Document:

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                                 EXHIBIT 10.10                    EXECUTION COPY
                                                                        02/28/02

                              EMPLOYMENT AGREEMENT

        THIS AGREEMENT is made as of the 28th day of February, 2002, among
STERLING FINANCIAL CORPORATION ("Corporation"), a Pennsylvania business
corporation having a place of business at 101 North Pointe Boulevard, Lancaster,
Pennsylvania 17601, Bank of Lancaster County ("Bank") a national chartered bank
having a place of business at 101 North Pointe Boulevard, Lancaster,
Pennsylvania 17601, and J. BRADLEY SCOVILL ("Executive"), an individual residing
at 990 McCosh Street, Hanover, Pennsylvania 17331.

                                   WITNESSETH:

        WHEREAS, the Corporation is a registered financial  holding company;

        WHEREAS, Bank is a subsidiary of the Corporation;

        WHEREAS, Corporation and Bank desire to employ Executive to serve in the
capacity of Senior Executive Vice President of Corporation and Chief Financial
Officer of Corporation and 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 and Bank of
        Hanover and Trust Company 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 to which he may otherwise be entitled, or he may have, under the
        Employment Agreement dated January 25, 2000 and entered between
        Executive, Corporation and Bank of Hanover and Trust Company.

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, Chief Executive
        Officer and President of the Corporation, so long as the assignment is
        consistent with the Executive's office and duties. Executive shall be
        employed as Senior Executive Vice President of Corporation and Chief
        Financial Officer of Corporation and Bank, and shall hold such other
        titles as may be given to him from time to time by the Boards of
        Directors of Corporation and Bank. Executive shall devote his full time,
        attention and energies to the business of Corporation and Bank during
        the Employment Period (as defined in Section 3 of this Agreement);
        provided, however, that this Section 2 shall not be construed as
        preventing Executive from (a) engaging in activities incident or
        necessary to personal

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        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 Boards of Directors of Corporation and Bank, or (c) being involved
        in any other activity with the prior approval of the Boards 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, Bank or their
        subsidiaries, nor may the Executive serve as a director or officer or in
        any other capacity in a company which competes with Corporation, Bank or
        their subsidiaries.

3.      TERM OF AGREEMENT.

        (a)    This Agreement shall be for a three (3) year period (the
               "Employment Period"), beginning on the date first written above
               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 date first written
               above (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).

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

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

               (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 Section 3(d)

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                      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;

               (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 which brings public
                      discredit to Corporation, Bank or their subsidiaries, as
                      determined by an affirmative vote of seventy percent (70%)
                      of the disinterested members of the Boards of Directors of
                      Corporation and Bank; or

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

               (ix)   Unlawful discrimination by the Executive, including
                      harassment against employees, customers, business
                      associates, contractors, or vendors of Corporation, Bank
                      or their subsidiaries, which could result in liability to
                      Corporation, Bank or one of their subsidiaries; or

               (x)    Theft or material abuse by executive of the property of
                      Corporation, Bank or their subsidiaries or the property of
                      customers, employees, subsidiaries, contractors, vendors,
                      or business associates of Corporation, Bank or their
                      subsidiaries.

               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 Chief
               Financial Officer of Corporation and Bank, (ii) a reassignment
               which requires Executive to move his principal residence and/or a
               requirement that Executive move his office more than fifty (50)
               miles from the Corporation's or 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) of this Agreement, (iv) any reduction in the
               Executive's Annual Base Salary as in effect on

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               the date on the date of this Agreement, or as the same may be
               increased from time to time, except such reductions that are the
               result of a national financial depression, or national or bank
               emergency, or (v) any failure of Corporation or 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, or other qualified retirement, life insurance,
               medical, health and accident, disability or other employee plans
               of Corporation or 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.

               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.

               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 may continue to participate in
               all qualified and non-qualified retirement benefit plans as if
               his employment had continued through the remaining term of the
               Agreement. If Executive is not eligible to continue to
               participate in qualified or non-qualified retirement plans,
               Executive will receive a lump sum cash payment equal to 25% of
               the payments to be received for termination of this Agreement
               under this provision. However, in the event that 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.

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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,
               taking into account any reasonable accommodation required by law,
               and without posing a direct threat to himself and others, for a
               period of one hundred eighty (180) days or more. The Executive
               shall have no duty to mitigate any payment provided for in this
               Section 3(d) by seeking other employment.

        (e)    Executive agrees that in the event his employment under this
               Agreement is terminated, regardless of the reason for
               termination, 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; provided, however, that if the Executive
               is terminated after January 1, 2003, but before January 1, 2004,
               then Agreed Compensation shall equal the sum of (A) the
               Executive's highest Annual Base Salary under the Agreement and
               (B) the Executive's annual bonus for 2002. If the Executive is
               terminated after January 1, 2004, but before January 1, 2005,
               then 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 for 2002 and
               2003.

