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): August 15, 2011

FIRST DEFIANCE FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

OHIO	0-26850	34-1803915
(State or other jurisdiction of incorporation)	(Commission File No.)	(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 Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On August 15, 2011, the Board of Directors (the “Board”) of First Defiance Financial Corp. (“First Defiance”) approved the creation of an annual incentive program for the benefit of certain employees of First Defiance and its wholly-owned subsidiaries, First Federal Bank of the Midwest and First Insurance and Investments, Inc., now known as First Insurance Group of the Midwest, Inc., including the following named executive officers: Messrs. Allen, Hileman, Rohrs, Rose and Small. Under the program, employees who are designated as participants by the Board are given the opportunity to earn an award if First Defiance achieves various performance objectives established by the Board and described below.

As a condition of receiving an award, a participant must elect whether to receive payment in the form of cash, First Defiance shares or a combination of cash and shares. Because payment with respect to the award may be made in shares, the awards have been granted as “performance-based awards” pursuant to and subject to the terms and conditions described in the First Defiance 2010 Equity Incentive Plan (“2010 Plan”) and evidenced by related award agreements.

Each participant will receive an award expressed as a percentage of the participant’s base salary (the “target award”) that is divided equally between a short-term incentive component (“STI”) and a long-term incentive component (“LTI”).

The STI of a participant’s award can be earned based on the level of achievement of the following performance objectives over a performance period of one year that began on January 1, 2011: diluted earnings per share, net charge offs, non-performing assets, classified assets, return on average assets, and return on average equity.

The LTI of a participant’s award can be earned based on a comparison of First Defiance’s average return on common equity, increase in earnings per share, and revenue growth over a performance period of two years that began on January 1, 2011 compared to a peer group of similar financial institutions and financial institution holding companies selected by the Compensation Committee of the Board (the “Committee”).

Each performance objective can be achieved at a “threshold”, “target” and “maximum” level of performance. Performance at the threshold, target and maximum levels of performance provides for a payout equal to 50%, 100% and 150%, respectively, for that performance objective. No amount is payable with respect to any performance objective if performance is achieved at less than the threshold level.

With respect to each performance period, the Committee will determine the amount payable with respect to the STI and LTI based on the level of achievement of the performance objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the amount payable with respect to any award.

Fifty percent of the STI will be paid between January 1 and March 15 of the first fiscal year following the end of the STI performance period, an additional 25% of the STI will be paid between January 1 and March 15 of the second fiscal year following the end of the performance period, and the remaining 25% of the STI will be paid between January 1 and March 15 of the

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third fiscal year following the end of the performance period. The LTI will be paid in a lump-sum between January 1 and March 15 of the first fiscal year following the end of the LTI performance period.

Except in the case of death, disability, retirement or a change in control (as defined in the 2010 Plan), a participant must remain employed through the performance period and on each payment date in order to receive a payment with respect to an award. In the event of a participant’s death, disability, retirement or a change in control, the treatment of the award will be as described in the award agreement evidencing the award. If the participant is terminated for cause after the end of the performance period but before payment of the award is made, the participant will forfeit any right to payment of the award.

As a participant in the United States Department of the Treasury’s Capital Purchase Program, First Defiance is subject to the limitations set forth in Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10 (collectively, “TARP”). TARP prohibits First Defiance from paying or accruing any bonus compensation to any of its five most highly compensated employees (as determined under TARP), including Messrs. Rohrs and Small.

Under TARP, each of Messrs. Rohrs and Small are permitted to receive awards of “long-term restricted stock” (as defined in TARP), provided that the value of such long-term restricted stock, determined as of the grant date, does not exceed 1/3 of their respective compensation. In addition, the awards granted to Messrs. Rohrs and Small are subject to additional restrictions on vesting and settlement under TARP.

Unlike the awards granted to the other named executive officers, the Board granted Messrs. Rohrs and Small awards of “performance-based restricted stock units” pursuant to the 2010 Plan. These awards are intended to qualify as grants of long-term restricted stock that are not subject to the TARP bonus prohibition. Except for the limitations imposed by TARP, the awards granted to Messrs. Rohrs and Small are subject to the same terms and conditions, including achievement of the same performance objectives, as granted to the other named executive officers.

The named executive officers who have been granted awards, their target award percentage, and the type of award granted (standard or TARP) are set forth below.

Name	Title	Target Award Percentage  of Base Salary			Type
William J. Small	Chairman, President and Chief Executive Officer of First Defiance		90	%	TARP
Donald P. Hileman	Executive Vice President & Chief Financial Officer of First Defiance and First Federal Bank and Chief Executive Officer of First Insurance Group of the Midwest		70	%	Standard

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Name	Title	Target Award Percentage  of Base Salary			Type
James L. Rohrs	Executive Vice President of First Defiance and President & Chief Executive Officer of First Federal Bank		70	%	TARP
Dennis E. Rose, Jr.	Executive Vice President of First Federal Bank		50	%	Standard
Gregory R. Allen	First Federal Bank President of Southern Market Area		50	%	Standard

The foregoing summary is qualified in its entirety by reference to the award agreements entered into between First Defiance and each of the named executive officers, copies of which are attached as Exhibits 10.1, 10.2, 10.3, and 10.4 hereto.

