Exhibit 10.18

THE MIDDLEFIELD BANKING COMPANY

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

This EXECUTIVE DEFERRED COMPENSATION AGREEMENT (this “Agreement”) is entered
into as of this 22nd day of September, 2010, by and between The Middlefield
Banking Company, an Ohio-chartered bank (the “Bank”), and Jay P. Giles, Senior
Vice President of the Bank (the “Executive”).

WHEREAS, the Executive has contributed substantially to the Bank’s success and
the Bank desires that the Executive remain in its employ,

WHEREAS, to encourage the Executive to remain a Bank employee, the Bank desires
to establish a noncontributory, defined contribution arrangement to provide a
supplemental retirement income opportunity for the Executive, with contributions
made solely by the Bank and benefits payable out of the Bank’s general assets,

WHEREAS, none of the conditions or events included in the definition of the term
“golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of the Bank, is contemplated insofar as the
Bank is concerned, and

WHEREAS, the parties hereto intend that this Agreement shall be considered an
unfunded and noncontributory arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). The Executive is fully advised of
the Bank’s financial status.

NOW THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Executive and the Bank hereby agree as follows.

ARTICLE 1

DEFINITIONS

1.1 “Account Balance” means the Bank’s accounting of Annual Contributions made
by the Bank, plus accrued interest.

1.2 “Annual Contribution” means the amount credited to the Account Balance after
the end of each Plan Year for which the Performance Goals are achieved. The
Annual Contribution is conditional on achievement of the Performance Goals,
except that the Annual Contribution amount in any Plan Year shall not be less
than 5% or more than 15% of the Executive’s Base Annual Salary. In its
discretion, the Bank’s board of directors may increase or decrease the amount of
the Annual Contribution, but the Annual Contribution amount shall be changed no
more frequently than annually.

1.3 “Base Annual Salary” means compensation of the type required to be reported
as salary according to Securities and Exchange Commission Rule 229.402(c) (17
CFR 229.402(c)), specifically column (c) of that rule’s Summary Compensation
Table (or any successor provision).

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1.4 “Beneficiary” means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the Executive,
determined according to Article 5.

1.5 “Beneficiary Designation Form” means the form established from time to time
by the Plan Administrator that the Executive completes, signs, and returns to
the Plan Administrator to designate one or more Beneficiaries.

1.6 “Change in Control” shall mean a change in control as defined in Internal
Revenue Code section 409A and rules, regulations, and guidance of general
application thereunder issued by the Department of the Treasury, including –

(a) Change in ownership: a change in ownership of Middlefield Banc Corp., an
Ohio corporation of which the Bank is a wholly owned subsidiary, occurs on the
date any one person or group accumulates ownership of Middlefield Banc Corp.
stock constituting more than 50% of the total fair market value or total voting
power of Middlefield Banc Corp. stock,

(b) Change in effective control: (x) any one person or more than one person
acting as a group acquires within a 12-month period ownership of Middlefield
Banc Corp. stock possessing 30% or more of the total voting power of Middlefield
Banc Corp., or (y) a majority of Middlefield Banc Corp.’s board of directors is
replaced during any 12-month period by directors whose appointment or election
is not endorsed in advance by a majority of Middlefield Banc Corp.’s board of
directors, or

(c) Change in ownership of a substantial portion of assets: a change in
ownership of a substantial portion of Middlefield Banc Corp.’s assets occurs if
in a 12-month period any one person or more than one person acting as a group
acquires from Middlefield Banc Corp. assets having a total gross fair market
value equal to or exceeding 40% of the total gross fair market value of all of
Middlefield Banc Corp.’s assets immediately before the acquisition or
acquisitions. For this purpose, gross fair market value means the value of
Middlefield Banc Corp.’s assets, or the value of the assets being disposed of,
determined without regard to any liabilities associated with the assets.

1.7 “Code” means the Internal Revenue Code of 1986, as amended, and rules,
regulations, and guidance of general application issued thereunder by the
Department of the Treasury.

1.8 “Effective Date” means January 1, 2010.

1.9 “Normal Retirement Age” means age 65.

