<PAGE>   1
EXHIBIT 10.1

                             CONTRACT OF EMPLOYMENT

      This Contract of Employment, duly made and entered into effective as of
the 23rd day of August, 1999 (the "Effective Date") in Evansville, Indiana, by
and between National City Bancshares, Inc., herein referred to as "NCBE", and
Michael T. Vea, herein referred to as "VEA."

                                WITNESSETH THAT:

      WHEREAS, VEA seeks to be employed as the Chief Executive Officer of NCBE;
and,

      WHEREAS, NCBE seeks to employ VEA as its Chief Executive Officer; and,

      WHEREAS, NCBE and VEA believe that it would be mutually beneficial if VEA
is a Director and serves as Chairman of the Board of Directors of NCBE; and,

      Whereas, NCBE and VEA have agreed upon the terms of a Contract of
Employment governing the terms and conditions of VEA's employment by NCBE,

      NOW,THEREFORE, for and in consideration of the mutual promises, covenants
and agreements contained in this Contract of Employment and agreed to be kept
and performed by VEA and NCBE, they mutually agree and understand as follows:

      1. EMPLOYMENT AND BOARD OF DIRECTORS POSITION[S]. NCBE hereby employs VEA
as Chief Executive Officer of NCBE and VEA hereby accepts such employment upon
the terms and conditions set forth in this Contract of Employment. VEA shall
commence his service as Chief Executive Officer on September 7, 1999 (the
"Commencement Date"). NCBE and VEA agree that VEA will be elected or appointed
to and serve as a Director of the NCBE Board of Directors and will be further
elected to and serve as Chairman of the NCBE Board of Directors as soon as
reasonably possible after the execution of this Agreement, but in any event not
later than the Commencement Date. NCBE and VEA further agree that such
appointment or election and continued service as a Director and/or Chairman of
the NCBE Board of Directors are subject to the terms and conditions of the
By-laws of NCBE and this Contract of Employment; NCBE and VEA agree that
termination of this Contract of Employment as provided in Paragraph 12 will
operate as a resignation by VEA from the position of Director and/or Chairman of
the Board of NCBE.

      2. TERM. Subject to the provisions of Paragraph 12, the initial term of
this Contract of Employment shall begin on the Effective Date and shall
terminate on the third anniversary of the Commencement Date (the "Initial
Term"). This Contract of Employment shall automatically renew for successive one
(1) year terms (each such one year period is called a "Renewal Term"; the
Initial Term and the Renewal Terms are sometimes collectively referred to as the
"term of this Contract of Employment") unless terminated as provided in
Paragraph 12 or unless either NCBE or VEA gives to the other written notice of
intent to cancel this Contract of Employment at least sixty (60) calendar days
before the expiration of the Initial Term or the expiration of the then current
Renewal Term. For the purposes of this Contract of Employment, a "year" means
(i) the period that begins on the Effective Date and ends at midnight on the day
before the first anniversary of the Commencement Date (the "first year" of the
term of this Contract of Employment), and, thereafter, (ii) the period that
begins on the first and each succeeding anniversary of the Commencement Date and
ends at midnight on the day before the next anniversary of the Commencement
Date.


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      3.   CASH COMPENSATION. VEA's cash compensation for all services rendered
to NCBE shall consist of a base salary and a performance bonus of up to one
hundred percent (100%) of base salary, which will be determined and payable at
the time or times and in the amounts as follows:

      (a)  BASE SALARY. NCBE shall pay VEA a base salary of Three Hundred Fifty
      Thousand and 00/100 Dollars ($350,000.00), less all applicable deductions
      for federal, state, FICA, Medicare and local taxes and any other allowable
      deductions authorized in writing by VEA, for each year of the term of this
      Contract of Employment in equal installments based on the regular payroll
      cycle and on the payroll payment dates of NCBE. During the 60 day period
      preceding the anniversary of each year during the term of this Contract of
      Employment, the Compensation Committee of the Board of Directors of NCBE
      shall conduct a review of VEA's performance, using the factors described
      in Paragraph 3(b), to determine the base salary that will apply for the
      immediately succeeding year. However, VEA's base salary for any year
      during the term of this Contract of Employment will not be reduced below
      $350,000, except for across-the-board salary reductions similarly
      affecting all employees of NCBE whose job positions and responsibilities
      are substantially the same as the Executive.

