NB&T FINANCIAL GROUP INC
EXECUTIVE RETIREMENT PLAN PARTICIPATION
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>dex102.txt
<DESCRIPTION>EXECUTIVE RETIREMENT PLAN PARTICIPATION
<TEXT>
<PAGE>

                                                                    Exhibit 10.2

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                             PARTICIPATION AGREEMENT

         THIS PARTICIPATION AGREEMENT (the "Participation Agreement") is entered
into as of this 20th day of August, 2002 by and between the NB&T Financial
Group, Inc. (the "Sponsor"), The National Bank and Trust Company (the
"Employer") and TIMOTHY L. SMITH, an executive of the Employer (the
"Participant").

RECITALS:

         WHEREAS, the Employer has adopted the ("Plan") effective as of August
20, 2002, and the Administrator has determined that the Participant shall be
eligible to participate in the Plan on the terms and conditions set forth in
this Participation Agreement and the Plan;

         NOW, THEREFORE, in consideration of the foregoing and the agreements
and covenants set forth herein, the parties agree as follows:

         1.       Definitions. Except as otherwise provided, or unless the
                  -----------
 context otherwise requires, the terms used in this Participation Agreement
shall have the same meanings as set forth in the Plan.

         2.       Incorporation of Plan. The Plan, a copy of which is attached
                  ---------------------
 hereto as Exhibit A, is hereby incorporated into this Participation Agreement
as if fully set forth herein, and the parties hereby agree to be bound by all of
the terms and provisions contained in the Plan. The Participant hereby
acknowledges receipt of a copy of the Plan and confirms his understanding and
acceptance of all of the terms and conditions contained therein.

         3.       Effective Date of Participation. The effective date of the
                  -------------------------------
Participant's participation in the Plan shall be August 20, 2002 (the
                                                 ---------------
"Participation Date").

         4.       Normal Retirement Age. The Participant's Normal Retirement
                  ---------------------
Age for purposes of the Plan and this Participation Agreement is age fifty-five
(55).

         5.       Prohibition Against Funding. Should any investment be acquired
                  ---------------------------
in connection with the liabilities assumed under this Plan and Participation
Agreement, it is expressly understood and agreed that the Participants and
Beneficiaries shall not have any right with respect to, or claim against, such
assets nor shall any such purchase be construed to create a trust of any kind
or a fiduciary relationship between the Employer and the Participants, their
Beneficiaries or any other person. Any such assets shall be and remain a part
of the general, unpledged, unrestricted assets of the Employer, subject to the
claims of its general creditors. It is the express intention of the parties
hereto that this arrangement shall be unfunded for tax purposes and for
purposes of Title I of ERISA. The Participant shall be required to look to the
provisions of the Plan and to the Employer itself for enforcement of any and
all benefits due under this Participation Agreement and, to the extent the
Participant acquires a right to receive

                                       1

<PAGE>

payment under the Plan and this Participation Agreement, such right shall be no
greater than the right of any unsecured general creditor of the Employer. The
Employer shall be designated the owner and beneficiary of any investment
acquired in connection with its obligation under the Plan and this
Participation Agreement.

         6.       Provisions Related to SERP Benefit.
                  -----------------------------------

                  (a)   Benefit. The SERP Benefit for the Participant shall be
                        -------
                        the applicable SERP Benefit as provided below:

                                  (1)    In the event the Participant has
                           attained fifty-five (55) years of age, on or prior
                           to, the Participant's effective date of Termination,
                           such Participant shall be entitled to an annual SERP
                           Benefit of seventy five thousand dollars ($75,000);
                           OR

                                  (2)    In the event the Participant continues
                           to be employed by the Employer beyond the
                           Participant's attainment of fifty-five (55) years of
                           age, such Participant shall be entitled to an
                           enhanced annual SERP Benefit of eighty-five thousand
                           dollars ($85,0000). Such enhanced SERP Benefit shall
                           be contingent on: 1) Participant's continuous
                           full-time employment with the Employer until age
                           fifty-seven (57) and 2) Participant's attainment of
                           fifty-seven (57) years of age, on or prior to,
                           Participant's Termination.

                                  The above SERP Benefits are exclusive of one
                           another and shall never be considered cumulative
                           regardless of Participant's age at Termination.

