Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into this 9th day of
September, 2019 by and among First Defiance Financial Corp. (“First Defiance”),
an Ohio-chartered corporation and savings and loan holding company, First
Federal Bank of the Midwest (“First Federal”), a federally chartered stock
savings bank, both of which are located in Defiance, Ohio (collectively, the
“Company”), and Gary M. Small, an individual (hereinafter referred to as
“Executive”).

WITNESSETH:

WHEREAS, United Community Financial Corp. (“UCFC”), Home Savings Bank, an
Ohio-chartered commercial bank (“Home Savings”), and Executive are party to an
Employment Agreement, dated as of February 20, 2018 (the “Prior Employment
Agreement”);

WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as
of September 9, 2019 (the “Merger Agreement”), by and between the Company and
UCFC;

WHEREAS, effective as of the Effective Time (as defined in the Merger
Agreement), the Company desires that this Agreement supersede the Prior
Employment Agreement and to employ Executive on the terms set forth in this
Agreement; and

WHEREAS, Executive and the Company desire to enter into this Agreement to set
forth the terms and conditions of the employment relationship between the
Company and Executive.

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
below, and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the parties, the Company and Executive,
each party intending to be legally bound, hereby agree as follows:

1. Employment and Term.

(a) Term. The Company hereby agrees to employ Executive, and Executive hereby
agrees to be employed by the Company, subject to the terms and subject to the
conditions of this Agreement, for the period commencing on the date of the
closing of the transactions contemplated by the Merger Agreement (the “Effective
Date”) and ending on the third (3rd) anniversary thereof (the “Initial Term”).
Unless a Non-Renewal Notice (as defined below) is given as herein provided or
Executive’s employment is earlier terminated in accordance with the terms
hereof, commencing on the first (1st) anniversary of the Effective Date and on
each anniversary of the Effective Date thereafter, the term of Executive’s
employment under this Agreement shall be extended automatically for an
additional twelve (12)-month period. The Company or Executive may elect to
terminate the automatic extension of the Employment Term (as defined below) by
giving written notice of such election not less than ninety (90) days prior to
the end of the then-current term (the “Non-Renewal Notice”). The Initial Term
and any renewal term are referred to herein as the “Employment Term.” The
portion of the Employment Term commencing on the Effective Date and ending on
the second (2nd) anniversary of the Succession Date (as defined below) shall be
referred to herein as the “Initial Period.” The Employment Term may be
terminated as set forth in Section 4 of this Agreement.

 

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(b) Resignation of All Other Positions. Upon termination of Executive’s
employment hereunder for any reason, Executive shall be deemed to have resigned
from all positions that Executive holds with the Company and any of its
Affiliates (as defined below), including as an officer or member of the Board of
Directors of the Company (the “Board”) or a committee thereof. For purposes of
this Agreement, an “Affiliate” shall mean any corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, trust, association or organization that controls, is
controlled by or is under common control with the Company.

2. Duties and Positions of Executive.

(a) General Duties and Responsibilities. During the Employment Term, Executive
shall serve as the President of First Defiance and First Federal and, until the
Bank Merger (as defined in the Merger Agreement), Home Savings (First Federal
and Home Savings, collectively, the “Bank”). In addition to the foregoing
positions, on a date (the “Succession Date”) between January 1, 2021 and
June 30, 2021 to be determined by the Board following the Effective Date,
Executive shall be appointed to the position of Chief Executive Officer;
provided that, if Donald P. Hileman (the “Current CEO”) ceases to serve as Chief
Executive Officer of the Company for any reason, the Succession Date shall be
the date of the Current CEO’s cessation of service. During the Employment Term,
Executive shall also be nominated and/or appointed as a member of both the Board
and the board of directors of the Bank. During the Employment Term, Executive
shall report directly to the Current CEO through the Succession Date and solely
and directly to the Board thereafter. In such positions, Executive shall have
such duties and authority customarily associated with such positions. Executive
will further perform such other duties and hold such other positions related to
the business of the Company and its Affiliates as may from time to time be
reasonably requested of Executive by the Board. Executive shall perform his
services at such business location(s) as reasonably determined by Executive and
the Board, it being understood that Executive will not be required to move his
primary personal residence.