      (b)  PERFORMANCE BONUS. NCBE and VEA agree to enter into good faith
      negotiations to negotiate the criteria, manner of calculation, and payment
      terms of a performance bonus plan pursuant to which VEA shall receive a
      monetary bonus as additional compensation based on the following or
      additional factors:

           1.   Return on NCBE assets;

           2.   Return on equity;

           3.   Credit quality of loans; and

           4.   An increase in earnings per share of NCBE common stock.

If no agreement is reached within a period of ninety [90] days after the
commencement of VEA's employment hereunder, or sooner if NCBE and VEA agree, but
in any event within an expedited time after the end of the ninety [90] day
period provided in this Paragraph; NCBE and VEA may mutually select an
individual or firm qualified by experience and/or education to determine the
criteria, manner of calculation and payment terms of the Performance Bonus based
on the factors set out in this Contract of Employment and based on the
prevailing practice on performance bonuses in the banking industry for an
executive performing the duties and with the business responsibilities of VEA.
If an individual or firm is not selected by mutual agreement, NCBE and VEA will,
within ten [10] working days after failure to select such individual, submit
this Performance Bonus issue to an arbitrator subject to the Resolution of
Employment Disputes rules and regulations of the American Arbitration
Association to determine applying the above noted factors and prevailing
practice the criteria, manner of calculation and payment terms of the
Performance Bonus. NCBE will pay the cost of either a mutually selected
individual or firm or an arbitrator. The decision of the arbitrator will be
given within thirty [30] days after presentation and will be final and binding
on NCBE and VEA.


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<PAGE>   3

      4.   CASH, STOCK AND STOCK OPTION AMOUNTS. As additional incentive to VEA,
NCBE agrees to provide him with the following:

      (a)  CASH AMOUNTS. NCBE shall pay VEA cash, less all applicable deductions
      for federal, state, FICA, Medicare and local taxes, the following amounts
      at the stated times: (i) Forty Thousand Dollars ($40,000.00) on the
      Commencement Date; (ii) Twelve Thousand Dollars ($12,000.00) per month for
      eight [8] months starting on October 1, 1999 through and including May 1,
      2000; and (iii) Fourteen Thousand Dollars ($14,000.00) on June 1, 2000.
      Provided, however, if NCBE terminates VEA's employment under the
      provisions of Section 12(a) or if VEA terminates his employment under the
      provisions of Section 12(g), then any of the foregoing payments which are
      not due and payable as of the date of termination of employment shall be
      forfeited.

      (b)  NCBE STOCK. On the Commencement Date, NCBE will issue to VEA Eight
      Thousand Seven Hundred Fifty (8,750) shares of NCBE common stock.

      (c)  NCBE STOCK OPTIONS. NCBE agrees to issue VEA a non-qualified stock
      option for Thirty Thousand (30,000) shares of NCBE common stock with the
      exercise price equal to the last sale price of the NCBE common stock on
      the Commencement Date. Subject to the provisions of Paragraph 13, this
      option will vest and become may be exercised as follows: (i) one half
      [1/2] of the shares of NCBE common stock subject to the option become
      exercisable on the last day of the first year of the term of this Contract
      of Employment, and (ii) the remaining one half [1/2] of the shares of NCBE
      common stock subject to the option on the last day of the second year of
      the term of this Contract of Employment. This option shall not be issued
      subject to, and is not under the terms of and is not controlled by, the
      terms of "THE 1999 STOCK OPTION AND INCENTIVE PLAN" of NCBE.

      5.   ADDITIONAL STOCK OPTIONS. NCBE shall issue VEA a non-qualified stock
option for an additional 75,000 shares of common stock of NCBE on the
Commencement Date. One third [1/3] of the shares of NCBE common stock subject to
this option will vest and become exercisable on September 6, 2000; an additional
one third [1/3] of the shares of NCBE common stock subject to this option will
vest and become exercisable on September 6, 2001; the final one third [1/3] of
the shares of NCBE common stock subject to this option will vest and become
exercisable on September 6, 2002. The exercise price of each share subject to
this option is equal to the last sale price of the NCBE common stock on the
Commencement Date. This stock option will be issued subject to, under the terms
of and be controlled by the terms of "THE 1999 STOCK OPTION AND INCENTIVE PLAN"
of NCBE, but not as Incentive Stock Options thereunder. The stock option
agreement issued under the terms of "THE 1999 STOCK OPTION AND INCENTIVE PLAN"
of NCBE shall contain terms that are consistent with, and shall not expand VEA's
obligations beyond those set forth in, the terms of this Contract of Employment.

      6.   ADDITIONAL PROVISIONS REGARDING NCBE COMMON STOCK. VEA acknowledges
that the NCBE common stock to be issued to him under Paragraph 4(b) and 4(c)
(the "Unregistered Shares") will not be issued pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Act"), but will
instead be issued in reliance upon the exemption from registration set forth in
Section 4(2) of the Act and Regulation D promulgated under the Act. VEA is aware
the Unregistered Shares cannot be resold in the public market unless an
exemption from registration is available. VEA is also aware that the provisions
of Rule 144 promulgated under the Act will permit the resale of the Unregistered
Shares in the public market subject to certain conditions after such shares have
been held for at least one year. In the event that this Contract of Employment
is terminated prior to the time that VEA is able to sell the Unregistered Shares
pursuant to Rule 144 and upon written request from VEA of his intention to sell
the Unregistered Shares, NCBE agrees to prepare and file with the Securities and
Exchange Commission as soon as possible and in any event within thirty (30)
days, a registration statement on Form S-3 (the "Registration Statement")
covering the resale of the Unregistered Shares. NCBE agrees to use its best
efforts to cause the Registration Statement to be declared effective by the SEC
as soon as possible after filing and to keep the Registration Statement
continuously effective until all of the Unregistered Shares have been sold. NCBE
shall pay all costs incurred in connection with the Registration Statement other
than the fees of VEA's counsel, if any, and any underwriting discounts or
brokerage commissions incurred in connection with the sale of the Unregistered
Shares. NCBE and VEA agree to execute indemnification agreements, custody
agreements and other customary documents required in connection with the
registration and resale of the Unregistered Shares.


