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                                                                   EXHIBIT 10.10

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT is made as of the 25th day of January, 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 HANOVER AND TRUST COMPANY ("Bank") a state chartered
bank having a place of business at 25 Carlisle Street, Hanover, Pennsylvania
17331, and J. BRADLEY SCOVILL ("Executive"), an individual residing at 990
McCosh Street, Hanover, Pennsylvania 17331.

                                   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 employ Executive to serve in
the capacity of Executive Vice President of Corporation and President and Chief
Executive Officer of Bank under the terms and conditions set forth herein;

         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, Hanover
         Bancorp Inc. 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 Severance Agreement
         dated March 22, 1995 between Executive, Hanover Bancorp Inc. and Bank.

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 so long as the assignment is consistent with the
         Executive's office and duties. Executive shall be employed as Executive
         Vice President of Corporation and President and Chief Executive Officer
         of 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
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         (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 Effective Date as set
                  forth in Section 1.1(c) of the Agreement and Plan of Merger
                  between Corporation and Hanover Bancorp, Inc. (the "Effective
                  Date") (the "Agreement and Plan of Merger"), and if not
                  previously terminated pursuant to the terms of this Agreement,
                  the Employment Period shall end three (3) years later;
                  provided however, that this Agreement will be automatically
                  renewed on the first anniversary date of the Effective Date
                  (the "Renewal Date") for the three-year period commencing on
                  such date and ending three years later, unless either party
                  gives written notice of nonrenewal to the other party at least
                  sixty (60) days prior to the Renewal Date (in which case this
                  Agreement will continue in effect for a term ending two years
                  from the Renewal Date). If this Agreement is renewed on the
                  Renewal Date, it will be automatically renewed on the first
                  anniversary date of the Renewal Date and each subsequent year
                  (the "Annual Renewal Date") for a period ending three years
                  from each Annual Renewal Date, unless either party gives
                  written notice of non renewal to the other party at least
                  sixty (60) days prior to an Annual Renewal (in which case this
                  Agreement will continue in effect for a term ending two years
                  from the Annual Renewal Date immediately following such
                  notice). If the Agreement and Plan of Merger is terminated
                  pursuant to its terms, the parties hereto shall have no
                  further obligations under this Agreement and this Agreement
                  shall be null and void.

         (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 each of Corporation and 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;

                  (ii)     Executive's failure to follow the good faith lawful
                           instructions of the Board of Directors of Corporation
                           or Bank with respect to its operations, after

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                           written notice from Corporation or Bank and a failure
                           to cure such violation within thirty (30) days of
                           said written notice;

                  (iii)    Executive's willful 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, after written notice from
                           Corporation or Bank and a failure to cure such
                           violation within thirty (30) days of said written
                           notice;

                  (v)      dishonesty 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.

                  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.

         (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 inconsistent with Executive's status as
                  Executive Vice President of Corporation and President and
                  Chief Executive Officer of Bank, (ii) a reassignment which
                  requires Executive to move his principal residence more than
                  fifty (50) miles from the Corporation's and Bank's principal
                  executive office immediately prior to this Agreement, (iii)
                  any removal of the Executive from office 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 on the date
                  hereof 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

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                  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 the remaining
                  balance of the Agreed Compensation otherwise due to the
                  Executive for the remainder of the then existing Employment
                  Period, 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 such benefits (or substantially similar benefits).
                  If permitted under the terms of the plan, Executive shall
                  receive the additional retirement benefits to which he would
                  have been entitled had his employment continued through the
                  remaining term of the Agreement. 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. However, 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 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 the provisions of Section 3(a) 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,

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                  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 posting
                  a direct threat to himself and others, for a period of one
                  hundred eighty (180) days. The Executive shall have no duty to
                  mitigate any payment provided for in this Section 3(d) by
                  seeking other employment.

         (e)      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
                  entities.

         (f)      The term "Agreed Compensation" shall equal the sum of (A) the
                  Executive's highest Annual Base Salary under the Agreement,
                  and (B) the average of the Executive's annual bonuses with
                  respect to the three (3) calendar years immediately preceding
                  the Executive's termination.