(b) Devotion of Entire Time to the Business of the Company. During the
Employment Term, Executive shall devote his full business time, ability and
attention during normal business hours to the faithful performance of his duties
under this Agreement. Executive shall not directly or indirectly render any
services of a business, commercial or professional nature to any person or
organization other than the Company or its Affiliates without the prior written
consent of the Board; provided, however, that Executive shall not be precluded
from (i) taking such vacation or sick leave as is applicable to Executive,
(ii) pursuing personal investments that do not interfere or conflict with the
performance of his duties to the Company, (iii) reasonably participating in
community, civic, charitable or similar organizations, or in industry-related
activities, including, but not limited to, attending state and national trade
association meetings, and (iv) serving as an officer, director, trustee or
committee member of a state or national trade association or the Federal Home
Loan Bank, or such other regulatory governing body.

(c) Standards. During the Employment Term, Executive shall perform his duties in
accordance with such reasonable standards expected of executives with comparable
positions in comparable organizations and as may be established from time to
time by the Board.

 

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3. Compensation and Review.

(a) Base Salary. During the Employment Term, Executive will receive an annual
base salary of $480,000 (or if higher, the base salary of Executive in effect as
of immediately prior to the Effective Date), subject to review annually for
increase (but not decrease), with the first adjustment (if determined to be
appropriate) to occur based on the Peer Review Process (as defined below) on the
timing contemplated under Section 3(h) of this Agreement. For purposes of this
Agreement, the initial annual base salary, together with any increase(s), will
be referred to herein the “Base Salary.” The Base Salary will be payable in
accordance with the Company’s regular payroll payment practices, but not less
frequently than monthly.

(b) Special Equity Retention Grant. On or as soon as reasonably practicable
following the Succession Date (but in no event later than thirty (30) days
following the Succession Date), the Company shall grant to Executive an award
(the “Equity Retention Award”) of restricted common stock of the Company having
a grant date fair value equal to $750,000. The Equity Retention Award shall vest
in one-fifth (1/5) installments upon each of the first (1st), second (2nd),
third (3rd), fourth (4th) and fifth (5th) anniversaries of the Succession Date
and shall have voting rights and be entitled to dividends when paid to
shareholders generally.

(c) Annual Cash Incentive Awards. During each year of the Employment Term,
Executive shall be eligible to receive an annual cash bonus (the “Annual
Bonus”), with a target opportunity of not less than fifty percent (50%) of the
Base Salary (the “Target Annual Bonus”), subject to review annually for increase
(but not decrease), with the first such adjustment (if determined to be
appropriate) to occur based on the Peer Review Process on the timing
contemplated pursuant to Section 3(h) of this Agreement. The Annual Bonus shall
be payable in accordance with the incentive bonus plan applicable to other
senior executives that the Company may adopt and implement from time to time.
Nothing contained in this Section 3(c) shall obligate the Company to institute,
maintain or refrain from changing, amending or discontinuing any incentive bonus
plan, so long as such changes are similarly applicable to other senior executive
employees under such plan.

(d) Annual Long-Term Incentive Awards. During each year of the Employment Term,
Executive shall be eligible to be granted annual long-term incentive awards (the
“Annual Long-Term Awards”), with a target grant date fair value of not less than
forty percent (40%) of the Base Salary, subject to review annually for increase
(but not decrease), with the first such adjustment (if determined to be
appropriate) to occur based on the Peer Review Process on the timing
contemplated pursuant to Section 3(h) of this Agreement. The grant timing, form
and terms and conditions of such Annual Long-Term Awards shall be no less
favorable than those applicable to the Current CEO prior to the Succession Date
(with termination protections to be no less favorable than as set forth in this
Agreement).

(e) Fringe Benefits. During the Employment Term, the Company will provide
Executive with all health and life insurance coverages, disability programs,
tax-qualified retirement plans, equity compensation programs and similar fringe
benefit plans (including, but not limited to, supplemental disability (as
described below) and additional life insurance (on the

 

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same basis and coverage levels as in effect immediately prior to the Effective
Date)), paid holidays, paid vacation, perquisites and such other fringe benefits
(including, but not limited to, the payment of Executive’s dues at one (1) or
more country clubs or social clubs) of employment on terms that are no less
favorable than those provided to Executive immediately prior to the Effective
Date (or to the Current CEO prior to the Succession Date, if more favorable).