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 Two
               Hundred Twenty-Five Thousand Dollars ($225,000) per year (subject
               to applicable withholdings and deductions) payable at the same
               times as salaries are payable to other executive employees of
               Corporation or Bank. 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

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               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 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.

        (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 that 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) of this Agreement.

        (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 mutually
               agreeable country club.

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        (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 (or 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 (or the entity affected by the transaction); 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's or Bank's then
                      outstanding securities, or

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               (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 Section 3
               of this Agreement (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 may continue to participate in
               all qualified and non-qualified retirement plans as if his
               employment had continued through the then remaining term of the
               Agreement. If Executive is not eligible to participate in non-
               qualified or qualified retirement plans, Executive will 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

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               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.

        (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 CAUSE.

        (a)    In the event that Executive's employment is involuntarily
               terminated by Corporation and/or Bank without Cause, and in a
               situation not addressed by the Change in Control provisions set
               forth in Section 6 of this Agreement, 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 may continue to
               participate in all qualified and non-qualified retirement
               benefits plans as if his employment had continued through the
               then remaining term of the Agreement. If Executive is not
               eligible to participate in non-qualified or qualified retirement
               plans, Executive will 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). 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

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               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.

        (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 financial or bank holding company) or financial
                      services industry, or (2) any other activity in which
                      Corporation or Bank or any of their subsidiaries or
                      affiliates, other than Town and Country, Inc. and
                      Equipment Finance, Inc., are engaged during the Employment
                      Period, and remain so engaged at the end of the Employment
                      Period, in any county in which, at any time during the
                      Employment Period or on the date of termination of the
                      Executive's employment, Corporation, Bank or any of their
                      subsidiaries or affiliates conducted business, or in any
                      county contiguous to such a county, including countries
                      located outside of the Commonwealth of Pennsylvania (the
                      "Non-Competition Area"); or

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

               (iii)  directly or indirectly contact, solicit or induce any
                      person, corporation or other entity who or which is a
                      customer or referral source of Corporation,

                                       10

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                                  EXHIBIT 10.10                   EXECUTION COPY
                                                                        02/28/02

                      Bank or any of their subsidiaries or affiliates at any
                      time during the Employment Period or on the effective date
                      of termination of the Executive's employment; or

               (iv)   directly or indirectly solicit, induce or encourage any
                      employee of Corporation, Bank or any of their subsidiaries
                      or affiliates, who is employed, at any time during the
                      Employment Period or on the effective date of termination
                      of the Executive's employment, to leave the employ of
                      Corporation, Bank or any of their subsidiaries or
                      affiliates or to seek, obtain or accept employment with
                      any person other than Corporation, Bank or any of their
                      subsidiaries or affiliates.

        (b)    It is expressly understood and agreed that, although Executive
               and Corporation and Bank consider the restrictions contained in
               Section 8(a) and (c) of this Agreement 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) and (c) of this Agreement is an unreasonable or otherwise
               unenforceable restriction against Executive, the provisions of
               Section 8(a) and (c) of this Agreement 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 first written at the beginning of this Agreement and
               ending on one of the following dates, as applicable:

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

               (iv)   if the Executive's employment is involuntarily terminated
                      in accordance with the provisions of Section 7 of this
                      Agreement (relating to termination absent Cause), the
                      second anniversary date of the effective date of
                      termination of employment; or

                                       11

<PAGE>

                                  EXHIBIT 10.10                   EXECUTION COPY
                                                                        02/28/02

               (v)    if the Executive voluntarily terminates his employment
                      without Good Reason and absent Change in Control, the
                      second anniversary date of the effective date of
                      termination of employment; or

               (vi)   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, customer lists, 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.     WORK MADE FOR HIRE. Any work performed by the Executive under this
        Agreement should be considered a "Work Made for Hire" as that phrase is
        defined by the U.S. patent laws and shall be owned by and for the
        express benefit of Corporation, Bank and their subsidiaries and
        affiliates. In the event it should be established that such work does
        not qualify as a Work Made for Hire, the Executive agrees to and does
        hereby assign to Corporation, Bank and their affiliates and
        subsidiaries, all of his rights, title, and/or interest in such work
        product, including, but not limited to, all copyrights, patents,
        trademarks, and proprietary rights.

11.     RETURN OF COMPANY PROPERTY AND DOCUMENTS. The Executive agrees that, at
        the time of termination of his employment, regardless of the reason for
        termination, he will deliver to Corporation, Bank and their subsidiaries
        and affiliates, any and all company property, including, but not limited
        to, keys, security codes or passes, mobile telephones, pagers,
        computers, devices, confidential information (as defined in this
        Agreement), records, data, notes, reports, proposals, lists,
        correspondence, specification, drawings, blueprints, sketches, software
        programs, equipment, other documents or property, or reproductions of
        any of the aforementioned items developed or obtained by the Executive
        during the course of his employment.

12.     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

                                       12

<PAGE>

                                  EXHIBIT 10.10                   EXECUTION COPY
                                                                        02/28/02

        insurance, if the Board of Directors of the Corporation and/or Bank
        determine that such coverage cannot be obtained at a reasonable price.

