EXHIBIT 10.7


                              EMPLOYMENT AGREEMENT

     AGREEMENT  made this 31st day of December,  1999, by and between  COMMUNITY
BANKS, INC., a Pennsylvania corporation, ("Community"), COMMUNITY BANKS, N.A., a
National Banking Association  ("CBNA") and ROBERT W. LAWLEY, an adult individual
(hereinafter referred to as "Executive").

                              W I T N E S S E T H:

     WHEREAS,  Executive is currently  employed by CBNA as CBNA's Chief  Lending
Officer.

     WHEREAS, for purposes of the Agreement,  Community and CBNA are referred to
collectively as the "Company."

     WHEREAS,  the Company wishes to employ Executive and Executive wishes to be
employed  by Company,  as an  Executive  Vice  President  and the Chief  Lending
Officer of CBNA, upon the terms set forth below, as of the Effective Date of the
Merger; and

     NOW, THEREFORE,  in consideration of the agreements  hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:

          1. Length of  Employment.  Company  agrees to employ  Executive  for a
rolling term of two (2) years  commencing as of the date of this  Agreement (the
"Effective  Date").  On each anniversary date of the Effective Date, the term of
this Agreement  shall  automatically  renew and extend for an additional one (1)
year period unless either party shall have provided  notice of its intent not to
renew within sixty (60) days prior to such  anniversary  date.  Upon the date of
any Change in Control (as defined in Paragraph 8) should occur, the term of this
Agreement shall  automatically renew and be extended for two (2) years from such
date.

          2. Position and Responsibilities. During the course of his employment,
Executive shall (i) perform the duties and responsibilities of an Executive Vice
President of Company and Chief Lending  Officer of CBNA, (ii) perform such other
senior management duties and  responsibilities as the Board of Directors and CEO
may direct, and (iii) shall be afforded the title and privileges associated with
being at least an Executive Vice President of the Company.

          3. Performance of Responsibilities, Loyalty.

          a.  Executive  shall  devote his full time to the  performance  of his
     responsibilities  hereunder.  Executive  shall  at  all  times  faithfully,
     industriously and to the best of his abilities perform all duties necessary
     to carry out his responsibilities.



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          b.  Throughout  the term  hereof,  Executive  shall not at any time or
     place,  either directly or indirectly engage in any business or activity in
     competition with or adverse to the interests of Company.

          4. Compensation.

          a. During the  initial  calendar  year of the term of this  Agreement,
     Company  shall pay to  Executive  a base salary of not less than $ . During
     successive  calendar years, the Company may, in its discretion,  adjust the
     base  salary;  provided  that it shall at no point  be  reduced  below  the
     initial  base salary.  This salary shall be paid in regular,  substantially
     equal  installments in accordance with the regular payroll practices of the
     Company,  less  any  and  all  applicable  deductions  for  taxes,  medical
     benefits, etc.

          b. In  addition  to base  salary,  during the term of this  Agreement,
     Company shall provide  Executive with an automobile,  including all related
     maintenance,  repairs,  insurance  and other  costs.  In lieu of  providing
     Executive  with  an  automobile,  Company  may  provide  Executive  with  a
     reasonable  allowance  on a monthly  basis,  which  allowance  shall  cover
     Executive's   costs  associated  with  an  automobile,   including  without
     limitation, lease or installment payments, maintenance,  repairs, insurance
     and other costs.

          5. Benefits.

          a.  Executive  shall  receive  employee  benefits from Company no less
     favorable  than the  employee  benefits  he received as an employee of CBNA
     and, in addition, shall be eligible to partici pate in all employee benefit
     plans  generally  available  to  executive  officers of Company,  including
     without limitation, health and dental insurance plans, group life insurance
     plans,   retirement  plans,  incentive  compensation  plans,   supplemental
     executive  retirement plans and stock option,  grant or appreciation rights
     plans.  The  participation  of Executive in each benefit plan  described in
     this paragraph  shall be subject to the terms of the applicable plan and to
     procedures  generally  applicable to Company officers;  provided,  however,
     that  Executive  shall  receive  credit for years of service  with CBNA for
     vesting purposes only. Nothing in this paragraph shall obligate the Company
     to offer any such plans.

          b. Executive shall be provided holiday pay,  vacation,  personal days,
     sick leave,  short-term  disability and long-term  disability in accordance
     with Company  policy for officers of similar  position  performing  similar
     duties.


          c. The Company shall pay the reasonable  costs of Executive  attending
     continuing education seminars and banking conventions and meetings.

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<PAGE>

          6.  Relocation.  Company  shall  not,  without  the prior  consent  of
Executive,  transfer or relocate the office in which Executive performs the bulk
of his duties to any  location  more than  thirty  (30) miles from  Millersburg,
Pennsylvania without an increase in duties and responsibilities and commensurate
compensation.  In the event  Executive is so transferred  or relocated,  Company
shall  pay all  reasonable  out-of-pocket  expenses  incurred  by  Executive  in
connection  with such  relocation.  Company shall not require  Executive to move
from his residence.

