	$	100,000
	 2015
	    	100	%	    	$	993,291	    	$	93,801	    	$	88,390	    	$	100,000
	 1/2016
	    	100	%	    	$	1,123,763	    	$	100,000	    	$	100,000	    	$	100,000

  

 14 

 AMENDMENT TO THE SALARY CONTINUATION AGREEMENT 
  
 This Amendment to the Salary Continuation Agreement is made effective as of
this              day of November 2007 by and between COMMUNITY BANKS, INC. a Pennsylvania corporation (the “Company”) and Executive, a party to a Salary Continuation Agreement
(the “Agreement”) with the Company. 
  
 BACKGROUND:

  
 WHEREAS, the payment of benefits to the Executive pursuant to
the Agreement is subject to the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder; and 
  
 WHEREAS, the Company and the Executive desire to amend the Agreement in order to comply with section 409A of the Code.

  
 NOW, THEREFORE, in consideration of the foregoing recitals and
the agreements hereinafter contained, and intending to be legally bound hereby, the parties agree to add the following additional paragraphs to Executive’s Agreement: 
  

 1. Timing of Payment. Notwithstanding anything in this Agreement to the contrary, if, at the time of the Executive’s
termination of employment with the Company, the Company has stock which is publicly traded on an established securities market and the Executive is a “specified employee” (as defined in section 409A of the Code) and it is necessary to
postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under section 409A of the Code, then the Company shall
postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Executive) until the first payroll date that occurs after the date that is six
months following the Executive’s “separation of service” with the Company (within the meaning of such term under section 409A of the Code). The accumulated postponed amount shall be paid in a lump sum payment within ten days after the
end of the six-month period. If the Executive dies during the postponement period prior to the payment of postponed amount, the amounts postponed on account of section 409A shall be paid to the personal representative of the Executive’s estate
within 60 days after the date of Executive’s death. 
  
 2.
Section 409A Compliance. This Agreement is intended to comply with the requirements of section 409A of the Code and shall in all respects be administered in accordance with section 409A. Notwithstanding anything in the Agreement to the
contrary, distributions upon termination of employment may only be made upon a section 409A “separation from service.” In the event any amount due hereunder is not paid by the designated date, such amount shall be paid by December 31
of the calendar year in which such amount was designated to be paid. In no event shall the Executive, directly or indirectly, designate the calendar year of a payment. 
  

 [SIGNATURE PAGE FOLLOWS] 

 IN WITNESS WHEREOF, the Company has caused this Amendment to the Salary Continuation Agreement to be
executed by its duly authorized officers and the Executive has hereunto set his/her hand and seal as of the date first above written. 
  

									
		 		 	COMMUNITY BANKS, INC.
					
		 	/s/ Patricia E. Jack	 		 	By	 	/s/ Anthony N. Leo
		 	Witness	 		 		 	Anthony N. Leo
				
		 		 		 	EXECUTIVE:
				
		 	/s/ Patricia E. Jack	 		 	/s/ Eddie L. Dunklebarger
		 	Witness	 		 	Signature
				
		 		 		 	Eddie L. Dunklebarger
		 		 		 	Printed Name

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