(f) Supplemental Disability. During the Employment Term, the Company shall
provide Executive with supplemental disability coverage to ensure that total
disability benefits are equivalent to sixty percent (60%) of the Base Salary, up
to a maximum benefit of $35,000 per month, pursuant to the policy in effect as
of immediately prior to the Effective Date or, as determined by the Company, a
replacement policy that provides equivalent benefits.

(g) Expenses. The Company shall reimburse Executive for reasonable travel,
industry, entertainment and miscellaneous expenses incurred in connection with
the performance of Executive’s duties under this Agreement, including
participation in industry-related activities, in accordance with any policies or
procedures of the Company pertaining to reimbursement of such expenses to senior
executives, as in effect from time to time.

(h) Review for New Peer Group. Each year, on or about the anniversary of the
Effective Date, the compensation and benefits of Executive shall be reviewed for
upward adjustment to ensure that Executive’s compensation and benefits are
commensurate with market practices for his role with the Company relative to the
Company’s peer group (determined taking into account the effect of the
transactions contemplated in the Merger Agreement, and updated in the ordinary
course thereafter) (the “Peer Review Process”). The first such adjustments (if
determined to be appropriate, consistent with the Peer Review Process) during
the Employment Term shall occur as soon as practicable following the Effective
Date (and in no event later than thirty (30) days following the Effective Date)
with application for the 2020 fiscal year of the Company; provided that, prior
to the Succession Date, the Base Salary shall not be less than eighty percent
(80%) of the annual base salary of the Current CEO. The Compensation Committee
of the Board shall have sole discretion with respect to all determinations
related to or arising from the Peer Review Process. Any such adjustments shall
be made in accordance with the Company’s charter documents and applicable laws,
rules or regulations, including those of any listing agency applicable to the
Company, by either the Board or the Compensation Committee of the Board.

4. Termination of Employment.

(a) Death or Disability. Executive’s employment shall terminate automatically
upon Executive’s death during the Employment Term. If the Disability (as defined
below) of Executive occurs during the Employment Term, the Company may provide
Executive with written notice in accordance with Section 24 of this Agreement of
its intention to terminate Executive’s employment. In such event, Executive’s
employment with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by Executive (the “Disability Effective Date”);
provided that, within the thirty (30) days after such receipt, Executive shall
not have returned to full-time performance of Executive’s duties. For purposes
of this Agreement, “Disability” shall mean a physical or mental impairment that
renders Executive incapable of performing the essential functions of Executive’s
job, on a full-time

 

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basis, taking into account reasonable accommodation as required by law, as
determined by a physician who is selected by the agreement of the Executive (or
his guardian) and the Company, for a period of greater than one hundred fifty
(150) consecutive days. In the absence of a beneficiary designation by
Executive, or if Executive’s designated beneficiary does not survive Executive,
payments and benefits described in this Section 4(a) will be paid to Executive’s
estate.

(b) Cause. The Company may terminate the Employment Term and Executive’s
employment upon notice at any time with or without Cause. For purposes of this
Agreement, “Cause” shall mean any of the following: (i) Executive’s continued
intentional failure or refusal to materially abide by the terms and conditions
of this Agreement or perform substantially Executive’s assigned duties (other
than as a result of total or partial incapacity due to Disability); (ii)
Executive’s engagement in willful misconduct, including, without limitation,
fraud, embezzlement, theft or dishonesty, in the course of Executive’s
employment with the Company; (iii) Executive’s conviction of, or plea of guilty
or nolo contendere to, a felony or a crime other than a felony, which felony or
crime involves moral turpitude or a breach of trust or fiduciary duty owed to
the Company or any of its Affiliates; or (iv) Executive’s disclosure of material
trade secrets or material non-public confidential information of the Company or
any of its Affiliates in violation of the Company’s policies that apply to
Executive or any agreement with the Company or any of its Affiliates in respect
of confidentiality, nondisclosure or otherwise. No act or failure to act on the
part of Executive shall be considered “willful” unless it is done, or omitted to
be done, by Executive in bad faith or without reasonable belief that his action
or omission was in the best interests of the Company and its Affiliates. If an
action or omission constituting Cause (other than pursuant to clause (iii)) is
curable, Executive may be terminated only if Executive has not cured such action
or omission within thirty (30) days following written notice thereof from the
Company. Further, Executive will not be deemed to be discharged for Cause unless
and until there is delivered to Executive a copy of a resolution duly adopted by
the affirmative vote of a majority (or any higher threshold contemplated by
Section 4(e) of this Agreement) of the authorized number of directors on the
Board, at a meeting called and duly held for such purpose (after reasonable
notice is provided to Executive and Executive is given an opportunity, together
with counsel for Executive, to be heard before the Board), finding in good faith
that Executive is guilty of the conduct set forth above and specifying the
particulars thereof in reasonable detail.

