Document:

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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);

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         provided, however, that this Section 2 shall not be construed as
         preventing Executive from (a) engaging in activities incident or
         necessary to personal investments so long as such investment does not
         exceed 5% of the outstanding shares of any publicly held company, (b)
         acting as a member of the Board of Directors of any other corporation
         or as a member of the Board of Trustees of any other organization, with
         the prior approval of the Board of Directors of Corporation and Bank,
         or (c) being involved in any other activity with the prior approval of
         the Board of Directors of Corporation and Bank. The Executive shall not
         engage in any business or commercial activities, duties or pursuits
         which compete with the business or commercial activities of Corporation
         or Bank, nor may the Executive serve as a director or officer or in any
         other capacity in a company which competes with Corporation or Bank.

3.       TERM OF AGREEMENT.

         (a)      This Agreement shall be for a three (3) year period (the
                  "Employment Period") beginning on the 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;

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                  (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 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

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                  result of a national financial depression, or national or bank
                  emergency, or (v) any failure of Corporation and Bank to
                  provide the Executive with benefits at least as favorable as
                  those enjoyed by the Executive during the Employment Period
                  under any of the pension, life insurance, medical, health and
                  accident, disability or other employee plans of Corporation
                  and Bank, or the taking of any action that would materially
                  reduce any of such benefits unless such reduction is part of a
                  reduction applicable to all employees. If such termination
                  occurs for Good Reason, then Corporation or Bank shall pay
                  Executive an amount equal to 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.

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         (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, 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.

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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.

         (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,

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                  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 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

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                           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 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

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                  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 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

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                  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, 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

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                           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

                  (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;

<PAGE>   12

                  (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 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.

<PAGE>   13

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

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

16.      ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
         either oral or in writing, between the parties with respect to the
         employment of the Executive by the Bank and/or Corporation 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.

<PAGE>   14

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

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

20.      VALIDITY. The invalidity or unenforceability of any provision of this
         Agreement shall not affect the validity or enforceability of any other
         provision of this Agreement, which shall remain in full force and
         effect.

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

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

<PAGE>   15

         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"EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         AGREEMENT between E. W. Blanch Holdings., Inc., a Delaware corporation
(hereinafter called the "Company"), and Kaj Ahlmann (hereinafter called the
"Employee").

         1. EFFECTIVE DATE. The effective date of this Agreement shall be
November 24, 1999.

         2. EMPLOYMENT. The Company hereby employs the Employee and the Employee
hereby accepts employment upon the terms and conditions hereinafter set forth.

         3. TERM. The term of this Agreement shall be from the effective date of
this Agreement to March 31, 2004 and shall automatically renew for annual
periods thereafter unless the Company gives notice of its intention not to
renew, not less than 30 days prior to the end of the current annual period. This
Agreement is also subject to early termination by the Company for "Cause."

         For purposes of this Agreement, the Company shall have Cause to
terminate Employee's employment hereunder upon (a) any misrepresentation or
concealment of a material fact for the purpose of securing this employment
agreement; (b) theft, fraud, embezzlement, dishonesty, or other similar behavior
by the Employee; (c) any material breach by the Employee of the terms of this
Agreement; (d) any repeated or material neglect of duty or misconduct of the
Employee in discharging any of his duties and responsibilities hereunder; (e)
any conduct of the Employee which is materially detrimental or embarrassing to
the Company, including but not limited to the Employee being convicted of a
felony; and/or (f) any refusal or material or repeated failure by the Employee
to comply with the policies, rules, and regulations of the Company. In the event
that this Agreement shall be terminated for Cause, the Company shall continue to
make payments hereunder for all services rendered by the Employee up to the date
of termination but shall have no further obligations to make payments after that
date.

         The Company may terminate the Employee's employment hereunder if (i)
the Employee becomes disabled, as such term is defined in the group disability
insurance policy of Employer or (ii) the Employee dies. In any such case, the
Company shall have no further obligation or liability under this Agreement.