First Defiance’s shareholders approved the 2010 Plan at the 2010 Annual Meeting of Shareholders of First Defiance held on April 20, 2010. A description of the material terms of the 2010 Plan was included in First Defiance’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on March 19, 2010. The 2010 Plan was filed as Annex A thereto, and is incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
10.1	First Defiance Financial Corp. Performance-Based Award Agreement (Long Term Incentive)
10.2	First Defiance Financial Corp. Performance-Based Award Agreement (Long Term Incentive – TARP Applicable)
10.3	First Defiance Financial Corp. Performance-Based Award Agreement (Short Term Incentive)

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10.4 First Defiance Financial Corp. Performance-Based Award Agreement (Short Term Incentive – TARP Applicable)

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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 hereunto duly authorized.

FIRST DEFIANCE FINANCIAL CORP.
By:	/s/ Donald P. Hileman
	Donald P. Hileman, Executive Vice President & Chief Financial Officer

Date: August 19, 2011

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EX-10.1

Exhibit 10.1

FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(LONG-TERM INCENTIVE)

First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant a Performance Award, subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Performance-Based Award Agreement (Long-Term Incentive) (this “Award Agreement”).

1. Name of Participant:                                                          

2. Performance Period: The 24 month period beginning January 1, 2011 and ending on December 31, 2012 (the “Performance Period”).

3. Target Award As Percentage of Base Salary:     %

4. Earning an Award: At the end of the Performance Period, the Participant shall be eligible to receive a cash payment equal to between 0% and 150% of the Target Award based on the achievement of the Performance Objectives set forth in Exhibit A during the Performance Period (the “Award”).

5. Amount Payable: With respect to the Performance Period, the Committee shall determine the amount payable with respect to the Award based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the amount payable with respect to the Award.

6. Limitations on Earning an Award: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit any right to payment with respect to the Award. Notwithstanding the foregoing:

(a) Death, Disability, Retirement: If the Participant, dies, becomes Disabled or Retires during the Performance Period, the amount of the Participant’s Award shall be based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Payment with respect to the Award will be made in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control: If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the amount of the Participant’s Award shall equal the greater of: (i) the amount payable with respect to the Award as though the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the amount that would have been payable with respect to the Awards based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. The Award will be settled in a lump sum within 60 days following the Participant’s termination.

7. Form of Payment: As a condition to receiving the Award, the Participant must elect whether to receive payment of the Award in the form of cash and/or Shares by completing the form attached as Exhibit B.

8. Payment of Award: Provided that the Participant remains employed by the Company or an Affiliate on the payment date, payment of the Award shall be made between January 1 and March 15 of the first fiscal year following the end of the Performance Period. Notwithstanding the foregoing, if the Participant is terminated for Cause after the end of the Performance Period but before payment of the Award is made, the Participant shall forfeit any right to payment of the Award.

9. Miscellaneous:

(a) Non-Transferability. The Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.

(b) Beneficiary. Payments with respect to the Award shall be made to the Participant, except that, in the event of the Participant’s death, payment shall be made to the Participant’s beneficiary. Unless otherwise specifically designated by the Participant in writing, the Participant’s beneficiary shall be the Participant’s spouse or, if none, the Participant’s estate.

(c) No Right to Continued Service or to Awards. The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.

(d) Tax Withholding. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Award. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with payment of the Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being paid at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding and if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

(e) Requirements of Law. The grant of the Award is subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other

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quotation system.

(f) Governing Law. The Plan and the Award Agreement shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio.

(g) Award Subject to Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan.

(h) Section 409A of the Code. This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination.

(i) Signature in Counterparts. This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

[signature page attached]

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PARTICIPANT
	Date:
Signature
Print Name
FIRST DEFIANCE FINANCIAL CORP.
By:	Date:
Its:

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(LONG-TERM INCENTIVE)

EXHIBIT A

As described in Section 4 of the Award Agreement, at the end of the Performance Period, the Participant may earn between 0% and 150% of the Target Award based on the achievement of the Performance Objectives set forth below during the Performance Period. When determining the level of achievement of the Performance Objectives, the Committee may make such adjustments as it deems equitable to account for unusual or non-recurring items Performance between two stated levels will be interpolated when determining the percentage of the Target Award earned. Each component of the Target Award is calculated separately and the Participant’s Award for the Performance Period shall equal the sum of each component.

(a) 33% of the Award is based on the Company’s return on common equity relative to the return on common equity of the Peer Group during the Performance Period (“Average ROE”). Average ROE will be determined by adding return on equity for each year during the Performance Period and dividing the sum by two.

The percentage of the Target Award earned shall equal the percentage corresponding to the Company’s Average ROE relative to the Average ROE of the Peer Group during the Performance Period, as set forth below, multiplied by 33%:

Relative Performance of Average ROE to Peer Group:	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		50	%
Equal to Peer Group 75th percentile, but less than Peer Group 85th percentile		100	%
Equal to or higher than Peer Group 85th percentile		150	%

(b) 33% of the Award is based on the increase in the Company’s diluted earnings per share (“EPS”) relative to the increased in the earnings per share of the Peer Group during the Performance Period (“EPS Growth”). EPS Growth with be determined by subtracting fully diluted earnings per share on the first day of the Performance Period from fully diluted earnings per share on the last day of the Performance Period, and dividing the difference by two.

The percentage of the Target Award earned shall equal the percentage that corresponds to the Company’s EPS Growth compared to the EPS Growth of the Peer Group during the Performance Period, as set forth below, multiplied by 33%:

Relative Performance of EPS Growth to Peer Group	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0	%
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		50	%
Equal to Peer Group 75th percentile, but less than Peer		100	%

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Group 85th percentile
Equal to or higher than Peer Group 85th percentile	150	%

(c) 34% of the Award is based on the increase in the Company’s revenue relative to the increased in the revenue of the Peer Group during the Performance Period (“Revenue Growth”). Revenue Growth with be determined by subtracting revenue on the first day of the Performance Period from revenue on the last day of the Performance Period, and dividing the difference by two.

