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                                  EXHIBIT 10.11


                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made as of this 1st day of December, 2000, among
STERLING FINANCIAL CORPORATION ("Corporation"), a Pennsylvania business
corporation having a place of business at 101 North Pointe Boulevard, Lancaster,
Pennsylvania 17601, BANK OF LANCASTER, N.A., a national banking association
having a place of business at 101 North Pointe Boulevard, Lancaster,
Pennsylvania 17601 ("Bank"), and GREGORY S. LEFEVER ("Executive"), an individual
residing at 701 Rosemont Drive, Lititz, Pennsylvania 17543.

                                   WITNESSETH:

         WHEREAS, the Corporation is a registered bank holding company;

         WHEREAS, the Bank is a subsidiary of the Corporation;

         WHEREAS, Corporation and Bank desire to presently employ Executive to
serve in the capacity of Executive Vice President and Managing Director of Trust
and Investment for Corporation and Bank;

         WHEREAS, Corporation and Bank commit to create a separate affiliate
trust entity as expeditiously as possible; and

         WHEREAS, Corporation and Bank intend to employ Executive as President
and CEO of the affiliate trust entity once created; and

         WHEREAS, Executive desires to accept employment with Corporation and
Bank on the terms and conditions set forth herein.

                                   AGREEMENT:

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

1.       EMPLOYMENT. Corporation and Bank hereby employ Executive and Executive
         hereby accepts employment with Corporation and Bank, under the terms
         and conditions set forth in this Agreement. As consideration for this
         Agreement, Executive hereby agrees to release Corporation and Bank of
         any obligations, duties or responsibilities, and Executive agrees to
         relinquish any and all rights, including but not limited to any
         payments, compensation or sums of money he may otherwise be entitled,
         or he may have, under the Change in Control Agreement executed by
         Corporation, Bank and Executive on or about July 12, 1999.

2.       DUTIES OF EMPLOYEE. Executive shall perform and discharge well and
         faithfully such duties as an executive officer of Corporation and Bank
         as may be assigned to Executive from time to time by the Board of
         Directors of Corporation and Bank and the Chairman and President of the
         Corporation and Bank, so long as the assignment is consistent with the
         Executive's office and duties. Executive shall be employed as Executive
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         President and Managing Director of Trust and Investments for
         Corporation and Bank, and shall hold such other titles as may be given
         to him from time to time by the Board of Directors of Corporation and
         Bank. Executive shall devote his full time, attention and energies to
         the business of Corporation and Bank during the Employment Period (as
         defined in Section 3 of this Agreement); provided, however, that this
         Section 2 shall not be construed as preventing Executive from (a)
         engaging in activities incident or necessary to personal investments so
         long as such investment does not exceed 5% of the outstanding shares of
         any publicly held company, (b) acting as a member of the Board of
         Directors of any other corporation or as a member of the Board of
         Trustees of any other organization, with the prior approval of the
         Board of Directors of Corporation and Bank, or (c) being involved in
         any other activity with the prior approval of the Board of Directors of
         Corporation and Bank. The Executive shall not engage in any business or
         commercial activities, duties or pursuits which compete with the
         business or commercial activities of Corporation or Bank, nor may the
         Executive serve as a director or officer or in any other capacity in a
         company which competes with Corporation or Bank.

3.       TERM OF AGREEMENT.

         (a)      This Agreement shall be for a three (3) year period (the
                  "Employment Period") beginning on the date first mentioned
                  above, and if not previously terminated pursuant to the terms
                  of this Agreement, the Employment Period shall end three (3)
                  years later. The Employment Period shall be automatically
                  extended on the third anniversary date of the commencement of
                  the Employment Period (the "Renewal Date") for a period ending
                  one (1) year from the Renewal Date unless either party shall
                  give written notice of non-renewal to the other party at least
                  thirty (30) days prior to the Renewal Date, in which event
                  this Agreement shall terminate at the end of the Employment
                  Period. If this Agreement is renewed on the Renewal Date, it
                  will be automatically renewed on the first anniversary date of
                  the Renewal Date (the "Annual Renewal Date") and each
                  subsequent Annual Renewal Date for a period of one (1) year
                  unless either party gives written notice of non-renewal to the
                  other party at least thirty (30) days prior to an Annual
                  Renewal Date, in which case this Agreement shall terminate on
                  that Annual Renewal Date.