1.10 “Performance Goals” means the performance criteria set forth in Schedule A
attached to this Agreement and incorporated herein by this reference, which
criteria have been established by the Bank’s board of directors. The Performance
Goals may be changed by the board of directors no more frequently than annually.
If the performance criteria are changed, a new Schedule A shall be substituted
for and shall supersede the old Schedule A, and the new Schedule A shall be
deemed to be incorporated by reference herein and to be a part of this
Agreement. A change in Performance Goals shall not become effective for the Plan
Year in which the change is made unless the change is made on or before March 31
of the Plan Year. The Plan Administrator shall have sole authority to determine
whether the Performance Goals have been achieved for any Plan Year. The Plan
Administrator’s determination that the Performance Goals for a Plan Year have or
have not been achieved shall be conclusive and binding.

 

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1.11 “Plan Administrator” or “Administrator” means the plan administrator
described in Article 8.

1.12 “Plan Year” means the calendar year. The first Plan Year shall begin on the
Effective Date and end on December 31, 2010.

1.13 “Separation from Service” means the Executive’s service as an executive or
independent contractor to the Bank and any member of a controlled group, as
defined in Code section 414, terminates for any reason, other than because of a
leave of absence approved by the Bank or the Executive’s death. If there is a
dispute about the Executive’s status or the date of the Executive’s Separation
from Service, the Bank shall have the sole and absolute right to decide the
dispute unless a Change in Control shall have occurred.

1.14 “Termination with Cause” and “Cause” shall have the same definition
specified in any effective severance or employment agreement existing on the
date hereof or hereafter entered into between the Executive and the Bank or
between the Executive and Middlefield Banc Corp. If the Executive is not a party
to a severance or employment agreement containing a definition, Termination with
Cause means the Bank terminates the Executive’s employment because of –

(a) the Executive’s gross negligence or gross neglect of duties or intentional
and material failure to perform stated duties after written notice thereof, or

(b) disloyalty or dishonesty by the Executive in the performance of duties or
breach of the Executive’s fiduciary duties for personal profit, in any case
whether in the Executive’s capacity as a director or officer, or

(c) intentional wrongful damage by the Executive to the business or property of
the Bank or its affiliates, including without limitation the reputation of the
Bank, which in the judgment of the Bank causes material harm to the Bank or
affiliates, or

(d) a willful violation by the Executive of any applicable law or significant
policy of the Bank or an affiliate that, in the Bank’s judgment, results in an
adverse effect on the Bank or the affiliate, regardless of whether the violation
leads to criminal prosecution or conviction. For purposes of this Agreement
applicable laws include any statute, rule, regulatory order, statement of
policy, or final cease-and-desist order of any governmental agency or body
having regulatory authority over the Bank, or

(e) the occurrence of any event that results in the Executive being excluded
from coverage, or having coverage limited for the Executive as compared to other
executives of the Bank, under the Bank’s blanket bond or other fidelity or
insurance policy covering its directors, officers, or employees, or

(f) the Executive is removed from office or permanently prohibited from
participating in the Bank’s affairs by an order issued under section 8(e)(4) or
section 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or
(g)(1), or

 

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(g) conviction of the Executive for or plea of no contest to a felony or
conviction of or plea of no contest to a misdemeanor involving moral turpitude,
or the actual incarceration of the Executive for 45 consecutive days or more.

ARTICLE 2

DEFERRAL ACCOUNT

2.1 Annual Contribution. The Bank shall establish an Account Balance on its
books. Within three months after the end of each Plan Year the Bank shall credit
the Annual Contribution to the Account Balance provided the Performance Goals
were achieved for the Plan Year. Contributions to the Account Balance by the
Executive are prohibited. Discretionary contributions by the Bank are likewise
prohibited. The Annual Contribution shall not be made by the Bank for the Plan
Year in which the Executive attains Normal Retirement Age or for any year
thereafter. However, if the Performance Goals are achieved for the Plan Year in
which the Executive attains Normal Retirement Age (and if Separation from
Service does not occur before Normal Retirement Age), the Bank shall make a
final contribution in an amount equal to the Annual Contribution multiplied by a
percentage. The percentage shall equal the number of days in the Plan Year
before the Executive attained Normal Retirement Age divided by 365. No Annual
Contributions shall be made by the Bank for the Plan Year in which the
Executive’s death or Separation from Service occurs or for any year thereafter
(except for a final contribution for the year in which the Executive attains
Normal Retirement Age, unless Separation from Service occurs before Normal
Retirement Age).

