EXHIBIT 10.18

THE NATIONAL BANK AND TRUST COMPANY

Annual Incentive Plan

Amended and Restated Effective January 1, 2011

 

I. Purpose and Background

The National Bank and Trust Company (the “Company”) previously adopted the
National Bank and Trust Company Annual Incentive Plan (the “Plan”) to provide
quarterly and annual cash incentive compensation opportunities to employees who
are Participants (as defined below) based on the achievement of predetermined
quarterly and annual financial, strategic, operating unit and/or individual
performance objectives. Effective January 1, 2011, the Plan is amended and
restated as provided in this document.

The Plan has been and continues to be a goal attainment incentive plan, which is
based on the principle of “pay for performance”. Participants in Salary Grades 1
through 7 and Participants who are sales managers in Salary Grade 8 may receive
quarterly payouts (“Quarterly Awards”) based on the achievement of the Operating
Unit Performance Objectives and Individual Performance Objectives described in
Article III(b)(2), and annual payouts (“Annual Awards” and, together with the
Quarterly Awards, the “Awards”) based on Company Performance Objectives
described in Article III(b)(1). Participants who are service managers in Salary
Grade 8 and Participants in salary grades higher than Salary Grade 8 may only
receive Annual Awards with respect to all performance objectives.

 

II. Participation

 

  (a) Eligibility. All individuals who are regular full-time and regular
part-time employees of the Company on January 1 of any calendar year (“Plan
Year”) will be “Participants” for that Plan Year. The level of participation in
the Plan is determined by job function and salary grade.

 

  (b) New Hires. In the event that an individual becomes an employee of the
Company after January 1 of a Plan Year, the individual will become a Participant
on the first day of the month following the individual’s date of hire and the
individual’s Award for such Plan Year will be calculated on the base salary paid
between the date of participation and the end of the quarter and/or Plan Year,
as applicable.

 

  (c) Changes in Eligible Positions. If a Participant is promoted, demoted or
transferred to a position with a different level of participation after
January 1 of a Plan year, the Participant’s Award will be prorated for each
level of participation using the base salary paid beginning on the first day of
the month following the date of promotion, demotion or transfer.

 

III. Awards

 

  (a) Terms and Conditions of Awards. For each Plan Year, the Company’s Chief
Executive Officer (or the Chief Executive Officer’s designee) will establish the
terms and conditions of each Participant’s Award for such Plan Year, including:
(i) a “target” Award, expressed as a percentage of each Participant’s base
salary (which need not be uniform among Participants); (ii) the performance
objectives used to determine the amount payable with respect to an Award;
(iii) the levels of achievement of these performance objectives, which may be
achieved at “threshold”, “target” and “maximum” levels of performance; (iv) the
weight of each performance objective; (v) the amount payable with respect to the
Award; and (vi) such additional terms and conditions that are not inconsistent
with this Plan. Notwithstanding the foregoing, the Board of Directors of NB&T
Financial Group, Inc. (the “Board”), with the input and recommendations of the
Board’s Compensation Committee (the “Committee”), will establish all terms and
conditions of Awards granted to any employee of the Company who is an officer
NB&T Financial Group, Inc. (“NBTF”) as defined in Rule16a-1(f) of the Securities
Exchange Act of 1934 (the “Executive Officers”) and all Company Performance
Objectives (as defined below).

 

  (b) Performance Objectives. The performance objectives used to determine the
amount payable with respect to an Award may include any combination of the
“Company Performance Objectives”, “Operating Unit Performance Objectives” and/or
“Individual Performance Objectives” described below. As appropriate under
Section III(a), the Chief Executive Officer or the Board, with the input and
recommendations of the Committee, will establish “threshold”, “target” and
“maximum” levels of achievement for each performance objective. Different
performance objectives may be applied to individual Participants or to groups of
Participants.

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  (i) Company Performance Objectives. The Board, with the input and
recommendations of the Committee, will establish “Company Performance
Objectives” based on the performance of the Company or an affiliate, any
business unit or department of the Company or an affiliate, or any combination
of the foregoing. The Company Performance Objectives may include, without
limitation, the following:

 

Performance Measure

  

Description

Net Operating Income        

   Income before income taxes and extraordinary items, plus the provision for
loan losses, less net charge-offs plus bonus and related FICA taxes. Security
gains and losses will be included in net operating income on a pro rated basis
based on the average life of the securities sold.

Texas Ratio

   Non-performing loans plus real estate owned, divided by tangible common
equity capital plus loan loss reserves.

Efficiency Ratio

   Non-interest expense divided by revenue.