         (b)      Notwithstanding the provisions of Section 3(a) of this
                  Agreement, this Agreement shall terminate automatically for
                  Cause (as defined herein) upon written notice from the Board
                  of Directors of Corporation or Bank to Executive. As used in
                  this Agreement, "Cause" shall mean any of the following:

                  (i)      Executive's conviction of or plea of guilty or nolo
                           contendere to a felony, a crime of falsehood or a
                           crime involving moral turpitude, or the actual
                           incarceration of Executive for a period of forty-five
                           (45) consecutive days or more;


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                  (ii)     Executive's failure to follow the lawful instructions
                           of the Board of Directors of Corporation or Bank with
                           respect to its operations, after written notice from
                           Corporation or Bank and a failure to cure such
                           violation within thirty (30) days of said written
                           notice;

                  (iii)    Executive's failure to substantially perform
                           Executive's duties to Corporation or Bank, other than
                           a failure resulting from Executive's incapacity
                           because of physical or mental illness, as provided in
                           subsection (d) of this Section 3, after written
                           notice from Corporation or Bank and a failure to cure
                           such violation within thirty (30) days of said
                           written notice;

                  (iv)     Executive's intentional violation of the provisions
                           of this Agreement;

                  (v)      dishonesty or gross negligence of the Executive in
                           the performance of his duties;

                  (vi)     Executive's removal or prohibition from being an
                           institutional-affiliated party by a final order of an
                           appropriate federal banking agency pursuant to
                           Section 8(e) of the Federal Deposit Insurance Act or
                           by the Office of the Comptroller of the Currency
                           pursuant to national law;

                  (vii)    conduct on the part of the Executive as determined by
                           an affirmative vote of seventy percent (70%) of the
                           disinterested members of the Board of Directors of
                           Corporation and Bank which brings public discredit to
                           Corporation or Bank; or

                  (viii)   Executive's breach of fiduciary duty involving
                           personal profit.

                  (ix)     Executive's violation of any law, rule or regulation
                           governing banks or bank officers or any final cease
                           and desist order issued by a bank regulatory
                           authority;

                  (x)      Executive's unlawful discrimination, including
                           harassment, against Corporation's employees,
                           customers, business associates, contractors or
                           visitors;

                  (xi)     Executive's theft or abuse of Corporation's property
                           or the property of Corporation's customers,
                           employees, contractors, vendors or business
                           associates; or

                  (xii)    the direction or recommendation of a state or federal
                           bank regulatory authority to remove Executive from
                           his positions with Corporation or Bank as identified
                           herein.


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                  If this Agreement is terminated for Cause, all of Executive's
                  rights under this Agreement shall cease as of the effective
                  date of such termination and Corporation and Bank shall have
                  no further obligations to Executive.

         (c)      Notwithstanding the provisions of Section 3(a) of this
                  Agreement, this Agreement shall terminate automatically upon
                  Executive's voluntary termination of employment (other than in
                  accordance with Section 5 of this Agreement) for Good Reason.
                  The term "Good Reason" shall mean (i) the assignment of duties
                  and responsibilities to Executive inconsistent with his
                  position; (ii) a reassignment of Executive to a principal
                  office which is more than thirty (30) miles from the
                  Executive's principal office in Lancaster County; (iii) any
                  removal of the Executive from his position or any adverse
                  change in the terms and conditions of the Executive's
                  employment, except for any termination of the Executive's
                  employment under the provisions of Section 3(b) hereof; (iv)
                  any reduction in the Executive's Annual Base Salary as in
                  effect immediately prior to this Agreement or as the same may
                  be increased from time to time, except such reductions that
                  are the result of a national financial depression, or national
                  or bank emergency; or (v) any failure of Corporation and Bank
                  to provide the Executive with benefits at least as favorable
                  as those enjoyed by the Executive during the Employment Period
                  under any of the pension, life insurance, medical, health and
                  accident, disability or other employee plans of Corporation
                  and Bank, or the taking of any action that would materially
                  reduce any of such benefits, unless such reduction is part of
                  a reduction applicable to all employees.

                  If such termination occurs for Good Reason, then Corporation
                  or Bank shall pay Executive an amount equal to two times
                  Agreed Compensation, which amount shall be payable in equal
                  monthly installments and shall be subject to federal, state
                  and local tax withholdings. In addition, for the remainder of
                  the then existing Employment Period, or until Executive
                  secures substantially similar benefits through other
                  employment, whichever shall first occur, Executive shall
                  receive a continuation of all life, disability, medical
                  insurance and other normal health and welfare benefits in
                  effect with respect to Executive during the two (2) years
                  prior to his termination of employment, or, if Corporation and
                  Bank cannot provide such benefits because Executive is no
                  longer an employee, a dollar amount equal to the cost to
                  Executive of obtaining substantially similar benefits. In lieu
                  of continued pension, welfare and other benefits, Executive
                  may elect to receive a one-time lump sum cash payment equal to
                  25% of the payments to be received for termination of the
                  Agreement under this provision. Said lump sum shall be payable
                  within thirty (30) days following the date of termination and
                  shall be subject to federal, state and local tax withholdings.
                  Notwithstanding any other provisions of this Agreement or any
                  other agreement or plan of Corporation or Bank, in the event
                  the payments described herein, when added to all other amounts
                  or benefits provided to or on behalf of the Executive in
                  connection with his termination of employment, would result in
                  the imposition of an excise tax


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                  under Code Section 4999, such payments shall be retroactively
                  (if necessary) reduced to the extent necessary to avoid such
                  excise tax imposition. Upon written notice to Executive,
                  together with calculations of Corporation's independent
                  auditors, Executive shall remit to Corporation the amount of
                  the reduction plus such interest as may be necessary to avoid
                  the imposition of such excise tax. Notwithstanding the
                  foregoing or any other provision of this contract to the
                  contrary, if any portion of the amount herein payable to the
                  Executive is determined to be non-deductible pursuant to the
                  regulations promulgated under Section 280G of the Internal
                  Revenue Code of 1986, as amended (the "Code"), the Corporation
                  shall be required only to pay to Executive the amount
                  determined to be deductible under Section 280G.