2.2 Interest. At the end of each Plan Year and until the first to occur of
(x) Normal Retirement Age, (y) the Executive’s death, or (z) the Executive’s
Separation from Service, interest is to be credited on the Account Balance at an
annual rate of interest for that Plan Year, compounded monthly on the first day
of the month, equal to the prime interest rate as published in The Wall Street
Journal (the “Index”). After the first to occur of (x) Normal Retirement Age,
(y) the Executive’s death, or (z) the Executive’s Separation from Service,
interest shall be credited on the Account Balance at an annual rate equal to the
yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest
 1/4%.

2.3 Statement of Account. Within 120 days after the end of each Plan Year, the
Bank shall provide to the Executive a statement of the Account Balance at the
end of the Plan Year. Each annual statement of the Account Balance shall
supersede the previous year’s statement of the Account Balance.

2.4 Accounting Device Only. The Account Balance is solely a device for measuring
amounts to be paid under this Agreement. The Account Balance is not a trust fund
of any kind. The Executive is a general unsecured creditor of the Bank for the
payment of benefits. The benefits represent the mere promise by the Bank to pay
benefits. The Executive’s rights are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by the Executive’s creditors.

 

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ARTICLE 3

BENEFITS DURING LIFETIME

3.1 Normal Retirement Age. Unless Separation from Service or a Change in Control
occurs before Normal Retirement Age, when the Executive attains Normal
Retirement Age the Bank shall pay to the Executive the Account Balance as of the
end of the month in which the Executive attains Normal Retirement Age, instead
of any other benefit under this Agreement. Beginning on the first day of the
month after the month in which the Executive attains Normal Retirement Age, the
Account Balance shall be paid to the Executive in 180 substantially equal
monthly installments. The Bank shall credit interest according to the formula of
section 2.2, compounded monthly, until the Account Balance is paid in full. If
the Executive’s Separation from Service is a Termination with Cause, no further
benefits shall be paid under this Agreement and this Agreement shall terminate.

3.2 Separation from Service. If Separation from Service occurs before Normal
Retirement Age for reasons other than death, instead of any other benefit under
this Agreement the Bank shall pay to the Executive the Account Balance as of the
end of the month immediately before the month in which payments commence, unless
the Change-in-Control benefit shall have been paid under section 3.3. Beginning
on the first day of the later of (x) the seventh month after the month in which
Separation from Service occurs or (y) the month after the month in which the
Executive attains Normal Retirement Age, the Bank shall pay the Account Balance
in 180 substantially equal monthly installments. The Bank shall credit interest
according to the formula of section 2.2, compounded monthly, until the Account
Balance is paid in full.

3.3 Change in Control. If a Change in Control occurs both before the Executive
attains Normal Retirement Age and before the Executive’s Separation from
Service, instead of any other benefit payable under this Agreement the Bank
shall pay to the Executive the entire Account Balance in a single lump sum
within three days after the Change in Control. Payment of the Change-in-Control
benefit shall fully discharge the Bank from all obligations under this
Agreement, except the legal fee reimbursement obligation under section 9.11.

3.4 Payout of Normal Retirement Benefit or Separation from Service Benefit after
a Change in Control. If when a Change in Control occurs the Executive is
receiving the benefit under section 3.1, the Bank shall pay the remaining
benefits to the Executive in a single lump sum within three business days after
the Change in Control. If when a Change in Control occurs the Executive is
receiving or is entitled at Normal Retirement Age to receive the benefit under
section 3.2, the Bank shall pay the remaining benefits to the Executive in a
single lump sum within three business days after the later of (x) the date of
the Change in Control or (y) the first day of the seventh month after the month
in which the Executive’s Separation from Service occurs. The lump-sum payment
due to the Executive as a result of a Change in Control shall be an amount equal
to the Account Balance remaining unpaid.

