8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 21, 2008

FIRST DEFIANCE FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Ohio (State or other jurisdiction of incorporation) 0-26850 (Commission File No.) 34-1803915 (IRS Employer I.D. No.)

601 Clinton Street, Defiance, Ohio 43512

(Address of principal executive offices)  (Zip Code)

Registrant’s telephone number, including area code:  (419) 782-5015

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 5 – Corporate Governance and Management

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.

           (e)           On July 21, 2008, the board of directors of First Defiance Financial Corp. (the “Company”) approved the First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan (the “Plan”).  The Company’s executive officers and certain other key employees are eligible to participate in the Plan.

The Plan provides that payments will be made to participants upon the achievement of performance objectives during a specified performance period, which must last a minimum of three consecutive fiscal years.  Performance periods for different awards may run concurrently or overlap.  Performance objectives may be based on items including, but not limited to, earnings per share, total revenue, net interest income, non-interest income, net income, net income before tax, non-interest expense, efficiency ratio, return on equity, return on assets, economic profit added, loans, deposits, tangible equity, assets, net charge-offs, new market growth, product line developments, and nonperforming assets.  Further, performance objectives may be measured by the performance of the Company and/or its affiliates, or by any employee or group of employees.  Performance objectives and the length of the performance period may vary by participant and need not be the same for all participants.  The terms of a participant’s specific award will be established in the related award agreement.

To receive a bonus under the Plan, the participant’s  applicable performance objectives must be met.  Upon the achievement of these objectives, a participant will receive the bonus determined in accordance with his or her individual award agreement.  Awards will be paid in cash by March 15 of the year immediately following the performance period.

In the event of a participant’s death or disability, the treatment of the award will be as specified in the applicable award agreement.  Upon the occurrence of a change in control (as defined in the Plan),  the amount of the award will be determined assuming that performance as of the date of the change in control would continue at the same rate for the remainder of the performance period, but will be pro-rated based on the number of months remaining in the performance period.

The named executive officers of the Company who participate in the Plan and their potential payments under the Plan (assuming the satisfaction of relevant performance objectives) are set forth below.

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		Potential Plan Payment
Name	Title	Minimum	Maximum
William J. Small	Chairman, President and Chief Executive Officer	$13,180	$189,785
James L .Rohrs	Executive Vice President	$  7,500	$108,000
John C. Wahl	Executive Vice President and Chief Financial Officer**	$  5,469	$  78,750

_______________________________

** Mr. Wahl is currently recovering from an illness and during his recovery Donald P. Hileman is serving as the Company’s Interim Chief Financial Officer.

The foregoing summary is qualified in its entirety by reference to the Plan and the Form of Contingent Award Agreement entered into between the Company and each of William J. Small, James L. Rohrs and John C. Wahl, copies of which are attached as Exhibits 10.1 and 10.2 hereto.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan
10.2	Form of Contingent Award Agreement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST DEFIANCE FINANCIAL CORP.
By:	/s/ William J. Small
	William J. Small
	Chief Executive Officer

Date:  December 11, 2008

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EX-10.1

EXHIBIT 10.1

FIRST DEFIANCE FINANCIAL CORP.

2008 LONG TERM INCENTIVE COMPENSATION PLAN

ARTICLE 1

General Purpose of Plan; Definitions

1.1 Name and Purposes. The name of this Plan is the First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan. The purpose of this Plan is to enable First Defiance Financial Corp. and its Affiliates to: (i) reward executive officers and other key management employees who contribute to the long-term success of the Company, by making the amount of their compensation contingent upon the Company’s long-term profitable performance and growth; and (ii) to attract and retain executive officers and other key management employees of exceptional ability.

1.2 Certain Definitions. Unless the context otherwise indicates, the following words used herein shall have the following meanings whenever used in this instrument:

(a) "Affiliate" means any corporation, partnership, joint venture or other entity, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Company, as determined by the Board of Directors in its discretion.

