EXHIBIT 10.2
                          KEYSTONE HERITAGE GROUP, INC.
                                    1995 10-K


                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT made this 30th day of June, 1995, effective July 1, 1995, by
and  between  the  Lebanon  Valley   National  Bank  of  Lebanon,   Pennsylvania
(hereinafter  referred to as "Bank") and Kurt A. Phillips  (hereinafter referred
to as "Executive").

                                WITNESSETH THAT:

     WHEREAS,  Executive has been  employed by Bank and is presently  serving as
its Executive Vice- President and Chief Financial Officer; and

     WHEREAS,  Bank  wishes  to  assure  itself  of the  continued  services  of
Executive  during  the period and on the terms and  conditions  hereinafter  set
forth; and

     WHEREAS, Executive is willing to serve the Bank on a full time basis during
such period on such terms and conditions.

     NOW, THEREFORE,  in consideration of the promises hereinafter set forth, it
is mutually agreed as follows:

     1. Except as  otherwise  provided in  paragraph 2 below,  Bank shall employ
Executive as its Executive  Vice-President and Chief Financial Officer or in any
capacities  as may from time to time be  specified  by the  Board of  Directors,
provided that such duties shall be consistent with Executive's current status as
Bank's Executive  Vice-President  and Chief Financial  Officer.  Said employment
shall be continuous  and on a full time basis for the period  beginning  July 1,
1995 and ending on December 31,

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1997.  On the last day of each  month  this  Agreement  shall  automatically  be
extended  for an  additional  month so that there is always a thirty  (30) month
contract in effect.  Unless  sooner  terminated  pursuant to paragraph 2, below,
Bank may terminate  this Agreement at any time by giving  Executive  thirty (30)
month's  written  notice of the effective  date of said  termination.  Executive
accepts  such  employment  and agrees that during such period he will devote his
best  efforts,  and his full  business  time and  attention,  except  for normal
vacation Periods and illness,  to the performance of such duties for the Bank as
may be assigned to him from time to time by the Bank.

     2. Notwithstanding the provisions of paragraph 1 above, this contract shall
terminate under the following additional conditions:

     a. Upon the death of the Executive.

     b. Mental or physical  disability  of  Executive  which  prevents  him from
performing his normal duties for a period in excess of six (6) months.

     c. At the option of the Bank upon Executive attaining the age of sixty-five
(65) by giving such notice as is provided at that time for comparable' employees
under the personnel policy then in effect.

     d. At the option of Executive by giving three (3) month's written notice to
Bank of his intent to resign or retire provided, however, that in the event that
Executive gives such

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notice,  Bank shall have the option of terminating this Agreement at any earlier
date.

     e. At the option of Bank,  if Executive  is convicted of a crime  involving
moral  turpitude  involving  actions not related to his employment or is charged
with a criminal offense arising out of his employment.  Termination shall become
effective  two (2) weeks after  written  notice to Executive of Bank's intent to
terminate this Agreement pursuant to this  subparagraph.  In the event that this
Agreement is terminated as the result of charges against Executive,  it shall be
reinstated retroactively in the event that said charges are dismissed.

     3. Beginning July 1, 1995, and continuing  through  December 31, 1995, Bank
will pay the Executive a base salary at the annual rate of Eighty-Five  Thousand
Dollars ($85,000.00) payable in bimonthly installments. No later than January 31
of each year  during  the term of this  Agreement,  Bank  shall  review and give
consideration  to the  increase  of the annual rate of  Executive's  base salary
effective the preceding January 1 during the period of his full time employment.
In making such  determination,  Bank shall  consider the  Consumer  Price Index,
salary  increases given to other employee and officers of the Bank,  salaries of
comparable  officers  of  peer  group  banking  institutions  as well as the net
profits of Bank in the  preceding  year.  The base  salary in effect  during the
preceding calendar year shall remain in effect until the termination of this

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Agreement as provided herein unless increased pursuant to this paragraph.

     4. In addition  to the base  salary  provided  herein,  Executive  shall be
entitled to such bonuses and other  benefits as are made  available to the other
officers and employees of Bank other than severance pay.

     5. During the term of this Agreement or any extension  thereof,  or for two
(2) years immediately following  termination of this Agreement,  Executive shall
not engage in the banking  business as the employee or  consultant  of a bank or
savings and loan  association or the parent company of a wholly owned subsidiary
bank or  savings  and loan  association  which has an  office  in the  following
counties of Pennsylvania: Lebanon, Dauphin, Schuylkill, Berks and Lancaster.

     6. This Agreement  shall be binding upon the parties  hereto,  their heirs,
successors and assigns and shall not be modified except in writing signed by all
of the parties hereto.

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

ATTEST:                            LEBANON VALLEY NATIONAL BANK
/s/ Lance M. Frehafer              By: /s/  Donald W. Lesher, Jr.
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Secretary                          Chairman of the Board

Witness:
/s/ Peggy Y. Layser                /s/  Kurt A. Phillips
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                                   Kurt A. Phillips