13.     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.

14.     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.

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

16.     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.

17.     INDEMNIFICATION. The Corporation and/or Bank 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
        or Bank 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.

18.     ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
        either oral or in writing, between the parties with respect to the
        employment of the Executive by the Bank and/or Corporation, including
        the Employment Agreement entered by Executive, Corporation and Bank of
        Hanover and Trust Company and dated January 25, 2000, and this Agreement
        contains all the covenants and agreements between the parties with
        respect to employment.

                                       13

<PAGE>

                                  EXHIBIT 10.10                   EXECUTION COPY
                                                                        02/28/02

19.     SUCCESSORS; BINDING AGREEMENT.

        (a)    Corporation 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/or its subsidiaries to expressly assume and agree
               to perform this Agreement in the same manner and to the same
               extent that Corporation would be required to perform it if no
               such succession had taken place. Failure by Corporation 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.

        (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.

20.     ARBITRATION. Corporation, Bank and Executive recognize that in the event
        a dispute should arise between them concerning the interpretation or
        implementation of this Agreement (except for any enforcement sought with
        respect to Sections 8, 9, 10 or 11 of this Agreement, which may be
        litigated in Court), 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 in this Agreement or any enforcement sought
        with respect to Sections 8, 9, 10 or 11 of this Agreement.

21.     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.

                                       14

<PAGE>

                                  EXHIBIT 10.10                   EXECUTION COPY
                                                                        02/28/02

22.     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.

23.     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.

24.     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.

<TABLE>
<S>                                         <C>
ATTEST:                                     STERLING FINANCIAL CORPORATION

  /s/ Douglas P. Barton                     By   /s/ John E. Stefan
  -----------------------                        -----------------------------
                                                 John E. Stefan, Chairman

ATTEST:                                     BANK OF LANCASTER COUNTY

  /s/ Douglas P. Barton                     By  /s/ John E. Stefan
  ---------------------                         ------------------------------
                                                John E. Stefan, Chairman

WITNESS:

/s/ Anne C. Lohr                            /s/ J. Bradley Scovill
-----------------------                     ----------------------------------
                                                J. Bradley Scovill
                                                 "Executive"
</TABLE>

                                       15<PAGE>
                              OFFICER'S CERTIFICATE

         I do hereby certify and represent that:

         1. I am the duly elected Secretary of deCODE genetics, Inc., a Delaware
corporation.

         2. Pursuant to Rule 306(a) of Regulation S-T, the following exhibit
10.36 to deCODE genetics, Inc.'s Annual Report on Form 10-K is a fair and
accurate English translation of a document prepared in the Icelandic language.

         IN WITNESS WHEREOF, I have signed this Officer's Certificate in my
capacity as Secretary of deCODE genetics, Inc. on this 21 day of March, 2002.

                                  By:        /s/ Tanya Zharov
                                             -----------------------------------
                                  Name:      Tanya Zharov
                                  Title:     Secretary and Corporate Counsel

<PAGE>
                                                                   Exhibit 10.36

                                   CONTRACT ON
                                FINANCIAL LEASING

                                   LYSING HF.

                                  WWW.LYSING.IS

                        Suourlandsbraut 22, 108 Reykjavik
        Tel: +354-540-1500, Fax: +354-540-1505, Freephone: +354-800-6515
<PAGE>
CONTRACT ON                                           NO. 105591   COPY
FINANCIAL LEASING                                                  LYSING HF.

LYSING HF. STATE REG. NO. 621101-2420                 Document drawn
                                                      up by:
                                                      Sveinn Por
                                                      Stefansson
AS LESSOR AND                                         CURRENCY LINKED

Lessee:           Islensk erfoagreining ehf.    State Reg. No        691295-3549
Domicile:         Lynghals 1                             Tel:           570-1900
Postal address:   110 Reykjavik                          Tel:

HEREINAFTER TERMED THE LESSEE, ENTER INTO THE FOLLOWING CONTRACT ON FINANCIAL
LEASE:

ARTICLE 1
THE LEASED PROPERTY:

Research equipment and instruments pursuant to invoice No. 0206 dated 12 Dec.
2001 with serial numbers pursuant to attached document No 3 and photocopies of
foreign invoices

ARTICLE 2
BASE AMOUNT OF LEASE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                               Division of       ISK              Rate      Foreign
                                               lease amount                                 currency
                                               indexed to USD
------------------------------------------------------------------------------------------------------
<S>             <C>      <C>                   <C>               <C>              <C>       <C>
Amount          ISK      1,291,800,000                           1,291,800,000    107.65    12,000,000
of lease
---------------------------------------------                    -------------------------------------
VAT             ISK        316,491,000
---------------------------------------------                    -------------------------------------
Total           ISK      1,608,291,000
------------------------------------------------------------------------------------------------------
                              Total exc. VAT             ISK     1,291,800,000
------------------------------------------------------------------------------------------------------
</TABLE>

