<PAGE>

                                  EXHIBIT 10.16
                              EMPLOYMENT AGREEMENT
                               For Robert W. Pullo
<PAGE>


                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into on October 17,
2000, by and between Waypoint Financial Corp., a Pennsylvania corporation (the
"Company"), with its principal office located in Harrisburg, Pennsylvania, and
Robert W. Pullo, a resident of York, Pennsylvania ("Executive"). Any reference
herein to the "Bank" shall refer to Waypoint Bank, a wholly-owned subsidiary of
the Company.

     WHEREAS, the Company and Executive wish to enter into an employment
agreement to evidence the terms and conditions of Executive's appointment as
Co-Chairman of the Board of Directors of the Company and to provide for
Executive's employment by the Company, upon the terms and conditions set forth
herein:

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.   Employment. The Company hereby agrees to employ Executive, and
          ----------
Executive hereby accepts such employment and agrees to perform his duties and
responsibi lities, in accordance with the terms, conditions and provisions

hereinafter set forth.

     1.1. Employment Term. The term of Executive's employment under this
          ---------------
Agreement shall commence on October 17, 2000 (the "Effective Date") and shall
continue for thirty-six (36) consecutive months, or until October 16, 2003;
provided, however, that the Agreement may be renewed annually for an additional
twelve months, in the mutual agreement of the Executive and the Board of
Directors, provided, further, that the Agreement shall not extend beyond October
16, 2005 (the "Employment Term"). At the expiration of the Employment Term, the
Company and the Executive shall enter into a Consulting Agreement with a term of
two years, or until October 16, 2005, provided, however, that any extension of
the term of this Agreement shall cause a corresponding reduction in the term of
the Consulting Agreement. The Consulting Agreement shall be substantially in the
form attached hereto as Exhibit A.

     1.2. Duties and Responsibilities. The Company hereby appoints Executive as
          ---------------------------
Co-Chairman of its Board of Directors (the "Board") and Executive shall serve as
Co-Chairman until October 16, 2002, and thereafter, shall serve as Vice Chairman
of the Board of Directors and Vice Chairman of the Executive Committee.
Executive shall be a member of the Board at all times during the Employment
Term. During the Employment Term, Executive shall perform all duties and accept
all responsibilities incident to the position of Co-Chairman of the Board (or,
as applicable, as Vice Chairman of the Board and Vice Chairman of the Executive
Committee) as may be assigned to him by the Board.

     1.3. Extent of Service. During the Employment Term, Executive agrees to use
          -----------------
his best efforts to carry out his duties and responsibilities under Section 1.2
hereof, consistent with the other provisions of this Agreement. The foregoing
shall not be construed as preventing Executive from continuing in any director
capacities in which he is currently involved or from making investments in other
businesses or enterprises, provided that Executive agrees not to engage in any
other business activity which, in the reasonable judgment of the Board, is
likely to interfere with his ability to discharge his duties and
responsibilities to the Company. Executive further agrees not to accept any new
positions on either a part time or independent contracting basis for any other
business or enterprise during the Employment Term without the prior written
consent of the Board.

     1.4. Base Salary. For all the services rendered by Executive hereunder, the
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Company shall pay Executive a base salary ("Base Salary"), commencing on the
Effective Date, at the annual rate of $393,750 (or such higher amount as
Executive is earning as base salary from York Financial Corp. on the day prior
to the Effective Date as the result of any increase made by York Financial Corp.
during its normal compensation review), adjusted each year in an amount which is
no less than the rate of increase in the Consumer Price Index ("CPI") and
payable in installments at such times as the Company customarily pays its other
senior level executives (but in any event no less often than monthly).
Executive's Base Salary shall be reviewed annually for appropriate adjustment in
cash
<PAGE>

compensation (but shall not be reduced below the then current level) by the
Board pursuant to its normal performance review policies for senior level
executives.

     1.5. Retirement and Benefit Coverages and Perquisite. During the Employment
          -----------------------------------------------
Term, Executive shall be entitled to participate in all (a) employee pension and
retirement plans and programs ("Retirement Plans") and (b) welfare benefit plans
and programs ("Benefit Coverages"), in each case made available to the Company's
or Bank's senior level executives as a group or to the Company's or Bank's
employees generally, as such Retirement Plans or Benefit Coverages may be in
effect from time to time. Notwithstanding the terms of any Retirement Plans,
Executive shall at all times after the Effective Date have a fully vested right
to all benefits earned under such Retirement Plans payable under such Retirement
Plans or by the Company whereby the effect of granting such full vesting would
present a qualification issue for any such Retirement Plan under the applicable
tax laws. Executive shall also be entitled to an automobile, country club
initiation fees, dues and assessments and any other executive perquisites all in
accordance with the Company's policy for senior executives.