(b) “Contingent Award Agreement” means a written agreement between the Board of Directors and a Participant setting forth the terms and conditions of an Award.

(c) "Award" means an actual cash award to a Plan Participant in accordance with the terms and conditions of the Plan and a Contingent Award Agreement

(d) "Board of Directors" means the Board of Directors of the Company, as constituted from time to time.

(e) “Cause” with respect to an employee of the Company or any affiliate of the Company means and is limited to (a) criminal dishonesty, (b) refusal to perform duties on an exclusive and substantially full-time basis, (c) refusal to act in accordance with any specific substantive instructions given by the Company or any affiliate of the Company with respect to performance of duties normally associated with such employee’s position, or (d) engaging in conduct which could be materially damaging to the Company or any affiliate of the Company without a reasonable good faith belief that such conduct was in the best interest of the Company or any affiliate of the Company.

(f) "Code" means the Internal Revenue Code of 1986, as amended, and any lawful regulations or guidance promulgated thereunder. Whenever reference is made to a specific Internal Revenue Code section, such reference shall be deemed to be a reference to any successor Internal Revenue Code section or sections with the same or similar purpose.

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(g) "Committee" means the Compensation Committee of the Board administering this Plan as provided in Article 2.

(h) "Company" means First Defiance Financial Corp., a corporation organized under the laws of the State of Ohio and, for purposes of determining whether a Change in Control has occurred, any corporation or entity that is a successor to First Defiance Financial Corp. or substantially all of the assets of First Defiance Financial Corp. and that assumes the obligations of First Defiance Financial Corp. under this Plan by operation of law or otherwise.

(i) “Contingent Award” means an Award that is contingent on satisfying performance conditions set forth under a Contingent Award Agreement.

(j) "Director" means a member of the Board of Directors.

(k) "Disability" means the person (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan of the Company or an affiliate covering the person, or (c) has been determined.

(l) “Outside Director” means a nonemployee Director who meets the definitions of the terms "outside director" set forth in Section 162(m) of the Code.

(m) "Participant" means an employee of the Company who is designated as a Participant in the Plan as provided for under Article 3.

(n) "Performance Period" means each period of at least three consecutive fiscal years, as established by the Committee, over which Awards may be earned contingent on satisfying specified performance conditions. Performance Periods shall begin on January 1 and end on December 31. The Committee may, in its discretion, establish partially concurrent Performance Periods.

(o) "Plan" means this First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan, as amended from time to time.

(p) “Retirement” means a voluntary termination of employment by the Participant on or after attainment of age 62.

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ARTICLE 2

Administration

2.1 Authority and Duties of the Committee.

(a) The Plan shall be administered by a Committee of at least three Directors who are appointed by the Board of Directors. Unless otherwise determined by the Board of Directors, the Compensation Committee of the Board of Directors (or any subcommittee thereof) shall serve as the Committee, and all of the members of the Committee shall be Outside Directors.

(b) The Committee has the sole and exclusive authority, subject to any limitations specifically set forth in this Plan, to:

(i) select the Eligible Participants to whom Contingent Awards are made;

(ii) determine the specific terms and conditions of Contingent Awards made to a Participant, not inconsistent with the terms of the Plan;

(iii) determine whether any conditions or objectives related to Awards have been met,

(iv) subsequently modify or waive any terms and conditions of Awards, not inconsistent with the terms of this Plan;

(v) adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan as it deems advisable from time to time;

(vi) promulgate such administrative forms as it from time to time deems necessary or appropriate for administration of the Plan;

(vii) construe, interpret, administer and implement the terms and provisions of this Plan, any Contingent Award and any related agreements;

(viii) correct any defect, supply any omission and reconcile any inconsistency in or between the Plan, any Contingent Award and any related agreements; and

(ix) otherwise supervise the administration of this Plan.

(c) All decisions made by the Committee pursuant to the provisions of this Plan are final and binding on all persons, including the Company and Participants, but may be made by their terms subject to ratification or approval by the Board of Directors.