ARTICLE 3
SELLER: Islensk erfoagreining direct importation      State Reg. No. 691295-3549

ARTICLE 4
INITIAL TERM OF LEASE

From: 10 January 2002
To: 9 January 2005
Date of first lease payment: 10 January 2002
Number of payments: 36
Date of payment: 14 December 2001
Number of months: 36

ARTICLE 5
ARRANGEMENT OF PAYMENTS DURING INITIAL TERM OF LEASE

10 January 2002 to 10 January 2005
No. of payments: 36
Lease indexed to USD: ISK 38,468,518
Total exc. VAT: ISK 38,468,518.-

                                                                               2
<PAGE>
Payment frequency:                Monthly                   Subject to VAT

ARTICLE 6
MONTHLY CONTINUATION OF LEASE FOLLOWS END OF INITIAL TERM OF LEASE

from 10 January 2005
Lease indexed to USD: ISK 3,205,710.-
Total exc. VAT: ISK 3,205,710.-

ARTICLE 7

INSURED BY:                               Vatryggingarfelag Islands hf.
Insurance amount ISK:                     1,291,800,000
Collection of premiums                    Directly from the Lessee

ARTICLE 8
SURETY

Bill of Exchange

MORTGAGED PROPERTY: deCode Genetics Inc., USA

ARTICLE 9
ATTACHMENTS TO THE CONTRACT:

Attached document 1: annex dated 10 December 2001
Attached document 2: letter dated 22 October 2001
Attached document 3: list of serial numbers

ARTICLE 10
SPECIAL TERMS

Upon signature of this Contract the Lessee shall pay an initial fee of ISK
6,459,000.- plus VAT and with the first lease payment the interest of the
paid-out amount, estimated at ISK 6,510,938.

Calculations based on LIBOR interest rate 1.94% (10 December 2001)

                                                                               3
<PAGE>
ARTICLE 11: THE LEASED PROPERTY

The leased property is specified in Article 1 of this Contract. The amount of
the lease of this Contract is specified in Article 2. In addition, documents
describing the leased property in detail are appended to this Contract, and form
a part hereof.

ARTICLE 12: TERM OF LEASE

The term of lease is specified in articles 4 and 6. The Lessee may terminate
this Contract with one month's notice when one month is remaining of the initial
term of lease under the terms of Article 4. In the event that the Lessee does
not terminate the Contract as specified above, the Contract shall be
automatically extended without time limits.

The Lessee may terminate the extended lease in writing with one month's notice.
In the event that the Lessee terminates this Contract, the terms of Article 29
shall apply to the return of the leased property and costs accruing.

ARTICLE 13: LEASE PAYMENTS

The Lessee shall make payments on the lease under the terms of Article 5 on the
agreed payment dates. The payment is payable in advance, the first date of
payment being at the beginning of the initial term of the lease under the terms
of Article 4. Should Lysing hf. pay the full or partial price of the leased
property before the beginning of the initial term of the lease under the terms
of Article 4, the Lessee shall pay, in addition to the first payment under the
terms of Article 5, interest as of the date of payment to the first date of the
initial term of lease under the terms of Article 4.

If the Contract is in Icelandic kronur, Lysing hf. may adjust the lease amount
specified in Articles 5 and 6 in accordance with changes in the credit terms of
Lysing hf. Lysing hf. may adjust the indexed lease pursuant to Articles 5 and 6
in accordance with changes in the LIBOR-interest rate on the foreign currency or
currencies in which the lease is denominated, or to the credit terms of Lysing
hf.

ARTICLE 14: INDEXATION

If the lease payment is index-linked, the Lessee shall pay, in addition to the
lease payment, an indexation adjustment. The adjustment shall be calculated on
the basis of changes from the base consumer price index to which this Contract
is linked under the terms of Article 2, to the index as current on each date of
payment on the lease. However, an index which is lower than the base index of
this Contract shall not be applied.

Lease payments indexed to the changes in the exchange rate of a currency abroad
and/or the exchange rate of foreign currencies against the Icelandic krona (ISK)
are specified in ISK.

The lease payment is payable in ISK. Calculation shall be based upon the posted
selling rate of the Central Bank of Iceland for the currency or currencies in
question on the date of issue of the invoice.

                                                                               4
<PAGE>
ARTICLE 15: OWNERSHIP

Lysing hf. is the sole owner of the leased property. The company may request the
leased property to be labelled as its property with a label supplied by the
company to the Lessee. The label shall not be removed during the term of lease.

At the Lessee's expense, Lysing hf. will register its ownership of the leased
property, if such registration is obligatory by law or regarded as necessary by
the company. The Lessee may not undertake any declaration of legal consequence
regarding the leased property, and it is not subject to enforcement procedures
in respect of the Lessee's debts.

The Lessee may not permit others the use of the leased property, nor deliver it
to another party in any other manner, without the consent of Lysing hf.