3.5 One Benefit Only. Despite anything to the contrary in this Agreement, the
Executive and Beneficiary are entitled to one benefit only under this Agreement,
which shall be determined by the first event to occur that is dealt with by this
Agreement. Except as provided in section 3.4, later occurrence of events dealt
with by this Agreement shall not entitle the Executive or Beneficiary to other
or additional benefits under this Agreement.

 

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3.6 Savings Clause Relating to Compliance with Code Section 409A. Despite any
contrary provision of this Agreement, if when the Executive’s employment
terminates the Executive is a specified employee, as defined in Code section
409A, and if any payments under Article 3 of this Agreement will result in
additional tax or interest to the Executive because of section 409A, the
Executive shall not be entitled to the payments under Article 3 until the
earliest of (x) the date that is at least six months after termination of the
Executive’s employment for reasons other than the Executive’s death, (y) the
date of the Executive’s death, or (z) any earlier date that does not result in
additional tax or interest to the Executive under section 409A. If any provision
of this Agreement would subject the Executive to additional tax or interest
under section 409A, the Bank shall reform the provision. However, the Bank shall
maintain to the maximum extent practicable the original intent of the applicable
provision without subjecting the Executive to additional tax or interest, and
the Bank shall not be required to incur any additional compensation expense as a
result of the reformed provision.

ARTICLE 4

DEATH BENEFITS

After the Executive’s death, the Bank shall pay to the Executive’s Beneficiary
the Account Balance as of the date of the Executive’s death. The Account Balance
shall be paid to the Executive’s Beneficiary in a single lump sum 90 days after
the date of the Executive’s death. However, if the Executive dies after
termination of this Agreement under Article 6, the Executive’s Beneficiary shall
be entitled to no benefits under this Agreement.

ARTICLE 5

BENEFICIARIES

5.1 Beneficiary Designations. The Executive shall have the right to designate at
any time a Beneficiary to receive any benefits payable under this Agreement
after the Executive’s death. The Beneficiary designated under this Agreement may
be the same as or different from the beneficiary designation under any other
benefit plan of the Bank in which the Executive participates.

5.2 Beneficiary Designation Change. The Executive shall designate a Beneficiary
by completing and signing the Beneficiary Designation Form and delivering it to
the Plan Administrator or its designated agent. The Executive’s Beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases
the Executive or if the Executive names a spouse as Beneficiary and the marriage
is subsequently dissolved. The Executive shall have the right to change a
Beneficiary by completing, signing, and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures, as in effect from time to time. Upon the acceptance by the Plan
Administrator of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be cancelled. The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Executive and accepted by the Plan Administrator before the Executive’s death.

5.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received, accepted, and acknowledged in writing by the
Plan Administrator or its designated agent.

 

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5.4 No Beneficiary Designation. If the Executive dies without a valid
beneficiary designation or if all designated Beneficiaries predecease the
Executive, the Executive’s spouse shall be the designated Beneficiary. If the
Executive has no surviving spouse, the benefits shall be paid to the Executive’s
estate.

5.5 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Bank may pay the benefit to the guardian, legal
representative, or person having the care or custody of the minor, incapacitated
person, or incapable person. The Bank may require proof of incapacity, minority,
or guardianship as it may deem appropriate before distribution of the benefit.
Distribution shall completely discharge the Bank from all liability for the
benefit.

ARTICLE 6

GENERAL LIMITATIONS

6.1 Termination with Cause. Despite any contrary provision of this Agreement,
the Bank shall not pay any benefit under this Agreement and this Agreement shall
terminate if Separation from Service is a Termination with Cause.

6.2 Misstatement. No benefits shall be paid under this Agreement if the
Executive makes any material misstatement of fact on any application or resume
provided to the Bank, on any application for life insurance purchased by the
Bank, or on any application for benefits provided by the Bank.

6.3 Removal. Despite any contrary provision of this Agreement, if the Executive
is removed from office or permanently prohibited from participating in the
Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations of the
Bank under this Agreement shall terminate as of the effective date of the order.

6.4 Default. Despite any contrary provision of this Agreement, if the Bank is in
“default” or “in danger of default”, as those terms are defined in of section
3(x) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations
under this Agreement shall terminate.

ARTICLE 7

CLAIMS AND REVIEW PROCEDURES

7.1 Claims Procedure. Any person who has not received benefits under this
Agreement that he or she believes should be paid (the “claimant”) shall make a
claim for benefits as follows.