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2.2 Delegation of Duties. The Committee may delegate ministerial duties to any other person or persons, and it may employ attorneys, consultants, accountants or other professional advisers for purposes of Plan administration at the expense of the Company.

2.3 Limitation of Liability. Members of the Board of Directors, members of the Committee and Company employees who are their designees acting under this Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.

ARTICLE 3

Participants

3.1 Eligibility. Executiveofficers and other key management employees of the Company or any of its Affiliates (each an "Eligible Participant") who are selected by the Committee in its sole discretion are eligible to participate in this Plan.

3.2 Contingent Award Agreements. Awards made under the Plan are contingent upon the Participant's execution of a written agreement in a form prescribed by the Committee (hereinafter “Contingent Award Agreement”).  Execution of a Contingent Award Agreement shall constitute the Participant's irrevocable agreement to, and acceptance of, the terms and conditions of the Contingent Award set forth in such agreement and of the terms and conditions of the Plan applicable to such Contingent Award. Contingent Award Agreements may differ from time to time and from Participant to Participant.

ARTICLE 4

Performance Based Awards

4.1 Contingent Awards. A Contingent Award represents a right to receive a future Award conditioned upon the attainment of specified performance objectives and such other conditions, restrictions and contingencies as the Committee may determine. Each Contingent Award made under this Plan will be evidenced by minutes of a meeting, or by a unanimous written consent without a meeting, of the Committee and by a Contingent Award Agreement is executed by the Board and the Plan Participant. The timing of Contingent Awards and the Award opportunity covered by each Contingent Award are to be determined by the Committee in its discretion

4.2 Performance Conditions. At the time a Contingent Award is made, the Committee will specify the performance conditions which, depending on the extent to which they are met, will determine the level of Award paid to the Participant. The Committee will also specify the Performance Period applicable to a Contingent Award during which the performance conditions must be met. With respect to awards intended to be "performance based compensation," the Committee may use performance objectives based on one or more of the following but not limited to: earnings per share, total revenue, net interest income, non-interest income, net income, net income before tax, non-interest expense,

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efficiency ratio, return on equity, return on assets, economic profit added, loans, deposits, tangible equity, assets, net charge-offs, new market growth, product line developments, and nonperforming assets. The Committee may designate a single goal criterion or multiple goal criteria for performance measurement purposes. Performance measurement may be described in terms of objectives that are related to the performance by the Company, by any Affiliate, or by any employee or group of employees in connection with services performed by that employee or those employees for the Company, a Subsidiary, or one or more subunits of the Company or of any Affiliate. The performance objectives may be made relative to the performance of other companies. The performance objectives and periods need not be the same for each Participant nor for each Contingent Award.

4.3 Adjustment of Performance Conditions. The Committee may modify, amend or otherwise adjust the performance conditions specified for outstanding Contingent Awards if it determines that an adjustment would be consistent with the objectives of this Plan and taking into account the interests of the Participants and the public shareholders of the Company. The types of events which could cause an adjustment in the performance objectives include, without limitation, accounting changes which substantially affect the determination of performance objectives, changes in applicable laws or regulations which affect the performance objectives, and divisive corporate reorganizations, including spin-offs and other distributions of property or stock.

4.4 Determination of Awards. At the end of each Performance Period corresponding to a Contingent Award, the Committee shall determine the extent to which designated performance conditions have been achieved based on reference to audited financial statements for each fiscal year during the Performance Period. Upon making this determination, the Committee shall then determine the level of Award earned in accordance with the terms and conditions set forth under the corresponding Contingent Award Agreement, and shall then notify each Participant of the Award to be paid.

4.5 Payment of Awards. Awards earned and payable as determined by the Committee shall be paid to the Participant in cash no later than March 15 of the year immediately following the Performance Period. In the event of a Participant’s death after the end of the Performance Period, but before payment of the Award, such Award shall be paid to the beneficiary or beneficiaries designated in writing by the Participant and filed with the Company or, in the absence of and such designation, or if no such designated beneficiary survives the Participant, to the Participant’s estate.

