PROMISTAR FINANCIAL CORP
EXHIBIT 10.2
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>prom_ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>

                       EMPLOYMENT AND SEVERANCE AGREEMENT


         THIS  EMPLOYMENT AND SEVERANCE  AGREEMENT is made and entered this 21st
day of May,  2001 by and among JAMES R. LAUFFER,  an individual  and resident of
Pennsylvania  ("Lauffer"),   PROMISTAR  FINANCIAL  CORPORATION,  a  Pennsylvania
corporation  ("Promistar"),  PROMISTAR  BANK,  a  national  banking  association
("Promistar  Bank"),  FNH CORPORATION,  a Pennsylvania  corporation  ("FNH") and
FIRST NATIONAL BANK OF HERMINIE, a national banking association (the "Bank");

         WHEREAS,  Promistar  and FNH are  parties to an  Agreement  and Plan of
Reorganization  dated as of February  24, 2001 (the "Merger  Agreement"),  which
contemplates  that FNH would  merge  with and into  Promistar  and that the Bank
would merge with and into  Promistar  Bank (the FNH into Promistar and Bank into
Promistar  Bank  mergers  are  hereinafter   referred  to  collectively  as  the
"Mergers");

         WHEREAS,  Lauffer is a director and executive officer of FNH and of the
Bank and,  after the Mergers will be a director of Promistar  and an employee of
Promistar Bank for an indefinite period;

         WHEREAS,  Lauffer and the Bank are parties to (i) a Second  Amended and
Restated  Employment  Contract  dated as of  August  9,  1999  (the  "Employment
Contract");  (ii) an Executive  Supplemental  Income Agreement dated as of March
25, 1987 (the "Supplemental Agreement");  (iii) an Executive Salary Continuation
Agreement dated as of July 15, 1999 (the "Continuation Agreement");  and (iv) an
Endorsement Method Split Dollar Plan Agreement (the "Split Dollar Agreement" and
collectively the "Lauffer Employment Contracts");

         WHEREAS,  the parties have agreed that,  as of the  Effective  Time (as
such term is defined in the Merger Agreement), Promistar and Promistar Bank will
expressly  assume each and all of the  obligations of the Bank under the Lauffer
Employment  Contracts as such  documents are in effect as of the date hereof and
giving effect to the amendments  contemplated  by this  Employment and Severance
Agreement;

         WHEREAS,  the parties have agreed that the Employment  Contract will be
amended as of the Effective Time to provide,  generally,  that (i) Promistar and
Promistar  Bank shall pay the severance  amount due thereunder in a lump-sum and
(ii) such severance amount will be increased if Shareholder Approval (as defined
below) of the amendment to the Continuation Agreement is not received;

         WHEREAS,  the parties have agreed that the Continuation  Agreement will
be amended as of the Effective  Time to provide,  generally,  that (i) Promistar
and Promistar Bank shall pay the Retirement  and  Post-Retirement  Death Benefit
under Section IV of the Continuation Agreement and (ii) the offsets described in
the second  sentence  of Section IV shall no longer  apply (that is, the benefit
will be increased) if Shareholder Approval of that amendment is received;

<PAGE>

         WHEREAS,  the parties have agreed that  Lauffer will accept  employment
with Promistar Bank and, upon cessation of such  employment,  he will serve as a
director of Promistar;

         WHEREAS,   Sections   5.01(o)  and  5.02(l)  of  the  Merger  Agreement
contemplate,  and make a condition  precedent to the Mergers, an agreement among
Lauffer, FNH and Promistar amending the Employment Contract and the Continuation
Agreement and providing for the compensation to be paid to Lauffer following the
Mergers;

         WHEREAS,  this  Employment and Severance  Agreement,  together with the
Exhibits  hereto,  is  intended  to be the  agreement  contemplated  by Sections
5.01(o) and 5.02(l) of the Merger Agreement;

         NOW,  THEREFORE,  in consideration  of the mutual promises  hereinafter
made and intending to be legally bound, the parties hereto agree as follow:

1.       TERMINATION OF THIS EMPLOYMENT AND SEVERANCE AGREEMENT.

         If the  Effective  Time (as defined in the Merger  Agreement)  does not
occur, this Employment and Severance Agreement shall be without force and effect
and shall be  terminated  in its  entirety  without  action  by any  party  upon
termination  of the Merger  Agreement.  Without  limiting the  generality of the
foregoing,  if the  Effective  Time does not occur,  the Mergers will not occur,
Lauffer  will  retain  all  rights he has or may have with  respect  to the Bank
and/or FNH under the Lauffer  Employment  Contracts  and neither  Promistar  nor
Promistar Bank will have any obligations to Lauffer under this Agreement.