 

  7.1.1 Initiation – written claim. The claimant initiates a claim by submitting
to the Administrator a written claim for the benefits. If the claim relates to
the contents of a notice received by the claimant, the claim must be made within
60 days after the notice was received by the claimant. All other claims must be
made within 180 days after the date of the event that caused the claim to arise.
The claim must state with particularity the determination desired by the
claimant.

 

  7.1.2 Timing of Administrator response. The Administrator shall respond to the
claimant within 90 days after receiving the claim. If the Administrator
determines that special circumstances require additional time for processing the
claim, the Administrator can extend the response period by an additional 90 days
by notifying the claimant in writing, before the end of the initial 90-day
period, that an additional period is required. The notice of extension must set
forth the special circumstances and the date by which the Administrator expects
to render its decision.

 

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  7.1.3 Notice of decision. If the Administrator denies part or all of the
claim, the Administrator shall notify the claimant in writing of the denial. The
Administrator shall write the notification in a manner calculated to be
understood by the claimant. The notification shall set forth –

 

  (a) The specific reasons for the denial,

 

  (b) A reference to the specific provisions of this Agreement on which the
denial is based,

 

  (c) A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,

 

  (d) An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and

 

  (e) A statement of the claimant’s right to bring a civil action under ERISA
section 502(a) after an adverse benefit determination on review.

7.2 Review Procedure. If the Administrator denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the
Administrator of the denial, as follows.

 

  7.2.1 Initiation – written request. To initiate the review, the claimant must
file with the Administrator a written request for review within 60 days after
receiving the Administrator’s notice of denial.

 

  7.2.2 Additional submissions – information access. The claimant shall then
have the opportunity to submit written comments, documents, records, and other
information relating to the claim. Upon request and free of charge, the
Administrator shall also provide the claimant reasonable access to and copies of
all documents, records, and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

 

  7.2.3 Considerations on review. In considering the review, the Administrator
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether the information was submitted
or considered in the initial benefit determination.

 

  7.2.4 Timing of Administrator response. The Administrator shall respond in
writing to the claimant within 60 days after receiving the request for review.
If the Administrator determines that special circumstances require additional
time for processing the claim, the Administrator can extend the response period
by an additional 60 days by notifying the claimant in writing before the end of
the initial 60-day period that an additional period is required. The notice of
extension must set forth the special circumstances and the date by which the
Administrator expects to render its decision.

 

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  7.2.5 Notice of decision. The Administrator shall notify the claimant in
writing of its decision on review. The Administrator shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:

 

  (a) The specific reasons for the denial,

 

  (b) A reference to the specific provisions of the Agreement on which the
denial is based,

 

  (c) A statement that the claimant is entitled to receive, upon request and
free of charge, reasonable access to and copies of all documents, records, and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and

 

  (d) A statement of the claimant’s right to bring a civil action under ERISA
section 502(a).

ARTICLE 8

ADMINISTRATION OF AGREEMENT

8.1 Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator consisting of the board or such committee or persons as the board
shall appoint. The Executive may not be a member of the Plan Administrator. The
Plan Administrator shall have the discretion and authority to (x) make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (y) decide or resolve any and all questions
that may arise, including interpretations of this Agreement.

8.2 Agents. In the administration of this Agreement, the Plan Administrator may
employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative) and may from time to
time consult with counsel, who may be counsel to the Bank.

8.3 Binding Effect of Decisions. The decision or action of the Plan
Administrator concerning any question arising out of the administration,
interpretation, and application of the Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement. Neither the Executive nor any Beneficiary
shall be deemed to have any right, vested or unvested, regarding the continuing
effect of any decision or action of the Plan Administrator.

8.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless
the members of the Plan Administrator against any and all claims, losses,
damages, expenses, or liabilities arising from any action or failure to act with
respect to this Agreement, except in the case of willful misconduct by the Plan
Administrator or any of its members.

8.5 Bank Information. To enable the Plan Administrator to perform its functions,
the Bank shall supply full and timely information to the Plan Administrator on
all matters relating to the date and circumstances of the retirement, death, or
Separation from Service of the Executive and such other pertinent information as
the Plan Administrator may reasonably require.