          7. Termination of Employment.  This Agreement may be terminated during
the term hereof as follows:

          a. (1) At any time by mutual agreement of Executive and Company.

             (2) If this Agreement is terminated pursuant to subparagraph (a)(1)
     of  this  Paragraph  7,  neither  party  shall  have  further obligation or
     liability to the other hereunder,  except that Executive shall be entitled
     to accrued and unpaid salary.

          b. (1) By  Company,  at any  time for  Cause.  "Cause"  shall  include
     Executive's  personal dishonesty,  willful misconduct,  breach of fiduciary
     duty  involving  personal  profit,  incompetence,  intentional  failure  to
     perform  stated  duties,  willful  violation of any law, rule or regulation
     (other than traffic  violations or offenses not involving moral turpitude),
     final cease and desist order of any government  agency having  jurisdiction
     over Company,  or material  breach of this Agreement,  following  Company's
     notice  thereof to Executive  and  Executive's  failure to cure same within
     thirty (30) days of such notice.

             (2) If this Agreement is terminated pursuant to subparagraph (b)(1)
     of this Paragraph 7, Company shall have no further obligation or liability
     to Executive hereunder, except that Executive shall be entitled to accrued
     and unpaid salary.

          c. (1)  Automatically,  if  Executive  is removed  and/or  permanently
     prohibited  from  participating  in the conduct of Company's  affairs by an
     order issued by an appropriate  regulatory agency under Section 8(e) of the
     Federal Deposit Insurance Act, as amended,  or any similar state or federal
     law.

             (2) If this Agreement is terminated pursuant to subparagraph (c)(1)
     of this Paragraph 7, Company shall have no further obligation  or liability
     hereunder,  except that  Executive  shall be entitled to accrued and unpaid
     salary.

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<PAGE>

          d. (1) By Company at any time, if in its sole judgment and  discretion
     the  continued  employment  of Executive  would no longer be  beneficial or
     desirable.

             (2)In the event that Executive's employment is terminated  pursuant
     to this subparagraph (d)(1) of this  Paragraph  7,  Executive  shall not be
     obligated to perform any services on behalf of Company and Company shall be
     obligated to continue  Executive's  salary and those  benefits set forth in
     Paragraph 5(a) hereof for the remaining term of this  Agreement;  provided,
     however, that in no event shall this provision obligate Company to make any
     further increase to Executive's salary above his salary on the date of such
     termination,   or  continue  Executive's  participation  in  any  incentive
     compensation plan, or stock option,  grant or appreciation  rights plan, or
     any similar incentive based compensation plan.

             (3) Notwithstanding  the provisions of subparagraph  (d)(2) of this
     Paragraph,  in the event that Executive's employment is terminated pursuant
     to  subparagraph  (d)(1)  of this  Paragraph  7  subsequent  to a Change in
     Control,  or the  Company  shall  breach any  provision  of this  Agreement
     subsequent to a Change in Control,  Executive may elect, which election may
     be made in Executive's  sole  discretion,  to receive from Company a single
     payment upon such  termination  amounting to any salary to which  Executive
     would be entitled  pursuant to  subparagraph  (d)(2),  such single  payment
     being in lieu of the  payments  and  benefits  set  forth  in  subparagraph
     (d)(2).  As used in this  paragraph,  "Change  in  Control"  shall have the
     meaning defined in Paragraph 8 hereof.

          e. (1) By Executive upon a Change in Control.

             (2) In the event that Executive  terminates his employment pursuant
     to subparagraph (e)(i) of this Paragraph  7,  Executive  may  elect,  which
     election  may be made in  Executive's  sole  discretion,  to  receive  from
     Company a single payment upon such  termination  amounting to any salary to
     which Executive would be entitled  pursuant to subparagraph  (d)(2) of this
     Paragraph 7, such single payment being in lieu of the payments and benefits
     set forth in subparagraph (d)(2) of this Paragraph 7.

          f. By  Executive  at any time,  upon thirty (30) days prior  notice to
     Company;  provided,  however,  that if this  Agreement  shall be terminated
     pursuant to this subparagraph (f) of this Paragraph 7, Company shall not be
     further obligated or liable under this Agreement, except for the payment of
     accrued and unpaid salary.

          8.  Definition of Change of Control.  For purposes of this  Agreement,
the term "Change of Control" shall mean:

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<PAGE>

          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 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 as 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;

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<PAGE>

          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.

          9. Suspension. If Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice served in
accordance  with  law  by  an  appropriate   regulatory  agency,  the  Company's
obligations  under this Agreement  shall be suspended as of the date of service,
unless  stayed by  appropriate  proceedings.  If the  charges  in the notice are
dismissed,  Company  shall (i) pay Executive  all of the  compensation  withheld
while its contract  obligations  were  suspended  and (ii)  reinstate any of its
obligations which were suspended.