         4. Compensation. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee at a salary rate of not less than
$650,000.00 per year, payable in accordance with the Company's payroll practice
as from time to time in effect.

         Employee will participate in the Company's bonus and incentive
compensation plans as may exist from time to time at the discretion of the
Company, subject to the eligibility and other provisions of those plans.

         5. DUTIES. The Employee is engaged as an executive of the Company and
hereby promises to perform and discharge faithfully and efficiently the duties,
which may be assigned to him from time to time. Employee will work out of Kansas
City, Kansas and will not be expected to relocate to Dallas or elsewhere.

         6. EXTENT OF SERVICES. The Employee shall devote substantially his full
time, attention and energies to the business of the Company and shall not during
the term of this Agreement be engaged in any other substantial business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage; but this shall not be construed as preventing the
Employee from investing his personal assets in businesses which do not compete
with the Company in such form or manner as

                                      - 1 -

<PAGE>

will not require any substantial services on the part of the Employee in the
operation of the affairs of the companies in which such investments are made and
in which his participation is solely that of an investor and except that the
Employee may purchase securities in any corporation whose securities are
regularly traded, provided that such purchases shall not result in him
collectively owning beneficially at any time more than 1% of any class of
securities of any corporation engaged in a business competitive with that of the
Company.

         7. COVENANTS NOT TO SOLICIT, COMPETE OR INTERFERE. For a period of two
(2) years from and after the termination of Employee's employment hereunder for
any reason, other than a material breach by the Company hereunder, Employee will
not, directly or indirectly, as a sole proprietor, member of a partnership, or
stockholder, investor, officer or director of a corporation, or as an employee,
agent, associate or consultant of any person, firm or corporation:

                  (a) Solicit or accept business (i) from any clients or
         prospects of the Company or its affiliates who were solicited or
         serviced directly by the Employee or where the Employee supervised,
         directly or indirectly, in whole or in part, the solicitation or
         service activities related to such clients or prospects or (ii) from
         any former client of the Company or its affiliates who was such within
         one (1) year prior to Employee's date of termination and who was
         solicited or serviced directly by the Employee or where the Employee
         supervised, directly or indirectly, in whole or in part, the
         solicitation or service activities related to such former client; or

                  (b) Solicit, or assist anyone else in the solicitation of, any
         of the Company's employees to terminate their employment with the
         Company and to become employed by any business enterprise with which
         the Employee may then be associated, affiliated, or connected; or

                  (c) Engage in the business of the type performed by the
         Company or its affiliates, including but not limited to reinsurance
         brokerage and related business. The geographic area encompassed by this
         restriction shall be the entire United States. Employee acknowledges
         that, in light of his senior management position within the Company,
         this is a reasonable and appropriate geographic restriction.

         As used in this paragraph 7 and in paragraph 8, "affiliate" shall mean
any person, firm or corporation that, directly or indirectly, controls, is
controlled by, or is under common control with, the Company, whether such
control is through stock ownership, contract or otherwise, and shall expressly
include the Company's predecessor, E. W. Blanch Co. Limited Partnership; and
"prospect" shall mean any person or organization to whom a proposal for services
was rendered by the Company or its affiliates during the 12-month period
immediately preceding the Employee's date of termination; and "solicit" includes
but is not limited to any contact or communication of any nature with a prospect
or existing client for the purpose of or having the effect of maintaining or
establishing goodwill as a basis for any present, future or expanded business,
or otherwise furthering a business goal.

         It is the desire and intent of the parties that the provisions of this
paragraph 7 shall be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this paragraph 7 shall be adjudicated
to be invalid or unenforceable, this paragraph 7 shall be deemed amended to
permit a court to modify the portion thus adjudicated to be invalid or
unenforceable, so that this paragraph shall be legally

                                      - 2 -
<PAGE>

enforceable to the full extent permitted in the law of the particular
jurisdiction in which such adjudication is made.