     1.6. Reimbursement of Expenses and Vacation. Executive shall be provided
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with reimbursement of expenses related to his employment by the Company on a
basis no less favorable than that which may be authorized from time to time for
senior level executives as a group, and entitled to vacation (six (6) weeks
beginning in calendar year 2001) and holidays in accordance with the Company's
normal personnel policies for senior level executives.

     1.7. Short-Term Incentive Compensation. Executive shall be entitled to
          ---------------------------------
participate in any short-term incentive compensation programs established by the
Company for its senior level executives generally. Bonuses under such programs
shall be based upon achievement of certain annual individual or business
performance objectives specified and approved by the Board (or a Committee
thereof) in its sole discretion, provided, however, that Executive shall be paid
a guaranteed bonus of no less than the greater of One Hundred Twenty-Five
Thousand Dollars ($125,000) or 33% of Base Salary, as adjusted.

     1.8  Long-Term Incentive Compensation; Stock Options. Executive shall also
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be entitled to participate on a basis consistent with other comparably situated
executives in all incentive compensation programs including but not limited to
stock options and recognition plans, established by the Company for its senior
level executives. Bonuses under such programs shall be based upon achievement of
certain individual or business performance objectives specified and approved by
the Board (or a Committee thereof) in its sole discretion.

     2.   Confidential Information. Executive recognizes and acknowledges that
          ------------------------
by applicable, after the Employment Term, he will have access to certain
confidential and proprietary information relating to the Company's business,
which may include, but is not limited to, trade secrets, trade "know-how",
customer information, supplier information, cost and pricing information,
marketing and sales techniques, strategies and programs, computer programs and
software and financial information (collectively referred to as "Confidential
Information"). Executive acknowledges that such Confidential Information is a
valuable and unique asset of the Company and Executive covenants that he will
not, unless expressly authorized in writing by the Board, at any time during the
course of his employment use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation except in
connection with the performance of his duties for the Company and in a manner
consistent with the Company's policies regarding Confidential Information.
Executive also covenants that at any time after the termination of such
employment, he will not, directly or indirectly, use any Confidential
Information or divulge or disclose any Confidential Information to any person,
firm or corporation, unless such information is in the public domain through no
fault of Executive or except when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information in which case Executive will inform the Company in
writing promptly of such required disclosure, but in any event at least two
business days prior to disclosure, provided, however, if prior notice is not
possible, then as soon thereafter as reasonably practicable. All written
Confidential Information (including, without limitation, in any computer or
other electronic format) which comes into Executive's
<PAGE>

possession during the course of his employment shall remain the property of the
Company. Except as required in the performance of Executive's duties for the
Company, or unless expressly authorized in writing by the Board, Executive shall
not remove any written Confidential Information from the Company's premises,
except in connection with the performance of his duties for the Company and in a
manner consistent with the Company's policies regarding Confidential
Information. Upon termination of Executive's employment, Executive agrees
immediately to return to the Company all written Confidential Information in his
possession.

     3. Non-Compete Obligation. Executive agrees that during the term of this
        ----------------------
Agreement and for a period of two years after the end of the initial Employment
Term (i.e., through October 6, 2005) Executive shall not, directly or
indirectly, engage (as principal, partner, director, officer, agent, employee,
or owner, with or without compensation) in any line of business that the Company
or the Bank is involved (including, but not limited to, the providing of
wholesale banking services, consumer financial services, retail banking, trust
and investment management services, secured and unsecured loan and financing
services, real estate financing services, asset and investment management and
fiduciary services, cash management services, and consumer and commercial credit
card services), within sixty miles of Harrisburg, Pennsylvania.

     Executive shall not entice or solicit, directly or indirectly, any other
executives or key management personnel of the Company (or any subsidiary) to
work with Executive or any entity with which Executive has affiliated for a
period of two years after the end of the Employment Term or for any period that
Executive provides consulting services to the Company or is a director of the
Company, whichever is longer. Executive shall also not entice or solicit,
directly or indirectly, any client or customer of the Company (or any
subsidiary) for any competitor or in any competitive activity for a period of
two years after the end of the Employment Term or for any period that Executive
provides consulting services to the Company or is a director of the Company,
whichever is longer.

     The foregoing restriction shall not be construed to prohibit Executive from
owning less than five percent (5%) of any class of securities of any corporation
located in Maryland, Pennsylvania or New Jersey which is engaged in any of the
foregoing businesses having a class of securities registered pursuant to the
Securities Exchange Act of 1934, provided that such ownership represents a
passive investment and that neither Executive nor any group of persons including
Executive in any way, either directly or indirectly, manages or exercises
control of any such corporation, guarantees any of its financial obligations,
otherwise takes part in its business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.