 

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ARTICLE 9

MISCELLANEOUS

9.1 Amendments and Termination. This Agreement may be amended solely by a
written agreement signed by the Bank and by the Executive. Except for the case
of Termination with Cause, this Agreement shall not be terminated unless the
Account Balance is first paid to the Executive or the Executive’s Beneficiary.

9.2 Binding Effect. This Agreement shall bind the Executive and the Bank and
their beneficiaries, survivors, executors, successors, administrators, and
transferees.

9.3 Successors; Binding Agreement. By an assumption agreement in form and
substance satisfactory to the Executive, the Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the Bank’s business or assets to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
the Bank would be required to perform this Agreement had no succession occurred.

9.4 No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the
Bank nor does it interfere with the Bank’s right to discharge the Executive. It
also does not require the Executive to remain an employee or interfere with the
Executive’s right to terminate employment at any time.

9.5 Non-Transferability. Benefits under this Agreement may not be sold,
transferred, assigned, pledged, attached, or encumbered.

9.6 Tax Withholding. The Bank shall withhold any taxes that are required to be
withheld from the benefits provided under this Agreement.

9.7 Applicable Law. This Agreement and all rights hereunder shall be governed by
the laws of the State of Ohio, except to the extent the laws of the United
States of America otherwise require.

9.8 Unfunded Arrangement. The Executive and the Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay benefits.
The rights to benefits are not subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive’s life is a general asset of the Bank
to which the Executive and the Beneficiary have no preferred or secured claim.

9.9 Entire Agreement. This Agreement constitutes the entire agreement between
the Bank and the Executive concerning the subject matter. No rights are granted
to the Executive under this Agreement other than those specifically set forth.

9.10 Tax Consequences. The Bank does not insure or guarantee the tax
consequences of payments provided hereunder for matters beyond its control. The
Executive certifies that the Executive’s decision to defer receipt of
compensation is not due to reliance on financial, tax, or legal advice given by
the Bank or any of its employees, agents, accountants, or legal advisors.

 

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9.11 Payment of Legal Fees. The Bank is aware that after a Change in Control
management of the Bank could cause or attempt to cause the Bank to refuse to
comply with its obligations under this Agreement, or could institute or cause or
attempt to cause the Bank to institute litigation seeking to have this Agreement
declared unenforceable, or could take or attempt to take other action to deny
the Executive the benefits intended under this Agreement. In these circumstances
the purpose of this Agreement would be frustrated. The Bank desires that the
Executive not be required to incur the expenses associated with the enforcement
of rights under this Agreement, whether by litigation or other legal action,
because the cost and expense thereof would substantially detract from the
benefits intended to be granted to the Executive hereunder. The Bank desires
that the Executive not be forced to negotiate settlement of rights under this
Agreement under threat of incurring expenses. Accordingly, if after a Change in
Control occurs it appears to the Executive that (x) the Bank has failed to
comply with any of its obligations under this Agreement, or (y) the Bank or any
other person has taken any action to declare this Agreement void or
unenforceable, or instituted any litigation or other legal action designed to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice, at the
Bank’s expense as provided in this section 9.11, to represent the Executive in
the initiation or defense of any litigation or other legal action, whether by or
against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction. Despite any existing or previous
attorney-client relationship between the Bank and any counsel chosen by the
Executive under this section 9.11, the Bank irrevocably consents to the
Executive entering into an attorney-client relationship with that counsel, and
the Bank and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel. The fees and expenses of counsel
selected from time to time by the Executive as provided in this section shall be
paid or reimbursed to the Executive by the Bank on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by
counsel in accordance with counsel’s customary practices, up to a maximum
aggregate amount of $500,000, whether suit be brought or not, and whether or not
incurred in trial, bankruptcy, or appellate proceedings. The Bank’s obligation
to pay the Executive’s legal fees under this section 9.11 operates separately
from and in addition to any legal fee reimbursement obligation the Bank may have
with the Executive under any separate employment, severance, or other agreement
between the Executive and the Bank. Despite anything in this section 9.11 to the
contrary however, the Bank shall not be required to pay or reimburse the
Executive’s legal expenses if doing so would violate section 18(k) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the Federal
Deposit Insurance Corporation [12 CFR 359.3].