         8. NONDISCLOSURE OF INFORMATION. Employee recognizes and acknowledges
that the Company's trade secrets and confidential or proprietary information,
including such trade secrets or information as may exist from time to time, and
information as to the identity of clients of the Company, reinsurance contract
data and other similar items, are valuable, special and unique assets of the
Company's business, access to and knowledge of which are essential to the
performance of the duties of Employee hereunder. Employee will not, during or
after the term hereof, in whole or in part, disclose such secrets or
confidential or proprietary information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, nor shall
Employee make use of any such property for his own purposes or for the benefits
of any person, firm, corporation or other entity (except the Company) under any
circumstances, during or after the term hereof, provided that after the term
hereof these restrictions shall not apply to such secrets or information which
are then in the public domain (provided that Employee was not responsible,
directly or indirectly, for such secrets or information entering the public
domain without the Company's consent).

         9. INJUNCTIVE RELIEF. If there is a breach or threatened breach of the
provisions of paragraphs 7 or 8 of this Agreement, the Company shall be entitled
to an injunction restraining Employee from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach including recovery of and damages incurred by the
Company and any profits made by Employee as a result of such breach or
threatened breach. The Company shall be entitled to recovery of its legal fees
and related costs in the event of a breach or threatened breach of this
Agreement by Employee.

         10. EMPLOYEE BENEFITS. During the term of this Agreement, Employee
shall participate in all employee benefit plans of the Company, subject to the
eligibility, enrollment and other requirements of such plans.

         11. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given or
delivered if delivered personally or mailed by registered or certified mail,
return receipt requested, with first class postage prepaid, to his residence in
the case of Employee and to its principal office in the case of the Company.

         12. BREACH, WAIVER OF BREACH. The waiver by the Company of a breach of
any provision of this Agreement by the Employee shall not operate or be
construed as a waiver of any subsequent breach by the Employee.

         13. GOVERNING LAW. The validity, interpretation, construction,
performance, enforcement and remedies of or relating to this Agreement, and the
rights and obligations of the parties hereunder, shall be governed by the
substantive laws of the State of Texas (without regard to the conflict of laws
rules or statutes of any jurisdiction), and any and every legal proceeding
arising out of or in connection with this Agreement shall be brought in the
appropriate courts of the State of Texas, each of the parties hereby consenting
to the exclusive jurisdiction of said courts for this purpose.

         14. ASSIGNMENT. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the successors
of the Company and may be assigned, for all or any part of the term hereof, by
the Company to an affiliate of the Company or to any corporation (i) which at
the time controls the capital stock of the Company, (ii) which succeeds to
substantially all the assets of the Company or (iii) the controlling capital
stock of which is at the time

                                     - 3 -
<PAGE>

owned by the Company; provided, however, that in the event of any transaction
specified in (i), (ii) or (iii) above, the Company shall remain liable with
respect to the obligations of the Company under this Agreement. In the event of
such assignment, any and all references to the "Company" in other paragraphs of
this Agreement shall be deemed to mean and include such assignee corporation.

         15. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties with respect to employment. It may not be changed orally but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.

         16. SURVIVAL. The parties expressly acknowledge and agree that the
provisions of this Agreement, which by their express or implied terms extend
beyond the termination of Employee's employment hereunder (including, without
limitation, the provisions of paragraphs 7 and 8 relating to noncompetition and
nondisclosure of information), shall continue in full force and effect
notwithstanding Employee's termination of employment hereunder or the
termination of this Agreement, respectively.

           IN WITNESS WHEREOF, the parties have executed this Agreement as of
the dates below.

E. W. Blanch Holdings, Inc.
500 North Akard, Suite 4500
Dallas, TX  75201

------------------------------------------       ------------------------------
Edgar W. Blanch, Jr., CEO                                     Date

------------------------------------------       ------------------------------
Kaj Ahlmann

Address:

------------------------------------------

------------------------------------------

------------------------------------------

                                     - 4 -

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