     4. Enforcement of Obligations. Executive acknowledges that the restrictions
        --------------------------
contained in Sections 2 and 3 are reasonable and necessary to protect the
legitimate interests of the Company, that the Company would not have entered
into this Agreement in the absence of such restrictions, and that any violation
of any provision of those Sections will result in irreparable injury to the
Company. Executive further represents and acknowledges that: (i) he has been
advised by the Company to consult his own legal counsel with respect to this
Agreement; and (ii) that he has, prior to execution of this Agreement, reviewed
thoroughly this Agreement with his counsel. Executive agrees that the Company
shall be entitled to preliminary and permanent injunctive relief, without the
necessity of proving actual damages, as well as to an equitable accounting of
all earnings, profits and other benefits arising from any violations of Sections
2 and 3, which rights shall be cumulative and in addition to any other rights or
remedies to which the Company may be entitled. In the event that any of the
provisions of Sections 2 and 3 should ever be adjudicated to exceed the time,
geographic, product or service, or other limitations permitted by applicable law
in any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic, product or service, or other
limitations permitted by applicable law. Executive irrevocably and
unconditionally (i) agrees that any suit, action or other legal proceeding
arising out of this Agreement in which any party is seeking in whole or in part
any form of equitable relief, including without limitation, any action commenced
by the Company for preliminary and permanent injunctive relief and other
equitable relief, may be brought in any court of competent jurisdiction in
Dauphin County; (ii) consents to the non-exclusive jurisdiction of any court in
any such suit, action or proceeding; and (iii) waives any objection which
Executive may have to the laying of venue of any such suit, action or proceeding
in
<PAGE>

any such court. Executive also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner permitted
by the notice provisions of Section 10.

     5.   Termination. The Employment Term shall terminate upon the occurrence
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of any one of the following events:

     5.1. Disability. The Company may terminate the Employment Term if Executive
          ----------
is unable substantially to perform his duties and responsibilities hereunder to
the full extent required by the Board by reason of illness, injury or incapacity
for six consecutive months, or for more than six months in the aggregate during
any period of twelve calendar months provided that the Company shall continue to
pay the Executive his Base Salary for one year, and provided further, that any
amounts actually paid to Executive pursuant to any disability insurance or other
similar program which the Company has provided or may provide on behalf of its
employees shall reduce the compensation to be paid to Executive pursuant to this
paragraph. In addition, Executive shall be entitled to receive (i) any other
amounts earned, accrued or owing but not yet paid under Section 1 above and (ii)
any other benefits, in accordance with the terms of any applicable plans and
programs of the Company including the health coverage described in Section 5.4.
Otherwise, the Company shall have no further liability or obligation to
Executive for compensation under this Agreement. Executive agrees, in the event
of a dispute under this Section 5. 1, to submit to a physical examination by a
licensed physician selected by the Board.

     5.2. Death. The Employment Term shall terminate in the event of Executive's
          -----
death. In such event, the Company shall pay to Executive's executors legal
representatives or administrators, as applicable, an amount equal to Executive's
Base Salary, on a monthly basis, at the rate in effect at the time of
Executive's death for a period of one (1) year from the date of Executive's
death. In addition, (i) Executive's estate shall be entitled to receive any
other amounts earned, accrued or owing but not yet paid under Section 1 above
and (ii) any other benefits, in accordance with the terms of any applicable
plans and programs of the Company, and Executive's spouse shall be entitled to
the health coverage described in Section 5.4 until she attains age 65 or
eligibility for Medicare, if later. Otherwise, the Company shall have no further
liability or obligation under this Agreement to his executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him.

     5.3. Cause. The Company may terminate the Employment Term, at any time, for
          -----
"cause" upon 30 days' written notice, in which event all payments under this
Agreement shall cease, except for Base Salary to the extent already accrued, and
any other vested benefits to which Executive is entitled by applicable law, in
accordance with the terms of any applicable plans and programs of the Company.
For purposes of this Agreement, termination for cause shall include termination
because of Executive's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement. For purposes of this
Agreement, an act or omission on the part of Executive shall be deemed "willful"
only if it was not due primarily to an error in judgment or negligence and was
done by Executive not in good faith and without reasonable belief that the act
or omission was in the best interest of the Company.

     5.4. Termination Without Cause. The Company may remove Executive at any
          -------------------------
time without cause from the position in which he is employed hereunder;
provided, however, that, in the event that such notice is given, Executive shall
be under no obligation to render any additional services to the Company and
subject to the provisions of Sections 2 and 3, shall be allowed to seek other
employment. Upon any such removal, Executive shall be entitled to receive a
single lump sum payment within 30 days equal to the remaining Base Salary and
bonus due under this Agreement, as if the Employment Term ended on October 16,
2005. No other payments or benefits shall be due under this Agreement to
Executive, but Executive shall be entitled to any other vested benefits in
accordance with the terms of any applicable plans and programs of the Company.
In addition, Executive and his spouse and dependents shall be eligible, at the
Company's expense for health coverage under the Company's medical plan, as in
effect from time to time, until Executive and his spouse, as applicable, attain
age 65 or eligibility for Medicare, if later; provided, however, that in the
event continued coverage for Executive and his spouse and dependents under the
health plan
<PAGE>