                  At the option of the Executive, exercisable by the Executive
                  within ninety (90) days after the occurrence of the event
                  constituting "Good Reason," the Executive may resign from
                  employment under this Agreement by a notice in writing (the
                  "Notice of Termination") delivered to Corporation and Bank and
                  the provisions of this Section 3(c) hereof shall thereupon
                  apply.

         (d)      Notwithstanding any other provisions of Section 3 of this
                  Agreement, this Agreement shall terminate automatically upon
                  Executive's Disability and Executive's rights under this
                  Agreement shall cease as of the date of such termination;
                  provided, however, that Executive shall nevertheless be
                  entitled to receive any benefits that may be available under
                  any disability plan of Corporation and Bank, until the
                  earliest of (i) Executive's return to employment, (ii) his
                  attainment of age 65, or (iii) his death. In addition,
                  Executive shall receive for such period a continuation of all
                  life, disability, medical insurance and other normal health
                  and welfare benefits in effect with respect to Executive
                  during the two (2) years prior to his disability, or, if
                  Corporation and Bank cannot provide such benefits because
                  Executive is no longer an employee, a dollar amount equal to
                  the cost to Executive of obtaining such benefits (or
                  substantially similar benefits). For purposes of this
                  Agreement, the Executive shall have a Disability if, as a
                  result of physical or mental injury or impairment, Executive
                  is unable to perform all of the essential job functions of his
                  position on a full time basis with or without a reasonable
                  accommodation and without posing a direct threat to himself
                  and others, for a period of one hundred eighty (180)
                  consecutive days or more. The Executive shall have no duty to
                  mitigate any payment provided for in this Section 3(d) by
                  seeking other employment.

         (e)      Notwithstanding any other provisions of Section 3 of this
                  Agreement, this Agreement shall terminate automatically upon
                  Executive's death and Executive's rights under this Agreement
                  shall cease as of the date of such termination.

         (f)      Executive agrees that in the event his employment under this
                  Agreement is terminated, Executive shall resign as a director
                  of Corporation and Bank, or any affiliate or subsidiary
                  thereof, if he is then serving as a director of any of such


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                  entities.

         (g)      In the event that this Agreement is not renewed by Corporation
                  and Bank in accordance with Subsection (a) of Section 3 of
                  this Agreement, then Corporation and Bank shall pay Executive,
                  within thirty (30) days following termination of the Agreement
                  and upon the receipt of a mutually agreed release, an amount
                  equal to 1.0 times the Executive's Agreed Compensation.

         (h)      The term "Agreed Compensation" shall mean an amount equal to
                  the average annual compensation (including, without
                  limitation, Annual Base Salary and bonuses) payable by
                  Corporation and Bank to Executive and includable by Executive
                  in gross income for the most recent five (5) taxable years, or
                  such shorter period as Executive shall have been employed by
                  Corporation and Bank, ending, if a Change in Control (as
                  defined in subsection (b) of Section 5 of this Agreement)
                  occurs, before the date on which the Change of Control
                  occurred.

1.       EMPLOYMENT PERIOD COMPENSATION.

         (a)      Annual Base Salary. For services performed by Executive under
                  this Agreement, Corporation or Bank shall initially pay
                  Executive an Annual Base Salary at the rate of One Hundred
                  Thirteen Thousand Dollars ($113,000) per year (subject to
                  applicable withholdings and deductions) payable at the same
                  times as salaries are payable to other executive employees of
                  Corporation or Bank. After Executive's review in March 2001,
                  Corporation or Bank shall increase his Annual Base Salary to
                  One Hundred Twenty-Five Thousand Dollars ($125,000) per year.
                  Following said increase, Corporation or Bank may, from time to
                  time, increase Executive's Annual Base Salary. Any and all
                  such increases shall be deemed to constitute amendments to
                  this Section 4(a) to reflect the increased amounts, effective
                  as of the date established for such increases by the Board of
                  Directors of Corporation or Bank or any committee of such
                  Board in the resolutions authorizing such increases.

         (b)      Bonus. For services performed by Executive under this
                  Agreement, Corporation or Bank may, from time to time, pay a
                  bonus or bonuses to Executive as Corporation or Bank, in its
                  sole discretion, deems appropriate. The payment of any such
                  bonuses shall not reduce or otherwise affect any other
                  obligation of Corporation or Bank to Executive provided for in
                  this Agreement. Executive is entitled to participate in the
                  bonus programs available to senior executives.

