FIRST DEFIANCE FINANCIAL CORP. 2008 LONG TERM INCENTIVE COMPENSATION PLAN

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.

(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.

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.

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.

3.1

Eligibility. Executive officers 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.

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,