would result in an adverse tax consequence to the Company or other executives of
the Company, the Company shall permit Executive to purchase comparable coverage
under such plan. In that event, the Company shall annually also provide
Executive (or his spouse in the event surviving at the Executive's death), until
the health coverage ceases, with an annual bonus (payable on or before January
31 of each year during which health coverage is provided) equal to the amount of
premium that would be required under such plan for Executive to purchase such
coverage for himself, his spouse and dependents, if any, and a tax equivalency
payment (assuming Executive is in the maximum Federal, state and local income
tax brackets) such that Executive receives enough funds on an after tax basis to
be able to pay such premiums.

     5.5 Required Provisions. If Executive is suspended from office and/or
         -------------------
temporarily prohibited from participating in the conduct of the Bank's affairs
by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, the Bank'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, the Bank may in its discretion (i) pay Executive all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.

     If Executive is removed and/or permanently prohibited from participating in
the conduct of the Bank's affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) and (g)(1)),
as amended by the Financial Institutions Reform, Recovery and Enforcement Act of
1989, all obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected. In the case of termination or removal of the Executive by an
order issued under section 8(e)(4) of the Federal Deposit Insurance Act (12
U.S.C. 1818(e)(4)), as amended by the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, the Company shall, if it deems the reinstatement of
the Executive to his former position to be in the best interest of the Company,
use its best efforts to appeal and overturn such order.

     If the Bank is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act as amended by the Financial Institutions Reform, Recovery
and Enforcement Act of 1989), all obligations under this Agreement shall
terminated as of the date of default, but this paragraph shall not affect any
vested rights of the contracting parties.

     All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank:

     (1) by the Office of Thrift Supervision ("OTS"), at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in section 13(c) (12
U.S.C. '1823(c)) of the Federal Deposit Insurance Act; or

     (2) by the OTS, at the time the OTS approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined
by the OTS to be in an unsafe or unsound condition.

     Any payments made to Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and
any regulations promulgated thereunder.

     5.6. Voluntary Termination. Executive may voluntarily terminate the
          ---------------------
Employment Term upon 60 days' prior written notice for any reason. In such
event, no further payments shall be due under this Agreement except that
Executive shall be entitled to any vested benefits due in accordance with the
terms of any applicable plan and programs of the Company. A Voluntary
Termination under this Section 5.6 shall not be deemed a breach of this
Agreement.

     6. Payments Upon a Change in Control.
        ---------------------------------
<PAGE>

     6.1. Definitions. For all purposes of this Section 6, the following terms
          -----------
shall have the meanings specified in this Section 6.1 unless the context
otherwise clearly requires:

     (a) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

     (b) "Base Compensation" shall mean the total cash remuneration received by
Executive in all capacities with the Company, and its Affiliates, including
current annualized base salary, bonuses and all short-term annual incentives at
the target level, and reported (or as would be reported) for Federal income tax
purposes on Form W-2, together with any and all salary deferrals under any of
the Company's benefit plans or programs, for the most recent full calendar year
immediately preceding the calendar year in which occurs a Change of Control, or
the calendar year in which occurs a Change of Control, whichever is higher.

     "Beneficial Owner" shall have the meaning ascribed to such term in Section
13(d)(3) of the Exchange Act.

     (d) "Change of Control" shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the Effective Date, pursuant to Section 13 or 15(d) of the
Exchange Act; or (ii) results in a change in control of the Bank or the Company
within the meaning of the Home Owners Loan Act, as amended ("HOLA"), and
applicable rules and regulations promulgated thereunder, as in effect on the
Effective Date, or (iii) without limitation such a Change of Control shall be
deemed to have occurred at such time as (a) any Person is or becomes the
Beneficial Owner, directly or indirectly, of 20% or more of the Bank's or the
Company's outstanding securities except for any securities of the Bank purchased
by the Company in connection with the conversion of the Company to the stock
form and any securities purchased by the Bank's employee stock ownership plan
and trust; or (b) individuals who constitute the Board on the Effective Date
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
Effective Date whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by the same Nominating
Committee serving under the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all of the assets of the
Bank or the Company or similar transaction occurs in which the Bank or the
Company is not the resulting entity; or (d) a proxy statement shall be
distributed soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company or Bank or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Company; or (e) a tender offer is made and
completed for 20% or more of the voting securities of the Bank or Company then
outstanding.

     (e) "Person" shall have the meaning ascribed to such term in Section 13(d)
and 14(d) of the Exchange Act.

     (f) "Termination Date" shall mean the date of receipt of the Notice of
Termination described in Section 6.2 or any later date specified therein, as the
case may be.

     (g) "Termination of Employment" shall mean the termination of Executive's
actual employment relationship with the Company.