ARTICLE 16: INSPECTION

The Lessee has chosen the leased property, and shall undertake on behalf of
Lysing hf. to inspect it, as the purchaser is obliged to do by the terms of the
Act on the Sale of Goods No. 39/1922 and/or other rules of law. Lysing hf. takes
no responsibility for the leased property. Lease payments must be made even if
the Lessee is not satisfied with the leased property, or if it does not have the
characteristics which the Lessee expected.

ARTICLE 17: DELIVERY

The Lessee assumes the risk of the leased property being destroyed or damaged or
deteriorating after the seller has delivered the leased property, or after the
risk has passed from the seller to the purchaser under the terms of the Act on
the Sale of Goods No. 39/1922 and/or other rules of law.

The Lessee confirms that the leased property described above has been delivered
to him and that he has accepted it without reservation and has verified, through
necessary inspection and testing, that the leased property is without defect and
possesses the agreed characteristics agreed.

The lease amount pursuant to Article 2 of this Contract is in accordance with
agreements made between the Lessee and the Seller.

ARTICLE 18: COST OF SHIPMENT AND REGISTRATION

All costs incurred due to the packaging and shipment of the leased property from
the seller to the lessee, as well as all costs pertaining to installation of the
leased property at the place of use, are the Lessee's responsibility and payable
by the Lessee.

Furthermore, the Lessee shall pay all costs pertaining to registration and
transfer of ownership.

ARTICLE 19: SELLER'S DEFAULT

The Lessee shall inform Lysing hf. in writing or by other equally verifiable
means, should the leased property prove defective, or if a delay occurs in
delivery by the seller, so that all necessary measures can be taken against the
seller in respect of the default.

The Lessee shall pay lease payments, even if the seller defaults on his contract
with Lysing hf. and/or the Lessee.

However, the Lessee may be entitled to a discount, damages or reimbursement as
follows:

      a)    Default on the part of the seller which leads to a discount on the
            purchase price, or damages payable by the seller, shall benefit the
            Lessee fully in

                                                                               5
<PAGE>
            the form of reduced lease payments. The Lessee shall have no further
            claim on Lysing hf. In other respects, this Contract shall remain
            valid.

      b)    In the event that the seller's default is of such a serious nature
            that the Sale Contract may be cancelled, Lysing hf. shall make this
            decision and notify the seller of its decision.

When the sale contract has been cancelled and a settlement with the seller has
not been reached within 30 days of the Contract being cancelled, Lysing hf. may
claim settlement from the Lessee under the terms of Article 30. Refunds of the
purchasing price of the leased property from the seller shall be fully
deductible from the claims of Lysing hf. against the Lessee on the date of
payment. Possible damages shall also be payable to the Lessee if they stem from
damage suffered by the Lessee in the matter, provided that the Lessee is not in
debt to Lysing hf.

The Lessee shall pay the expense of claims made against the seller resulting
from the seller's default, irrespective of whether the claim is made in the name
of Lysing hf. or of the Lessee on behalf of the company.

ARTICLE 20: TREATMENT OF LEASED PROPERTY

The Lessee shall maintain the leased property in good condition, and have all
damage and malfunctions repaired as soon as they occur, and observe the rules of
the manufacturer/seller regarding its use.

The Lessee shall attend all service inspections recommended by the agent, and
have the manufacturer/seller or a party recognised by them attend to all
maintenance and repair of the leased property, at the expense of the Lessee and
without right to reimbursement from Lysing hf. In addition, the Lessee shall in
all cases have the equipment lubricated and the oil and filters changed as
specified in the service manual. In the case of vehicles this shall be carried
out at least every 5,000km and shall be registered in the lubrication record
that shall accompany the vehicle.

The Lessee shall ensure that laws are obeyed regarding all treatment and use of
the leased property. Special care shall be taken that the leased property is
equipped with required protective and safety equipment, in order to avoid the
risk of accidents and disease. Any removal of safety equipment is at the
Lessee's risk. The Lessee shall consult with public monitoring authorities if
required by law or regulations. The Lessee shall pay all resulting costs without
the right to reimbursement.

The Lessee bears responsibility for the equipment being used only within the
limits prescribed by insurance companies for the use of the equipment, and by
those who are insured during its use. For example, the equipment may not be
sub-leased, used for training or competitive events, except with the written
approval of Lysing hf.

The Lessee may not modify the leased property. Should the Lessee, in spite of
the above, have modified the leased property, he shall restore it to its
original condition at his own expense. The Lessee may attach the leased property
to items belonging to the Lessee or other parties, provided that there is no
risk to the right of title of the Lessee. In the case of a vehicle, the Lessee
may attach a towbar to the leased property, provided that the equipment is
especially insured for the towing operation to be carried out, and that it is
within the capacity of the equipment, according to the information provided by
the seller.