9.12 Severability. If any provision of this Agreement is held invalid, such
invalidity shall not affect any other provision of this Agreement not held
invalid, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall not affect the remainder of the
provision not held invalid, and the remainder of such provision together with
all other provisions of this Agreement shall continue in full force and effect
to the full extent consistent with law.

9.13 Waiver. A waiver by either party of any of the terms or conditions of this
Agreement in any one instance shall not be considered a waiver of the terms or
conditions for the future or a waiver of any subsequent breach. All remedies,
rights, undertakings, obligations, and agreements contained in this Agreement
shall be cumulative, and none of them shall be in limitation of any other
remedy, right, undertaking, obligation or agreement of either party.

 

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9.14 Captions and Counterparts. Captions in this Agreement are included for
convenience only and shall not affect the interpretation or construction of the
Agreement or any of its provisions. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of
which taken together shall constitute a single agreement.

9.15 Notice. All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand or mailed, certified or registered mail, return receipt requested, with
postage prepaid. Unless otherwise changed by notice, notice shall be properly
addressed to the Executive if addressed to the address of the Executive on the
books and records of the Bank at the time of the delivery of such notice, and
properly addressed to the Bank if addressed to the Board of Directors, The
Middlefield Banking Company, 15985 East High Street, Middlefield, Ohio
44062-0035.

9.16 Termination or Modification of Agreement Because of Changes in Law, Rules
or Regulations. The Bank is entering into this Agreement on the assumption that
certain existing tax laws, rules, and regulations will continue in effect in
their current form. If that assumption materially changes and the change has a
material detrimental effect on this Agreement, the Bank reserves the right to
terminate or modify this Agreement accordingly, subject to the written consent
of the Executive, which shall not be unreasonably withheld. This section 9.16
shall become null and void effective immediately after a Change in Control.

IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have
executed this Executive Deferred Compensation Agreement as of the date first
written above.

 

EXECUTIVE:    

BANK

The Middlefield Banking Company

/s/ Jay P. Giles     By:   /s/ Thomas Caldwell Jay P. Giles     Its:   President
and C.E.O.

 

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THE MIDDLEFIELD BANKING COMPANY

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

Beneficiary Designation

I designate the following as beneficiary under this Executive Deferred
Compensation Agreement of benefits payable after my death.

Primary: Jay P. Giles, or successor, as Trustee of Jay P. Giles Declaration of
Trust dated March 24, 2000.

 

 

Contingent: None.

 

 

 

Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.

 

Signature:

  /s/ Jay P. Giles   Jay P. Giles

Date:

  September 22, 2010

Received by the Bank this 22nd day of September, 2010

 

By:

  /s/ Thomas Caldwell

Title:

  President and C.E.O.

 

 

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THE MIDDLEFIELD BANKING COMPANY

EXECUTIVE DEFERRED COMPENSATION AGREEMENT

Schedule A

Performance Goals

The Bank’s board of directors shall establish Performance Goals, which may be
absolute performance targets taking the Bank’s performance only into account, or
relative targets taking the Bank’s performance into account relative to a peer
group of companies, or a combination of both. The measures of performance used
to establish Performance Goals shall not change from one Plan Year to the next
unless the board of directors concludes that compelling reasons exist to use
different or additional measures of performance. If performance relative to a
peer group is used, the peer group analysis selected by the board of directors
shall not be changed from one Plan Year to the next unless the board of
directors concludes that the peer group being employed is no longer
representative of the Bank’s actual peer group of companies, or alternatively,
the company preparing the peer group analysis ceases to exist or no longer
prepares peer group analyses.