2.       AMENDMENT OF CONTINUATION AGREEMENT AND EMPLOYMENT CONTRACT.

         Effective as of the Effective Time, the Continuation  Agreement and the
Employment  Contract shall be amended in the respective forms attached hereto as
Exhibits 1 and 2 to provide generally as follows:

         a. CONTINUATION AGREEMENT. If the Mergers occur and the shareholders of
FNH approve,  at or before the  Effective  Time and in  accordance  with Section
280G(b)(5)(B)  of  the  Code  and  Section  6 of  this  Agreement  ("Shareholder
Approval") the  elimination of the offsets  otherwise  required under the second
sentence  of Section  IV of the  Continuation  Agreement  (the  "Offsets"),  the
Offsets shall be  eliminated  under the  Continuation  Agreement and the amounts
payable to Lauffer will be increased accordingly;

         b.  EMPLOYMENT  CONTRACT.  If the  Mergers  occur  and the  Shareholder
Approval  of the  amendment  to the  Continuation  Agreement  is  received,  the
termination  benefit payable to Lauffer pursuant to Section 12 of the Employment
shall be  converted  from  salary  continuation  to a lump-sum  payment.  If the
Mergers  occur and  Shareholder  Approval of the  amendment to the  Continuation
Agreement is not received,  the lump-sum  amount payable under Section 12 of the
Employment  Contract,  as  amended,  shall  be  increased  to  $821,000  if  the
automobile  otherwise described in Section 4(c) below is transferred by the Bank
prior to the  Effective  Time in a transfer  not part of a parachute  payment as
defined in Section  280G(b)(2)  of the Code or $778,000 if the  transfer of such
automobile is at the Effective Time or otherwise as part of a parachute payment.
Furthermore, the Employment Contract shall be amended to the extent


                                       2
<PAGE>

necessary to ensure that there is no  duplication  between the provisions of the
Employment Contract and this Employment and Severance Agreement.

         c.  ASSUMPTION  OF  CONTINUATION  AGREEMENT  AND  EMPLOYMENT  CONTRACT,
AS AMENDED,  BY PROMISTAR  AND PROMISTAR  BANK. As amended,  as of the Effective
Time, the Continuation Agreement and the Employment Contract shall be assumed by
Promistar and Promistar Bank.

3.       ASSUMPTION  OF  SPLIT  DOLLAR  AGREEMENT  AND SUPPLEMENTAL AGREEMENT BY
PROMISTAR AND PROMISTAR BANK.

         As of the Effective Time, Promistar and Promistar Bank shall assume all
obligations  to Lauffer under the Split Dollar  Agreement  and the  Supplemental
Agreement.

4.       EMPLOYMENT OF LAUFFER BY PROMISTAR BANK.

         At the  Effective  Time,  Lauffer shall become an employee of Promistar
Bank and shall have a title,  duties and office commensurate with his experience
and abilities, which position shall be no less senior than the level required to
cause  Lauffer to be  eligible  to retain his office in  Independent  Commercial
Bankers  Association  ("ICBA").  Promistar  Bank  agrees to employ  Lauffer  and
Lauffer  agrees to accept  such  employment.  Subject  to the  Section 5 of this
Agreement,  the  employment  will be  employment  at will and  either  party may
terminate the employment arrangement upon thirty (30) days written notice to the
other. During the period of employment,  Promistar Bank shall pay and provide to
Lauffer:

         (a)  a monthly salary of no less than $19,662;

         (b)  eligibility  to earn annual  bonuses on terms no less favorable to
Lauffer  than the bonus  arrangements  provided by the Bank prior to the Mergers
and,  if  Lauffer's  service  is less than 12 months in any  period  taken  into
account for an annual bonus, the bonus shall be pro rated for the period of time
actually served by Lauffer during that period;

         (c)  if not transferred  prior  to  the Effective  Time, a  transfer of
title,  free and  clear of all  encumbrances,  of the  automobile  provided  for
Lauffer's use by the Bank prior to the Mergers;

         (d)  participation in such employee benefit and fringe benefit plans as
are  provided  to senior  executives  of  Promistar  Bank on the same  terms and
conditions  as  the  such  other  senior   executives  of  Promistar   Bank  may
participate,  provided,  however,  Lauffer  will  decline  participation  in the
Promistar Bank health plan in favor of receipt of reimbursement of premiums paid
under  health  plan  coverage  in  effect  prior  to  his  employment,  as  such
reimbursement is described in Section 4(f)(2) below;