The percentage of the Target Award earned shall equal the percentage that corresponds to the Company’s Revenue Growth compared to the Revenue Growth of the Peer Group during the Performance Period, as set forth below, multiplied by 34%:

Relative Revenue Growth to Peer Group	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0	%
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		50	%
Equal to Peer Group 75th percentile, but less than Peer Group 85th percentile		100	%
Equal to or higher than Peer Group 85th percentile		150	%

For purposes of this Award Agreement: (i) return on common equity, earnings per share and revenue will be determined by the Committee, in its sole discretion, using financial information filed with the Securities and Exchange Commission; and (ii) the Committee shall select the institutions constituting, and make such periodic adjustments as it determines appropriate to, the “Peer Group” in its sole discretion.

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(LONG-TERM INCENTIVE)

EXHIBIT B

ELECTION AS TO FORM OF PAYMENT

I, the undersigned Participant, have been granted a Performance-Based Award (Long-Term Incentive) (the “Long-Term Award”) pursuant to the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”).

By making the election described in this Election as to Form of Payment (“Election Form”), I may elect to have all or a portion of my Long-Term Award paid to me in the form of unrestricted Shares.

I. Election

I hereby irrevocably elect to have the following percentage of my Short-Term Award paid in unrestricted Shares:

            % (the “Equity Election Amount”)

If I elect to receive any portion of my Short-Term Award in the form of unrestricted Shares, I will receive a number of whole Shares determined by: (a) multiplying (i) the Equity Election Amount by (ii) the amount payable on each Payment Date; and dividing the product by (b) the reported closing price of a Share on such Payment Date. Any fractional Shares will be settled in cash based on the reported closing price of a Share on the Payment Date.

II. Acknowledgements

By signing below, I understand that:

• My election is irrevocable once made;

• The Long-Term Award is conditioned up my making the election and return this Election Form to the Company within 10 business days following the Grant Date;

• If I fail to make an election, 100% of my Long-Term Award will be paid in cash.

Agreed and Acknowledged:
Participant Name
Signature
Dated:	, 20

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EX-10.2

Exhibit 10.2

FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

(LONG-TERM INCENTIVE – TARP APPLICABLE)

First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant an Award of Performance-Based Restricted Stock Units (the “RSUs”), subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Performance-Based Restricted Stock Unit Award Agreement (Long-Term Incentive – TARP Applicable) (this “Award Agreement”). Each whole or fractional RSU entitles the Participant to receive a cash payment equal to the Fair Market Value of a Share on the Payment Date (as defined below).

1. Name of Participant:                                                              

2. Performance Period: The 24 month period beginning January 1, 2011 and ending on December 31, 2012 (the “Performance Period”).

3. Grant Date: January 1, 2011 (the “Grant Date”).

4. Award of Restricted Stock Units: Subject to Section 10, the number of RSUs subject to the Award is equal to: (a) 150% multiplied by (b) the product of (i)     % of the Participant’s base salary and (ii) the Fair Market Value of a Share, each determined as of a Grant Date (as adjusted, pursuant to Section 9, the “Target Award”).

5. Vesting: At the end of the Performance Period, the Participant shall vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth in attached Exhibit A during the Performance Period. The Committee shall determine the number of RSUs vesting with respect to the Performance Period based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the number of RSUs vesting.

6. Limitations on Vesting: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit all of the RSUs subject to the Target Award. Notwithstanding the foregoing:

(a) Death, Disability, Retirement: If the Participant, dies, becomes Disabled or Retires during the Performance Period, the Participant shall vest in a number of RSUs based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control: If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the Participant shall vest in a number of RSUs equal to the greater of: (i) the number of RSUs that would have vested if the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the number of RSUs that would have vested based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s termination.

7. Form of Settlement: As a condition to receiving the Award, the Participant must elect whether to have the Participant’s vested RSUs settled in cash and/or Shares by completing attached Exhibit B.

8. Payment of Award: Provided that the Participant remains employed by the Company or an Affiliate on the payment date, all vested RSUs shall be settled between January 1 and March 15 of the first fiscal year following the end of the Performance Period. Notwithstanding the foregoing, if the Participant is terminated for Cause after the end of the Performance Period but before the RSUs are settled, the Participant shall forfeit any right to settlement of the RSUs.

9. TARP Limitations: Notwithstanding anything in this Award Agreement to the contrary, to the extent and during the period that the Company and the Participant are subject to the limitations set forth in Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10 (collectively, “TARP”), the following limitations will apply with respect to the RSUs:

(i) Limitations on Number of Restricted Stock Units. The number of RSUs subject to the Target Award, plus the aggregate value of all other “long term restricted stock” that is intended to be exempt from the TARP bonus prohibition for the fiscal year in which the Grant Date occurs, shall not exceed 1/3 of the Participant’s annual compensation for such fiscal year, determined by including the total Fair Market Value of all equity-based compensation granted during such fiscal year in the Participant’s annual compensation.

(ii) Restrictions on Payment. The Participant will forfeit any RSUs if the Participant does not continue performing substantial services for the Company for two years from the Grant Date (other than due to the Participant’s earlier death, Disability or the earlier occurrence of a “change in control event” as defined in Treasury Regulations §§1.280G-1, Q&A 27 through 29 or 1.409A-3(i)(5)(i) involving the Company).

