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                                                                   Exhibit 10.17

                              EMPLOYMENT AGREEMENT



         EMPLOYMENT AGREEMENT (this "Agreement") entered into this _____ day of
_____________, 2003, by and between WAYPOINT FINANCIAL CORP., a Pennsylvania
corporation (the "Company"), with its principal office in Harrisburg,
Pennsylvania, and David E. Zuern, a resident of Pennsylvania ("Executive"). Any
reference herein to the "Bank" shall refer to WAYPOINT BANK, a wholly-owned
subsidiary of the Company.

         WHEREAS, Company desires to continue to employ Executive in the
capacity of President and Chief Executive Officer of the Company and the Bank;
and

         WHEREAS, Executive and Company desire to evidence their agreement as to
the terms and conditions of Executive's continued employment as President and
Chief Executive Officer of the Company and the Bank.

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows, replacing and superceding all prior Employment
Agreements of and between the parties:

         1.       Employment. The Company and Bank hereby agree to employ
                  Executive, and Executive hereby accepts such employment and
                  agrees to perform his duties and responsibilities in
                  accordance with the terms, conditions and provisions
                  hereinafter set forth subject nevertheless to the specific
                  approval of Company's Board of Directors.

         1.1      Employment Term. The term of Executive's employment under this
                  Agreement will begin on September 15, 2003 (the "Effective
                  Date") and will continue until September 15, 2006; provided,
                  however that on September 15 of each calendar year, the term
                  of this Agreement will automatically extend for an additional
                  year renewal unless one party notifies the other, in writing
                  as least 60 days prior to the end of the then current term,
                  that the Agreement will not be further renewed or until the
                  agreement is terminated in accordance with Section 5 or
                  Section 6. Not withstanding the above and Section 5.4, the
                  parties hereto agree that unless extended by the mutual
                  agreement of the parties this agreement will terminate, and
                  the termination of Executive will be deemed retirement,
                  following the Company's annual meeting after Executive
                  achieves normal retirement age as then defined in the
                  Company's benefit plans.

                  The period commencing as of the Effective Date and ending on
                  the date on which the term of Executive's employment under
                  this Agreement terminates is hereinafter referred to as the
                  "Employment Term".

         1.2      Duties and Responsibilities. Executive shall serve as
                  President and Chief Executive Officer of the Company and the
                  Bank during the Employment Term and shall be supported by the
                  Board in such positions with the powers and


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                  authority to set and execute the strategic plans and
                  initiatives of the Company and the Bank subject to the Board's
                  supervision and approval. Executive and Company agree that
                  neither Company nor Bank will be in violation hereof in the
                  event Executive's title and responsibilities as President of
                  the Bank or the Company, but not as Chief Executive Officer,
                  is assigned to another executive in the course of implementing
                  a succession plan approved by Executive. The Company's Board
                  shall nominate Executive to continue as a member of its Board
                  of Directors (the "Board"). The Board shall support such
                  nomination. Executive agrees to serve as a director during the
                  Employment Term. The Board shall cause the Company to continue
                  to elect Executive as a director of the Bank, and Executive
                  agrees to serve as a director of the Bank. During the
                  Employment Term Executive shall perform all duties and accept
                  all responsibilities incident to such positions as may be
                  assigned to him by the Boards of the Company and the Bank.

         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 1.3 hereof and, consistent with
                  the other provisions of this Agreement, to devote
                  substantially all his business time, attention and energy
                  thereto. The foregoing shall not be construed as preventing
                  Executive from continuing in any director capacity in which he
                  is currently involved other than Directorship of other
                  financial institutions or entities precluded by applicable
                  statues or regulations 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. Executive and the Board specifically recognize and
                  agree to Executive's service as an officer of the Pennsylvania
                  Banker's Association and the incidental time commitments
                  associated with American Banker's Association commitments
                  related thereto as being in the best interests of the Company
                  and the Bank and agrees that expenses unreimbursed by those
                  organizations may be submitted for reimbursement by the
                  Company.