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      7.   DUTIES. VEA is engaged and employed as the Chief Executive Officer of
NCBE and shall be responsible for the day to day management of the business of
NCBE in consultation with the Board of Directors of NCBE. Precise services or
duties of VEA may be detailed, extended or curtailed, from time to time, at the
direction of the Board of Directors of NCBE. VEA agrees to perform his services
honestly and conscientiously and to conduct himself in a personal and business
manner which will enhance the reputation, goodwill, and business of NCBE and
further agrees to not conduct himself in a personal or business manner which
will reflect or operate adversely on the reputation and goodwill of NCBE or any
of its subsidiaries.

      8.   EXTENT OF SERVICES. VEA shall devote his entire business day,
attention, and energies to the business of NCBE and shall not, during the term
of this Contract of Employment, be engaged in any other business activity
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage without the prior written consent of the Board of Directors
of NCBE; provided, however, that nothing herein contained shall be construed as
preventing VEA from investing his assets in such form or manner as will not
require any services on the part of VEA in the operation of the affairs of the
companies or business entities in which such investments are made so long as (i)
such investments are not in companies with businesses similar to the type of
business conducted by NCBE unless such companies are publicly traded companies
or (ii) NCBE has given written consent to such investments, which will not be
unreasonably withheld after VEA has made full disclosure to NCBE of the nature
of such investments and demonstrated that he will not be involved in the
operation of the affairs of the companies in which such investments are made or
that if involved, his involvement in the operation of the affairs of the
companies in which such investments are made will not adversely affect his
ability to perform his obligations under this Contract of Employment.

      9.   CONFIDENTIALITY. VEA acknowledges and agrees that VEA has and will
have access to certain information with respect to NCBE and its customers and
the subsidiaries of NCBE and their customers as Chairman of the Board and Chief
Executive Officer of NCBE which is of actual and potential economic value to
NCBE and its subsidiaries, successors and assigns, because it is information
neither generally known to any company other than NCBE or its subsidiaries, nor
is such information readily ascertainable by proper means by anyone or any
company other than NCBE or its subsidiaries. This information of NCBE and its
subsidiaries includes, but is not limited to, marketing and operational plans,
strategic plans, computer systems and processes, prospective and present
customers and lists, customer files, customer credit information and credit
decisions on customer applications, all collectively referred to as
"Confidential Information." VEA recognizes that disclosing Confidential
Information would give an economic value to others to the serious detriment of
NCBE and its subsidiaries, its successors and assigns, and VEA further
acknowledges that he could not have obtained or would not have had the
opportunity to obtain the Confidential Information except as Chairman of the
Board and Chief Executive Officer.

      10.  FRINGE BENEFITS. NCBE shall provide the following fringe benefits to
VEA:

      (a)  EXPENSES. VEA is authorized to incur reasonable expenses for
      promoting the business of NCBE, including expenses for entertainment,
      travel, and similar items and NCBE will issue to VEA a credit card or
      cards for all such expenses.

      (b)  AUTOMOBILE. As it is necessary for VEA to have an automobile for
      necessary and reasonable business-related travel and entertainment, NCBE
      will purchase or lease an automobile for his use.


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      (c)  RELOCATION, MOVING AND INTERIM EXPENSES. NCBE will reimburse VEA for
      the reasonable cost of his expenses in moving his household to Evansville,
      Indiana, and the realtor fee applicable to the sale of his present
      residence. NCBE will reimburse VEA for the closing costs of the purchase
      of his new residence in Evansville, Indiana. NCBE will reimburse VEA for
      the reasonable cost of living and travel expenses during the period of
      time his family is not located in Evansville, IN. If the fringe benefits
      described in this subparagraph (c) create taxable income to VEA, the
      fringe benefits will be appropriately increased monetarily to accommodate
      federal, state and local income taxes and FICA and Medicare taxes.

      (d)  NCBE FRINGE BENEFITS. VEA will receive all other fringe benefits
      provided by NCBE to its other full time employees.

      (e)  EVANSVILLE COUNTRY CLUB. NCBE will apply and pay the initiation fee,
      assessments and the monthly fee for the Full Company Resident Golf
      Membership at the Evansville Country Club with VEA designated as the
      member.