         (g)      In the event that this Agreement expires by its terms in
                  accordance with the provisions of Section 3(a) and other than
                  for Cause, the Bank will pay Executive within thirty (30) days
                  following termination of the Agreement and upon the receipt of
                  a mutually agreed release an amount equal to 2.0 times the
                  Executive's Agreed Compensation.

4.       EMPLOYMENT PERIOD COMPENSATION.

         (a)      Annual Base Salary. For services performed by Executive under
                  this Agreement, Corporation or Bank shall pay Executive an
                  Annual Base Salary during the Employment Period at the rate of
                  $217,500 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.
                  Corporation or Bank may, from time to time, increase
                  Executive's Annual Base Salary, and 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.


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         (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 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)      Automobile. During the term of this Agreement, Corporation and
                  Bank shall provide Executive with exclusive use of an
                  automobile mutually agreed upon by Corporation and Bank and
                  reasonably consistent with Executive's position. Corporation
                  and Bank shall be responsible and shall pay for all costs of
                  insurance coverage, repairs, maintenance and other operating
                  and incidental expenses, including license, fuel and oil.
                  Corporation and Bank shall provide Executive with a
                  replacement automobile at approximately the time Executive's
                  automobile reaches three (3) years of age or 50,000 miles,
                  whichever is first, and approximately every three (3) years or
                  50,000 miles thereafter, upon the same terms and conditions.

         (e)      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 and Bank
                  authorize a change in such benefits. Corporation and Bank
                  shall not make any changes in such plans or benefits which
                  would adversely affect Executive's rights or benefits
                  thereunder, unless such change occurs pursuant to a program
                  applicable to all executive officers of Corporation and Bank
                  and does not result in a proportionately greater adverse
                  change in the rights of or benefits to Executive as compared
                  with any other executive officer of Corporation and Bank.
                  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.

         (f)      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 and Bank for their executive officers. Corporation
                  and Bank shall reimburse Executive for any and all dues and
                  reasonable related business expenses associated with the
                  Executive's membership in

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                  a country club, social club or service organization, including
                  but not limited to, The Hanover Country Club.

         (g)      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.

5.       TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.

         (a)      If a Change in Control (as defined in Section 5(b) of this
                  Agreement) shall occur, then, at the option of Executive,
                  exercisable by Executive within three hundred sixty five (365)
                  days of the Change in Control, Executive may resign from
                  employment with Corporation and Bank (or, if involuntarily
                  terminated, give notice of intention to collect benefits under
                  this Agreement) by delivering a notice in writing (the "Notice
                  of Termination") to Corporation and Bank and the provisions of
                  Section 6 of this Agreement shall apply.

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

                  (i)      (A) a merger, consolidation or division involving
                           Corporation or Bank, (B) a sale, exchange, transfer
                           or other disposition of substantially all of the
                           assets of Corporation or Bank, or (C) a purchase by
                           Corporation or Bank of substantially all of the
                           assets of another entity, unless (y) such merger,
                           consolidation, division, sale, exchange, transfer,
                           purchase or disposition is approved in advance by
                           seventy percent (70%) or more of the members of the
                           Board of Directors of Corporation or Bank (of the
                           entity affected by the transaction) who are not
                           interested in the transaction and (z) a majority of
                           the members of the Board of Directors of the legal
                           entity resulting from or existing after any such
                           transaction and of the Board of Directors of such
                           entity's parent corporation, if any, are former
                           members of the Board of Directors of Corporation or
                           Bank (of the entity affected by the transaction);
                           provided, however, that the provisions of (y) and (z)
                           above shall not apply to the merger of Bank within
                           three (3) years of the Effective Date in which the
                           Bank is the not surviving entity; or

                  (ii)     any "person" (as such term is used in Sections 13(d)
                           and 14(d) of the Securities Exchange Act of 1934 (the
                           "Exchange Act")), other than Corporation or Bank or
                           any "person" who on the date hereof is a director or
                           officer of Corporation or Bank is or becomes the
                           "beneficial owner" (as