The place of use shall be the Lessee's place of business, unless the Lessee
specifically requests a different location, which, provided that it is accepted
by Lysing hf., shall be specified in this Contract. If the property to which the
leased property is attached is

                                                                               6
<PAGE>
subject to any lien, the Lessee shall exempt the leased property from the lien
by registering a declaration stating Lysing hf.'s ownership of the leased
property on the form for registration of liens pertaining to the item to which
the leased property is attached, together with a statement of consent of the
holder of the lien. In subsequent documents regarding the lien, it shall also be
stated that the leased property is exempted from the lien.

The Lessee may not transport the leased property out of the country without the
written approval of Lysing hf.

ARTICLE 21: DAMAGE TO THE LEASED PROPERTY

The Lessee shall be responsible for, and must compensate Lysing hf. for, all
damage which may befall the leased property when it is in the Lessee's custody,
or when the Lessee is otherwise responsible for it. The Lessee shall notify
Lysing hf. immediately of such damage in writing, or by other equally reliable
means. If repair of the leased property is possible in the view of Lysing hf.,
the Lessee shall have the leased property repaired without delay.

The Lessee is responsible for ensuring that repair following such damage is
carried out in the repair shop of the seller, or a party referred to by the
seller, in a satisfactory manner and without delay.

The Lessee's obligation to make payments is not affected by the leased property
being unusable owing to damage or malfunction.

If damage of the leased property is so substantial that it is doubtful whether
it would be feasible to repair it, the final decision shall be made by Lysing
hf. and the Lessee shall abide by that decision. Should the conclusion be that
repair of the leased property is not feasible, the contracting parties shall
have the following options:

a)    Should the Lessee wish to renew the leased property, and if the insurance
      compensation suffices for the purchase of a comparable property for lease,
      the terms of this Contract shall remain valid without change regarding
      payments, term of lease etc.

b)    The Lessee may request that the leased property is replaced by another
      similar or identical item, even if the price of the new item is up to 10%
      higher than the insurance compensation for the leased property lost or
      destroyed. The terms of the original contract shall apply, but payments
      until the end of the period shall be adjusted.

c)    Should the Lessee not desire to renew the leased property, or the purchase
      price of the new leased property exceeds the insurance compensation by
      more than 10%, a settlement shall be made between the parties within 30
      days, under the terms of Article 30. The insurance compensation is
      deductible from the claim of Lysing hf. against the Lessee, or is payable
      to the Lessee if a settlement has been made between the Lessee and Lysing
      hf. before the insurance compensation is paid.

ARTICLE 22: DAMAGE CAUSED BY THE LEASED ITEM

During the term of this Contract, the Lessee is responsible for damage which the
leased property may cause, directly or indirectly. In the event that Lysing hf.
is compelled to pay compensation for such damage, the company shall have the
right to claim reimbursement from the Lessee.

                                                                               7
<PAGE>
ARTICLE 23: INSURANCE

The leased property shall be insured during the term of lease. Lysing hf. may
purchase the necessary insurance for the leased property at the expense of the
Lessee. Insurance premiums are variable according to the terms of insurance
policies.

During the term of lease, the amount of the insurance shall be based on the
purchase price of the leased property.

The insurance does not cover transport of the equipment from the place of
delivery to the place of use, additional equipment, installation or connection
of the leased property. Such expense shall be paid by the Lessee. The Lessee
must insure these items specifically.

The Lessee may purchase additional insurance for the leased property, provided
that such purchase does not affect the rights of Lysing hf.

The Lessee shall be liable for deductibles [excess] pursuant to the terms of
insurance as well as all claims on the part of the insurance company in relation
to non-compliance with the terms of insurance.

Invoices for premiums are sent directly to the Lessee. However, in the event
that the Lessee does not pay such premiums within the period allowed, Lysing hf.
may, at the request of the insurance company, pay the premium and claim
reimbursement from the Lessee, together with penalty interest, counted as of the
payment date, and collection costs, cf. Article 27.

ARTICLE 24: RIGHT OF INSPECTION

A member of the staff of Lysing hf. and/or a representative of the company is
entitled to inspect the leased property during the term of lease. In the case of
a vehicle, the Lessee acknowledges the right of Lysing hf. to call the leased
property in for inspection in writing at any time with seven days' notice, so
that its condition may be examined and its instruments read.

In the event that the Lessee does not comply with the request for inspection,
employees of Lysing hf. may inspect the item at its place of use or remove it to
a place of inspection, at the expense of the Lessee, wherever the item may be
found, without an enforcement order. For this purpose, the Lessee shall grant
the Lessor full access to the leased property and the site where the leased
property is kept.

ARTICLE 25: CHANGE OF ADDRESS

The Lessee shall notify Lysing hf. immediately of any change of address.

ARTICLE 26: TAXES AND DUTIES

In addition to lease payments, the Lessee shall pay Lysing hf. a fee as stated
in the company's rates schedule as well as all taxes and fees which may be
increased or levied upon the leased property, the lease contract or the lease
itself, including value-added tax, excise tax on motor vehicles and diesel
weight tax, if the Lessee has not paid on the due date, as well as collecting
costs, including the collecting costs of Lysing hf. in accordance with their
rates schedule. The Lessee is also responsible for all costs pertaining to the
use or custody of equipment. The Lessee shall also pay all fines which may be
levied, such as police fines etc.