(c) Good Reason. Executive’s employment may be terminated by Executive with or
without Good Reason. For purposes of this Agreement, “Good Reason” shall mean a
material and adverse change in the terms and conditions of Executive’s
employment, without Executive’s written consent, and shall include the
occurrence of the following:

(i) absent Executive’s agreement, a failure of the Board to appoint Executive as
Chief Executive Officer of the Company by June 30, 2021 (or, if earlier, the
date the Current CEO ceases to be Chief Executive Officer of the Company);

(ii) a material diminution in Executive’s titles, positions, authority, duties
or responsibilities or a failure to appoint Executive to the positions at the
times contemplated herein;

 

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(iii) a requirement that Executive report to any person or entity other than the
Current CEO or the Board through the Succession Date or the Board on or after
the Succession Date;

(iv) a reduction in the Base Salary, Target Annual Bonus or target Annual
Long-Term Awards opportunity;

(v) a material change in the geographic location in which Executive must perform
services under this Agreement. For purposes of this Agreement, “a material
change in the geographic location” shall mean a location that results in a one
(1)-way commute that is greater than seventy-five (75) miles (based on the
distance from Executive’s primary place of residence as of immediately prior to
the Effective Date), it being understood that the need to spend time in
Defiance, Ohio shall not be considered a material change;

(vi) the Board provides notice to Executive that it will not renew this
Agreement or offer Executive a substantially similar agreement; or

(vii) any other action or inaction that constitutes a material breach of this
Agreement, including a reduction in the fringe benefits provided to Executive
from those contemplated by this Agreement.

Executive shall provide written notice to the Company of the existence of one
(1) or more of the conditions giving rise to Good Reason within ninety (90) days
following his knowledge of the initial existence of such condition or
conditions, and the Company shall have thirty (30) days following receipt of
such written notice (the “Cure Period”) during which it may remedy the
condition. In the event that the Company fails to remedy the condition
constituting Good Reason during the Cure Period, Executive must terminate
employment, if at all, within ninety (90) days following the Cure Period for
such termination to constitute a termination for Good Reason. Executive’s mental
or physical incapacity following the occurrence of an event described above
shall not affect his ability to terminate employment for Good Reason.

(d) Notice of Termination. Any termination of employment by the Company for
Cause, or by Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 24 of
this Agreement. For purposes of this Agreement, the term “Notice of Termination”
means a written notice that (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the Date of Termination (which Date of
Termination shall be not more than thirty (30) days after the giving of such
notice). The failure by Executive or the Company to set forth in the Notice of
Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of Executive or the Company,
respectively, hereunder or preclude Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
respective rights hereunder.

 

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(e) Date of Termination. For purposes of this Agreement, the term “Date of
Termination” means (i) if Executive’s employment is terminated by the Company
for Cause, or by Executive for Good Reason, the date of receipt of the Notice of
Termination or such later date specified in the Notice of Termination, as the
case may be, (ii) if Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company notifies Executive
of such termination, (iii) if Executive resigns without Good Reason, the date on
which Executive notifies the Company of such termination, or (iv) if Executive’s
employment is terminated by reason of death or Disability, the date of
Executive’s death or the Disability Effective Date, as the case may be;
provided, however, that, notwithstanding the foregoing, any termination of
Executive (whether with or without Cause or due to Disability) or the decision
to take action that would give rise to a claim by Executive of Good Reason shall
require approval of at least a majority of the authorized number of directors on
the Board; provided that, during the Initial Period and the two (2) years
following a Change in Control (as defined below), approval of at least
seventy-five percent (75%) of the authorized number of directors on the Board
shall be required. Without limiting the generality of the foregoing, Executive
need not be invited to participate in the vote. Notwithstanding the foregoing,
in no event shall the Date of Termination occur until Executive experiences a
“separation from service” within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and the date on which such
separation from service takes place shall be the “Date of Termination.”