         (c)      Paid Time Off and/or Vacations. During the term of this
                  Agreement, Executive shall be entitled to paid time off and/or
                  vacation in accordance with the policies as established from
                  time to time by the Boards of Directors of Corporation and
                  Bank for the Corporation's and Bank's senior management.
                  However, Executive shall not be entitled to receive any
                  additional compensation from Corporation and Bank


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                  for failure to take paid time off and/or vacation, nor shall
                  Executive be able to accumulate unused paid time off and/or
                  vacation time from one year to the next, except to the extent
                  authorized by the Boards of Directors of Corporation and Bank.

         (d)      Employee Benefit Plans. During the term of this Agreement,
                  Executive shall be entitled to participate in or receive the
                  benefits of any employee benefit plan currently in effect at
                  Corporation and Bank, subject to the terms of said plan, until
                  such time that the Boards of Directors of Corporation or Bank
                  authorize a change in such benefits. Nothing paid to Executive
                  under any plan or arrangement presently in effect or made
                  available in the future shall be deemed to be in lieu of the
                  salary payable to Executive pursuant to Section 4(a) hereof.

         (e)      Business Expenses. During the term of this Agreement,
                  Executive shall be entitled to receive prompt reimbursement
                  for all reasonable expenses incurred by him, which are
                  properly accounted for, in accordance with the policies and
                  procedures established by the Boards of Directors of
                  Corporation or Bank for their executive officers. Corporation
                  or Bank shall reimburse Executive for any and all dues and
                  reasonable related business expenses associated with the
                  Executive's membership in Lancaster Country Club.

         (f)      Stock Options. Executive shall be entitled to participate in
                  the Corporation's stock option plans consistent with his
                  position as a member of Corporation's and Bank's senior
                  management. Upon a Change in Control (as defined in Section
                  5(b) of this Agreement), all options theretofore granted to
                  the Executive by the Corporation and not previously
                  exercisable shall become fully exercisable to the same extent
                  and in the same manner as if they had become exercisable by
                  passage of time or by virtue of the Corporation achieving
                  certain performance objectives in accordance with the relevant
                  provisions of any plan and any agreement.

2.       TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.

         (a)      If a Change in Control (as defined in Section 5(b) of this
                  Agreement) shall occur and if subsequently during the term of
                  this Agreement, there shall be:

                  (i)      any involuntary termination of the Executive (other
                           than for the reasons set forth in Sections 3(b) or
                           (3d) of this Agreement); or

                  (ii)     any reduction in Executive's title, responsibility
                           (including reporting responsibility) or authority as
                           in effect immediately prior to the Change in Control
                           (as defined in Section 5(b) of this Agreement);
                           provided, however, that Executive may be assigned to
                           a position with a reasonably similar title,
                           responsibility and authority if Executive's actual or
                           targeted compensation in such new position is not
                           less than Executive's actual and


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                           targeted compensation immediately prior to the Change
                           in Control (as defined in Section 5(b) of this
                           Agreement); or

                  (iii)    the assignment to Executive of duties inconsistent
                           with his position immediately prior to the Change in
                           Control (as defined in Section 5(b) of this
                           Agreement), except for an assignment of duties
                           consistent with a position permitted in Section
                           5(a)(ii) of this Agreement; or

                  (iv)     a reduction in Executive's Annual Base Salary in
                           effect immediately prior to the Change in Control (as
                           defined in Section 5(b) of this Agreement); or

                  (v)      reassignment of Executive to a principal office which
                           is more than 30 miles from Executive's principal
                           office in Lancaster, Pennsylvania; or

                  (vi)     the failure to provide Executive with welfare,
                           pension, incentive compensation, fringe and other
                           benefits to which he was entitled immediately prior
                           to the Change in Control (as defined in Section 5(b)
                           of this Agreement), unless such failure occurs by
                           reason of a reduction or change in such benefits for
                           employees generally or similarly situated executive
                           employees of the corporation which is the acquiring,
                           resulting or successor corporation in the Change in
                           Control (or an affiliate thereof); or

                  (vii)    any material breach of this Agreement by the
                           acquiring, resulting or successor corporation in the
                           Change in Control which is not cured within thirty
                           (30) days after receipt of written notice of such
                           breach from Executive,

                  then, at the option of Executive, exercisable by Executive
                  within ninety (90) days of the occurrence of any of the
                  foregoing events, Executive may resign from employment with
                  Corporation and Bank by delivering a notice in writing
                  ("Notice of Termination") to Corporation and Bank, whereupon
                  Executive will become entitled to the payments described in
                  Section 6. In the case of a termination described in Section
                  5(a)(i) of this Agreement, Executive shall confirm his
                  involuntary termination, in writing, within ninety (90) days
                  of the date of such termination, and such confirmation will be
                  deemed a Notice of Termination.