         (e)  vacations  taken  at  Lauffer's  discretion  of  not  less  in the
aggregate than four (4) nor more than 6 weeks per calendar year;

         (f)  Lauffer  shall  be  entitled  to  the  following additional fringe
benefits:

                  (i)   a payment of  up to $2,500 per year  in each of calendar
         years 2001, 2002 and 2003  for  financial  planning  and  tax  services
         provided to Lauffer and/or his spouse;


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<PAGE>

                  (ii)  reimbursement,  in an amount  not to exceed  $8,500  per
         year,  for the payment of  premiums  for health  insurance  coverage as
         provided under arrangements secured by or with respect to Lauffer prior
         to the  Effective  Time  in  which  Lauffer  intends  to  continue  his
         coverage;

                  (iii)  reimbursement  of up to $1,500 per year in country club
         dues each year for calendar years 2001, 2002 and 2003;

                  (iv)   reimbursement of up to $10,000  each year for  calendar
         years 2001, 2002 and 2003 for the expenses of attendance by Lauffer and
         Lauffer's spouse of ICBA meetings or other banking industry conventions
         and/or conferences;

                  (v)    until the death of Lauffer, payment of premiums on term
         life insurance  policies with a death benefit of not less than $250,000
         (which may be provided by continuing  the policy  purchased by the Bank
         and in effect on Lauffer's life prior to the Merger;

                  (vi)   payment of premiums in accordance with the terms of the
         Lincoln Benefit Life Insurance Endorsement Method Split Dollar Policy;

                  (vii)  payment  at  his  age 65  of  the  balance  accrued for
         Lauffer under  the FNH Director's  Deferred  Compensation Plan prior to
         the Mergers in  accordance  with its terms and, at the Effective  Time,
         Promistar  shall  place  an amount  of cash with a value  equal to such
         accrued  balance  in an  irrevocable  grantor trust with an institution
         with trust powers as trustee  and trust provisions requiring payment to
         Lauffer or his beneficiary at Lauffer's age 65.

                  (viii) At the Effective Time,  Promistar shall place an amount
         of cash with a present  value  equal to the  aggregate  of its  payment
         obligations  to  Lauffer  under  the  Supplemental  Agreement  and  its
         estimated  payment   obligations  to  Lauffer  under  the  Continuation
         Agreement in an  irrevocable  grantor  trust with an  institution  with
         trust  powers as  trustee  and trust  provisions  requiring  payment to
         Lauffer  or his  beneficiary  in  accordance  with  the  terms  of such
         agreements.

5.       COMPENSATION TO LAUFFER FOR SERVICES AS DIRECTOR OF PROMISTAR.

         During the period  Lauffer is employed by  Promistar  Bank as an active
employee under Section 4 above, he shall receive no compensation  from Promistar
for his services as a director of Promistar and,  instead,  he shall serve as an
employee-director  of  Promistar.   Upon  his  termination  of  employment  with
Promistar  Bank for any  reason,  Promistar  shall  compensate  Lauffer  for his
services as a director in accordance with Promistar's  compensation  program for
outside  (non-employee)  directors  then in  effect.  In  addition,  since it is
contemplated  that  Lauffer will  represent  Promistar  at ICBA,  community  and
industry functions,  if Lauffer terminates  employment with Promistar Bank prior
to the  expiration  of any  times or dates  set  forth in  Section  4(f)  above,
Promistar  shall pay or  provide to Lauffer  the  fringe  benefits  set forth in
Section 4(f) for the times  remaining in the  respective  subsections of Section
4(f) to the extent not then paid or provided by Promistar Bank.


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<PAGE>

6.       SHAREHOLDER APPROVAL.

         Shareholder  Approval  shall be deemed  received  if, at or before  the
Effective Time:

         (a)  the payments contemplated  by  the  Change  in Control  Agreements
(before giving effect to the Non-duplication  Amendments) are approved by a vote
of persons who owned, immediately before the Merger, more than 75% of the voting
power of all outstanding  stock of FNH within the meaning of Prop.  Treas.  Reg.
1.280G-1, Q&A 7(c); and

         (b)  Promistar receives  an opinion of counsel  acceptable to Promistar
(which may be counsel to the Bank) that the  requirements  for the exemption set
forth at Section 280G(b)(5) of the Code and Prop. Treas. Reg. 1.280G-1, Q&A 7 5,
6 and 7 have been satisfied.