5. Obligations of the Company upon Termination.

(a) Death or Disability. In the event that during the Employment Term
Executive’s employment is terminated due to death or Disability, Executive or
Executive’s beneficiary (as designated in by Executive in writing with the
Company prior to Executive’s death) or, in the absence of a beneficiary
designation by Executive, subject to Section 5(f), Executive’s estate shall be
entitled to the following payments and benefits:

(i) any accrued and unpaid base salary and Annual Bonus award, any accrued and
unused paid time off and any unreimbursed business expenses (the “Accrued
Obligations”), which shall be paid within thirty (30) days following the Date of
Termination, and any benefits payable in accordance with, and at the times
contemplated by, the terms of any other benefit plan of the Company or its
Affiliates (the “Other Benefits”);

(ii) a Target Annual Bonus for the year of termination, prorated based on the
number of days elapsed in the year as of the Date of Termination (the “Prorated
Annual Bonus”), which shall be paid within sixty (60) days following the Date of
Termination; and

(iii) (A) accelerated vesting in full of any unvested time-vesting long-term
incentive awards, (B) any performance-vesting long-term incentive awards for
which the performance period is complete shall vest in full and any such awards
for which the performance period is not complete shall be earned as provided in
the applicable award agreement and vest in full and (C) any vested stock options
shall remain exercisable for the full remaining term (collectively, the “LTI
Benefit”).

 

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In addition, in the event of Executive’s death, Executive’s beneficiary (or
Executive’s estate) shall be paid ninety (90) days of Base Salary in a lump sum
within sixty (60) days following the Date of Termination. In the event of
Executive’s Disability, Executive shall receive a cash payment equal to eighteen
(18) months of COBRA premiums for the coverage Executive had in place on the
Date of Termination (the “COBRA Amount”), which shall be paid in a lump sum
within sixty (60) days following the Date of Termination, and the group and
supplemental life insurance applicable to Executive shall be maintained until
Executive attains age sixty-five (65) (whether on an insured or self-insured
basis).

(b) Termination Without Cause or for Good Reason. Upon the involuntary
termination of Executive’s employment by the Company other than for Cause, death
or Disability, or Executive’s voluntary termination of service for Good Reason
during the Employment Term, subject to the terms of this Agreement, including
Section 5(f), Executive shall be entitled to the following payments and
benefits:

(i) the Accrued Obligations, which shall be paid within thirty (30) days
following the Date of Termination, and Other Benefits;

(ii) a cash payment equal to the product of (A) the Severance Multiple (as
defined below) multiplied by (B) the sum of Executive’s (x) Base Salary and
(y) Target Annual Bonus (or if higher, the Annual Bonus paid or payable to
Executive in respect of the most recently completed performance year), which
shall be paid within sixty (60) days following the Date of Termination;

(iii) the COBRA Amount, which shall be paid within sixty (60) days following the
Date of Termination;

(iv) the Prorated Annual Bonus, which shall be paid within sixty (60) days
following the Date of Termination; and

(v) the LTI Benefit.

For purposes of this Agreement, the “Severance Multiple” shall be two (2), other
than in the event of a termination of employment during the Initial Period or
the period six (6) months before or two (2) years following a Change in Control
(as defined below) occurring after the Effective Date, in which case the
Severance Multiple shall be 2.99 (such higher multiple, the “Change in Control
Severance Multiple”).