      (f)  ADDITIONAL COMPENSATION TO DEFRAY COSTS. NCBE will pay additional
      compensation to VEA in an amount necessary to enable VEA to pay all taxes
      to which VEA may become subject as a result of (i) the receipt of fringe
      benefits described in Paragraph 10(c) and (ii) the additional compensation
      amounts described in clause (i). These payments shall be made at least ten
      days prior to the earliest date such taxes (or estimated tax payments
      attributable to such taxes) are due.

      11.  DISABILITY. If during the term of this Contract of Employment, VEA is
unable to perform the duties otherwise required of him by this Contract of
Employment because of a disability, NCBE shall continue to pay VEA's base salary
then in effect and continue to provide the fringe benefits described in and
under the terms of Paragraph 10 for up to 270 days from the date of the
occurrence or commencement of the injury or illness giving rise to the
disability. For this purpose, the term, "disability" has the meaning ascribed to
it in Paragraph 12.

      12.  TERMINATION. Notwithstanding anything contained hereunto to the
contrary, this Contract of Employment and VEA's employment shall terminate upon
the occurrence of any of the following events:

      (a)  TERMINATION BY NCBE FOR CAUSE. NCBE may at any time, upon the giving
      of written notice, immediately terminate this Contract of Employment and
      VEA's employment for Cause. For the purposes of this Contract of
      Employment, "Cause" means (i) a material breach by VEA of the terms of
      this Contract of Employment which VEA does not remedy within a reasonable
      period of time after receiving notice of the breach, (ii) the commission
      by VEA any act which the Board of Directors determines is, in accordance
      with the terms of NCBE's published personnel policies, contrary to the
      best interests of NCBE and otherwise grounds for termination of
      employment, and (iii) insubordination, embezzlement, dishonesty, fraud,
      conviction of a felony and behavior outside the acceptable norms of
      business and personal conduct expected of the Chairman of the Board and
      Chief Executive Officer of NCBE. Notwithstanding the foregoing, VEA shall
      not be deemed to have been terminated for Cause unless and until there
      shall have been delivered to him a copy of a resolution duly adopted by
      the affirmative vote of not less than a majority of the entire membership
      of NCBE's Board of Directors at a meeting called and held for the purpose
      (after reasonable notice to him and an opportunity for him, together with
      his counsel, to be heard before such Board), finding that, in the good
      faith opinion of such Board, VEA was guilty of conduct enumerated above as
      constituting "Cause" and specifying the particulars thereof in detail.

      (b)  MUTUAL AGREEMENT. This Contract of Employment may be terminated at
      any time by the mutual agreement in writing of NCBE and VEA.

      (c)  DISABILITY. This Contract of Employment shall terminate in the event
      of VEA's disability for a period of 270 days or more. "Disability" shall
      mean a physical illness or other disability which incapacitates VEA and
      prevents him from performing and fulfilling his duties pursuant to this
      Contract of Employment. This determination shall be made by NCBE, and
      shall be based upon an opinion of an independent qualified physician
      mutually acceptable to NCBE and VEA that such a disability exists.

      (d)  BOARD OF DIRECTOR POSITIONS. This Contract of Employment shall
      terminate if after election to a position as Director or to the position
      as Chairman of the Board of Directors, VEA is not re-elected, is removed
      or resigns from either Board position for reasons other than the failure
      or inability of the Board of Directors to maintain directors liability
      insurance with coverage amounts and terms at least with coverage amounts
      and terms at least as much and as favorable as those maintained by
      entities comparable to NCBE.


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<PAGE>   6
      (e)  DEATH. This Contract of Employment shall automatically terminate upon
      the death of VEA.

      (f)  TERMINATION BY VEA FOR GOOD REASON. VEA may terminate this Contract
      of Employment at any time, upon the giving of written notice, immediately
      terminate this Contract of Employment and VEA's employment for Good
      Reason. For the purposes of this Contract of Employment, "Good Reason"
      means (i) VEA's election under this subparagraph to terminate this
      Contract of Employment within thirty [30] days after not being either
      re-elected or removed from either a Director or Chairman of the Board
      position for reasons other than Cause or because VEA resigns from either
      such position because of the failure or inability of the Board of
      Directors to maintain directors and/or officers liability insurance with
      coverage amounts and terms at least as much and as favorable as those
      maintained by entities comparable to NCBE; (ii) the occurrence of a Change
      in Control; (iii) any material breach of this Contract of Employment by
      NCBE which is not cured by the Company within ten days of receipt by NCBE
      of notice from VEA specifying the existence and nature of the breach; or
      (iv) any one of the following events occurs within six (6) months prior to
      or within two (2) years following a Change in Control:

           (1)    Without VEA's express written consent, the assignment of VEA
           to any duties which, in VEA's reasonable judgment, are materially
           inconsistent with his positions, duties, responsibilities or status
           with NCBE immediately prior to the earlier of termination of
           employment or the Change in Control or a substantial reduction of his
           duties or responsibilities which, in VEA's reasonable opinion, does
           not represent a promotion from his position, duties or
           responsibilities immediately prior to the earlier of termination of
           employment or the Change in Control.