         (b)      As used in this Agreement, "Change in Control" shall mean the
                  occurrence of any of the following:

                  (i)      any "person" (as such term is used in Sections 13(d)
                           and 14(d)(2) of the Securities and Exchange Act of
                           1934 (the "Exchange Act")), other than the Employers,
                           a subsidiary of the Employers, an employee benefit
                           plan of the Employers or a subsidiary of the
                           Employers (including a related trust), becomes the
                           beneficial owner (as determined pursuant to Rule
                           13d-3 under


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                           the Exchange Act), directly or indirectly, of
                           securities of the Employers representing more than
                           20% of the combined voting power of the Employers'
                           then outstanding securities;

                  (ii)     the occurrence of, or execution of an agreement
                           providing for, a sale of all or substantially all of
                           the assets of the Employers to an entity which is not
                           a direct or indirect subsidiary of Employers;

                  (iii)    the occurrence of, or execution of an agreement
                           providing for, a reorganization, merger,
                           consolidation or similar transaction involving the
                           Employers, unless (A) the shareholders of the
                           Corporation immediately prior to the consummation of
                           any such transaction will initially own securities
                           representing a majority of the voting power of the
                           surviving or resulting corporation, and (B) the
                           directors of the Employers immediately prior to the
                           consummation of such transaction will initially
                           represent a majority of the directors of the
                           surviving or resulting corporation; or

                  (iv)     any other event which is at any time irrevocably
                           designated as a "Change in Control" for purposes of
                           this Agreement by resolution adopted by a majority of
                           the then non-employee directors of the Employers.


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3.       RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN
         CONTROL.

         (a)      In the event that Executive validly and timely delivers a
                  Notice of Termination (as defined in Section 5(a) of this
                  Agreement) to Corporation and Bank, Executive shall be
                  entitled to receive the following compensation and benefits:

                  If, at the time of termination of Executive's employment, a
                  Change in Control (as defined in Section 5(b) of this
                  Agreement) has also occurred, Corporation and Bank shall pay
                  Executive an amount equal to two (2) and one-half times the
                  Agreed Compensation (as defined in Section 3(h) of this
                  Agreement) in either (i) thirty (30) equal monthly
                  installments or (ii) a lump sum equal to the present value of
                  the amounts payable under this subsection, said payments
                  commencing within thirty (30) days after Executive's
                  termination of employment. For purposes of the preceding
                  sentence, present value will be determined by using the
                  short-term applicable federal rate under Section 1274 of the
                  Internal Revenue Code of 1986, as amended (the "Code") in
                  effect on the date of termination of employment. In lieu of
                  continued pension, welfare and other benefits, a one-time lump
                  sum cash payment equal to 25% of the payments to be received
                  for termination of the Agreement under this provision shall be
                  paid to Executive within thirty (30) days following the date
                  of termination of Executive's employment. Notwithstanding any
                  other provision of this Agreement or any other agreement or
                  plan of Corporation or Bank, in the event the payment
                  described herein, when added to all other amounts or benefits
                  provided to or on behalf of the Executive in connection with
                  his termination of employment, would result in the imposition
                  of an excise tax under Code Section 4999, such payments shall
                  be retroactively (if necessary) reduced to the extent
                  necessary to avoid such excise tax imposition. Upon written
                  notice to Executive, together with calculations of
                  Corporation's independent auditors, Executive shall remit to
                  Corporation the amount of the reduction plus such interest as
                  may be necessary to avoid the imposition of such excise tax.
                  Notwithstanding the foregoing or any other provision of this
                  contract to the contrary, if any portion of the amount herein
                  payable to the Executive is determined to be non-deductible
                  pursuant to the regulations promulgated under Section 280G of
                  the Code, the Corporation shall be required only to pay to
                  Executive the amount determined to be deductible under Section
                  280G.

         (b)      Executive shall not be required to mitigate the amount of any
                  payment provided for in this Section 6 by seeking other
                  employment or otherwise. Unless otherwise agreed to in
                  writing, the amount of payment or the benefit provided for in
                  this Section 6 shall not be reduced by any compensation earned
                  by Executive as the result of employment by another employer
                  or by reason of Executive's receipt of or right to receive any
                  retirement or other benefits after the date of termination of
                  employment or otherwise.


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4.       RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT ABSENT CHANGE IN CONTROL.

         (a)      In the event that Executive's employment is involuntarily
                  terminated by Corporation and/or Bank without Cause and no
                  Change in Control (as defined in Section 5(b) of this
                  Agreement) shall have occurred at the date of such
                  termination, Corporation and Bank shall pay Executive an
                  amount equal to 2.0 times the Agreed Compensation (as defined
                  in subsection (h) of Section 3 of this Agreement) or the
                  remaining balance of the Agreed Compensation otherwise due to
                  the Executive for the remainder of the then existing
                  Employment Period, whichever is greater, and shall be payable
                  in equal monthly installments and shall be subject to federal,
                  state and local tax withholdings. In addition, for the
                  remainder of the then existing Employment Period or until
                  Executive secures substantially similar benefits through other
                  employment, whichever shall first occur, Executive shall
                  receive a continuation of all life, disability, medical
                  insurance and other normal health and welfare benefits in
                  effect with respect to Executive during the two (2) years
                  prior to his termination of employment, or, if Corporation and
                  Bank cannot provide such benefits because Executive is no
                  longer an employee, a dollar amount equal to the cost to
                  Executive of obtaining such benefits (or substantially similar
                  benefits). In lieu of continued pension, welfare and other
                  benefits, Executive may elect to receive a lump sum cash
                  payment equal to 25% of the payments to be received for
                  termination of the Agreement under this provision.
                  Notwithstanding any other provisions in this Agreement or any
                  other agreements or plans of Corporation or Bank, in the event
                  the payment described herein, when added to all other amounts
                  or benefits provided to or on behalf of the Executive in
                  connection with his termination of employment, would result in
                  the imposition of an excise tax under Code Section 4999, such
                  payments shall be retroactively (if necessary) reduced to the
                  extent necessary to avoid such excise tax imposition. Upon
                  written notice to Executive, together with calculations of
                  Corporation's independent auditors, Executive shall remit to
                  Corporation the amount of the reduction plus such interest as
                  may be necessary to avoid the imposition of such excise tax.
                  Notwithstanding the foregoing or any other provision of this
                  contract to the contrary, if any portion of the amount herein
                  payable to the Executive is determined to be non-deductible
                  pursuant to the regulations promulgated under Section 280G of
                  the Code, the Corporation shall be required only to pay to
                  Executive the amount determined to be deductible under Section
                  280G.