                                  Vesting. There will be no partial Vesting
                                  -------
                           available to the Participant. The Participant shall
                           become 100% vested in the SERP Benefit upon the
                           occurrence of:

                                  (1)    Normal Retirement; or

                                  (2)    Change in Control.

                                  Effect of Termination for Cause. A Participant
                                  -------------------------------
                           who is Terminated for Cause before his or her
                           Termination will receive no SERP Benefit under this
                           Plan. A Participant who is Terminated for Cause at
                           or after his Normal Retirement Date will be
                           entitled to the amount described in Section 6(a)(1)
                           of this Participation Agreement (but will not be
                           entitled to the enhanced benefit described in
                           Section 6(a)(2) of this Participation Agreement)
                           regardless of the Participant's age when he
                           Terminates.

                                  Effect of Change in Control. (i) If a Change
                                  ---------------------------
                           in Control occurs before the Participant Terminates
                           and before the Participant reaches age fifty-five
                           (55), he will be entitled to receive [beginning at
                           age fifty-five

                                       2

<PAGE>

                           (55)] the benefit described in Section 6(a)(1) of
                           this Participation Agreement as if he had been age
                           fifty-five (55) on the date of the Change in
                           Control. This amount will be paid as provided in
                           Section 6(b) of this Participation Agreement,
                           applied as of the date the Participant reaches age
                           fifty-five (55). (ii) If a Change in Control occurs
                           before the Participant Terminates but after the
                           Participant reaches age fifty-five (55) he will be
                           entitled to the benefit described in Section
                           6(a)(1) of this Participation Agreement [or in
                           Section 6(b)(2) of this Participation Agreement if
                           he has attained age fifty-seven (57) on or before
                           the date of the Change in Control]. This amount
                           will be paid as provided in Section 6(b) of this
                           Participation Agreement, applied as of the date the
                           Participant Terminates.

                                  Effect of Parachute Excise Taxes. If the sum
                           of the payments provided in the preceding subsection
                           and those provided under any other plan, program or
                           agreement between the Participant and any Related
                           Entity member constitute "excess parachute payments"
                           as defined in Code ss.280G(b)(1), the Sponsor will
                           reduce (or cause the Employer to reduce) the
                           Participant's SERP Benefits so that his total
                           "parachute payment" as defined in Code
                           ss.280G(b)(2)(A) under this and any all other
                           agreements will be $1.00 less than the amount that
                           would be an "excess parachute payment."

                  (b)   Form of SERP Benefit Payment. The annual SERP Benefit
                        --------------------
                        will be paid equally in quarterly installments for a
                        period of twenty (20) years, as provided for in the
                        attached Exhibit B "The NB&T Financial Group, Inc.
                        Supplemental Executive Retirement Plan Schedule of
                        Benefit Payments" beginning on the last day of the
                        first calendar quarter of the first calendar year that
                        begins after the Participant Terminates.

                  (c)   Post Termination Death Benefit. Participant's SERP
                        ------------------------------
                        Benefit shall be payable to the Participant in
                        quarterly installments for twenty (20) years for a
                        total of eighty (80) quarterly payments.  In the event
                        the Participant should die after payments have commenced
                        but before the eightieth (80th) quarterly payment has
                        been made, the Participant's Beneficiary, as designated
                        pursuant to this Participation Agreement, shall be paid
                        the balance of the remaining quarterly SERP Benefit
                        payments that would have been made to the Participant
                        had he lived, in equal quarterly installments. Payments
                        will cease upon the earlier of the Beneficiary's death
                        or payment of the eightieth (80th) payment (determined
                        by aggregating all quarterly payments made to the
                        Participant before his death and those made to the
                        Beneficiary after the Participant's death). No SERP
                        Benefits will be paid to any beneficiary of a
                        Beneficiary.

                  (d)   Post-Normal Retirement (but Pre Termination) Death
                        --------------------------------------------------
                        Benefit. In the event the Participant dies prior to his
                        -------
                        Termination of service but after attaining Normal
                        Retirement Age, the Participant's Beneficiary shall
                        receive the

                                       3

<PAGE>

                        SERP Benefit in effect at the time of the Participant's
                        death. The following are examples of this process and
                        are provided for illustrative purposes only:

                                  Example 1 - In the event the Participant dies
                        after having attained fifty-five (55) years of age but
                        before Termination and before reaching age fifty-seven
                        (57), Participant's Beneficiary would be entitled to an
                        annual SERP Benefit distribution equaling seventy-five
                        thousand dollars ($75,000) payable quarterly for twenty
                        (20) years or, if earlier, until the quarter during
                        which the Beneficiary dies. No SERP Benefits will be
                        paid to any beneficiary of a Beneficiary.