Other

   As determined by the Board

 

  (ii) Operating Unit and/or Individual Performance Objectives. The Board, with
the input and recommendations of the Committee, will establish specific
“Operating Unit Performance Objectives” and/or “Individual Performance
Objectives” for each department and/or Participant prior to the start of each
quarter and/or Plan Year that may represent items specific to a branch, such as
deposit and/or account growth, or items specific to an individual Participant,
such as number of sales calls made.

 

  (c) Amount Payable. The amount payable with respect to an Award will be
determined as follows:

 

  (i) Quarterly Awards. At the conclusion of each quarter, the Board, with the
input and recommendations of the Committee, will determine the level of
achievement for the quarter of the relevant performance objectives and the
amount payable with respect to Quarterly Awards based on the level of
achievement and the “target” Awards of each Participant.

 

  (ii) Annual Awards. After each Plan Year, the Board, with the input and
recommendations of the Committee, will determine the level of achievement for
the Plan year of the relevant performance level and the amount payable with
respect to Annual Awards based on the level of achievement and the “target”
Award of each Participant. In its discretion, the Board may exclude any
extraordinary or significant items (i.e., acquisition, divestitures, significant
changes in accounting principles or tax laws, etc.) in determining the level of
achievement of any performance objective.

For purposes of determining the amount payable with respect to an Award,
achievement of the performance objectives between stated levels of performance
will be interpolated by the Board.

 

  (d) Discretion. The Board, with the input and recommendation of the Committee,
may reduce the amount payable with respect to an Award in its sole discretion.

 

IV. Payment of Awards

 

  (a) Payment. The Company will pay any Quarterly Award in the month following
the end of each quarter and Annual Awards by no later than March 15 of the Plan
Year following the Plan Year in which the Annual Award was earned. Payment of
Awards will be made in the form of a single lump-sum cash payment, less all
applicable withholdings.

 

  (e) Conditions to Payment.

 

  (i) Award Thresholds. With respect to Participants who are service managers in
Salary Grade 8 and Participants in salary grades above Salary Grade 8, the
Company must have a Texas Ratio (as defined above) of 30% or lower (the “Award
Threshold”) as of the end of the most recent Plan Year before any Award is paid
for that Plan Year. For Participants in Salary Grades 1 through 7 and
Participants who are sales managers in Salary Grade 8, Annual Awards will be
paid only to the extent that the Award Threshold was achieved as of the end of
the most recent Plan Year.

 

  (ii)

Effect of Termination. A Participant must be employed on December 31st of the
bonus year in order to receive payment with respect to an Award.

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V. Effect of Change in Control

If a Change in Control (as defined in the NB&T Financial Group, Inc. Amended and
Restated 2006 Equity Plan) occurs during any Plan Year, all Awards under the
Plan will be paid to each Participant on a pro-rata basis, less any previous
payouts paid during the Plan Year, based on the extent to which the performance
objectives for that Plan Year were satsified on the date of the Change in
Control.

 

VI. No Entitlement to Incentive Compensation

Participants are eligible to receive a payment under this Plan only upon
attainment of certain performance objectives established under the Plan and
after the approval of the level of achievement of the performance objectives by
the Board, and subject to the other terms and conditions of the Plan.

 

VII. Withholding

The Company will withhold all federal, state, or local taxes that the Company
determines are required to be withheld from any Award payable under this Plan.

 

VIII. Administration

 

  (a) Authority. The Plan will be administered by the Board, with the input and
recommendation of the Chief Executive Officer and Committee as described herein.
The Board will have full power and authority, to the extent not inconsistent
with the Plan, to: (a) establish target Awards; (b) approve the performance
objectives, the level of achievement of the performance objectives, the weight
allocated to each performance objectives, the amount payable with respect to
Awards, and the other terms and conditions with respect to Awards; (c) take any
other action contemplated hereing; and (d) make any other determinations that
the Committee deems necessary or desirable for the administration of the Plan.

 

  (b) Interpretation. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Board deems necessary or desirable. Any decision of the Board in the
interpretation and administration of the Plan will be made in the Board’s sole
discretion and will be final, conclusive and binding on all persons.

 

  (c) Delegation. The Board may delegate its administrative responsibilities to
the Committee or any Company employee or group of employees; provided, however,
that the Board may not delegate its authority to establish the terms, conditions
and payments of Awards granted to any Executive Officer.

 

IX. Amendment and Termination of Plan

The Board reserves the right to amend or terminate the Plan at any time with or
without notice to Participants.

 

X. Miscellaneous

 

  (a) Limitation of Rights. Neither the establishment of this Plan nor any
amendment thereof will be construed as giving to any employee, beneficiary, or
any other person any legal or equitable right against the Company or any
affiliate, and their respective officers or directors except as expressly
provided herein, and in no event will the terms of employment or service of any
employee be modified or in any way affected hereby.