         1.4      Base Salary. For all the services rendered by Executive
                  hereunder, the Company or the Bank shall pay Executive a base
                  salary ("Base Salary"), commencing on the Effective Date, at
                  the annual rate of $365,000.00, payable in installments at
                  such times as the Company or the Bank customarily pays its
                  other senior level executives (but in any event no less often
                  than monthly). Executive's Base Salary for each year shall be
                  reviewed annually during the Company's regular annual salary
                  review process for appropriate adjustment (but shall not be
                  reduced below the then current level) by the Board pursuant to
                  its normal performance review policies for senior level
                  executives.


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         1.5      Retirement and Benefit Coverage and Perquisites. During the
                  Employment Term, Executive shall be entitled to participate in
                  all (a) employee pensions 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 the Bank's senior level executives as a group
                  or to its employees generally, as such Retirement Plans or
                  Benefits Coverages may be in effect from time to time.
                  Notwithstanding the terms of any of the 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 where the effect of granting such full vesting would
                  not jeopardize qualification for such Retirement Plan under
                  the applicable labor and tax laws. Executive also shall be
                  entitled to a Cadillac Seville or equivalent automobile,
                  country club initiation fees, dues and assessments and all
                  other executive perquisites in accordance with the Company's
                  policy for its most senior executives.

         1.6      Reimbursement of Expenses; Vacation. Executive shall be
                  provided 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 shall be entitled to vacation
                  (six weeks per calendar year) and holidays in accordance with
                  the Company's or the Bank'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 or the Bank 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.

         1.8      Long-Term Incentive Compensation/Stock Options. Executive
                  shall also be entitled to participate in all long-term
                  incentive compensation programs, including but not limited to
                  stock option plans and stock recognition or awards plans,
                  established for its senior level executives generally. 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 reason of his employment by and service
                  to the Company before, during and, if applicable, after the
                  Employment Term, he has had and will continue to 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


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                  "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 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
                  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 any extension thereof and for any period
                  during which Executive's compensation is continued after
                  termination, Executive shall not, directly or indirectly,
                  engage in (as principal, partner, director, officer, agent,
                  employee, consultant, owner, independent contractor or
                  otherwise, with or without compensation) or hold a financial
                  interest in any firm or organization engaged in the business
                  of banking (including, but not limited to, the providing of
                  wholesale banking services, consumer financial services,
                  retail banking, trust and investment management services,
                  electronic payment services, secured and unsecured loan and
                  financing services, real estate financing services, insurance,
                  asset and investment management and fiduciary services, cash
                  management services, consumer and commercial credit card
                  services, merchant card services, card processing services,
                  and electronic transaction processing services) or which
                  otherwise is engaged in competition with the Company, or its
                  subsidiaries or affiliates, within sixty miles of Harrisburg,
                  Pennsylvania.

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                  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. 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.

                  The foregoing restriction shall not be construed to prohibit
                  the ownership by Executive of not more than 5% of any class of
                  securities of any corporation 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 in 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, Pennsylvania; (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 any such court. Executive also irrevocably and



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                  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 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 this
                  Agreement 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 following termination by the Company, 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, including the extension of the period
                  to exercise the stock options 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(s)
                  selected by the Board.

         5.2      Death. This Agreement 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, including the extension of the period
                  to exercise stock options in accordance with the terms of any
                  applicable plans and programs of the Company. Otherwise, the
                  Company shall have no further liability or obligation under
                  this Agreement to the executors, legal representatives,
                  administrators, heirs or assigns or any other person claiming
                  under or through Executive.

         5.3      Cause. The Company may terminate this Agreement and
                  Executive's employment hereunder at any time for "cause", in
                  which event all payments under this Agreement shall cease,
                  except for Base Salary to the extent already accrued, and
                  Executive's right to exercise the stock options, and/or stock
                  awards provided by Section 1.8 shall immediately terminate.
                  Executive shall remain entitled to any other benefits 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 due to the Executive's
                  personal dishonesty,


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                  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 breach of any material
                  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. 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, if
                  it deems the reinstatement of the Executive to his former
                  position to be in the best interest of the Company, shall use
                  its best efforts to appeal and overturn such order.