7.       NON COMPETITION.

         During the period of employment  under Section 4 of this  Agreement and
for one year thereafter, Lauffer shall refrain from competing with Promistar and
Promistar Bank except with the prior written  consent of Promistar and Promistar
Bank. The phrase  "refrain from  competing  with  Promistar and Promistar  Bank"
shall mean that Lauffer will not engage,  directly or indirectly (including,  by
way of example only, as a principal,  partner, venturer,  employee or agent) nor
have  any  direct  or  indirect   interest  in  any   enterprise  (a  "Competing
Enterprise")  which competes or holds an interest of more than five percent (5%)
of an entity which  competes  with  Promistar  and  Promistar  Bank, or with any
subsidiary  of Promistar and  Promistar  Bank, by engaging in providing  banking
services  to  individuals  or  corporations  engaging  in  any  activity  in any
geographic area which the business plan of Promistar and/or Promistar Bank as in
effect at the Effective  Time,  contemplates  Promistar and Promistar Bank to be
engaged within two (2) years following the Effective Time. It is agreed that the
foregoing provisions shall not restrict Lauffer from either (i) being a director
of or having any investments or other interests in an enterprise  which is not a
Competing  Enterprise or (ii) having any investments in any Competing Enterprise
the  stock of which is  listed  on a  national  securities  exchange  or  traded
publicly  over-the-counter so long as such investment does not give Lauffer more
than three percent (3%) of the voting stock of such company.

8.       CONFIDENTIALITY.

         Lauffer agrees:

         (a)  To keep  secret  all  business  plans  and  mailing  lists  of the
Promistar  or Promistar  Bank and all matters of  Promistar  or  Promistar  Bank
specifically  indicated to be confidential by the Promistar or Promistar Bank or
established as confidential by written  Promistar or Promistar Bank policy,  and
not to  disclose  them to any one outside  Promistar  or  Promistar  Bank either
during or after his employment with Promistar or Promistar Bank, except with the
prior written consent of the applicable entity of Promistar or Promistar Bank or
as required by law; and

         (b)  To deliver promptly to Promistar or Promistar  Bank on termination
of  employment  of Lauffer  all  memoranda,  notes,  records,  reports and other
documents (and all copies thereof) with respect to any such confidential matters
and other proprietary information


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<PAGE>

(such as customer lists, supplier lists, etc.) which Lauffer may then possess or
have under his control.

9.       ARBITRATION.

         Any disputes  hereunder  shall be settled by  arbitration in Johnstown,
Pennsylvania,  under the auspices of, and in accordance  with the National Rules
for  the  Resolution  of  Employment   Disputes  of  the  American   Arbitration
Association,  and the decision in such arbitration shall be final and conclusive
on the  parties  and  judgment  upon such  decision  may be entered in any court
having jurisdiction  thereof. No arbitrator shall have the power of authority to
attempt to change the character of such  payments,  reform this  Agreement or to
award more to one party or the other than allowed by the Agreement.

10.      NOTICES.

         All notices and other  communications that are required or may be given
under this Agreement shall be in writing and shall be delivered personally or by
registered or certified mail  addressed to the party  concerned at the following
addresses:

                  If to Promistar:

                  Promistar Financial Corporation
                  551 Main Street
                  Johnstown, Pennsylvania 15901
                  Attention:  John H. Anderson

                  If to Promistar Bank:

                  Promistar Bank
                  551 Main Street
                  Johnstown, Pennsylvania 15901
                  Attention:  John H. Anderson

                  If to FNH:

                  FNH Corporation
                  98 Wendel Road
                  Irwin, Pennsylvania 15642

                  If to the Bank:

                  First National Bank of Herminie
                  98 Wendel Road
                  Irwin, Pennsylvania 15642



                                       6
<PAGE>

                  If to Lauffer:

                  James R. Lauffer
                  405 Old Route 30
                  Irwin, PA 15642

                  with a copy to:

                  James J. Barnes, Esq.
                  Richard D. Rose, Esq.
                  Buchanan Ingersoll Professional Corporation
                  301 Grant Street
                  20th Floor - One Oxford Centre
                  Pittsburgh, PA 15219

or to such  other  address  as shall be  designated  by notice in writing to the
other party in accordance herewith.  Notices and other communications  hereunder
shall be deemed effectively given when personally  delivered,  or, if mailed, 72
hours after deposit in the United States mail.

11.      MISCELLANEOUS.

         (a)  Except as specifically set forth herein, this Agreement supersedes
all prior agreements,  arrangements and undertakings,  written or oral, relating
to the subject matter hereof.

         (b)  After the Effective Time,

                  (i)  this  Agreement  shall  inure  to  the  benefit of and be
         binding upon Lauffer, Lauffer's heirs, representatives or estate.