(c) Definition of Change in Control. For purposes of this Agreement, a “Change
in Control” shall mean the occurrence of the following:

(i) an acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 30% or more of either (A) the then
outstanding shares of common stock of First Defiance (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then outstanding voting
securities of First Defiance entitled to vote generally in the election of
directors (the “Outstanding Company Voting

 

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Securities”); provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from First Defiance; (2) any acquisition by First Defiance;
(3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by First Defiance or any entity controlled by First Defiance; or
(4) any acquisition by any entity pursuant to a transaction that complies with
clauses (A), (B) and (C) of subsection (iii) of this Section 5(c); or

(ii) a change in the composition of the Board such that the individuals who, as
of the Effective Date, constitute the Board (the “Incumbent Board”) cease for
any reason to constitute at least a majority of the Board; provided, however,
that, for purposes of this Section 5(c), any individual who becomes a member of
the Board subsequent to the Effective Date whose election, or nomination for
election by First Defiance’s shareholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; provided, further, that any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board shall not be considered as a member of the Incumbent Board; or

(iii) the consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving First Defiance or any of its
subsidiaries or sale or other disposition of all or substantially all of the
assets of First Defiance, or the acquisition of assets or securities of another
entity by First Defiance or any of its subsidiaries (a “Business Combination”),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock (or, for a noncorporate entity,
equivalent securities) and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors (or,
for a noncorporate entity, equivalent securities), as the case may be, of the
entity resulting from such Business Combination (including an entity that, as a
result of such transaction, owns First Defiance or all or substantially all of
First Defiance’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be; (B) no Person (excluding any
entity resulting from such Business Combination or any employee benefit plan (or
related trust) of First Defiance or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock (or, for a
noncorporate entity, equivalent securities) of the entity resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such entity except to the extent that such ownership existed prior
to the Business Combination; and (C) at least a majority of the

 

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members of the board of directors (or, for a noncorporate entity, equivalent
body or committee) of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

(iv) the approval by the shareholders of First Defiance of a complete
liquidation or dissolution of First Defiance.

(d) Cause; Other than for Good Reason. If, during the Employment Term,
Executive’s employment is terminated by the Company for Cause or Executive
terminates his employment other than for Good Reason, this Agreement shall
terminate without further obligations to Executive other than the obligation to
pay to Executive the Accrued Obligations, which shall be paid within thirty
(30) days following the Date of Termination, and the Other Benefits.

(e) Excess Parachute Payment.

(i) Notwithstanding anything in this Agreement to the contrary, in the event the
Accounting Firm (as defined below) shall determine that receipt of all Payments
(as defined below) would subject Executive to the excise tax under Section 4999
of the Code, the Accounting Firm shall determine whether to reduce any of the
Payments paid or payable pursuant to the Agreement (the “Agreement Payments”) so
that the Parachute Value (as defined below) of all Payments, in the aggregate,
equals the Safe Harbor Amount (as defined below). The Agreement Payments shall
be so reduced only if the Accounting Firm determines that Executive would have a
greater Net After-Tax Receipt (as defined below) of aggregate Payments if the
Agreement Payments were so reduced. If the Accounting Firm determines that
Executive would not have a greater Net After-Tax Receipt of aggregate Payments
if the Agreement Payments were so reduced, Executive shall receive all Agreement
Payments to which the Executive is entitled hereunder.

(ii) If the Accounting Firm determines that aggregate Agreement Payments should
be reduced so that the Parachute Value of all Payments, in the aggregate, equals
the Safe Harbor Amount, the Company shall promptly give Executive notice to that
effect and a copy of the detailed calculation thereof. All determinations made
by the Accounting Firm under this Section 5(e) shall be binding upon the Company
and Executive and shall be made as soon as reasonably practicable and in no
event later than 15 days following the Date of Termination. For purposes of
reducing the Agreement Payments so that the Parachute Value of all Payments, in
the aggregate, equals the Safe Harbor Amount, only amounts payable under this
Agreement (and no other Payments) shall be reduced. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing the payments and
benefits in the following order: (i) cash payments that may not be valued under
Treas. Reg. § 1.280G-1, Q&A-24(c) (“24(c)”), (ii) equity-based payments that may
not be valued under 24(c), (iii) cash payments that may be valued under 24(c),
(iv) equity-based payments that may be valued under 24(c) and (v) other types of
benefits. With respect to each category of the foregoing, such reduction shall
occur first with respect to amounts that are not “deferred compensation” within
the meaning of Section 409A of the Code and next with respect to payments that
are deferred compensation, in each case, beginning with payments or benefits
that are to be paid the farthest in time from the Accounting Firm’s
determination. All reasonable fees and expenses of the Accounting Firm shall be
borne solely by the Company.