(iii) Restrictions on Settlement: Payment with respect to any vested RSUs may only be made based on the date on which the Company repays the percentage of aggregate TARP financial assistance received, as set forth below:

Percentage of TARP  Financial Assistance Repaid		Percentage of RSUs Becoming Payable
	25%		25	%
	50%		50	%
	75%		75	%
	100%		100	%

10. Miscellaneous:

(a) Non-Transferability. RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.

(b) Beneficiary. Payments with respect to the Award shall be made to the Participant, except that, in the event of the Participant’s death, payment shall be made to the Participant’s beneficiary. Unless otherwise specifically designated by the Participant in writing, the Participant’s beneficiary shall be the Participant’s spouse or, if none, the Participant’s estate.

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(c) No Right to Continued Service or to Awards. The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.

(d) Tax Withholding. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the RSUs. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with the exercise or settlement of an Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

(e) Requirements of Law. The grant of Awards shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system.

(f) Governing Law. The Plan and all Award Agreements shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio.

(g) Award Subject to Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan.

(h) Section 409A of the Code. This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the

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maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination.

(i) Signature in Counterparts. This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

PARTICIPANT
	Date:
Signature
Print Name
FIRST DEFIANCE FINANCIAL CORP.
By:	Date:
Its:

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(LONG-TERM INCENTIVE)

EXHIBIT A

As described in Section 5 of the Award Agreement, at the end of the Performance Period, the Participant may vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth below during the Performance Period. When determining the level of achievement of the Performance Objectives, the Committee may make such adjustments as it deems equitable to account for unusual or non-recurring items Performance between two stated levels will be interpolated when determining the percentage of the Target Award earned. Each component of the Target Award is calculated separately and the Participant’s Award for the Performance Period shall equal the sum of each component.

(a) 33% of the Award is based on the Company’s return on common equity relative to the return on common equity of the Peer Group during the Performance Period (“Average ROE”). Average ROE will be determined by adding return on equity for each year during the Performance Period and dividing the sum by two.

The percentage of the Target Award earned shall equal the percentage corresponding to the Company’s Average ROE relative to the Average ROE of the Peer Group during the Performance Period, as set forth below, multiplied by 33%:

Relative Performance of Average ROE to Peer Group:	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		33	%
Equal to Peer Group 75th percentile, but less than Peer Group 85th percentile		66	%
Equal to or higher than Peer Group 85th percentile		100	%

(b) 33% of the Award is based on the increase in the Company’s diluted earnings per share (“EPS”) relative to the increased in the earnings per share of the Peer Group during the Performance Period (“EPS Growth”). EPS Growth with be determined by subtracting fully diluted earnings per share on the first day of the Performance Period from fully diluted earnings per share on the last day of the Performance Period, and dividing the difference by two.

The percentage of the Target Award earned shall equal the percentage that corresponds to the Company’s EPS Growth compared to the EPS Growth of the Peer Group during the Performance Period, as set forth below, multiplied by 33%:

Relative Performance of EPS Growth to Peer Group	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0	%
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		33	%
Equal to Peer Group 75th percentile, but less than Peer		66	%

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Group 85th percentile
Equal to or higher than Peer Group 85th percentile	100	%

(c) 34% of the Award is based on the increase in the Company’s revenue relative to the increased in the revenue of the Peer Group during the Performance Period (“Revenue Growth”). Revenue Growth with be determined by subtracting revenue on the first day of the Performance Period from revenue on the last day of the Performance Period, and dividing the difference by two.

The percentage of the Target Award earned shall equal the percentage that corresponds to the Company’s Revenue Growth compared to the Revenue Growth of the Peer Group during the Performance Period, as set forth below, multiplied by 34%:

Relative Revenue Growth to Peer Group	Percentage of Target  Award Component Earned
Less than Peer Group 50th percentile		0	%
Equal to Peer Group 50th percentile, but less than Peer Group 75% percentile		33	%
Equal to Peer Group 75th percentile, but less than Peer Group 85th percentile		66	%
Equal to or higher than Peer Group 85th percentile		100	%

For purposes of this Award Agreement: (i) return on common equity, earnings per share and revenue will be determined by the Committee, in its sole discretion, using financial information filed with the Securities and Exchange Commission; and (ii) the Committee shall select the institutions constituting, and make such periodic adjustments as it determines appropriate to, the “Peer Group” in its sole discretion.

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

(LONG-TERM INCENTIVE – TARP APPLICABLE)

EXHIBIT A

ELECTION AS TO FORM OF PAYMENT

I, the undersigned Participant, have been granted a Performance-Based Restricted Stock Unit Award (Short-Term Incentive – TARP Applicable) (the “Long-Term Award”) pursuant to the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”).

By making the election described in this Election as to Form of Payment (“Election Form”), I may elect to have all or a portion of my Long-Term Award paid to me in the form of Shares.

Unless I elect otherwise below, I will receive a payment with respect to each vested RSUs equal to the Fair Market Value of a Share on the relevant Payment Date.

I. Election

I hereby irrevocably elect to have the following percentage of my Long-Term Award paid in unrestricted Shares:

            % (the “Equity Election Amount”)

If I elect to receive any portion of my Long-Term Award in the form of unrestricted Shares, I will receive a number of whole Shares equal to the product of: (a) the Equity Election Amount; and (b) the number of RSUs being settled on each Payment Date. Any fractional RSUs will be settled in cash based on the Fair Market Value of a Share on the applicable Payment Date.