ARTICLE 27: DEFAULT

Should the Lessee not pay lease payments and other required payments on the
payment date, the Lessee shall pay Lysing hf. the maximum permitted penalty
interest on the amount outstanding, together with the costs according to the
submitted rates

                                                                               8
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schedule for services of Lysing hf., and all other costs which may be incurred,
such as legal fees and charges.

Lysing hf. may continue to apply price or currency indexation to the outstanding
amount.

ARTICLE 28: CANCELLATION

Lysing hf. may cancel this Contract without prior notice should the Lessee
default or violate the terms of the lease. For example:

a)    If the Lessee does not pay the payments stipulated by this Contract on the
      due dates, or if Lysing hf. has had to pay unpaid compensation, duties or
      fines for which the registered owner is responsible vis-a-vis a third
      party, cf. articles 22 and 26 of this Contract.

b)    If the Lessee neglects to bring in the equipment for inspection or
      neglects its maintenance or repair of damage, as stated in the Contract,
      or otherwise fails to comply with the terms of Article 20 on the handling
      of the leased property.

c)    If the Lessee does not grant the Lessor or other person nominated by the
      Lessor access to the leased property on request.

d)    If the Lessee transports the leased property out of the country without
      the written approval of the Lessor.

e)    If the Lessee or anyone else is arrested for driving under the influence
      of alcohol while driving the vehicle or the Lessee's driving licence is
      suspended.

f)    If the conditions of cancellation apply to other leasing contracts or loan
      agreements between Lysing hf. and the Lessee.

Lysing hf. may also terminate this Contract, without prior notice, on the
following grounds:

a)    If the estate of the Lessee (or, if the Lessee is a company with unlimited
      liability, the estate of one of its owners) is subject to bankruptcy
      proceedings or the Lessee seeks composition with creditors.

b)    If the financial standing of the Lessee (or, if the Lessee is a company
      with unlimited liability, the financial standing of one of its owners)
      deteriorates seriously.

c)    If any changes are made to the operations or organisation of the Lessee's
      business which can impede the fulfilment of his obligations under this
      Contract.

ARTICLE 29: RETURN OF LEASED PROPERTY

In the event that this Contract is terminated pursuant to the terms of articles
12, 19 or 21, or cancelled under the terms of Article 28, the Lessee shall
without delay return the leased property to the place specified by Lysing hf.
The leased property shall be returned undamaged and in normal condition as might
be expected from normal use, cf. Article 20 of the Contract. Lysing hf. may
remove the leased property and have it inspected for the purpose of sale by the
agent or a recognised workshop where the cost of restoring the leased property
to the condition described in this Contract and the inspection manual is
assessed. Lysing hf. may have the trade-in value of the leased property assessed
by the agent, or another competent party at the discretion of Lysing hf. Costs
resulting from sales inspections and repairs shall be paid by the Lessee.

The Lessee may remove all accessories which did not come with the leased
property on the making of this Contract and cannot be counted as maintenance,
but all damage caused by such attachment must be repaired. The leased property
shall be returned

                                                                               9
<PAGE>
with a registration certificate, if the equipment is registered, service records
and manuals from the manufacturer.

Until the leased property has been returned, it is the responsibility of the
Lessee.

The Lessee shall bear all costs pertaining to returning the leased property,
such as costs of disconnection, packing, loading, shipment and insurance. He is
also responsible for all taxes and duties accruing to the leased property as
well as insurance during the sales procedure or until full settlement has taken
place, in addition to all costs for cleaning, checking, repairing and legal
inspection of the leased property.

In the event that the Lessee does not return the equipment as stipulated above,
he acknowledges by signature of this Contract the right of the owner to
repossess the leased property whenever and wherever it can be found without
enforcement order. The Lessee shall for this purpose grant the Lessor full
access to the storage location of the leased property.

ARTICLE 30: SETTLEMENT

Settlement between Lysing hf. and the Lessee owing to termination of the
Contract under the terms of articles 19, 21 or 28, shall be as follows:

1)    The Lessee shall pay all outstanding lease payments as specified in
      articles 5 and 6, together with penalty interest and cost, pursuant to
      Article 27.

2)    The Lessee shall pay all non-payable lease payments as specified in
      Article 5 of the Contract as well as taxes and duties pursuant to Article
      26, insurance pursuant to Article 23 and all other costs pertaining to the
      leased property.

3)    The Lessee shall pay all costs pursuant to Article 29 pertaining to the
      cancellation or termination of the Contract and debt collection measures,
      including any collecting and legal costs of an attorney in accordance with
      a rates schedule, together with compensation for any loss which Lysing hf.
      may suffer as a result of the cancellation of the Contract before the
      initial term of lease has expired. However, Lysing hf. shall not claim
      compensation unless the Contract is cancelled on the grounds of default by
      the Lessee.