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                           defined in Rule 13d-3 under the Exchange Act),
                           directly or indirectly, of securities of Corporation
                           or Bank representing twenty-five (25%) percent or
                           more of the combined voting power of Corporation or
                           Bank's then outstanding securities, or

                  (iii)    during any period of two (2) consecutive years during
                           the term of Executive's employment under this
                           Agreement, individuals who at the beginning of such
                           period constitute the Board of Directors of
                           Corporation or Bank cease for any reason to
                           constitute at least a majority thereof, unless the
                           election of each director who was not a director at
                           the beginning of such period has been approved in
                           advance by directors representing at least two-thirds
                           of the directors then in office who were directors at
                           the beginning of the period; or

                  (iv)     any other change in control of Corporation and Bank
                           similar in effect to any of the foregoing.

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

         (a)      In the event that Executive 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
                  compensation and benefits set forth below:

                  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 a lump sum amount equal to and no greater than 2.99
                  times the Executive's Agreed Compensation as defined in
                  subsection (f) of Section 3, (the payment of which shall be
                  subject to applicable taxes and withholdings). In addition,
                  for a period of three (3) years from the date of termination
                  of employment, 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). If permitted
                  under the terms of the plan, Executive shall receive
                  additional retirement benefits to which he would have been
                  entitled had his employment continued through the then
                  remaining term of the Agreement. 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. However, 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

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                  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.

7.       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 shall have occurred at the date of such
                  termination, Corporation and Bank shall pay Executive an
                  amount equal to 2.0 times the Executive's Agreed Compensation
                  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 addition, if permitted pursuant to the terms of
                  the plan, Executive shall receive additional retirement
                  benefits to which he would have been entitled had his
                  employment continued through the then remaining term of the
                  Agreement. 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. However, 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,

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                  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.

8.       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 area in which, at any time
                           during the Employment Period or at the date of
                           termination of the Executive's employment, is within
                           thirty (30) miles of any branch location, office or
                           other facility of Corporation or Bank or any of their
                           subsidiaries, unless Executive exclusively performs
                           all such activity outside of said thirty (30) mile
                           area (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


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                  (iii)    if employed in a capacity provided in (i) and (ii),
                           solicit current customers, during the term of this
                           Agreement, of Corporation, Bank or any Corporation
                           subsidiary in the Non-Competition Area; or

                  (iv)     solicit employees of Corporation, Bank or any
                           Corporation subsidiary who are employed during the
                           term of this Agreement.

         (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), the end of the
                           then existing Employment Period; 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, the third 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 expires by its terms 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.

9.       UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder,
         or at any later time, the 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 the Executive of his duties as an executive of Corporation and Bank,
         any material confidential information

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         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 of 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. Except as otherwise provided in this Agreement, any notice
         required or permitted to be given under this Agreement shall be deemed
         properly given if in writing and if mailed by registered or certified
         mail, postage prepaid with return receipt requested, to Executive's
         residence, in the case of notices to Executive, and to the principal
         executive offices of Corporation and Bank, in the case of notices to
         Corporation and Bank.

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 either 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 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

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         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 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 and the provisions of
                  Section 3 of this Agreement shall apply. As used in this
                  Agreement, "Corporation" and "Bank" shall mean Sterling
                  Financial Corporation and Bank of Hanover and Trust Company,
                  as defined previously and any successor to their respective
                  businesses and/or assets as aforesaid which assumes and agrees
                  to perform this Agreement by operation of law or otherwise.

         (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 after a Notice of
                  Termination is delivered by Executive, or following
                  termination of Executive's employment without Cause, and 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 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

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         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.

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

ATTEST:                                      STERLING FINANCIAL CORPORATION


 /s/ Ronald L. Bowman                        By /s/ John E. Stefan
 ---------------------                          ---------------------------


                                             BANK OF HANOVER AND TRUST COMPANY


/s/ Thomas J. Paholsky                       By /s/ Terrence L. Hormel
 ---------------------                          ---------------------------


WITNESS:

/s/ Paul G. Mattaini                            /s/ J. Bradley Scovill
 ---------------------                          ---------------------------
                                                       "Executive"

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