           (2)    A reduction by NCBE in VEA's salary from the level of such
           salary immediately prior to the earlier of termination of employment
           or the Change in Control or NCBE's failure to increase (within twelve
           (12) months of VEA's last increase in base salary) VEA's base salary
           after a Change in Control in an amount which at least equals, on a
           percentage basis, the average percentage increase in base salary for
           all executive and senior officers of NCBE effected in the preceding
           twelve (12) months.

           (3)    The failure by NCBE to continue in effect any incentive, bonus
           or other compensation plan in which VEA participates, including but
           not limited to NCBE's stock option plans, unless an equitable
           arrangement (embodied in an ongoing substitute or alternative plan),
           with which VEA has consented, has been made with respect to such plan
           in connection with the Change in Control, or the failure by NCBE to
           continue VEA's participation therein, or any action by NCBE which
           would directly or indirectly materially reduce VEA's participation
           therein.

           (4)    The failure by NCBE to continue to provide VEA with benefits
           substantially similar to those enjoyed by VEA or to which VEA was
           entitled under any of NCBE's principal pension, profit sharing, life
           insurance, medical, dental, health and accident, or disability plans
           in which VEA was participating immediately prior to the earlier of
           the termination of employment or the Change in Control, the taking of
           any action by NCBE which would directly or indirectly materially
           reduce any of such benefits or deprive VEA of any material fringe
           benefit enjoyed by VEA or to which VEA was entitled immediately prior
           to the earlier of the termination of employment or the Change in
           Control, or the failure by NCBE to provide VEA with the number of
           paid vacation and sick leave days to which VEA is entitled on the
           basis of years of service or position with NCBE in accordance with
           NCBE's normal vacation policy in effect on the date hereof.

           (5)    NCBE's requiring VEA to be based anywhere other than the
           metropolitan area where NCBE office at which he was based immediately
           prior to the earlier of the termination of employment or the Change
           in Control was located, except for required travel on NCBE's business
           in accordance with NCBE's past management practices.

           (6)    Any failure of NCBE to obtain the assumption of the obligation
           to perform this Agreement by any successor as contemplated in
           Paragraph 16.

           (7)    Any failure by NCBE or its shareholders, as the case may be,
           to reappoint or reelect VEA to a corporate office held by him
           immediately prior to the earlier of the termination of employment or
           the Change in Control or his removal from any such office including
           any seat held at such time on NCBE's Board of Directors.

           (8)    The effectiveness of a resignation, tendered at any time,
           either before or after a Change in Control and regardless of whether
           formally characterized as voluntary or otherwise, by VEA of any
           corporate


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<PAGE>   7
           office held by him immediately prior to the Change in Control or of
           any seat held at such time on NCBE's Board of Directors, at the the
           request of NCBE or at the request of the person obtaining control
           NCBE in such Change in Control.

           (9)    Any purported termination of VEA's employment which is not
           effected pursuant to a Notice of Termination satisfying the
           requirements of Paragraph 12(h) (and, if applicable, Paragraph
           12(a)); and for purposes of this Agreement, no such purported
           termination shall be effective.

           (10)   Any request by NCBE that VEA participate in an unlawful act or
           take any action constituting a breach of VEA's professional standard
           of conduct.

           (11)   Any breach by NCBE of any of the provisions of this Contract
           of Employment or any failure by NCBE to carry out any of its
           obligations hereunder. Notwithstanding anything in this Contract of
           Employment to the contrary, VEA's right to terminate VEA's employment
           pursuant to this Contract of Employment shall not be affected by
           VEA's incapacity due to physical or mental illness.

      (g)  TERMINATION BY VEA WITHOUT GOOD REASON. VEA may terminate this
      Contract of Employment at any time for reasons other than Good Reason or
      for no reason by giving NCBE at least thirty [30] days prior written
      notice.


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<PAGE>   8

      (h)  NOTICE OF TERMINATION. Any termination of VEA's employment by NCBE as
      contemplated in Paragraph 10(a) or by VEA as contemplated by Paragraph
      10(f) shall be communicated by written "Notice of Termination" to the
      other party. Any such "Notice of Termination" shall indicate the specific
      provisions of this Contract of Employment relied upon and shall set forth
      in reasonable detail the facts and circumstances claimed to provide a
      basis for such termination.