4.6 Special Limitations on Contingent Awards.Unless a Contingent Award agreement approved by the Committee provides otherwise, Awards made under this Plan are intended to meet the requirements for exclusion from coverage under Code Section 409A and all Awards shall be construed and administered accordingly.

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ARTICLE 5

Termination, Transfers and Leaves of Absence

5.1 Termination. A Contingent Award or unearned portion thereof will terminate without payment of an Award upon the termination of employment of the Participant during the Performance Period for any reason except as provided for under this section. In the event of a Participant's employment with the Company or its Affiliates terminates by reason of his or her death, Disability or Retirement, the terms and conditions for payment of an Award will be determined at the sole discretion of the Committee, and will be set forth under the Contingent Award Agreement.

5.2 Transfer of Participant. For purposes of this Plan, the transfer of a Participant among the Company and its Affiliates is deemed not to be a termination of employment.

5.3 Effect of Leaves of Absence. For purposes of this Plan, the following leaves of absence are deemed not to be a termination of employment:

(a) a leave of absence, approved in writing by the Company, for sickness or any other purpose approved by the Company, if the period of such leave does not exceed 90 days;

(b) a leave of absence in excess of 90 days, approved in writing by the Company, but only if the employee's right to reemployment is guaranteed either by a statute (e.g., military service) or by contract, and provided that, in the case of any such leave of absence, the employee returns to work within 30 days after the end of such leave; and

(c) any other absence determined by the Committee in its discretion not to constitute a termination of employment.

ARTICLE 6

Effect of Change in Control

6.1 Change in Control Defined. "Change in Control" shall mean a “Change in Ownership” as defined in (a) hereof; a “Change in Effective Control” as defined in (b), hereof; or a “Change in Ownership of a Substantial Portion of Assets” as defined in (c) hereof.

(a) Change in Ownership. For purposes of this Agreement, a change in the ownership of the Company occurs on the date that any one person, or more than one person acting as a group (as defined in subsection (d) hereof), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company. However, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the Company, the

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acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company (or to cause a change in the effective control of the Company within the meaning of subsection (b) hereof). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section.

(b) Change in the Effective Control. For purposes of this Agreement, a change in the effective control of the Company occurs on the date that either –

(i) Any one person, or more than one person acting as a group (as determined under subsection (d) hereof), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company; or

(ii) a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors prior to the date of the appointment or election.

In the absence of an event described in subsection (b)(i) or (ii) above, a change in the effective control of a Company will not have occurred.

(c) Change in the Ownership of a Substantial Portion of the Company’s Assets. For purposes of this Agreement, a change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in subsection(d) hereof), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

There is no Change in Control Event under this subsection (c) when there is a transfer to an entity that is controlled by the shareholders of the Company immediately after the transfer, as provided in this paragraph. A transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to –

(i) A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

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(ii) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

(iii) A person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Company; or

(iv) An entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described in section (iii) above.

For purposes of this subsection (c) and except as otherwise provided, a person’s status is determined immediately after the transfer of the assets. For example, a transfer to a corporation in which the transferor corporation has no ownership interest before the transaction, but which is a majority-owned subsidiary of the transferor corporation after the transaction is not treated as a change in the ownership of the assets of the transferor corporation.

(d) Persons Acting as a Group. Persons will not be considered to be acting as a group solely because they purchase assets or purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, purchase or acquisition of assets, or similar business transaction with the Company. If a person, including an entity shareholder, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation prior to the transaction giving rise to the change and not with the ownership interest in the other corporation.