II. Acknowledgements

By signing below, I understand that:

• My election is irrevocable once made;

• The Long-Term Award is conditioned up my making the election and return this Election Form to the Company within 10 business days following the Grant Date;

• If I fail to make an election, 100% of my Long-Term Award will be paid in cash.

• Both the Long-Term Award and settlement of the Long-Term Award are subject to the terms and conditions set forth in Section 9 of the Award Agreement, Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10

Agreed and Acknowledged:
Participant Name
Signature
Dated:	, 20

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EX-10.3

Exhibit 10.3

FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(SHORT-TERM INCENTIVE)

First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant a Performance-Based Award subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Performance-Based Award Agreement (Short-Term Incentive) (this “Award Agreement”).

1. Name of Participant:                                              

2. Performance Period: The 12 month period beginning January 1, 2011 and ending on December 31, 2011 (the “Performance Period”).

3. Target Award As Percentage of Base Salary:     %

4. Earning an Award: At the end of the Performance Period, the Participant shall be eligible to receive a cash payment equal to between 0% and 150% of the Target Award based on the achievement of the Performance Objectives set forth in Exhibit A during the Performance Period (the “Award”).

5. Amount Payable: With respect to the Performance Period, the Committee shall determine the amount payable with respect to the Award based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the amount payable with respect to the Award.

6. Limitations on Earning an Award: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit any right to payment with respect to the Award. Notwithstanding the foregoing:

(a) Death, Disability, Retirement: If the Participant, dies, becomes Disabled or Retires during the Performance Period, the amount of the Participant’s Award shall be based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Payment with respect to the Award will be made in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control: If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the amount of the Participant’s Award shall equal the greater of: (i) the amount payable with respect to the Award as though the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the amount that would have been payable with respect to the Awards based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. The Award will be settled in a lump sum within 60 days following the Participant’s termination.

7. Form of Payment: As a condition to receiving the Award, the Participant must elect whether to receive payment of the Award in the form of cash and/or Shares by completing the form attached as Exhibit B.

8. Payment: Provided that the Participant remains employed by the Company or an Affiliate on such date (each a “Payment Date”):

(a) 50% of the Award shall be paid between January 1 and March 15 of the first fiscal year following the end of the Performance Period;

(b) 25% of the Award shall be paid between January 1 and March 15 of the second fiscal year following the end of the Performance Period; and

(c) 25% of the Award shall be paid between January 1 and March 15 of the third fiscal year following the end of the Performance Period.

9. Effect of Termination: Notwithstanding the foregoing:

(a) Death, Disability or Retirement. In the event of the Participant’s death, Disability or Retirement prior to a Payment Date, the unpaid portion of the Award shall be paid in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control. In the event of a Change in Control, the unpaid portion of the Award shall be paid in a lump sum within 60 days following the Change in Control.

(c) Termination for Cause. If the Participant is terminated for Cause (regardless of whether such termination would also constitute a Retirement) during the Performance Period, the Participant shall forfeit any further right to payment with respect to the Award.

10. Miscellaneous:

(a) Non-Transferability. The Award may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.

(b) Beneficiary. Payments with respect to the Award shall be made to the Participant, except that, in the event of the Participant’s death, payment shall be made to the Participant’s beneficiary. Unless otherwise specifically designated by the Participant in writing, the Participant’s beneficiary shall be the Participant’s spouse or, if none, the Participant’s estate.

(c) No Right to Continued Service or to Awards. The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.

(d) Tax Withholding. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the Award. To the extent permitted by the Committee, in its sole discretion, this amount may be:

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(i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with payment of the Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being paid at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding and if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

(e) Requirements of Law. The grant of the Award is subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system.

(f) Governing Law. The Plan and the Award Agreement shall be governed by and construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio.

(g) Award Subject to Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan.

(h) Section 409A of the Code. This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Award Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s

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termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination.

(i) Signature in Counterparts. This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

PARTICIPANT
	Date:
Signature
Print Name
FIRST DEFIANCE FINANCIAL CORP.
By:	Date:
Its:

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(SHORT-TERM INCENTIVE)

EXHIBIT A

As described in Section 4 of the Award Agreement, at the end of the Performance Period, the Participant may earn between 0% and 150% of the Target Award based on the achievement of the Performance Objectives set forth below during the Performance Period. When determining the level of achievement of the Performance Objectives, the Committee may make such adjustments as it deems equitable to account for unusual or non-recurring items Performance between two stated levels will be interpolated when determining the percentage of the Target Award earned. Each component of the Target Award is calculated separately and the Participant’s Award for the Performance Period shall equal the sum of each component.

(a) 25% of the Award is based on the Company’s diluted earnings per share, as reported on the Company’s financial statements (“Diluted EPS”), at the end of the Performance Period. The percentage of the Target Award earned will correspond to Company’s Diluted EPS, as set forth below, multiplied by 25%:

Diluted Earnings Per Share	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%
		80	%
		90	%
		100	%
		110	%
		120	%
		130	%
		140	%
		150	%

(b) 15% of the Award is based on the percentage of the Company’s net charge offs compared to the Company’s average loans, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Net Charge Off Percentage”). The percentage of the Target Award earned will correspond to Net Charge Off Percentage, as set forth below, multiplied by 25%:

Net Charge Off Percentage	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%

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80	%
90	%
100	%
110	%
120	%
130	%
140	%
150	%

(c) 15% of the Award is based on the percentage of the Company’s non-performing assets compared to the Company’s total assets, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Non-Performing Asset Percentage”). The percentage of the Target Award earned will correspond to Non-Performing Asset Percentage, as set forth below, multiplied by 25%:

Non-Performing Asset Percentage	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%
		80	%
		90	%
		100	%
		110	%
		120	%
		130	%
		140	%
		150	%

(d) 25% of the Award is based on the percentage of the Company’s classified assets compared to the Company’s total assets, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Classified Asset Percentage”). The percentage of the Target Award earned will correspond to Classified Asset Percentage, as set forth below, multiplied by 25%:

Classified Asset Percentage	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%
		80	%

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90	%
100	%
110	%
120	%
130	%
140	%
150	%

(e) 10% of the Award is based on the percentage of the Company’s return on average equity, as reported on the Company’s financial statements, at the end of the Performance Period (the “Return on Average Equity”). The percentage of the Target Award earned will correspond to Return on Average Equity, as set forth below, multiplied by 25%:

Return on Average Equity	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%
		80	%
		90	%
		100	%
		110	%
		120	%
		130	%
		140	%
		150	%

(f) 10% of the Award is based on the percentage of the Company’s return on average assets, as reported on the Company’s financial statements, at the end of the Performance Period (the “Return on Average Assets”). The percentage of the Target Award earned will correspond to Return on Average Assets, as set forth below, multiplied by 25%:

Return on Average Assets	Percentage of Award Component Earned
		0	%
		50	%
		60	%
		70	%
		80	%
		90	%

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100	%
110	%
120	%
130	%
140	%
150	%

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(SHORT-TERM INCENTIVE)

EXHIBIT B

ELECTION AS TO FORM OF PAYMENT

I, the undersigned Participant, have been granted a Performance-Based Award (Short-Term Incentive) (the “Short-Term Award”) pursuant to the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”).

By making the election described in this Election as to Form of Payment (“Election Form”), I may elect to have all or a portion of my Short-Term Award paid to me in the form of unrestricted Shares.

I. Election

I hereby irrevocably elect to have the following percentage of my Short-Term Award paid in unrestricted Shares:

    % (the “Equity Election Amount”)

If I elect to receive any portion of my Short-Term Award in the form of unrestricted Shares, I will receive a number of whole Shares determined by: (a) multiplying (i) the Equity Election Amount by (ii) the amount payable on each Payment Date; and dividing the product by (b) the reported closing price of a Share on such Payment Date. Any fractional Shares will be settled in cash based on the reported closing price of a Share on the Payment Date.

II. Acknowledgements

By signing below, I understand that:

• My election is irrevocable once made;

• The Short-Term Award is conditioned up my making the election and return this Election Form to the Company within 10 business days following the Grant Date;

• If I fail to make an election, 100% of my Award will be paid in cash.

Agreed and Acknowledged:
Participant Name
Signature
Dated:	, 20

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EX-10.4

Exhibit 10.4

FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

(SHORT TERM INCENTIVE – TARP APPLICABLE)

First Defiance Financial Corp. (the “Company”) hereby grants the undersigned Participant an Award of Performance-Based Restricted Stock Units (the “RSUs”), subject to the terms and conditions described in the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”) and this Performance-Based Restricted Stock Unit Award Agreement (Short-Term Incentive – TARP Applicable) (this “Award Agreement”). Each whole or fractional RSU entitles the Participant to receive a cash payment equal to the Fair Market Value of a Share on the Payment Date (as defined below).

1. Name of Participant:                                              

2. Performance Period: The 12 month period beginning January 1, 2011 and ending on December 31, 2011 (the “Performance Period”).

3. Grant Date: January 1, 2011 (the “Grant Date”).

4. Award of Restricted Stock Units: Subject to Section 10, the number of RSUs subject to the Award is equal to: (a) 150% multiplied by (b) the product of (i)    % of the Participant’s base salary and (ii) the Fair Market Value of a Share, each determined as of a Grant Date (as adjusted, pursuant to Section 10, the “Target Award”).

5. Vesting: At the end of the Performance Period, the Participant shall vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth in attached Exhibit A during the Performance Period. The Committee shall determine the number of RSUs vesting with respect to the Performance Period based on the level of achievement of the Performance Objectives and any other factors that the Committee deems relevant. The Committee, in its sole discretion, may adjust the number of RSUs vesting.

6. Limitations on Vesting: If the Participant’s employment terminates for any reason prior to the end of the Performance Period, the Participant shall forfeit all of the RSUs subject to the Target Award. Notwithstanding the foregoing:

(a) Death, Disability, Retirement: If the Participant, dies, becomes Disabled or Retires during the Performance Period, the Participant shall vest in a number of RSUs based on the achievement of the Performance Objectives determined as of the fiscal quarter ended nearest to the Participant’s death, Disability or Retirement. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control: If a Change in Control occurs during the Performance Period and the Participant is terminated by the Company, other than for Cause (but in no event after the end of the Performance Period), the Participant shall vest in a number of RSUs equal to the greater of: (i) the number of RSUs that would have vested if the Performance Objectives had been satisfied at the “target” level of achievement for the Performance Period; or (ii) the number of RSUs that would have vested based on the actual level of achievement of the Performance Objectives through the fiscal quarter ended nearest to the Participant’s termination. Vested RSUs shall be settled in a lump sum within 60 days following the Participant’s termination.

7. Form of Settlement: As a condition to receiving the Award, the Participant must elect whether to have the Participant’s vested RSUs settled in cash and/or Shares by completing attached Exhibit B.