4)    Penalty interest shall be charged on items 2-3 should a settlement not be
      concluded within 15 days immediately following the termination or
      cancellation of the Contract.

5)    From the payment of the Lessee to Lysing hf., as specified in items 2-4
      above, the value of the leased property shall be deducted, when it has
      been returned and sold or leased to another party, or assessed pursuant to
      Article 29 and the new selling/assessment price shall be the basis of
      calculation, after deduction of sales costs, including trade-in of
      equipment and repairs and other costs pursuant to Article 29. Should this
      evaluation and/or the cost of repairs be disputed, and the parties fail to
      reach an agreement, the lessor may have the lease property sold at public
      auction by the District Commissioners of Reykjavik, Hafnarfjorour or
      Kopavogur in accordance with Article 8 of Act No. 90/1991, in the
      condition that it is in, provided that the Lessee has made a written
      objection to the evaluation or settlement within ten days from the date
      that he should have been aware of such evaluation or settlement.
      Otherwise, the Lessee must abide by such evaluation or settlement.

Similarly, reimbursement or damages from the seller of the leased property
resulting from defects or default pursuant to Article 19, and insurance
compensation, if the leased property is destroyed or lost pursuant to Article
21, shall be deducted from the payment from the Lessee to Lysing hf. under items
2-4 above.

                                                                              10
<PAGE>
Should the settlement of the lease result in credit payable to the Lessee,
Lysing hf. may, instead of paying this balance to the Lessee, balance it against
other claims or leases in effect between the two parties.

ARTICLE 31. LATENT DEFECTS AND OUTSTANDING CLAIMS

Should compensation or repair costs be incurred by Lysing hf. owing to latent
defects or neglect, which was known or should have been known by the Lessee, but
which was not made known when the leased property was returned, or when
delivered to a new lessee Lysing hf. is entitled to reimbursement from the
Lessee, together with all costs incurred as a result, including legal costs. The
same applies to all claims payable by the Lessee, such as taxes, duties and
fines, that were not known when the lease ended or the settlement was made.

ARTICLE 32: ACCOUNTING

The method by which payments are entered in the accounts of the Lessee is the
responsibility of the Lessee and his auditor.

ARTICLE 33: TRANSFER

Lysing hf. may transfer this Contract to a bank or other leasing company,
provided that such a transfer does not affect the legal rights of the Lessee.
The Lessee may not transfer rights under this Contract without the consent of
Lysing hf.

ARTICLE 34. AMENDMENTS

Amendments to this Contract may only be made by means of a written annex, signed
by both contracting parties.

ARTICLE 35: JURISDICTION

Disputes arising in relation to this Contract may be referred to the District
Court of Reykjavik.

                                                                              11
<PAGE>
THE UNDERSIGNED LESSEE AND GUARANTORS HAVE EXAMINED AND HAVE NO OBJECTIONS TO
ALL THE CONDITIONS OF THIS CONTRACT, ARTICLES 1 TO 35 AND ESPECIALLY ARTICLE 20
ON THE HANDLING OF THE LEASED PROPERTY AND ARTICLES 19, 22 AND 22, WHICH LIMIT
THE RESPONSIBILITY OF THE LESSOR, THE TERMS ON CANCELLATION IN ARTICLE 28, THE
SPECIAL RIGHTS OF THE LESSOR TO REPOSSESS THE LEASED PROPERTY WITHOUT
ENFORCEMENT ORDER, DEFINED IN ARTICLES 24 AND 29, AND THE TERMS OF SETTLEMENT IN
ARTICLE 30. FURTHERMORE, THE LESSEE AND THE GUARANTORS HAVE CAREFULLY EXAMINED
ALL DOCUMENTS ATTACHED TO THE CONTRACT. THE LESSEE AUTHORISES LYSING HF. TO MAKE
ENQUIRIES ABOUT HIS BANKING AFFAIRS DURING THE TERM OF EFFECT OF THIS CONTRACT.

WITH THEIR SIGNATURE, THE LESSEE AND HIS GUARANTORS AUTHORISE LYSING HF. TO
REQUEST REGISTRATION WITH LANSTRAUST HF. FOR ANY EVENTS OF DEFAULT ON THIS
CONTRACT, WHEN SUCH DEFAULTS HAVE CONTINUED FOR AT LEAST 40 DAYS, TO BE
PUBLISHED IN THE LANSTRAUST HF. REGISTRY OF DEFAULTS ETC.

Place: Reykjavik           Date: 13 December 2001

On behalf of Lysing hf.             Lessor:
[Company Signature]                 On behalf of Islensk erfoagreining ehf.,
                                                     Tomas Sigurosson [sign]

                                           On behalf of deCode Genetics Inc.
                                                     Tomas Sigurosson[sign.]

Witnesses to the correct signatures,
date and financial competence of the parties:

Elin Poroardottir [sign.] Id. No. 060763-4969

Karl Porsteins [sign.] Id. No. 131064-4899

                                                                              12

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