      (i)  DEFINITION OF "CHANGE IN CONTROL." For the purposes of this Contract
      of Employment, "Change in Control" means:

           (1)    The acquisition by any individual, entity or group (within the
           meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
           Act of 1934, as amended (the "Exchange Act") (a "Person") of
           beneficial ownership (within the meaning of Rule 13d-3 promulgated
           under the Exchange Act as in effect from time to time) of twenty-
           five percent (25%) or more of either (i) the then outstanding shares
           of common stock of NCBE or (ii) the combined voting power of the then
           outstanding voting securities of NCBE entitled to vote generally in
           the election of directors; provided, however, that the following
           acquisitions shall not constitute an acquisition of control: (i) any
           acquisition directly from NCBE (excluding an acquisition by virtue of
           the exercise of a conversion privilege), (ii) any acquisition by
           NCBE, (iii) any acquisition by any employee benefit plan (or related
           trust) sponsored or maintained by NCBE or any corporation controlled
           by NCBE, or (iv) any acquisition by any corporation pursuant to a
           reorganization, merger or consolidation, if, following such
           reorganization, merger or consolidation, the conditions described in
           clauses (i), (ii) and (iii) of subparagaph (3) of Paragraph 12(i) are
           satisfied;

           (2)    Individuals who, as of the date hereof, constitute the Board
           of Directors of NCBE (the "Incumbent Board") cease for any reason to
           constitute at least a majority of the Board of Directors of NCBE (the
           "Board"); provided, however, that any individual becoming a director
           subsequent to the Effective Date whose election, or nomination for
           election by NCBE's shareholders, was approved by a vote of at least a
           majority of the directors then comprising the Incumbent Board shall
           be considered as though such individual were a member of the
           Incumbent Board, but excluding, for this purpose, any such individual
           whose initial assumption of office occurs as a result of either an
           actual or threatened election contest (as such terms are used in Rule
           14a-11 of Regulation 14A promulgated under the Exchange Act) or other
           actual or threatened solicitation of proxies or consents by or on
           behalf of a Person other than the Board; or


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<PAGE>   9
           (3)    Approval by the shareholders of NCBE of a reorganization,
           merger or consolidation, in each case, unless, following such
           reorganization, merger or consolidation, (i) more than sixty percent
           (60%) of, respectively, the then outstanding shares of common stock
           of the corporation resulting from such reorganization, merger or
           consolidation and the combined voting power of the then outstanding
           voting securities of such corporation entitled to vote generally in
           the election of directors is then beneficially owned, directly or
           indirectly, by all or substantially all of the individuals and
           entities who were the beneficial owners, respectively, of the
           outstanding NCBE common stock and outstanding NCBE voting securities
           immediately prior to such reorganization, merger or consolidation in
           substantially the same proportions as their ownership, immediately
           prior to such reorganization, merger or consolidation, of the
           outstanding NCBE stock and outstanding NCBE voting securities, as the
           case may be, (ii) no Person (excluding NCBE, any employee benefit
           plan or related trust of NCBE or such corporation resulting from such
           reorganization, merger or consolidation and any Person beneficially
           owning, immediately prior to such reorganization, merger or
           consolidation, directly or indirectly, twenty-five percent (25%) or
           more of the outstanding NCBE common stock or outstanding voting
           securities, as the case may be) beneficially owns, directly or
           indirectly, twenty-five percent (25%) or more of, respectively, the
           then outstanding shares of common stock of NCBE resulting from such
           reorganization, merger or consolidation or the combined voting power
           of the then outstanding voting securities of such corporation
           entitled to vote generally in the election of directors and (iii) at
           least a majority of the members of the board of directors of the
           corporation resulting from such reorganization, merger or
           consolidation were members of the Incumbent Board at the time of the
           execution of the initial agreement providing for such reorganization,
           merger or consolidation; or

           (4)    Approval by the shareholders of NCBE of (i) a complete
           liquidation or dissolution of NCBE or (ii) the sale or other
           disposition of all or substantially all of the assets of NCBE, other
           than to a corporation with respect to which following such sale or
           other disposition (a) more than sixty percent (60%) of, respectively,
           the then outstanding shares of common stock of such corporation and
           the combined voting power of the then outstanding voting securities
           of such corporation entitled to vote generally in the election of
           directors is then beneficially owned, directly or indirectly, by all
           or substantially all of the individuals and entities who were the
           beneficial owners, respectively, of the outstanding NCBE common stock
           and outstanding NCBE voting securities immediately prior to such sale
           or other disposition in substantially the same proportion as their
           ownership, immediately prior to such sale or other disposition, of
           the outstanding NCBE common stock and outstanding NCBE voting
           securities, as the case may be, (b) no Person (excluding NCBE and any
           employee benefit plan or related trust of NCBE or such corporation
           and any Person beneficially owning, immediately prior to such sale or
           other disposition, directly or indirectly, twenty-five percent (25%)
           or more of the outstanding NCBE common stock or outstanding NCBE
           voting securities, as the case may be) beneficially owns, directly or
           indirectly, twenty-five percent (25%) or more of, respectively, the
           then outstanding shares of common stock of such corporation and the
           combined voting power of the then outstanding voting securities of
           such corporation entitled to vote generally in the election of
           directors and (c) at least a majority of the members of the board of
           directors of such corporation were members of the Incumbent Board at
           the time of the execution of the initial agreement or action of the
           Board providing for such sale or other disposition of assets of NCBE.