         (b)      Executive shall not be required to mitigate the amount of any
                  payment provided for in this Section 7 by seeking other
                  employment or otherwise. Unless otherwise agreed to in
                  writing, the amount of payment or the benefit provided for in
                  this Section 7 shall not be reduced by any compensation earned
                  by Executive as the result of employment by another employer
                  or by reason of Executive's receipt of or right to receive any
                  retirement or other benefits after the date of termination of
                  employment or otherwise.


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5.       COVENANT NOT TO COMPETE.

         (a)      Executive hereby acknowledges and recognizes the highly
                  competitive nature of the business of Corporation and Bank and
                  accordingly agrees that, during and for the applicable period
                  set forth in Section 8(c) hereof, Executive shall not, except
                  as otherwise permitted in writing by the Corporation and the
                  Bank:

                  (i)      be engaged, directly or indirectly, either for his
                           own account or as agent, consultant, employee,
                           partner, officer, director, proprietor, investor
                           (except as an investor owning less than 5% of the
                           stock of a publicly owned company) or otherwise of
                           any person, firm, corporation or enterprise engaged
                           in (1) the banking (including bank holding company)
                           or financial services industry, or (2) any other
                           activity in which Corporation or Bank or any of their
                           subsidiaries are engaged during the Employment
                           Period, and remain so engaged at the end of the
                           Employment Period, in any county in which, at any
                           time during the Employment Period or at the date of
                           termination of the Executive's employment,
                           Corporation or Bank or any of their subsidiaries
                           operated their businesses, or any county contiguous
                           to any county in which Corporation or Bank or any of
                           their subsidiaries operated their businesses (the
                           "Non-Competition Area"); or

                  (ii)     provide financial or other assistance to any person,
                           firm, corporation, or enterprise engaged in (1) the
                           banking (including bank holding company) or financial
                           services industry, or (2) any other activity in which
                           Corporation or Bank or any of their subsidiaries are
                           engaged during the Employment Period, in the
                           Non-Competition Area; or

                  (iii)    for his own account or as agent, consultant,
                           employee, partner, officer, director, proprietor,
                           investor (except as an investor owning less than 5%
                           of the stock of a publicly owned company) or
                           otherwise of any person, firm, corporation or
                           enterprise engaged in (1) the banking (including bank
                           holding company) or financial services industry, or
                           (2) any other activity in which Corporation or Bank
                           or any of their subsidiaries are engaged during the
                           Employment Period, and remain so engaged at the end
                           of the Employment Period, in the Non-Competition
                           Area, directly or indirectly contact, solicit or
                           induce any person, corporation or other entity who or
                           which is a customer or referral source of
                           Corporation, Bank or any of their subsidiaries during
                           the term of Executive's employment or at the date of
                           termination of Executive's employment; or

                  (iv)     directly or indirectly solicit, induce or encourage
                           any employee of Corporation, Bank or any of their
                           subsidiaries, who is employed during the term of
                           Executive's employment or at the date of termination
                           of Executive's employment, to leave the employ of
                           Corporation or Bank or to seek,


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                           obtain or accept employment with any person or entity
                           other than Corporation or Bank.

         (b)      It is expressly understood and agreed that, although Executive
                  and Corporation and Bank consider the restrictions contained
                  in Section 8(a) hereof reasonable for the purpose of
                  preserving for Corporation and Bank and their subsidiaries
                  their good will and other proprietary rights, if a final
                  judicial determination is made by a court having jurisdiction
                  that the time or territory or any other restriction contained
                  in Section 8(a) hereof is an unreasonable or otherwise
                  unenforceable restriction against Executive, the provisions of
                  Section 8(a) hereof shall not be rendered void but shall be
                  deemed amended to apply as to such maximum time and territory
                  and to such other extent as such court may judicially
                  determine or indicate to be reasonable.