                                  Example 2 - In the event the Participant dies
                        after having attained fifty-seven (57) years of age but
                        before Termination, Participant's Beneficiary would be
                        entitled to an enhanced annual SERP Benefit
                        distribution equaling eighty-five thousand dollars
                        ($85,000) not to exceed a twenty (20) year distribution
                        period (or, if earlier, until the quarter during which
                        the Beneficiary dies. No SERP Benefits will be paid to
                        any beneficiary of a Beneficiary).

                  (e)   Pre Termination Death Benefit. In the event the
                        -----------------------------
                        Participant dies prior to his Termination but before
                        attaining Normal Retirement Age, the Participant's
                        Beneficiary shall receive a SERP Benefit calculated as
                        if the Participant had reached age fifty-five (55) on
                        the day preceding his death. This is an example of this
                        process and is provided for illustrative purposes only:

                                  Example - In the event the Participant dies
                        before having attained fifty-five (55) years of age and
                        before Termination, Participant's Beneficiary would be
                        entitled to an annual SERP Benefit distribution
                        equaling seventy-five thousand dollars ($75,000)
                        payable quarterly for twenty (20) years (or, if
                        earlier, until the quarter during which the Beneficiary
                        dies. No SERP Benefits will be paid to any beneficiary
                        of a Beneficiary).

         7.       Participant's Covenants.
                  ------------------------

                  (a)   Covenant Not to Compete. Commencing on the date of
                        -----------------------
                        Participant's Termination with the Employer and all
                        Affiliates (hereinafter defined) and ending on the
                        third anniversary thereof (the "Restricted Competition
                        Period"), Participant agrees that he shall not, and
                        shall not permit any of his Affiliates, alone, together
                        or in association with others, either as principal,
                        agent, owner, shareholder, officer, director, partner,
                        lender, investor, independent contractor, consultant or
                        in any other capacity, to engage in, have a financial
                        interest in or be in any way connected or affiliated
                        with, or render advice or services to any natural
                        person, organization or entity of any type that engages
                        in any activity which would compete, in any way, in any
                        county in which a Related Entity has a branch or
                        business operation at the time of Participant's
                        Termination of

                                       4

<PAGE>

                        employment, with the business operated by any Related
                        Entity or conducting the business of banking and
                        providing other financial services. For purposes of
                        this subsection, an "Affiliate" of a person shall mean
                        (i) any natural person, organization or entity of any
                        type that directly, or indirectly through one or more
                        intermediaries, controls, is controlled by or is under
                        common control with, such specified person; (ii) any
                        relative or spouse of such person, or any relative of
                        such spouse, any one of whom has the same home as such
                        person; (iii) any trust or estate in which such person
                        or any of the persons specified in (ii) collectively
                        own ten percent or more of the total beneficial
                        interest or of which any of such persons serve as
                        trustee, executor or in any similar capacity; or (iv)
                        any corporation or other organization in which such
                        person or any of the persons specified in (ii) are the
                        beneficial owners collectively of ten percent or more
                        of any class of equity securities or ten percent or
                        more of the equity interest. For purposes of the
                        definition of the term "Affiliate," "control" means the
                        power to direct the management and policies of such
                        person, directly or indirectly, whether through the
                        ownership of voting securities, by contract or
                        otherwise.

                                  The Participant and each Related Entity
                        agree that the value to them of this Covenant Not to
                        Compete is equal to three hundred percent of the
                        annualized gross compensation due to the Participant at
                        his rate of compensation as in effect immediately
                        before his Termination and that this amount has been
                        included in the SERP Benefit.

                  (b)   Covenant Not to Solicit. During the Restricted
                        -----------------------
                        Competition Period [defined in Section 7(a)],
                        Participant further agrees that he will not, and will
                        not permit any Affiliate [defined in Section 7(a)],
                        directly or indirectly, to solicit, divert, take away
                        or interfere with, or attempt to solicit, divert, take
                        away or interfere with, the relationship of any Related
                        Entity with any person who is or was a customer,
                        employee or supplier of any Related Entity at any time
                        during the period commencing two years immediately
                        prior to the date of this Participation Agreement and
                        ending upon the Participant's Termination.