         5.4.     Termination or Non-Renewal Without Cause. The Company may
                  terminate Executive's employment hereunder at any time without
                  cause, or give Executive notice that it does not intend to
                  renew the Agreement (in either case the Employment Term shall
                  be deemed to have ended), upon not less than 60 days' prior
                  written notice to Executive; 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. In addition, Executive shall
                  be entitled to voluntarily terminate employment with the
                  Company (and such termination shall be deemed a constructive
                  termination) upon one or more of the following occurrences:

                  (a)      any failure of the Company to comply with and satisfy
                           any of the terms of this Agreement, including the
                           appointment or nomination of Executive to the officer
                           and director positions specified in Section 1. 2
                           hereof;

                  (b)      except as described in Section 1.2 hereof any change
                           resulting in a reduction by the Company of the
                           authority, duties or responsibilities of Executive;

                  (c)      any reduction by the Company of Executive's
                           compensation level or removal from the officer
                           positions which Executive holds as of the Effective
                           Date hereof except in connection with promotions to
                           higher office; or

                  (d)      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.

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                  Upon any such termination (whether actual or constructive) or
                  non-renewal pursuant to this Section 5.4, and assuming
                  Executive executes (and does not revoke) a mutual release in
                  favor of the Company and Executive in the form attached hereto
                  as Exhibit A, Executive shall be entitled to receive a single
                  lump sum payment within 30 days (or, at Executive's
                  discretion, payable over 24 to 36 months) equal to three times
                  the sum of (i) his annual rate of Base Salary and (ii) his
                  annual short term incentive compensation otherwise payable
                  under Section 1.7 at the "target" level established under the
                  Company's Annual Incentive Plan for the full year of the
                  removal or non-renewal, in lieu of any amount due to Executive
                  under the Company's then current severance pay plan for
                  employees. No other payments or benefits shall be due under
                  this Agreement to Executive, but Executive shall be entitled
                  to any other benefits in accordance with the terms of any
                  applicable plans and programs of the Company, and all options
                  to purchase shares of stock of the Company shall become fully
                  vested and all restrictions on shares of stock of the Company
                  previously granted to Executive shall lapse and shall not be
                  subject to any further conditions, and such options shall be
                  exercisable unless in the opinion of counsel such action would
                  disqualify the affected plan. In such case Company shall offer
                  Executive alternative means to permit vesting and/or
                  satisfaction of restrictions. In addition, Executive and his
                  spouse and dependents at the time of the termination, if any,
                  shall be eligible, subject to the cost sharing applicable to
                  Company employees for health coverage under a Company medical
                  plan or a substitute plan or arrangement providing similar
                  coverage at the Company's election for a minimum of three
                  years.

         5.5      Required Provisions. If the Executive is suspended 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)) the bank's obligations under the
                  contract 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
                  the 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 the 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)), all
                  obligations of the bank under the contract shall terminate as
                  of the effective date of the order, but vested rights of the
                  contracting parties shall not be affected.

                  If the bank is in default (as defined in section 3(x)(1) of
                  the Federal Deposit Insurance Act), all obligations under the
                  contract shall terminate as of the date of default, but this
                  paragraph 5.5 shall not affect any vested rights of the
                  contracting parties.

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                  All obligations under the contract shall be terminated, except
                  to the extent determined that continuation of the contract is
                  necessary [for] the continued operation of the association:

                  (i)      by the Director or his or her designee, 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) of the Federal Deposit Insurance Act; or

                  (ii)     by the Director or his or her designee, at the time
                           the Director or his or her designee approves a
                           supervisory merger to resolve problems related to
                           operation of the bank or when the bank is determined
                           by the Director 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
                  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 Due on a Change of Control.

         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:

                  (1)      "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").

                  (2)      "Base Compensation" shall mean the total cash
                           remuneration received by Executive in all capacities
                           as an employee with the Company and its Affiliates,
                           including current annualized base salary, Short and
                           Long-Term Cash Compensation Plan payments 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



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                  which occurs a Change of Control, or the calendar year in
                  which occurs a Change of Control, whichever is higher.