For the first Plan Year, the Executive will receive an Annual Contribution
amount equal to 5% of the Executive’s Base Annual Salary. For every Plan Year
after the first Plan Year unless changed by the board of directors under section
1.10 of the Agreement, the Performance Goals are –

 

September 30, September 30,

Performance Target #1

  Performance Goal
#1    

Annual Contribution for Achievement

of Performance Goal #1

Bank’s Target Net Income for Plan Year

  $ 4,151,000      2.5% of the Executive’s Base Annual Salary

Bank’s Net Income for Plan Year Is Equal to or Greater than –

  $ 4,192,510      3.5% of the Executive’s Base Annual Salary

Bank’s Net Income for Plan Year Is Equal to or Greater than –

  $ 4,234,020      4.5% of the Executive’s Base Annual Salary

Bank’s Net Income for Plan Year Is Equal to or Greater than –

  $ 4,275,530      5.5% of the Executive’s Base Annual Salary

Bank’s Net Income for Plan Year Is Equal to or Greater than –

  $ 4,317,040      6.5% of the Executive’s Base Annual Salary

Bank’s Net Income for Plan Year Is Equal to or Greater than –

  $ 4,358,550      7.5% of the Executive’s Base Annual Salary

The Bank’s target net income for Performance Goal #1 is $4,151,000. At a
minimum, the Executive is entitled to an Annual Contribution for Performance
Goal #1 equal to 2.5% of Base Annual Salary. For the Executive to receive a
greater Annual Contribution under Performance Goal #1, the Bank’s net income for
the Plan Year must meet or exceed 101% of the Bank’s target net income for the
Plan Year. For every additional 1% that the Bank’s target net income is achieved
or exceeded in any Plan Year, up to 105%, the Executive’s Annual Contribution
amount also increases by 1%. Thus, the maximum Annual Contribution for
achievement of Performance Goal #1 is 7.5% of the Executive’s Base Annual
Salary. The Bank and the Executive agree that the Bank’s net income for the Plan
Year shall be derived from the quarterly reports of condition filed with the
FDIC under the Federal Deposit Insurance Act section 7(a), 12 U.S.C. 1817(a),
and FDIC rules, 12 CFR Part 304.

 

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Performance Target #2

  

Performance Goal #2

  

Annual Contribution for Achievement

of Performance Goal #2

Bank’s Target Peer Rank

   Overall Ranking in Top 50% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report    2.5% of the Executive’s
Base Annual Salary

Bank Has An –

   Overall Ranking in Top 60% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report    3.5% of the Executive’s
Base Annual Salary

Bank Has An –

   Overall Ranking in Top 70% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report    4.5% of the Executive’s
Base Annual Salary

Bank Has An –

   Overall Ranking in Top 80% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report    5.5% of the Executive’s
Base Annual Salary

Bank Has An –

   Overall Ranking in Top 90% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report    6.5% of the Executive’s
Base Annual Salary

Bank Has An –

   Overall Ranking in Top 100% of Ohio-Headquartered Commercial Banks as
established using the Uniform Bank Performance Report [ranked #1]    7.5% of the
Executive’s Base Annual Salary

The Bank’s target Peer Rank for Performance Goal #2 is an overall ranking in the
top 50% of all Ohio-headquartered publicly traded commercial banks as
established using the Uniform Bank Performance Report (“UBPR”) as reported on
the Federal Financial Institutions Examination Council’s website at
www.ffiec.gov/UBPR.htm. The UBPR is an analytical tool created for bank
supervisory, examination, and management purposes. In a concise format, the UPBR
shows the impact of management decisions and economic conditions on a bank’s
performance and balance-sheet composition. The performance and composition data
contained in the report can be used as an aid in evaluating the adequacy of
earnings, liquidity, capital, asset and liability management, and growth
management.

 

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At a minimum, the Executive’s Annual Contribution in any Plan Year shall not be
less than 5% of the Executive’s Base Annual Salary (i.e., the 2.5% of Base
Annual Salary Annual Contribution under Performance Goal #1 plus the 2.5% of
Base Annual Salary Annual Contribution under Performance Goal #2). At a maximum,
the Executive’s Annual Contribution in any Plan Year shall not exceed 15% of the
Executive’s Base Annual Salary (i.e., the 7.5% of Base Annual Salary Annual
Contribution under Performance Goal #1 plus the 7.5% of Base Annual Salary
Annual Contribution under Performance Goal #2).

Changes in the Performance Goals approved by the board of directors shall become
effective no more frequently than annually. The Plan Administrator’s
determination that the Performance Goals for a Plan Year have or have not been
achieved shall be conclusive and binding.

 

 

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