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<PAGE>   10

      13.  SEVERANCE.

      (a)  If this Contract of Employment and VEA's employment is terminated (i)
      by NCBE as otherwise permitted under the terms of this Contract of
      Employment for any reason other than those listed in Paragraphs 12(c) or
      (e), or (ii) by VEA for either of the Good Reasons listed in Paragraphs
      12(f)(i) or (iii), then VEA shall be paid and receive severance as
      follows:

           (1)    VEA shall receive a lump sum payment within five days after
           the termination of employment equal to the balance of his unpaid BASE
           SALARY and any payments not yet paid under Paragraph 4(a) for the
           remaining portion of the Initial Term (if the date of VEA's
           termination of employment occurs during the Initial Term) or Renewal
           Term (if the date of VEA's termination of employment occurs during a
           Renewal Term), but in no event will the period upon which the lump
           sum payment is calculated be less than one (1) year. Provided
           however, if the termination of employment occurs for the reasons
           described in Paragraph 12(a), then VEA's lump sum payment calculated
           in accordance with the first sentence of this subparagraph (1) shall
           be based upon a one (1) year period; and

           (2)    The FRINGE BENEFITS provided in Paragraph 10 (other than
           Paragraph 10(c)) shall continue throughout the calculation period
           described in Paragraph 13(a), either in accordance with the terms of
           the benefit plan document to which those benefits are subject or, if
           the terms of any such plan would not otherwise provide the benefits
           in question in these circumstances or for the period specified, by
           NCBE on the same terms and conditions as provided for in the benefit
           plan document in question and without regard to such limiting
           provisions; and

           (3)    The STOCK OPTIONS provided in this Contract of Employment (and
           any other options that VEA may then possess or to which VEA may then
           be entitled), if not vested, shall vest in VEA and become immediately
           exercisable.

      (b)  If this Contract of Employment and VEA's employment is terminated
      after the occurrence of the events described in Paragraphs 12(f)(ii) or
      (iv), then VEA shall be paid and receive severance equal to (i) the
      benefits described in Paragraph 12(a), but calculating the lump sum
      payment described in Paragraph 12(a)(1) based upon a three [3] year
      period; plus (ii) a lump sum payment within five days after the
      termination of employment equal to the larger of VEA's PERFORMANCE BONUS
      for the year immediately preceding the event described in Paragraphs
      12(f)(ii) or (iv) or the average of the PERFORMANCE BONUSES awarded VEA
      for the three (3) year period immediately preceding the event described in
      Paragraphs 12(f)(ii) or (iv). VEA agrees and understands that VEA is
      exclusively responsible for the payment of the tax, if any, described in
      Section 4999(a) of the Internal Revenue Code of 1986, as amended, on any
      portion of the payments described in this Paragraph 13(b).

      (c)  If, prior to the occurrence of any of the events that constitute a
      Change in Control, a resolution specifically approving the occurrence
      shall not have been adopted by at least a majority of the Board, or in the
      event this Contract of Employment terminates for the reasons described in
      Paragraph 12(f)(iv) after the effective date of a Change in Control, in
      addition to the payments described in Paragraph 13(b), VEA shall receive
      cash payments in the amounts necessary to enable VEA to pay all taxes to
      which VEA may become subject as a result of (i) the receipt of the
      severance payments described in Paragraph 13(a)(1) or Paragraph 13(b) and
      (ii) the exercise of any stock option or sale of any stock acquired as the
      result of the exercise of any stock option described in this Contract of
      Employment or which may be granted under the terms of "THE 1999 STOCK
      OPTION AND INCENTIVE PLAN" of NCBE. These payments shall be made at least
      ten days prior to the earliest date such taxes (or estimated tax payments
      attributable to such taxes) are due.

      (d)  VEA is not required to mitigate the amount of benefit payments to be
      made by NCBE pursuant to this Paragraph 13 by seeking other employment or
      otherwise, nor shall the amount of any benefit payments provided for in
      this Paragraph 13 be reduced by any compensation earned by VEA as a result
      of employment by another employer or which might have been earned by VEA
      had VEA sought such employment, after the date of termination of his
      employment with NCBE or otherwise.

      14.  RESTRICTIVE COVENANT. As a further material inducement to NCBE to
enter into this Contract of Employment, for the benefit of its subsidiaries,
successors and assigns, and in consideration of the mutual promises contained in
this Contract of Employment, in the event VEA's employment terminates as a
result of a termination of this Contract of Employment for the reasons described
in Paragraphs 12(a) or (g),VEA agrees as follows:


                                       28
<PAGE>   11
      (a)  that for a period of one (1) year after any such termination, VEA
      will not conduct, directly or indirectly, any personal solicitation for
      banking or any related purpose any customer of NCBE or of any of its
      subsidiaries; and

      (b)  that for a period of one (1) year after any such termination, VEA
      will not, directly or indirectly, in any capacity, including but not
      limited to as an employee, agent, consultant, officer, director,
      shareholder or investor, engage in or participate in any way in any
      business like or competitive to the business of NCBE or any of its
      subsidiaries in any of the counties in which the present subsidiaries or
      future acquisitions (including actual or potential acquisitions known or
      disclosed to VEA during his employment by NCBE) are located or in any
      county contiguous to a county in which the present subsidiaries or future
      acquisitions are located.