6.2 Effect of Change in Control. Unless otherwise determined by the Committee in connection with the Contingent Award and set forth in the Contingent Award Agreement, in the event of a Change in Control of the Company an Award shall be made in an amount determined by taking the product of (A) the Award that would have been due if performance, measured as of the transaction date, were to continue at the same rate through the Performance Period; and (B) a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the Performance Period to the date of the transaction, and the denominator of which is the number of whole months in the Performance Period

6.3 Code Section 409A. Unless a Contingent Award Agreement approved by the Committee provides otherwise, each Contingent Award made under this Plan is intended to meet the requirements for exclusion from coverage under Code Section 409A. If the Committee provides than a Contingent Award shall be subject to Code Section 409A, then, notwithstanding the other provisions of this Article 6, the Committee may provide in the Contingent Award agreement for such changes to the definition of Change in Control from

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the definition set forth in this Article 6, and for such changes to the Committee's rights upon a Change in Control, as the Committee may deem necessary in order for such Award to comply with Code Section 409A.

ARTICLE 7

Transferability of Awards

7.1 Awards Are Non-Transferable. Contingent Awards or Awards are non-transferable and any attempts to assign, pledge, hypothecate or otherwise alienate or encumber (whether by operation of law or otherwise) any Contingent Award or Award shall be null and void.

ARTICLE 8

Amendment and Discontinuation

8.1 Amendment or Discontinuation of this Plan. The Board of Directors may amend, alter, or discontinue this Plan at any time, provided that no amendment, alteration, or discontinuance may be made, which would materially and adversely affect the rights of a Participant under any Contingent Award made prior to the date such action is adopted by the Board of Directors without the Participant's written consent thereto.

Notwithstanding the foregoing, this Plan may be amended without Participants' consent to: (i) comply with any law; (ii) preserve any intended favorable tax effects for the Company, the Plan or Participants; or (iii) avoid any unintended unfavorable tax effects for the Company, the Plan or Participants.

ARTICLE 9

Satisfaction of Tax Liabilities

9.1 In General. The Company shall withhold any taxes which the Committee determines the Company is required by law or required by the terms of this Plan to withhold in connection with any Awards incident to this Plan. The Participant or other recipient shall provide the Committee with such additional information or documentation as may be necessary for the Company to discharge its obligations under this Section. The Company may withhold cash, in an amount equal to the amount which the Committee determines is necessary to satisfy the obligation of the Company, a Subsidiary or a Parent to withhold federal, state and local income taxes. Alternatively, the Company may require the holder to pay to the Company such amounts, in cash, promptly upon demand.

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ARTICLE 10

General Provisions

10.1 No Implied Rights to Awards or Employment. No potential Participant has any claim or right to a Contingent Award under this Plan, and there is no obligation of uniformity of treatment of Participants under this Plan. Neither this Plan nor any Award thereunder shall be construed as giving any individual any right to continued employment with the Company or any Affiliate. The Plan does not constitute a contract of employment, and the Company and each Affiliate expressly reserve the right at any time to terminate employees free from liability, or any claim, under this Plan, except as may be specifically provided in this Plan or in an Award agreement.

10.2 Other Compensation Plans. Nothing contained in this Plan prevents the Board of Directors from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.

10.3 Successors. All obligations of the Company with respect to Contingent Awards made under this Plan are binding on any successor to the Company, whether as a result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Company.

10.4 Severability. In the event any provision of this Plan, or the application thereof to any person or circumstances, is held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, or other applications, and this Plan is to be construed and enforced as if the illegal or invalid provision had not been included.

10.5 Governing Law. To the extent not preempted by Federal law, this Plan and all Award agreements pursuant thereto are construed in accordance with and governed by the laws of the State of Ohio. This Plan is not intended to be governed by the Employee Retirement Income Security Act and shall be so construed and administered.

10.6 Legal Requirements. No Awards shall be made and the Company shall have no obligation to make any payment under the Plan, unless such payment is, without further action by the Committee, in compliance with all applicable Federal and state laws and regulations.

10.7 Forfeiture by Employees in Connection with Termination for Cause. Notwithstanding any other provision of this Plan, upon the termination of employment of a Participant for Cause, such Participant shall forfeit all entitlements associated with any Contingent Award made by the Committee under this Plan.