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

         (4)      "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 Change in Bank Control Act and the
                  Rules and Regulations promulgated by the Federal Deposit
                  Insurance Corporation ("FDIC") at 12 C.F.R. '303.4(a) with
                  respect to the Bank and the Board of Governors of the Federal
                  Reserve System (the "FRB") at 12 C.F.R. '225.41(b) with
                  respect to the Company, 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.



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

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

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

         (8)      "Termination following a Change of Control" shall mean a
                  Termination of Employment within two years after a Change of
                  Control either:

                  (i)      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

                  (ii)     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 terms of this
                                    Agreement;

                           (2)      any change resulting in a reduction by the
                                    Company of the status of Executive's
                                    authority, duties or responsibilities at the
                                    time of the Change of Control;

                           (3)      any reduction by the Company of Executive's
                                    compensation level or removal from the
                                    officer positions which Executive holds as
                                    of the date of the Change of Control except
                                    in connection with promotions to higher
                                    office;

                           (4)      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

                           (5)      within six months following the Change of
                                    Control, Executive determines, in his sole
                                    discretion, that circumstances have so
                                    changed with respect to the



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                           Company that he no longer wishes to continue in
                           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. 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 either case any payments made pursuant
       to Section 5.4 shall reduce the amount due under this Section and vise
       versa so that the total payment shall be the greater of either but not
       both), the Company shall pay to Executive, within fifteen days after the
       Termination Date, 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 Executive under any other plan, policy or program of the
       Company (and Executive's bonus under the Company's Annual Incentive Plan
       shall be paid at the target level for the fiscal year in which the Change
       of Control occurs), all of which shall be paid within 15 days after the
       Change of Control. Executive shall also be entitled to health coverage
       described in Section 5.4. No payments shall be due to Executive under the
       Company's then severance pay plan for employees. Further, all options to
       purchase shares of stock of the Company shall become fully vested and all
       restrictions on shares of stock of the Company previously granted to
       Executive shall lapse and shall not be subject to any further conditions,
       and all such options shall be exercisable unless in the opinion of
       counsel such accelerated vesting or restriction lapse will result in plan
       disqualification. In such case Company shall offer Executive alternative
       means to permit vesting and/or satisfaction of restrictions.

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, at the rate from
            time to time specified in The Wall



                                       12
<PAGE>
            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.



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 of the
     Company. The Company shall obtain the affirmation of any successor or
     assignee to the extent necessary to preserve Executive's rights hereunder.

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

9.   Arbitration and 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'


                                       13
<PAGE>

         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
         equally the expenses of the arbitration.

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 hand delivered or
         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
                      P.O. Box 1711
                      Harrisburg, PA 17105-1711
                      Attention:  Chairman, Compensation and Benefits Committee
                      Fax: (717) 231-2950

                 With a required copy to:

                      General Counsel
                      Waypoint Financial Corp.
                      235 N. Second Street
                      P.O. Box 1711
                      Harrisburg, PA  17105-1711
                      Attention:  Richard C. Ruben
                      Fax: (717) 231-2950

                 If to Executive, to:

                      David E. Zuern
                      P.O. Box 41
                      Lemoyne, PA  17043

                  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 Agreement, 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.

                                       14
<PAGE>

         (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 form time to time and as often as may be
         deemed expedient or necessary by such party in its sole discretion.

14.      Beneficiaries. 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.

                                       15
<PAGE>

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.
         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
         bylaw and certificate of incorporation to enter into and to carry out
         the terms of this Agreement.

                  [Remainder of Page Intentionally Left Blank]


                                       16
<PAGE>
         IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first above written.


ATTEST:                             WAYPOINT FINANCIAL CORP.



________________________________    By: _____________________________________
Secretary                                   Charles C. Pearson, Jr.
                                    Title:  Chairman of the Board


WITNESS:                            EXECUTIVE



--------------------------------    ----------------------------------------
                                                 David E. Zuern




                                       17
<PAGE>


IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.


ATTEST:                                 WAYPOINT FINANCIAL CORP.



                                        By:
---------------------------                 ----------------------------
Secretary                                          Charles C. Pearson, Jr.
                                            Title: Chairman of the Board



WITNESS:                                EXECUTIVE

---------------------------             --------------------------------
                                                   David E. Zuern