     (h) "Termination following a Change of Control" shall mean a Termination of
Employment within two years after a Change of Control either:
<PAGE>

     (A) initiated by the Company for any reason other than (a) Executive's
continuous illness, injury or incapacity for a period of twelve consecutive
months or (b) for cause, as defined in Section 5.3 hereof; or

     (B) initiated by Executive upon one or more of the following occurrences:

          (1)  any failure of the Company to comply with and satisfy any of the
               material terms of this Agreement;

          (2)  any change resulting in a reduction by the Company of the
               authority, duties or responsibilities of Executive under this
               Agreement;

          (3)  any reduction by the Company of Executive's compensation level or
               removal from the position of Co-Chairman or Vice-Chairman (in
               accordance with Section 1.2 hereof), except in connection with
               promotions to higher office;

the requirement that Executive undertake business travel (or commuting in excess
of fifty miles each way) to an extent substantially greater than is reasonable
and customary for the position Executive holds; or

after six months following a Change in Control, if Executive determines, in his
sole discretion, that circumstances have so changed with respect to the Company
that he no longer wishes to continue his employment.

     6.2. Notice of Termination. Any Termination following a Change of Control
          ---------------------
shall be communicated by a Notice of Termination to the other party hereto given
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, and (ii) if the Termination
Date is other than the date of receipt of such notice, specifies the Termination
Date (which date shall not be more than 15 days after the giving of such
notice).

     6.3. Severance Compensation With Termination. Subject to the provisions of
          ---------------------------------------
Section 6.6, in the event of Executive's Termination following a Change of
Control or in the event that Executive is terminated under Section 5.4 within
the six-month period immediately preceding a Change of Control (in which case
any payments made pursuant to Section 5.4 shall reduce the amount due under this
Section), the Company shall pay to Executive, within 15 days after the
Termination Date (or as soon as possible thereafter in the event that the
procedures set forth in Section 6.6 hereof cannot be completed within 15 days),
an amount in cash equal to 2.99 times Executive's Base Compensation.

     6.4. Other Payments: Stock Options and Stock. The payment due under Section
          ---------------------------------------
6.3 hereof shall be in addition to and not in lieu of any payments or benefits
due to Executive under any other plan, policy or program of the Company, all of
which shall be paid within 15 days after the Change of Control (or as soon as
possible thereafter in the event that the procedures set forth in Section 6.6
cannot be completed within 15 days), except that no payments shall be due to
Executive under the Company's then severance pay plan for employees, if any, and
all options to purchase shares of stock of the Company and all restrictions on
shares of stock of the Company previously granted to Executive shall become
fully vested and not subject to any further conditions and such options shall be
exercisable as provided in Section 1.8, provided, however, that vesting and
exercisability shall be subject to applicable regulatory requirements.

     6.5. Enforcement.
          -----------

     (a) In the event that the Company shall fail or refuse to make payment of
any amounts due Executive under Sections 6.3 and 6.4 within the respective time
periods provided therein, the Company shall pay to Executive, in addition to the
payment of any other sums provided in this Agreement, interest, compounded
monthly, on any amount remaining unpaid from the date payment is required under
Section 6.3 and 6.4, as appropriate, until paid to Executive,
<PAGE>

at the rate from time to time specified in The Wall Street Journal as the "prime
rate" plus 2%, each change in such rate to take effect on the effective date of
the change in such prime rate.

     (b) It is the intent of the parties that Executive not be required to incur
any expenses associated with the enforcement of his rights under this Section 6
by arbitration, litigation or other legal action because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
Executive hereunder. Accordingly, the Company shall pay Executive on demand the
amount necessary to reimburse Executive in full for all expenses (including all
attorneys' fees and legal expenses) incurred by Executive in enforcing any of
the obligations of the Company under this Agreement.

     6.6. Certain Reductions in Payments.
          ------------------------------

     (a) If the aggregate payments or benefits to be made or afforded to
Executive pursuant to this Agreement (and any other plans, programs and
arrangements maintained by the Company) (the "Termination Benefits") would
constitute "excess parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") or any successor thereto,
and if such Termination Benefits were reduced to an amount (the "NonTriggering
Amount"), the value of which is one dollar ($1.00) less than an amount equal to
three times Executive's "base amount," (determined in accordance with Code
Section 280G), then the Termination Benefits shall be reduced to the
Non-Triggering Amount. The allocation of the reduction required hereby among the
Termination Benefits shall be determined by Executive. Notwithstanding the
foregoing, if after application of the preceding sentences of this subsection
6.6(a), it is determined that the Executive received an excess parachute payment
despite the reduction in the Executive's Termination Benefits, the excess of
such Termination Benefits paid to the Executive over 2.99 times the Executive's
"base amount", as defined in Section 280G of the Code, shall be treated as a
loan to the Executive, and the Executive shall be required to repay such amount
to the Bank or the Company, or the successor of the Bank or the Company, within
ten years of the date of such determination, with interest at the prime rate
plus two-percent as set forth from time to time in The Wall Street Journal.