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ARTICLE 11

Effective Date and Term

11.1 Effective Date. The effective date of this First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan is the date on which the Board approves the Plan.

11.2 Termination Date. This Plan will continue in effect until amended or terminated by the Board

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EX-10.2

EXHIBIT 10.2

FIRST DEFIANCE FINANCIAL CORPORATION

LONG TERM INCENTIVE COMPENSATION PLAN

CONTINGENT AWARD AGREEMENT

CONTINGENT AWARD AGREEMENT (the “Agreement”) made as of the 21st day of July, 2008, between First Defiance Financial Corporation (“FDF”), an Ohio corporation, and _______________ (the “Participant”).

RECITALS

A. Employee is employed by FDF or a Subsidiary of FDF in a position FDF deems to be a key position.

B. FDF’s Board of Directors adopted the First Defiance Financial Corp. Long-Term Incentive Compensation Plan (the “Plan”) effective July 21, 2008.

C. FDF desires to provide long term incentive compensation (“LTIC”) to Participant under the Plan subject to the terms and conditions of the Plan and this Agreement as set forth below.

D. Capitalized terms used herein, but not defined herein, shall have the meaning defined for them under the Plan.

AGREEMENT

Now, therefore, intending to be legally bound and in consideration of the mutual covenants set forth herein, the parties hereto agree as follows:

1. Award. Shall mean a cash award paid to the Participant in accordance with the terms and conditions under this agreement and the Plan.

2. Performance Period.  The Performance Period for the Contingent Award made herein shall be the three year period beginning January 1, 2008 and ending December 31, 2010.

3. Target Award. The Participant’s Target Award for the Performance Period referenced under paragraph 4 of this Agreement shall be $__________.

4. Performance Award Schedule. The Award provided for under this Agreement shall be determined in accordance with the following schedules A and B based on FDF’s three-year cumulative fully diluted earnings per share (“EPS”), and average annual Return on Assets (ROA) during the Performance Period, computed under Generally Accepted Accounting Principles (GAAP).

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Schedule A

Annual EPS Growth Rate During Performance Period	Three-Year Cumulative Fully Diluted EPS for the Performance Period	Percent of Target Award Earned (1)
15.0%	$7.98	150%
12.5%	$7.63	125%
10.0%	$7.34	100%
9.0%	$7.15	75%
7.0%	$6.88	50%
5.0%	$6.61	25%

Schedule B

Average Annual ROA over Performance Period	Percent of EPS Award Paid (1)
1.20 %	120 %
1.10 %	110 %
1.00 %	100 %
.90 %	75 %
.80 %	50 %

(1) Subject to interpolation for cumulative EPS or ROA performance that is between schedule values

5. Award Determination. The Participant’s Award under this Agreement shall be determined as a multiple of: percent of the Participant’s Target Award earned under Schedule A, multiplied by the percent of EPS Award paid under Schedule B, multiplied by the Participant’s Target Award. The Participant must be actively employed by FDF as of the end of the Performance Period to be eligible to receive any Award except as noted in Section 10 of this Agreement. Actual Award percentage rates will be interpolated using the actual three-year cumulative fully diluted cumulative EPS and average ROA for the Performance Period

6. Payment of Award. Performance Awards earned as provided for under this agreement and in accordance with the Plan shall be paid in cash no later than March 15 next following the Performance Period.

7. Tax Withholding Obligations. An Award paid under this Agreement shall be subject to mandatory federal, state, and local tax withholding requirements.

8. Termination and Forfeiture of Award. The Participant’s right to receive an Award shall terminate in whole and forfeit upon termination of employment with FDF or its subsidiaries for any reason, except in the event of Participant’s death, Permanent Disability or Retirement. If the Participant’s termination with FDF meets one of the listed exceptions, the Participant’s Award opportunity will remain subject to the Award determination under paragraph 5 during the Performance Period provided for in this Agreement and the Award earned at the end of the Performance Period will be reduced proportionate to the number of months rounded to the nearest

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whole month the Participant was actively employed during the Performance Period. Payment will be made at the same time as provided for under paragraph 6 of this Agreement.