      It is understood and agreed that the consideration for this restrictive
covenant is a portion of the cash compensation described hereinabove. VEA
understands and agrees that NCBE; its subsidiaries, successors and assigns have
a valid interest to protect with this restrictive covenant and agrees that the
term and limitations of this restrictive covenant are reasonable. VEA hereby
represents to NCBE that VEA's experience and capabilities are such that the
provisions of this restrictive covenant will not prevent VEA from earning a
livelihood.

      In the event of any breach or threatened breach of this provision by VEA,
VEA agrees that NCBE may obtain specific performance or other equitable relief
for such breach or threatened breach. Nothing herein contained shall be
construed as prohibiting NCBE from pursuing any other remedies available to it
for such breach or threatened breach, including the recovery of damages from
VEA.

      15.  WAIVER OF BREACH. The waiver by NCBE of a breach of any provision of
this Contract of Employment by VEA shall not operate or be construed as a waiver
of any subsequent breach by VEA.

      16.  ASSIGNMENT. The rights and obligations of NCBE under this Contract of
Employment shall inure to the benefit of and be binding upon the successors and
assigns of NCBE and, in the event of the death of VEA, to the benefit of and be
enforceable by VEA's executors, administrators, heirs, distributees, devisees
and legatees and all amounts payable hereunder shall be paid in accordance with
the terms of this Contract of Employment to VEA's devisee, legatee or other
designee or if there be no such designee, to his estate.

      17.  ENTIRE AGREEMENT. This instrument contains the entire agreement of
NCBE and VEA. It may not be changed orally but only by an agreement in writing
signed by both of the parties hereto.

      18.  GOVERNING LAW. This Contract of Employment is made and entered into
in the State of Indiana, and shall in all respects be interpreted, enforced and
governed under the laws of said state.

      19.  SEVERABILITY. Each and every paragraph, term and/or provision of this
Contract of Employment shall be considered severable, and if, for any reason,
any paragraph, term, or provision hereof is determined to be invalid, contrary
to, or in conflict with any existing or future law of the State of Indiana, the
invalidity thereof shall not impair the operation or affect the remaining
paragraphs, terms, or provisions of this Contract of Employment, and the latter
shall continue in full force and effect.

      20.  TAXES. Each of the parties has received advice regarding the tax
implications of this Contract of Employment. Neither party has relied on the
representations of the other party regarding tax treatment as dictated and
created by the terms of this Contract of Employment with respect to the grants
of stock and issuance of stock options provided in this Contract of Employment
and, except as otherwise specifically provided for in this Contract of
Employment, VEA will be responsible for any tax obligations arising from such
grants and options.

      21.  NOTICES. Any notice which may be required to be given hereunder by
either party shall be in writing and either delivered personally to the other
party, sent by United States certified mail or sent by a private delivery
service which provides receipts of delivery to the last known legal address of
the party to whom such notice is directed.

      22.  COOPERATION. It is the intent of the parties to cooperate under this
Contract of Employment to perform in a beneficial and reasonable manner. All
provisions will be so interpreted. VEA and NCBE each agree to use their
reasonably best efforts to discharge their obligations under this Agreement in a
prompt fashion. Each party agrees that he or it will not unreasonably withhold
or delay providing his or its consent whenever that consent is required under
this Agreement; the parties agree that they will be deemed to have consented if
they do not respond to a request for consent within ten days of receipt of
notice requesting consent.


                                       29
<PAGE>   12
      23.  COUNTERPARTS. This Agreement may be executed in one or more
counterparts for the convenience of the parties, all of which together shall
constitute one and the same agreement.

      IN WITNESS WHEREOF, the parties have caused the execution of this Contract
of Employment the day and year first hereinabove set forth.


                   National City Bancshares, Inc.


                    By: /s/ Robert D. Vance
                        ------------------------------
                            Robert D. Vance, Chairman & Chief Executive Officer


                   By: /s/ Ronald G. Reherman
                       --------------------------------
                           Ronald G. Reherman, Director & Chairman of the Search
                           Committee of the Board of Directors

                   By: /s/ Laurence R. Steenberg
                       --------------------------------
                           Laurence R. Steenberg, Director & Chairman of the
                           Compensation Committee

                   "NCBE"



                   /s/ Michael T. Vea
                   ------------------------------------
                       Michael T. Vea

                   "VEA"


                                       30