     (b) All determinations to be made under this Section 6 shall be made by the
Company's independent public accountant immediately prior to the Change of
Control (the "Accounting Firm"), which firm shall provide its determinations and
any supporting calculations both to the Company and Executive within 10 days of
the Termination Date. Any such determination by the Accounting Firm shall be
binding upon the Company and Executive. Within five days after the Accounting
Firm's determination, the Company shall pay (or cause to be paid) or distribute
(or cause to be distributed) to or for the benefit of Executive such amounts as
are then due to Executive under this Agreement.

     (c) In the event that upon any audit by the Internal Revenue Service, or by
a state or local taxing authority, of the Termination Payment, a change is
finally determined to be required in the amount of taxes paid by Executive,
appropriate adjustments shall be made under this Agreement such that the net
amount which is payable to Executive after taking into account the provisions of
Section 4999 of the Code shall reflect the intent of the parties as expressed in
subsection (a) above, in the manner determined by the Accounting Firm.

     (d) All of the fees and expenses of the Accounting Firm in performing the
determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.

     7. Survivorship. The respective rights and obligations of the parties
        ------------
hereunder shall survive any termination of Executive's employment to the extent
necessary to the intended preservation of such rights and obligations and shall
be binding on all successors and assigns to the Company which shall obtain the
affirmation of any successor or assign prior to the assignment.

     8. Mitigation. Executive shall not be required to mitigate the amount of
        ----------
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts
<PAGE>

due Executive under this Agreement on account of any remuneration attributable
to any subsequent employment that he may obtain.

     9. Arbitration; Expenses. In the event of any dispute under the provisions
        ---------------------
of this Agreement other than a dispute in which the primary relief sought is an
equitable remedy such as an injunction, the parties shall be required to have
the dispute, controversy or claim settled by arbitration in Harrisburg,
Pennsylvania in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be final,
binding and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction. This
arbitration provision shall be specifically enforceable. The arbitrators shall
have no authority to modify any provision of this Agreement or to award a remedy
for a dispute involving this Agreement other than a benefit specifically
provided under or by virtue of the Agreement. If Executive prevails on any
material issue which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration Association
and the arbitrators and any expenses relating to the conduct of the arbitration
(including reasonable attorneys' fees and expenses). Otherwise, each party shall
be responsible for his or its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall share
the fees of the American Arbitration Association.

     10. Notices. All notices and other communications required or permitted
         -------
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when mailed by registered or certified
mail, as follows (provided that notice of change of address shall be deemed
given only when received):

     If to the Company, to:

                 Waypoint Financial Corp.
                 235 N. Second Street
                 Harrisburg, PA 17101
                 Attention: Chairman, Compensation Committee
                 Fax: (717) 231-2950

     With a required copy to:

                 Luse Lehman Gorman Pomerenk & Schick
                 5225 Wisconsin Avenue, NW, Ste 400
                 Washington, DC 20015
                 Attention:  Eric Luse, Esq.
                 Fax: (202) 362-2902

     If to Executive, to:

                 Robert W. Pullo
                 York Financial Corp.
                 101 South George St.
                 York, PA 17401
                 Fax:  (717) 699-2929

     With a required copy to:

                 John F. Breyer, Jr.
<PAGE>

                 Breyer & Associates PC
                 1100 New York Ave., N.W.
                 Suite 700 East
                 Washington, D.C. 20005
                 Fax: (202) 737-7979


or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.

     11. Contents of Agreements Amendment and Assignment.
         -----------------------------------------------

     (a) This Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.

     (b) All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive
hereunder are of a personal nature and shall not be assignable or delegatable in
whole or in part by Executive. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the extent
the Company would be required to perform if no such succession had taken place.

     12. Severability. If any provision of this Agreement or application thereof
         ------------
to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.

     13. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
         ------------------------------
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by such party from time to time and
as often as may be deemed expedient or necessary by such party in its sole
discretion.

     14. Beneficiaries/References. Executive shall be entitled, to the extent
         ------------------------
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death by giving the Company written notice thereof. In the event of
Executive's death or a judicial determination of his incompetence, reference in
this Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.

     15. Miscellaneous. All section headings used in this Agreement are for
         -------------
convenience only. This Agreement may be executed in counterparts, each of which
is an original. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for any of the other counterparts.

     16. Withholding. The Company may withhold from any payments under this
         -----------
Agreement all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation.
<PAGE>

Executive shall bear all expense of, and be solely responsible for, all federal,
state and local taxes due with respect to any payment received hereunder.

     17. Governing Law. This Agreement shall be governed by and interpreted
         -------------
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.

     18. Corporate Authority. The Company hereby represents that it has taken
         -------------------
all required corporate action in accordance with the provisions of its bylaws
and articles of incorporation to enter into and to carry out the terms of this
Agreement.