 

  (b) Contract of Employment. Nothing contained in the Plan will be construed to
constitute a contract of employment between the Company and any of its employees
or to constitute a right of an employee to be employed for any specified period
of time by the Company or any affiliate, and nothing in the Plan will interfere
in any way with the Company’s or any affiliate’s right to terminate the
employment of any person at any time, with or without notice, and with or
without cause, which right is expressly reserved.

 

  (c) Nonassignability of Benefits. Benefits payable under this Plan are not
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, including any such liability which is for alimony or
other payments for the support of a spouse or former spouse, or for any other
relative of the employee, unless pursuant to court order, prior to actual
receipt by the person entitled to the benefit under the terms of the Plan. Any
attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable under this Plan is
void. Neither the Company nor any affiliate is liable in any manner for, or
subject to, the debts, contracts, liabilities, engagements, or torts of any
person entitled to benefits under this Plan.

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  (d) Employees Bound. Any action with respect to the Plan taken by the Company
or any action authorized by or taken at the direction of the Board will be
conclusive upon all employees, beneficiaries, or any other person entitled to
benefits under the Plan.

 

  (e) Waiver. No delay or failure by the Company, an employee, or any other
person in exercising any right under the Plan, and no partial or single exercise
of that right, will constitute a waiver of that or any other right.

 

  (f) Construction. Wherever any words are used herein in the masculine or
neuter gender, they will be construed as though they were used in the feminine,
masculine or neuter gender, as the context may require, and vice versa, and
wherever any words are used herein in the singular form they will be construed
as though they were also used in the plural form, as the context may require,
and vice versa.

 

  (g) Severability. If any provision of this Plan will be held invalid or
unenforceable, such invalidity or unenforceability will not affect any other
provisions thereof, and the Plan will be construed and enforced as if such
provisions had not been included.

 

  (h) Governing Law. The laws of the State of Ohio (applied without regard to
any conflicts of laws principles) will determine all questions arising with
respect to the provisions of this Plan, except to the extent superseded by
federal law.

 

  (i) Notice. Any notice to be delivered pursuant to the Plan will be given in
writing and delivered, personally or by certified mail, return receipt
requested, postage prepaid, addressed to the Company or to the employee at their
last known addresses.

 

XI. Clawback. If NBTF is required to prepare an accounting restatement due to
the material noncompliance of NBTF with any financial reporting requirement
under Generally Accepted Accounting Principles as determined by NBTF’s audit
firm within three years after payout with respect to an Award, each Participant
who is an Executive Officer will (and, for Participants other than Executive
Officers, if required by the Board), reimburse the Company upon receipt of
written notification for any excess incentive payment amounts paid under the
Plan calculation(s) which were based on financial results required to be
restated. In calculating the excess amount, the Committee will compare the
calculation of the incentive payment based on the relevant results reflected in
the restated financials compared to the same results reflected in the original
financials that were required to be restated. The Company has the right to
reduce a Participant’s future Award payouts should repayment by the Participant
not occur.

 

XII. Ethical Statement. Participants are subject to NBTF’s Code of Ethics. Any
violations of the Code of Ethics may result in forfeiture of payments under this
Plan.

IN WITNESS WHEREOF, the Board has adopted this amended and restated Annual
Incentive Plan effective as of January 1, 2011.

 

The National Bank and Trust Company By:       Timothy L. Smith Its:    Chairman
of the Board of Directors

APPROVED:

NB&T Financial Group, Inc.

By:                                          
                                                            

       Timothy L. Smith

Its: Chairman of the Board of Directors

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EXHIBIT A

The following examples illustrates how an Annual Awards would be calculated

Annual Award (for Salary Grade 8 – Service Manager)

 

Target Award

  

Annual Base Salary

   $60,000

Target Award (%)

   15%

Target Award ($)

   $9,000 (15% x 60,000)

Performance Objectives/Weighting

  

Company Performance

   50% of Target Award ($4,500)

Operating Unit Performance

   30% of Target Award ($2,700)

Individual Performance

   20% of Target Award ($1,800)

Levels of Achievement

  

Threshold

   50%

Target

   100%

Maximum

   150%

Actual Achievement

  

Company Performance

   Target (100%)

Operating Unit Performance

   Maximum (150%)

Individual Performance

   Target (100%)

Calculation of Award

  

Company Performance

   $4,500 (100% x $4,500)

Operating Unit Performance

   $4,050 (150% x $2,700)

Individual Performance

   $1,800 (100% x $1,800)

Total Award

   $10,350