8. Settlement of RSUs: Provided that the Participant remains employed by the Company or an Affiliate on the applicable date (each a “Payment Date”):

(a) 50% of the vested RSUs shall be settled on January 1 of the first fiscal year following the end of the Performance Period;

(b) 25% of the vested RSUs shall be settled on January 1 of the second fiscal year following the end of the Performance Period; and

(c) 25% of the vested RSUs shall be settled on January 1 of the third fiscal year following the end of the Performance Period.

9. Effect of Termination: Notwithstanding the foregoing:

(a) Death, Disability or Retirement. In the event of the Participant’s death, Disability or Retirement prior to a Payment Date, any vested RSUs that have not been settled shall be settled in a lump sum within 60 days following the Participant’s death, Disability or Retirement.

(b) Change in Control. In the event of a Change in Control, any vested RSUs that have not been settled shall be settled in a lump sum within 60 days following the Change in Control.

(c) Termination for Cause. If the Participant is terminated for Cause (regardless of whether such termination would also constitute a Retirement) prior to a Payment Date, all RSUs that have not yet been settled shall be forfeited.

10. TARP Limitations: Notwithstanding anything in this Award Agreement to the contrary, to the extent and during the period that the Company and the Participant are subject to the limitations set forth in Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10 (collectively, “TARP”), the following limitations will apply with respect to the RSUs:

(i) Limitations on Number of Restricted Stock Units. The number of RSUs subject to the Target Award, plus the aggregate value of all other “long term restricted stock” that is intended to be exempt from the TARP bonus prohibition for the fiscal year in which the Grant Date occurs, shall not exceed 1/3 of the Participant’s annual compensation for such fiscal year, determined by including the total Fair Market Value of all equity-based compensation granted during such fiscal year in the Participant’s annual compensation.

(ii) Restrictions on Payment. The Participant will forfeit any RSUs if the Participant does not continue performing substantial services for the Company for two years from the Grant Date (other than due to the Participant’s earlier death, Disability or the earlier occurrence of a “change in control event” as defined in Treasury Regulations §§1.280G-1, Q&A 27 through 29 or 1.409A-3(i)(5)(i) involving the Company).

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(iii) Restrictions on Settlement: Payment with respect to any vested RSUs may only be made based on the date on which the Company repays the percentage of aggregate TARP financial assistance received, as set forth below:

Percentage of TARP Financial Assistance Repaid			Percentage of RSUs Becoming Payable
	25	%		25	%
	50	%		50	%
	75	%		75	%
	100	%		100	%

11. Miscellaneous:

(a) Non-Transferability. RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or the laws of descent and distribution.

(b) Beneficiary. Unless otherwise specifically designated by the Participant in writing, a Participant’s beneficiary under the Plan shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.

(c) No Right to Continued Service or to Awards. The granting of an Award shall impose no obligation on the Company or any Affiliate to continue the employment of a Participant or interfere with or limit the right of the Company or any Affiliate to Terminate the employment of the Participant at any time, with or without Cause, which right is expressly reserved.

(d) Tax Withholding. The Company or an Affiliate, as applicable, will have the power and right to deduct, withhold or collect any amount required by law or regulation to be withheld with respect to any taxable event arising with respect to the RSUs. To the extent permitted by the Committee, in its sole discretion, this amount may be: (i) withheld from other amounts due to the Participant, (ii) withheld from the value of any Award being settled or any Shares transferred in connection with the exercise or settlement of an Award, (iii) withheld from the vested portion of any Award (including Shares transferable thereunder), whether or not being exercised or settled at the time the taxable event arises, or (iv) collected directly from the Participant. Subject to the approval of the Committee, the Participant may elect to satisfy the withholding requirement, in whole or in part, by having the Company or an Affiliate, as applicable, withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction; provided that such Shares would otherwise be distributable to the Participant at the time of the withholding if such Shares are not otherwise distributable at the time of the withholding, provided that the Participant has a vested right to distribution of such Shares at such time. All such elections will be irrevocable and made in writing and will be subject to any terms and conditions that the Committee, in its sole discretion, deems appropriate.

(e) Requirements of Law. The grant of Awards shall be subject to all applicable laws, rules and regulations (including applicable federal and state securities laws) and to all required approvals of any governmental agencies or national securities exchange, market or other quotation system.

(f) Governing Law. The Plan and all Award Agreements shall be governed by and

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construed in accordance with the laws of (other than laws governing conflicts of laws) the State of Ohio.

(g) Award Subject to Plan. The Award is subject to the terms and conditions described in this Award Agreement and the Plan, which is incorporated by reference into and made a part of this Award Agreement. In the event of a conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan will govern. The Committee has the sole responsibility of interpreting the Plan and this Award Agreement, and its determination of the meaning of any provision in the Plan or this Award Agreement will be binding on the Participant. Capitalized terms that are not defined in this Award Agreement have the same meanings as in the Plan.

(h) Section 409A of the Code. This Award Agreement is intended, and shall be construed and interpreted, to comply with Section 409A of the Code and if necessary, any provision shall be held null and void to the extent such provision (or part thereof) fails to comply with Section 409A of the Code or the Treasury Regulations thereunder. For purposes of Section 409A of the Code, each payment of compensation under the Agreement shall be treated as a separate payment of compensation. Any amounts payable solely on account of an involuntary termination shall be excludible from the requirements of Section 409A of the Code, either as separation pay or as short-term deferrals to the maximum possible extent. Nothing herein shall be construed as the guarantee of any particular tax treatment to the Participant, and the Company shall have no liability with respect to any failure to comply with the requirements of Section 409A of the Code. Any reference to the Participant’s “termination” shall mean the Participant’s “separation from service”, as defined in Section 409A of the Code. In addition, if the Participant is determined to be a “specified employee” (within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees), the Participant shall not be entitled to payment or to distribution of any portion of an Award that is subject to Section 409A of the Code (and for which no exception applies) and is payable or distributable on account of the Participant’s termination until the expiration of six months from the date of such termination (or, if earlier, the Participant’s death). Such Award, or portion thereof, shall be paid or distributed on the first business day of the seventh month following such termination.