                                  The Participant and each Related Entity
                        agree that the value to them of this Covenant Not to
                        Solicit is equal to two hundred percent of the
                        annualized gross compensation due to the Participant at
                        his rate of compensation as in effect immediately
                        before his Termination and that this amount has been
                        included in the SERP Benefit.

                                       5

<PAGE>

                  (c)   Interpretation of Covenants. The parties to this
                        ---------------------------
                        Participation Agreement acknowledge and agree that the
                        duration and area for which the Covenant Not to Compete
                        and the Covenant Not to Solicit are to be effective are
                        fair and reasonable and are reasonably required for the
                        protection of the business of the Related Entities. In
                        the event that any court or arbitrator determines that
                        the time period or the area, or both of them, are
                        unreasonable as to any covenant and that such covenant
                        is to that extent unenforceable, the parties hereto
                        agree that the covenant shall remain in full force and
                        effect for the greatest time period and in the greatest
                        area that would not render it unenforceable. The
                        parties intend that each covenant shall be deemed to be
                        a series of separate covenants, one for each and every
                        county of each and every state of the United States of
                        America and one for each and every political
                        subdivision of each and every other country in which
                        the Covenant Not to compete or other covenant is
                        intended to be effective and is not proscribed by law.

         8.       Beneficiary. Notwithstanding the definition of "Beneficiary"
                  -----------
set forth in the Plan, Beneficiary means the person to whom the Participant is
legally married on the date this Participation Agreement is signed ("Spouse").
If the Participant's Spouse dies while the Participant is alive, no benefit will
be paid after the Participant's death whether or not the Participant
subsequently remarries and no person claiming through the Spouse or Participant
will have any rights under this Plan. Also, no benefits will be due to any
beneficiary of a Beneficiary.

                      SIGNATURE PAGE TO IMMEDIATELY FOLLOW

                 REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

                                       6

<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Participation Agreement
to be executed as of the day first above written.

                                            NB&T FINANCIAL GROUP, INC.

                                            By:________________________________
                                            Title:_____________________________

PARTICIPANT:                                THE NATIONAL BANK AND TRUST COMPANY

TIMOTHY L. SMITH                            By:________________________________
-------------------------------
[Name of Participant]
_______________________________             Title:_____________________________
Signature of Participant

ATTESTED:                                   ATTESTED:

By:____________________________             By:________________________________

Title:_________________________             Title:_____________________________

                                       7

<PAGE>

                          LIST OF COLLATERAL DOCUMENTS

                                    EXHIBIT A
                                    ---------

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                    EXHIBIT B
                                    ---------

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                          SCHEDULE OF BENEFIT PAYMENTS

                                    EXHIBIT C
                                    ---------

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                             BENEFICIARY DESIGNATION

                                       1

<PAGE>

                                    EXHIBIT B

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                          SCHEDULE OF BENEFIT PAYMENTS

            Age              Year                              Annual Payment

            55               2006                              $75,000

            57               2008                              $85,000

                         Annual payments shall not exceed $85,000

                                       1

<PAGE>

                                    EXHIBIT C

                         THE NB&T FINANCIAL GROUP, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                             BENEFICIARY DESIGNATION

         In the event of the Participant's death, any benefits to which the
Participant may be entitled shall be paid to the Beneficiary(ies) designated
below. This Beneficiary Designation shall be subject to the terms and conditions
set forth in the Plan and shall supersede all prior Beneficiary Designations
made by the Participant. This Beneficiary Designation shall be attached to and
become part of that certain Participation Agreement, dated as of _____________,
2002, between the Employer and the Participant.

                  Primary Beneficiary:  _______________________________________

                  Address:              _______________________________________

                                        _______________________________________

                  Secondary Beneficiary:_______________________________________

                  Address:              _______________________________________

                                        _______________________________________

         IN WITNESS WHEREOF, the Participant has executed this Beneficiary
Designation as of the date indicated.

                                    ___________________________________________
                                    Signature

                                   TIMOTHY L. SMITH
                                   --------------------------------------------
                                   Printed Name of Participant

                                   ____________________________________________
                                   Date

Received on: ____________________

By: _____________________________

                                       1

</TEXT>
</DOCUMENT>