9. Award Earned Upon a Change in Control. Upon the effective date of a Change in Control, an Award shall be made in an amount determined by taking the product of (A) the Award that would have been due if performance, measured as of the transaction date, were to continue at the same rate through the Performance Period; and (B) a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the Performance Period to the date of the transaction, and the denominator of which is the number of whole months in the Performance Period. Payment will be made before the later of two and one-half months after the effective date of a Change-in-Control, or the end of the calendar year in which the Change-in-Control occurs.

10. Non-compete, Non-solicitation and Business Protection.

A. Noncompetition Agreement and Nonsolicitation.

1. In view of Participant's importance to the success of FDF, Participant and FDF agree that FDF would likely suffer significant harm from Participant's competing with FDF or an Affiliate during Participant's term of employment with FDF or a Subsidiary and for some period of time thereafter.  Accordingly, Participant agrees that Participant shall not engage in competitive activities while employed by FDF or an Affiliate and during the Restricted Period.  Participant shall be deemed to engage in competitive activities if he shall, without the prior written consent of FDF, render services directly or indirectly, as an Participant, officer, director, consultant, advisor, partner or otherwise, for any organization or enterprise which competes directly or indirectly with the business of FDF or any Affiliate in providing financial products or services (including, without limitation, banking, insurance, or securities products or services) to consumers and businesses, or directly or indirectly acquires any financial or beneficial interest in any organization which conducts or is otherwise engaged in a business or enterprise which competes directly or indirectly with the business of FDF or any Affiliate in providing financial products or services (including, without limitation, banking, insurance or securities products or services) to consumers and businesses.  Notwithstanding the preceding sentence, Participant shall not be prohibited from owning less than 1 percent of any publicly traded corporation, whether or not such corporation is in competition with FDF or an Affiliate.  For purposes of this Section 10 the term "Restricted Period" shall be the period of one year following termination for any reason of Participant’s employment with FDF or an Affiliate.

During the Participant's employment by FDF or an Affiliate, the covenants contained in this Section 10.A.1., shall apply without regard to geographic location.  Following the termination of Participant's employment and during the Restricted Period, the covenants contained in this Section 10.A.1. shall be limited to those counties in which FDF or an Associate has branch banking insurance and investment or other offices, and all contiguous counties to any such county.

2. While employed by FDF or an Affiliate and during the Restricted Period, Participant agrees that Participant shall not, in any manner, directly or indirectly, (i) solicit by mail, by telephone, by personal meeting, or by any other means, either directly or indirectly, any customer or prospective customer of FDF or an

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Affiliate to whom Participant provided services, or for whom Participant transacted business, or whose identity becomes known to Participant in connection with Participant's services to FDF or an Affiliate (including employment with or services to any predecessor or successor entities), to transact business with a person or an entity other than FDF or an Affiliate or to refuse or refrain from doing any business with FDF or an Affiliate or (ii) interfere with or damage (or attempt to interfere with or damage) any relationship between FDF or an Affiliate and any such customer or prospective customer.  The term "solicit" as used in this Agreement means any communication of any kind whatsoever, inviting, encouraging or requesting any person to take or refrain from taking any action with respect to the business of FDF or an Affiliate.

3. While employed by FDF or an Affiliate and during the Restricted Period, Participant agrees that Participant shall not, in any manner, directly or indirectly, solicit any person who is an Employee of FDF or any Affiliate to apply for or accept employment or a business opportunity with any other person or entity.

4. The parties agree that nothing herein shall be construed to limit or negate the common law of torts or trade secrets where it provides broader protection than that provided herein.

