EXHIBIT 10.4

FIRST DEFIANCE FINANCIAL CORP.

2010 EQUITY INCENTIVE PLAN

AMENDED AND RESTATED

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT

(SHORT TERM INCENTIVE – TARP APPLICABLE)

First Defiance Financial Corp. (the “Company”) previously granted 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 a
Performance-Based Restricted Stock Unit Award Agreement (Short-Term Incentive –
TARP Applicable) (the “Prior 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).

The Company and the Participant hereby enter into this Amended and Restated
Performance-Based Restricted Stock Unit Award Agreement (Short Term Incentive –
TARP Applicable) (this “Award Agreement”) which supersedes and replaces the
Prior Award Agreement by clarifying the number of RSUs subject to the Target
Award.

 

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: The number of RSUs subject to the Award is
determined by dividing: (a)     % of the Participant’s base salary by (b) the
Fair Market Value of a Share, each determined as of a Grant Date, and
(c) multiplying the product by 150% (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

 

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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: Each whole or fractional RSU entitles the Participant to
receive a Share or a payment equal to the Fair Market Value of a Share on the
date the RSU is settled. The number of Shares or the amount of cash payable to
the Participant shall be based on the election made by the Participant pursuant
to Exhibit B, attached to the Prior Award Agreement.

 

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

 

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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%

 

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.

 

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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 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.

 

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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

(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  

Less than $1.21

     0 % 

$1.21

     33 % 

$1.24

     40 % 

$1.27

     47 % 

$1.30

     53 % 

$1.33

     60 % 

$1.34

     67 % 

$1.38

     74 % 

$1.42

     80 % 

$1.46

     87 % 

$1.50

     93 % 

$1.54 or more

     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 15%:

 

Net Charge Off Percentage

   Percentage of Award Component Earned  

More than 0.90%

     0 % 

0.90%

     33 % 

0.83%

     40 % 

0.76%

     47 % 

 

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0.69%

     53 % 

0.62%

     60 % 

0.55%

     67 % 

0.49%

     74 % 

0.43%

     80 % 

0.37%

     87 % 

0.31%

     93 % 

0.25% or less

     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 15%:

 

Non-Performing Asset Percentage

   Percentage of Award Component Earned  

More than 2.78%

     0 % 

2.78%

     33 % 

2.62%

     40 % 

2.47%

     47 % 

2.31%

     53 % 

2.16%

     60 % 

2.00%

     67 % 

1.80%

     74 % 

1.60%

     80 % 

1.40%

     87 % 

1.20%

     93 % 

1.00% or less

     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  

More than 6.81%

     0 % 

6.81%

     33 % 

6.35%

     40 % 

5.89%

     47 % 

 

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5.43%

     53 % 

4.97%

     60 % 

4.51%

     67 % 

4.26%

     74 % 

4.01%

     80 % 

3.75%

     87 % 

3.50%

     93 % 

3.25% or less

     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 10%:

 

Return on Average Equity

   Percentage of Award Component Earned  

Less than 4.79%

     0 % 

4.79%

     33 % 

4.95%

     40 % 

5.12%

     47 % 

5.29%

     53 % 

5.46%

     60 % 

5.63%

     67 % 

6.19%

     74 % 

6.76%

     80 % 

7.32%

     87 % 

7.88%

     93 % 

8.45% or more

     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 10%:

 

Return on Average Assets

   Percentage of Award Component Earned  

Less than 0.53%

     0 % 

0.53%

     33 % 

0.55%

     40 % 

0.57%

     47 % 

 

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0.58%

     53 % 

0.60%

     60 % 

0.62%

     67 % 

0.68%

     74 % 

0.74%

     80 % 

0.81%

     87 % 

0.87%

     93 % 

0.93% or more

     100 % 

 

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