                  (ii) this  Agreement  shall be  binding  upon and inure to the
         benefit of Promistar and Promistar Bank and its successors and assigns.
         Promistar  and  Promistar  Bank shall  require any  successor  (whether
         direct  or  indirect,   by  purchase,   conversion  of  form,   merger,
         consolidation or otherwise) to all or substantially all of the business
         or assets of Promistar  and  Promistar  Bank,  by agreement in form and
         substance satisfactory to the Executive,  expressly to assume and agree
         to perform  this  Agreement  in the same  manner and to the same extent
         that  Promistar and  Promistar  Bank would be required to perform if no
         such succession had taken place. As used in this  subparagraph,  "Bank"
         shall  mean (A) such  entity as  defined  in this  Agreement,  (B) each
         parent  or  subsidiary  thereof  and (C) any  successor,  other  than a
         regulatory  agency,  to the  business or any of the assets of Promistar
         and Promistar Bank which  executes and delivers the agreement  provided
         for in this Subsection  11(b)(ii) or which  otherwise  becomes bound by
         all the terms and provisions of this Agreement by operation of law.

         (c) This  Agreement  may be amended,  modified,  superseded,  canceled,
renewed or extended and the terms or covenants  hereof may be waived,  only by a
written  instrument  executed by each of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of any party at any time or
times to require  performance of any


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<PAGE>

provisions hereof shall in no manner affect the right at a later time to enforce
such provisions. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances,  shall be deemed  to be, or  construed  as, a further  or  continuing
waiver of any such breach or a waiver of the breach, preceding or succeeding, of
any other term or covenant contained in this Agreement.

         (d) In the event any one or more of the covenants,  terms or provisions
contained in this Agreement shall be invalid,  illegal or  unenforceable  in any
respect, the validity of the remaining covenants, terms and provisions contained
herein shall be in no way affected, prejudiced or disturbed thereby.

         (e) This  Agreement  is  personal  in nature and neither of the parties
hereto  shall,  without  the  consent  of the  other,  assign or  transfer  this
Agreement  or  any  rights  or  obligations  hereunder.   Without  limiting  the
foregoing,  the  Executive's  right to receive  payments  hereunder shall not be
assignable or transferable,  whether by pledge,  creation of a security interest
or otherwise,  other than a transfer to his beneficiary pursuant to the terms of
the  applicable  Lauffer  Employment  Contract  or by his will or by the laws of
descent  or  distribution,  and in the  event  of any  attempted  assignment  or
transfer  contrary to this Subsection 11(e) neither Promistar nor Promistar Bank
shall  have  liability  to  pay  any  amount  so  attempted  to be  assigned  or
transferred.

         (f) This  Agreement  shall be governed by and  construed in  accordance
with the laws of the  Commonwealth of Pennsylvania  regardless of its principles
of conflict of laws, except as such laws of the Commonwealth of Pennsylvania may
be preempted by the laws of the United States.

         (g) All  payments  required  hereunder  shall be made from the  general
assets of Promistar or Promistar  Bank and Lauffer shall have no rights  greater
than the rights of a general creditor of Promistar or Promistar Bank.

         (h) Promistar and Promistar Bank may withhold from any payment required
hereunder such amounts for federal,  state and local income tax as Promistar and
Promistar  Bank, in good faith,  determines  to be required by applicable  laws,
provided,  however,  Promistar  and Promistar  Bank shall  provide  Lauffer with
notice of the amount so withheld and shall promptly pay over such amounts to the
appropriate taxing body.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed and delivered as of the date first above written.

ATTEST:                               PROMISTAR

By /s/ Janet E. Gillen                By: /s/ John H. Anderson
   --------------------------            --------------------------------------
   Assistant Secretary                Title: Chairman and Chief Executive
                                             Officer



ATTEST:                               PROMISTAR BANK

By /s/ Janet E. Gillen                By: /s/ Steven C. Ackmann
   --------------------------             -------------------------------------
   Assistant Secretary                Title: Chairman, President & C.O.O.



                                       8
<PAGE>

ATTEST:                                                       FNH

By /s/ Kerry M. Anthony               By: /s/ Anthony P. Zello, Jr.
   --------------------------             -------------------------------------
   Executive Vice President           Title: Vice President, Personnel Officer
   & C.O.O.


ATTEST:                                FIRST NATIONAL BANK OF HERMINIE

By /s/ Kerry M. Anthony                By: /s/ Jay A. Miller
   --------------------------              ------------------------------------
   Executive Vice President            Title: President
   & C.O.O.


WITNESS:


By /s/ V. David Lavella                By: /s/ James R. Lauffer
   --------------------------              ------------------------------------
         Secretary                         James Lauffer














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