B. Confidential Information.

Participant has obtained and may obtain confidential information concerning the businesses, operations, financial affairs, organizational and personnel matters, policies, procedures and other non-public matters of FDF and its Subsidiaries, and those of third parties that is not generally disclosed to persons not employed by FDF or its Subsidiaries.  Such information (referred to herein as the "Confidential Information") may have been or may be provided in written form or orally.  Participant shall not disclose to any other person the Confidential Information at any time during his employment with FDF or a Subsidiary or after the termination of his employment, provided that Participant may disclose such Confidential Information only to a person who is then a director, officer, Participant, partner, attorney or agent of FDF or a Subsidiary who, in Participant's reasonable good faith judgment, has a need to know the Confidential Information.

C. Effect of Breach; FDF’s Remedies

1. Participant’s right to any Award or Award opportunity under this Agreement shall terminate immediately upon Participant's breach of any of Participant's obligations set forth in this Section 10.

2. Participant acknowledges that an Award constitutes valuable consideration to Participant and that a violation on Participant's part of this Section 10 would cause immeasurable and irreparable damage to FDF.  Accordingly, Participant agrees that FDF shall be entitled to injunctive relief in any court of competent jurisdiction for any actual or threatened violation of any of the provisions of this Section 10, in addition to any other remedies it may have.

3. In addition to FDF’s right to seek injunctive relief as set forth in subsection 2 above of this Section 10.C., in the event that Participant shall violate the terms and conditions of this Section 10, FDF may: (i) make a general claim for

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damages and (ii) terminate any payments or benefits payable by First Defiance Financial, if applicable, to Participant.

4. The Board shall be responsible for determining whether Participant shall have violated this Section 10, and in the absence of Participant's ability to show that the Board has acted in bad faith and without fair dealing; such decision will be final and binding.  Upon the request of Participant, FDF shall provide an advance opinion as to whether a proposed activity would violate the provisions of Section 10 of this Agreement.

11. Restriction on Transferability. Until an Award is made as provided above, rights to such Award may not be sold, transferred, pledged, assigned, or otherwise alienated at any time. Any attempt to do so contrary to the provisions hereof shall be null and void.

12. Administration. The Compensation Committee of FDF shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participant, FDF, and all other interested persons. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan or this Agreement.

13. Construction. The Contingent Award is being made pursuant to the First Defiance Financial Corp. 2008 Long Term Incentive Compensation Plan, and is subject to the terms of that Plan. A copy of the Plan has been given to the Participant, and additional copies of the Plan are available upon request during normal business hours at the principal executive offices of FDF. To the extent that any provision of this Agreement violates or is inconsistent with an express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

14. Effect on Other Employee Benefit Plans. The value of any Award pursuant to this Agreement shall not be included as compensation, earnings, salaries, or other similar terms used when calculating the Participant’s benefits under any employee benefit plan sponsored by FDF or any subsidiary except as such plan otherwise expressly provides.

15. No Employment Rights. An Award pursuant to this Agreement shall not give the Participant any right to remain employed by FDF or a subsidiary.

16. Severability. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

17. Construction. An Award pursuant to this Agreement is subject to the terms of the Plan. A copy of the Plan has been given to the Participant. To the extent that any provision of this Agreement violates or is inconsistent with an express provision of the Plan, the Plan provision shall govern and any inconsistent provision in this Agreement shall be of no force or effect.

18. Miscellaneous.

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A. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral.  This Agreement may only be amended in writing signed by the parties hereto.

B. The Board may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may in any way adversely affect the Participant’s rights with respect to Contingent Awards provided for under this Agreement, without the Participant’s written approval.

C. This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.  If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid.

D. All obligations of FDF under the Plan and this Agreement, with respect to Awards made, shall be binding on any successor to FDF, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of FDF.

E. To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement effective as of the day and year first above written.

FIRST DEFIANCE FINANCIAL CORP.
By:	Date:
EMPLOYEE
By:	Date:

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Election to Name Beneficiary

The undersigned hereby names _______________________________ as beneficiary of any Award payable to such beneficiary in accordance with the terms of this agreement and the Plan in the event of my death prior the end of the referenced performance period.

Signature Date

(Note: In the absence of a beneficiary designation, any award paid under this agreement will be made to the estate of the deceased participant)

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