         (c)      The provisions of this Section 8 shall be applicable
                  commencing on the date of this Agreement and ending on one of
                  the following dates, as applicable:

                  (i)      if Executive's employment terminates in accordance
                           with the provisions of Section 3(c) of this Agreement
                           (relating to termination by Executive for Good
                           Reason), the second anniversary date of the effective
                           date of termination of employment; or

                  (ii)     if Executive's employment terminates in accordance
                           with the provisions of Section 3(b) of this Agreement
                           (relating to termination for Cause), the second
                           anniversary date of the effective date of termination
                           of employment; or

                  (iii)    if the Executive voluntarily terminates his
                           employment in accordance with the provisions of
                           Section 5 hereof (relating to termination following
                           Change in Control), the second anniversary date of
                           the effective date of termination of employment; or

                  (iv)     if the Executive's employment is involuntarily
                           terminated in accordance with the provisions of
                           Section 7 hereof, the second anniversary date of the
                           effective date of termination of employment;

                  (v)      if the Agreement is not renewed by Corporation, Bank
                           or Executive in accordance with the provisions of
                           Section 3(a) and other than for Cause, the second
                           anniversary date of the effective date of termination
                           of employment.

6.       UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder,
         or at any later time, Executive shall not, without the written consent
         of the Boards of Directors of Corporation and Bank or a person
         authorized thereby, knowingly disclose to any person, other than an
         employee of Corporation or Bank or a person to whom disclosure is
         reasonably necessary or appropriate in connection with the performance
         by Executive of


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         his duties as an executive of Corporation and Bank, any material
         confidential information obtained by him while in the employ of
         Corporation and Bank with respect to any of Corporation and Bank's
         services, products, improvements, formulas, designs or styles,
         processes, customers, methods of business or any business practices the
         disclosure of which could be or will be damaging to Corporation or
         Bank; provided, however, that confidential information shall not
         include any information known generally to the public (other than as a
         result of unauthorized disclosure by the Executive or any person with
         the assistance, consent or direction of the Executive) or any
         information of a type not otherwise considered confidential by persons
         engaged in the same business or a business similar to that conducted by
         Corporation and Bank or any information that must be disclosed as
         required by law.

10.      LIABILITY INSURANCE. Corporation and Bank shall use their best efforts
         to obtain insurance coverage for the Executive under an insurance
         policy covering officers and directors of Corporation and Bank against
         lawsuits, arbitrations or other legal or regulatory proceedings;
         however, nothing herein shall be construed to require Corporation
         and/or Bank to obtain such insurance, if the Board of Directors of the
         Corporation and/or Bank determine that such coverage cannot be obtained
         at a reasonable price.

11.      NOTICES. For the purposes of this Agreement, notices and all other
         communications provided for in this Agreement shall be in writing and
         shall be deemed to have been duly given when delivered or mailed by
         United States certified mail, return receipt requested, postage
         prepaid, addressed as follows:

             If to the Executive:     Gregory S. Lefever
                                      701 Rosemont Drive
                                      Lititz, PA  17543

             If to the Corporation:   John E. Stefan, Chairman and President
                                      STERLING FINANCIAL CORPORATION
                                      101 North Pointe Boulevard
                                      Lancaster, Pennsylvania 17601

             If to the Bank:          John E. Stefan, Chairman and President
                                      BANK OF LANCASTER, N.A.
                                      101 North Pointe Boulevard
                                      Lancaster, Pennsylvania 17601

12.      WAIVER. No provision of this Agreement may be modified, waived or
         discharged unless such waiver, modification or discharge is agreed to
         in writing and signed by Executive and an executive officer
         specifically designated by the Boards of Directors of Corporation and
         Bank. No waiver by any party hereto at any time of any breach by the
         other party hereto of, or compliance with, any condition or provision
         of this Agreement to


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         be performed by such other party shall be deemed a waiver of similar or
         dissimilar provisions or conditions at the same or at any prior or
         subsequent time.

13.      ASSIGNMENT. This Agreement shall not be assignable by any party, except
         by Corporation and Bank to any successor in interest to their
         respective businesses.

14.      ATTORNEY'S FEES AND COSTS. If any action at law or in equity is
         necessary to enforce or interpret the terms of this Agreement, the
         prevailing party shall be entitled to reasonable attorney's fees,
         costs, and necessary disbursements in addition to any other relief that
         may be proper.

15.      INDEMNIFICATION. The Corporation will indemnify the Executive, to the
         fullest extent permitted under Pennsylvania and federal law, with
         respect to any threatened, pending or completed legal or regulatory
         action, suit or proceeding brought against him by reason of the fact
         that he is or was a director, officer, employee or agent of the
         Corporation, or is or was serving at the request of the Corporation as
         a director, officer, employee or agent of another person or entity. To
         the fullest extent permitted by Pennsylvania and federal law, the
         Corporation will, in advance of final disposition, pay any and all
         expenses incurred by the Executive in connection with any threatened,
         pending or completed legal or regulatory action, suit or proceeding
         with respect to which he may be entitled to indemnification hereunder.