          10.  Death or  Disability.  In the event that  Executive  is  rendered
unable  to  complete  the  terms of this  Agreement  due to death or  disability
continuing in excess of ninety (90) days, this Agreement shall be terminated and
Company  shall  have  no  further  liability,  obligations  or  responsibilities
hereunder except as set forth in Paragraph 5(b) hereof.

          11.  Covenant Not to Compete.  In the event  Executive  terminates his
employment with Company pursuant to Paragraph 7(f), he agrees that, for a period
of one (1) year following such termination, he shall not (i) solicit any Company
employees or officers to leave Company to accept  employment by Executive or his
new employer; and (ii) solicit or encourage any Company customers to cease doing
business  with the  Company  and/or  to  transfer  any or all of their  business
relationships to any institution which Executive may found or to Executive's new
employer.

          12. Entire  Agreement.  As of the Effective  Date of the Merger,  this
Agree ment and a certain Salary  Continuation  Agreement  between  Executive and
CBNA shall  constitute  the entire  agreement  between  the parties and no prior
promises,  agreements or  warranties,  verbal or written,  shall be of any force
unless embodied herein.  No modification of this Agreement shall be of any force
or effect unless reduced to writing and signed by both parties.

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<PAGE>

          13. Miscellaneous.

          a. This  Agreement  shall be binding  upon and inure to the benefit of
     the parties hereto, their respective heirs, successors and assigns.

          b. This  Agreement  shall not be modified or changed in any way except
     by a written agreement signed by the parties hereto.

          c. No waiver by any party hereto of any  provision  of this  Agreement
     shall be deemed a waiver of said provision or any other  provisions of this
     Agreement.

          d. This  Agreement  shall be  interpreted,  construed  and governed in
     accordance  with  the  laws  of  the  Commonwealth  of  Pennsylvania.   The
     invalidity or unenforceability of any provision of this Agreement shall not
     affect  the  validity  or  enforceability  of any other  provision  of this
     Agreement, which shall remain in full force and effect.

          IN WITNESS WHEREOF, the parties have set their hands and seals.

ATTEST:                                  COMMUNITY BANKS, INC.

/S/ Patricia E. Hoch                     By: /S/ Ernest L Lowe
------------------------------------         -----------------------------------


ATTEST:                                  COMMUNITY BANKS, N.A.

/S/ Patricia E. Hoch                     By: /S/ Ernest L Lowe
------------------------------------         -----------------------------------


WITNESS:                                 EXECUTIVE

/S/ Patricia E. Hoch                     /S/ Robert W. Lawley
------------------------------------     ---------------------------------------
                                             Robert W. Lawley




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<PAGE>



                    AGREEMENT TO MODIFY EMPLOYMENT AGREEMENT

     THIS  AGREEMENT  TO  MODIFY  EMPLOYMENT  AGREEMENT  ("Employment  Agreement
Modification")  is entered into on this 14th day of January,  2002, by COMMUNITY
BANKS, INC., a Pennsylvania corporation  ("Community"),  COMMUNITY BANKS, a bank
and trust company  organized and existing under the laws of the  Commonwealth of
Pennsylvania,  and successor by merger to Community Banks,  N.A.  ("Bank"),  and
ROBERT W. LAWLEY (the "Executive").

                                   BACKGROUND

     A.  Community,  Bank and  Executive  entered into an  Employment  Agreement
("Agreement")  on or about  December 31, 1999. B. The parties wish to modify the
identification of Executive's job title in the Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and intending to
be legally bound, the parties hereby agree as follows:

     1.  Modification of Job Title.  Effective  March 30, 2001,  Executive's job
title shall be  "Managing  Director - Operations  Division",  in addition to his
title of Executive Vice President of the Bank and the Corporation, and Executive
shall no longer continue to have the title "Chief Lending Officer."

     2. No Other Changes.  Except as specifically modified herein, all terms and
conditions of the Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, the Executive and duly authorized officers of Community
and Bank have signed this Employment Agreement Modification.

EXECUTIVE:

 /S/ Robert W. Lawley
-----------------------------------------
Robert W Lawley

WITNESS/ATTEST:
                                                        COMMUNITY BANKS

 /S/ Patricia E. Hoch                        By   /S/ Eddie L. Dunklebarger
-----------------------------------------         ------------------------------
                                                  Title    President & CEO
                                                  ------------------------------

WITNESS/ATTEST:                                       COMMUNITY BANKS, INC.

 /S/ Patricia E. Hoch                        By   /S/ Eddie L. Dunklebarger
-----------------------------------------         ------------------------------
                                                  Title    President & CEO
                                                  ------------------------------




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