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement effective as of October 17, 2000.


ATTEST                                              WAYPOINT FINANCIAL CORP.

                                          By:
------------------------------                  -------------------------------
                                          Name:
                                                -------------------------------
                                          Title:
                                                -------------------------------



WITNESS

------------------------------                  -------------------------------
                                                        Robert W. Pullo
<PAGE>

                                    EXHIBIT A


                              CONSULTING AGREEMENT

     THIS AGREEMENT (this "Agreement") is entered into effective as of
___________, 200__ (the "Effective Date") by and between Waypoint Financial
Corp., with its principal office located in Harrisburg, Pennsylvania (the
"Company") and Robert W. Pullo ("Consultant").

     WHEREAS, the management of the Company desires that they be able to call
upon the experience and knowledge of Consultant for consultation services and
advice; and

     WHEREAS, Consultant is willing to render such services and advice as a
consultant to the Company on the terms and subject to the conditions hereinafter
set forth in this Agreement.

     NOW THEREFORE, in consideration of the premises and mutual covenants herein
and for other good and valuable consideration, the parties agree as follows:

                                    ARTICLE I
                             CONSULTING ARRANGEMENT

     1. Term of Consulting Arrangement. Commencing on the Effective Date,
        ------------------------------
Consultant shall be retained by the Company to provide advice and consulting
services until __________, 2005 (the "Consulting Term"). At the expiration of
the Consulting Term, the provisions of this Article I shall cease to be of
further force and effect and the parties hereto shall have no further
obligations under Article I hereof. Notwithstanding

     2. Position and Responsibilities During the Consulting Term. During the
        --------------------------------------------------------
Consulting Term, Consultant agrees to serve as a consultant the Company and to
render such advice and services to the Company and at such times as are mutually
acceptable to Consultant and the Company. During this period, Consultant agrees
to serve as Vice Chairman of the Board of Directors of the Company. Consultant's
obligation to render such advice and services to the Company shall be subject to
his reasonable availability with due allowance for any other commitments that he
may have.

     3. Compensation During the Consulting Term. The Company shall pay
        ---------------------------------------
Consultant compensation for his consulting services during the Consulting Term.
Such amount shall be determined by averaging the five consecutive years of
compensation (for purposes of this calculation "compensation" includes salary
and bonus payments) containing the highest three (3) years of compensation
during the last six years that the Consultant was employed by the Company, and
prior thereto, by York Financial Corp. Such amount shall be payable in equal
installments of $___________ per month for thirty-six (36) months.

     4. Expenses and Other Facilities During the Consulting Term. Consultant
        --------------------------------------------------------
shall be reimbursed in accordance with the policies of the Company for necessary
and reasonable business expenses incurred by Consultant in connection with the
rendering of his advice and services to the Company during the Consulting Term.

     5. Status: Taxes
        -------------

        (a) Status of Consultant. During the Consulting Term, Consultant shall
            --------------------
not be an employee of the Company. Consultant shall have no authority to act as
an agent of the Company, except on authority specifically so delegated, and he
shall not represent to the contrary to any person. Consultant shall only
consult, render advice and perform such tasks as Consultant determines in good
faith are necessary to achieve the results specified by the Company. He shall
not direct the work of any employee of the Company, or make any management
decisions, or
<PAGE>

undertake to commit the Company to any course of action in relation to third
persons. Although the Company may specify the results to be achieved by
Consultant and may control and direct him in that regard, the Company shall not
control or direct Consultant as to the details or means by which such results
are accomplished.

     (b) Taxes. It is understood that the consulting fees paid to Consultant
         -----
hereunder in respect of services rendered during the Consulting Term shall
constitute revenue to Consultant. To the extent consistent with applicable law,
the Company will not withhold any amounts therefrom as federal income tax
withholding from wages or as employee contributions under the Federal Insurance
Contributions Act or any other state or federal laws. Consultant shall be solely
responsible for the withholding and/or payment of any federal, state or local
income or payroll taxes.

                                   ARTICLE II
                                    BENEFITS

     1.  Payments Under Other Agreements. Consultant's status as consultant to
         -------------------------------
the Company shall not entitle him to participate in any benefit plans or
programs maintained by the Company, nor shall it preclude Consultant from
receiving any benefits or payments to which he is entitled under any employee
plan, program, or agreement maintained or entered into by the Company as a
result of his employment by the Company prior to the execution of this
Agreement.

     2.  Continuation of Benefits. Notwithstanding any provision of Article II,
         ------------------------
paragraph 1 to the contrary, the Company shall provide Consultant with continued
medical coverage substantially identical to the coverage maintained by the
Company for Consultant prior to the Effective Date. Such coverage and payments
made pursuant thereto shall continue for a period of thirty-six (36) months
immediately following the Effective Date.