16.      ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
         either oral or in writing, between the parties with respect to the
         employment of the Executive by the Bank and/or Corporation, including,
         without limitation, the Change in Control Agreement executed by
         Corporation, Bank and Executive on or about July 12, 1999, and this
         Agreement contains all the covenants and agreements between the parties
         with respect to employment.

17.      SUCCESSORS; BINDING AGREEMENT.

         (a)      Corporation and Bank will require any successor (whether
                  direct or indirect, by purchase, merger, consolidation, or
                  otherwise) to all or substantially all of the businesses
                  and/or assets of Corporation and Bank to expressly assume and
                  agree to perform this Agreement in the same manner and to the
                  same extent that Corporation and Bank would be required to
                  perform it if no such succession had taken place. Failure by
                  Corporation and Bank to obtain such assumption and agreement
                  prior to the effectiveness of any such succession shall
                  constitute a breach of this Agreement.

         (b)      This Agreement shall inure to the benefit of and be
                  enforceable by Executive's personal or legal representatives,
                  executors, administrators, heirs, distributees, devisees and
                  legatees. If Executive should die while any amounts would be
                  payable to Executive under this Agreement if Executive had
                  continued to live, all such amounts shall be paid in
                  accordance with the terms of this Agreement to Executive's
                  devisee, legatee, or other designee, or, if there is no such
                  designee, to


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                  Executive's estate.

18.      ARBITRATION. Corporation, Bank and Executive recognize that in the
         event a dispute should arise between them concerning the interpretation
         or implementation of this Agreement, lengthy and expensive litigation
         will not afford a practical resolution of the issues within a
         reasonable period of time. Consequently, each party agrees that all
         disputes, disagreements and questions of interpretation concerning this
         Agreement are to be submitted for resolution, in Philadelphia,
         Pennsylvania, to the American Arbitration Association (the
         "Association") in accordance with the Association's National Rules for
         the Resolution of Employment Disputes or other applicable rules then in
         effect ("Rules"). Corporation, Bank or Executive may initiate an
         arbitration proceeding at any time by giving notice to the other in
         accordance with the Rules. Corporation and Bank and Executive may, as a
         matter of right, mutually agree on the appointment of a particular
         arbitrator from the Association's pool. The arbitrator shall not be
         bound by the rules of evidence and procedure of the courts of the
         Commonwealth of Pennsylvania but shall be bound by the substantive law
         applicable to this Agreement. The decision of the arbitrator, absent
         fraud, duress, incompetence or gross and obvious error of fact, shall
         be final and binding upon the parties and shall be enforceable in
         courts of proper jurisdiction. Following written notice of a request
         for arbitration, Corporation, Bank and Executive shall be entitled to
         an injunction restraining all further proceedings in any pending or
         subsequently filed litigation concerning this Agreement, except as
         otherwise provided herein.

19.      NO MITIGATION OR OFFSET. The Executive will not be required to mitigate
         the amount of any payment provided for in this Agreement by seeking
         employment or otherwise; nor will any amounts or benefits payable or
         provided hereunder be reduced in the event he does not secure
         employment, except as otherwise provided herein.

20.      VALIDITY. 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.

21.      APPLICABLE LAW. This Agreement shall be governed by and construed in
         accordance with the domestic, internal laws of the Commonwealth of
         Pennsylvania, without regard to its conflicts of laws principles.

22.      HEADINGS. The section headings of this Agreement are for convenience
         only and shall not control or affect the meaning or construction or
         limit the scope or intent of any of the provisions of this Agreement.

23.      NUMBER. Words used herein in the singular will be construed as being
         used in the plural, as the context requires, and vice versa.

24.      REFERENCES TO CORPORATION AND BANK. All references to Corporation or
         Bank shall be


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         deemed to include a reference to Corporation and/or Bank, individually
         or collectively, as appropriate in the relevant context.

25.      EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT. This Agreement shall
         become effective immediately upon the executive and delivery of this
         Agreement by the parties hereto. Upon the execution and delivery of
         this Agreement, any prior agreement relating to the subject matter
         hereof, including, without limitation, the Change in Control Agreement
         executed by Corporation, Bank and Executive on or about July 12, 1999,
         shall be deemed automatically terminated and be of no further force or
         affect.

26.      WITHHOLDING FOR TAXES. All amounts and benefits paid or provided
         hereunder shall be subject to withholding for taxes as required by law
         or as designated herein.



         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

ATTEST:                           STERLING FINANCIAL CORPORATION


  /s/ J. Roger Moyer, Jr.         By  /s/ John E. Stefan
---------------------------           ------------------------------------------
        Assistant Secretary              John E. Stefan, Chairman and President


ATTEST:                           BANK OF LANCASTER COUNTY, N.A.


  /s/ J. Roger Moyer, Jr.         By  /s/ John E. Stefan
---------------------------           ------------------------------------------
         Assistant Secretary              John E. Stefan, Chairman and President


WITNESS:


  /s/ Anne C. Lohr                By  /s/ Gregory S. Lefever
---------------------------           ------------------------------------------
                                          Gregory S. Lefever, Executive


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