(i) Signature in Counterparts. This Award Agreement may be signed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

PARTICIPANT
	Date:
Signature
Print Name

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FIRST DEFIANCE FINANCIAL CORP.
By:	Date:
Its:

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED AWARD AGREEMENT

(SHORT-TERM INCENTIVE)

EXHIBIT A

As described in Section 4 of the Award Agreement, at the end of the Performance Period, the Participant may vest in between 0% and 100% of the RSUs subject to the Target Award based on the achievement of the Performance Objectives set forth below during the Performance Period. When determining the level of achievement of the Performance Objectives, the Committee may make such adjustments as it deems equitable to account for unusual or non-recurring items Performance between two stated levels will be interpolated when determining the percentage of the Target Award earned. Each component of the Target Award is calculated separately and the Participant’s Award for the Performance Period shall equal the sum of each component.

(a) 25% of the Award is based on the Company’s diluted earnings per share, as reported on the Company’s financial statements (“Diluted EPS”), at the end of the Performance Period. The percentage of the Target Award earned will correspond to Company’s Diluted EPS, as set forth below, multiplied by 25%:

Diluted EPS	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%
		53	%
		60	%
		67	%
		74	%
		80	%
		87	%
		93	%
		100	%

(b) 15% of the Award is based on the percentage of the Company’s net charge offs compared to the Company’s average loans, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Net Charge Off Percentage”). The percentage of the Target Award earned will correspond to Net Charge Off Percentage, as set forth below, multiplied by 25%:

Net Charge Off Percentage	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%

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53	%
60	%
67	%
74	%
80	%
87	%
93	%
100	%

(c) 15% of the Award is based on the percentage of the Company’s non-performing assets compared to the Company’s total assets, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Non-Performing Asset Percentage”). The percentage of the Target Award earned will correspond to Non-Performing Asset Percentage, as set forth below, multiplied by 25%:

Non-Performing Asset Percentage	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%
		53	%
		60	%
		67	%
		74	%
		80	%
		87	%
		93	%
		100	%

(d) 25% of the Award is based on the percentage of the Company’s classified assets compared to the Company’s total assets, each as reported on the Company’s financial statements, at the end of the Performance Period (the “Classified Asset Percentage”). The percentage of the Target Award earned will correspond to Classified Asset Percentage, as set forth below, multiplied by 25%:

Classified Asset Percentage	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%

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53	%
60	%
67	%
74	%
80	%
87	%
93	%
100	%

(e) 10% of the Award is based on the percentage of the Company’s return on average equity, as reported on the Company’s financial statements, at the end of the Performance Period (the “Return on Average Equity”). The percentage of the Target Award earned will correspond to Return on Average Equity, as set forth below, multiplied by 25%:

Return on Average Equity	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%
		53	%
		60	%
		67	%
		74	%
		80	%
		87	%
		93	%
		100	%

(f) 10% of the Award is based on the percentage of the Company’s return on average assets, as reported on the Company’s financial statements, at the end of the Performance Period (the “Return on Average Assets”). The percentage of the Target Award earned will correspond to Return on Average Assets, as set forth below, multiplied by 25%:

Return on Average Assets	Percentage of Award Component Earned
		0	%
		33	%
		40	%
		47	%

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53	%
60	%
67	%
74	%
80	%
87	%
93	%
100	%

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FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

(SHORT-TERM INCENTIVE – TARP APPLICABLE)

EXHIBIT B

ELECTION AS TO FORM OF PAYMENT

I, the undersigned Participant, have been granted a Performance-Based Restricted Stock Unit Award (Short-Term Incentive – TARP Applicable) (the “Short-Term Award”) pursuant to the First Defiance Financial Corp. 2010 Equity Incentive Plan (the “Plan”).

By making the election described in this Election as to Form of Payment (“Election Form”), I may elect to have all or a portion of my Short-Term Award paid to me in the form of Shares.

Unless I elect otherwise below, I will receive a payment with respect to each vested RSUs equal to the Fair Market Value of a Share on the relevant Payment Date.

I. Election

I hereby irrevocably elect to have the following percentage of my Short-Term Award paid in unrestricted Shares:

    % (the “Equity Election Amount”)

If I elect to receive any portion of my Short-Term Award in the form of unrestricted Shares, I will receive a number of whole Shares equal to the product of: (a) the Equity Election Amount; and (b) the number of RSUs being settled on each Payment Date. Any fractional RSUs will be settled in cash based on the Fair Market Value of a Share on the applicable Payment Date.

II. Acknowledgements

By signing below, I understand that:

• My election is irrevocable once made;

• The Short-Term Award is conditioned up my making the election and return this Election Form to the Company within 10 business days following the Grant Date;

• If I fail to make an election, 100% of my Short-Term Award will be paid in cash.

• Both the Short-Term Award and settlement of the Short-Term Award are subject to the terms and conditions set forth in Section 10 of the Award Agreement, Section 111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended, and 30 C.F.R. §30.10

Agreed and Acknowledged:
Participant Name
Signature
Dated:	, 20

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