                                   ARTICLE III
                               GENERAL PROVISIONS

     1.  Other Employment. The Company acknowledges that this Agreement shall
         ----------------
not restrict Consultant in any manner from securing employment or otherwise
owning or managing a business of his choosing on a part-time basis, subject to
the requirements of Article III, paragraph 3 below.

     2.  Confidentiality. Consultant recognizes and acknowledges that by reason
         ---------------
of his relationship as consultant to the Company during and, if applicable,
after the expiration of the Consulting Agreement, he will have access to certain
confidential and proprietary information relating to the Company business, which
may include, but is not limited to, trade secrets, trade "know-how", customer
information, supplier information, cost and pricing information, marketing and
sales techniques, strategies and programs, computer programs and software and
financial information (collectively referred to as "Confidential Information").
Consultant acknowledges that such Confidential Information is a valuable and
unique asset of the Company and Consultant covenants that he will not, unless
expressly authorized in writing by the Board, at any time during the course of
this Agreement use any Confidential Information or divulge or disclose any
Confidential Information to any person, firm or corporation except in connection
with the performance of his duties for the Company and in a manner consistent
with the Company' policies regarding Confidential Information. Consultant also
covenants that at any time after the termination of this Agreement, he will not,
directly or indirectly, use any Confidential Information or divulge or disclose
any Confidential Information to any person, firm or corporation, unless such
information is in the public domain through no fault of Individual or except
when required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with apparent jurisdiction
to order him to divulge, disclose or make accessible such information in which
case Consultant will inform the Company in writing promptly of such required
disclosure, but in any event at least two business days prior to disclosure. All
written Confidential Information (including, without limitation, in any computer
or other electronic format) which comes into Consultant's possession during the
course of this Agreement shall remain the property of the
<PAGE>

Company. Except as required in the performance of Consultant's duties for the
Company, or unless expressly authorized in writing by the Board, Consultant
shall not remove any written Confidential Information from the Company premises,
except in connection with the performance of his duties for the Company and in a
manner consistent with the Company' policies regarding Confidential Information.
Upon termination of this Agreement, Consultant agrees immediately to return to
the Company all written Confidential Information in his possession.

     3. Non-Compete Obligation. Consultant agrees that during the term of this
        ----------------------
Agreement, Consultant shall not, directly or indirectly, engage (as principal,
partner, director, officer, agent, employee, or owner, with or without
compensation) in any line of business that the Company or the Bank is involved
(including, but not limited to, the providing of wholesale banking services,
consumer financial services, retail banking, trust and investment management
services, secured and unsecured loan and financing services, real estate
financing services, asset and investment management and fiduciary services, cash
management services, and consumer and commercial credit card services), within
sixty miles of Harrisburg, Pennsylvania.

     Consultant shall not entice or solicit, directly or indirectly, any
executives or key management personnel of the Company (or any subsidiary) to
work with Consultant or any entity with which Consultant has affiliated for any
period that Consultant provides consulting services to the Company. Consultant
shall also not entice or solicit, directly or indirectly, any client or customer
of the Company (or any subsidiary) for any competitor or in any competitive
activity for a period that Consultant provides consulting services to the
Company.

     The foregoing restriction shall not be construed to prohibit Consultant
from owning less than five percent (5%) of any class of securities of any
corporation in Maryland, Pennsylvania, or New Jersey which is engaged in any of
the foregoing businesses having a class of securities registered pursuant to the
Securities Exchange Act of 1934, provided that such ownership represents a
passive investment and that neither Consultant nor any group of persons
including Consultant in any way, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes part in its business, other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.

     4.   Miscellaneous.
          -------------

          (a) Governing Law. This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the Commonwealth of Pennsylvania.

          (b) Entire Agreement/Amendments. This Agreement contains the entire
              ---------------------------
understanding of the parties with respect to the retention of the Individual as
a consultant during the Consulting Term. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with respect
to the subject matter herein other than those expressly set forth herein. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.

          (c) No Waiver. The failure of a party to insist upon strict adherence
              ---------
to any term of this Agreement on any occasion shall not be considered a waiver
of such party's rights or deprive such party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.

          (d) Severability. In the event that any one or more of the provisions
              ------------
of this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected thereby.

          (e) Assignment. This Agreement shall not be assignable by the
              ----------
Consultant.

          (f) Binding Agreement. This Agreement shall inure to the benefit of
              -----------------
and be binding upon the parties.
<PAGE>

          (g) Notice. For the purpose of this Agreement, notices and all other
              ------
communications shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the execution page of this Agreement, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

          (h) Counterparts. This Agreement may be signed in counterparts, each
              ------------
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the day and year first above written.

                                            WAYPOINT FINANCIAL CORP.


By:
   -------------------------------
                                            Title:
                                            Address:



                                            ROBERT W. PULLO



                                               [signed]
                                            ---        -------------------------
                                            Address:
                                                    ----------------------------