 

10

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(iii) As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that amounts will have been paid or distributed by the Company to
or for the benefit of the Executive pursuant to this Agreement that should not
have been so paid or distributed (each, an “Overpayment”) or that additional
amounts that will have not been paid or distributed by the Company to or for the
benefit of Executive pursuant to this Agreement could have been so paid or
distributed (each, an “Underpayment”). In the event that the Accounting Firm,
based upon the assertion of a deficiency by the Internal Revenue Service against
the Company or Executive that the Accounting Firm believes has a high
probability of success, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of
Executive shall be repaid by Executive to the Company (as applicable) together
with interest at the applicable federal rate provided for in Section 7872(f)(2)
of the Code; provided, however, that no such repayment shall be required if and
to the extent such deemed repayment would not either reduce the amount on which
Executive is subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Accounting Firm, based
upon controlling precedent or substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.

(iv) To the extent requested by Executive, the Company shall cooperate with
Executive in good faith in valuing, and the Accounting Firm shall take into
account the value of, services provided or to be provided by Executive
(including, without limitation, Executive’s agreeing to refrain from performing
services pursuant to a covenant not to compete or similar covenant) before, on
or after the date of a change in ownership or control of the Company (within the
meaning of Q&A-2(b) of the final regulations under Section 280G of the Code),
such that payments in respect of such services may be considered reasonable
compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final
regulations under Section 280G of the Code and/or exempt from the definition of
the term “parachute payment” within the meaning of Q&A-2(a) of the final
regulations under Section 280G of the Code in accordance with Q&A-5(a) of the
final regulations under Section 280G of the Code.

(v) The following terms shall have the following meanings for purposes of this
Section 5(e):

(A) “Accounting Firm” shall mean a nationally recognized certified public
accounting firm or other professional organization that is a certified public
accounting firm recognized as an expert in determinations and calculations for
purposes of Section 280G of the Code that is selected by First Defiance prior to
a Change in Control for purposes of making the applicable determinations
hereunder and is reasonably acceptable to Executive, which firm shall not,
without Executive’s consent, be a firm serving as accountant or auditor for the
individual, entity or group effecting the Change in Control.

 

11

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(B) “Net After-Tax Receipt” shall mean the present value (as determined in
accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a
Payment net of all taxes imposed on Executive with respect thereto under
Sections 1 and 4999 of the Code and under applicable state and local laws,
determined by applying the highest marginal rate under Section 1 of the Code and
under state and local laws that applied to Executive’s taxable income for the
immediately preceding taxable year, or such other rate(s) as the Accounting Firm
determines to be likely to apply to Executive in the relevant tax year(s).

(C) “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the portion
of such Payment that constitutes a “parachute payment” under Section 280G(b)(2)
of the Code, as determined by the Accounting Firm for purposes of determining
whether and to what extent the excise tax under Section 4999 of the Code will
apply to such Payment.

(D) “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of Executive, whether paid or payable pursuant to this Agreement or
otherwise.

(E) “Safe Harbor Amount” shall mean 2.99 times Executive’s “base amount,” within
the meaning of Section 280G(b)(3) of the Code.

(vi) The provisions of this Section 5(e) shall survive the expiration of this
Agreement.

(f) Release. As a condition to receiving any payments, other than payment of the
Accrued Obligations and Other Benefits, pursuant to this Agreement, Executive
agrees to release the Company and all of its Affiliates, employees and directors
from any and all claims that Executive may have against the Company and all of
its Affiliates, employees and directors up to and including the date Executive
(or, in the event of Executive’s death or Disability, his estate or guardian, as
applicable) signs a Waiver and Release of Claims (the “Release”), which form
shall provide for such waivers and/or revocation periods as are required by, or
advisable under, applicable federal law and/or regulation, and which Release
shall be substantially in the form set forth in Appendix A to this Agreement.
Notwithstanding anything to the contrary in this Agreement, Executive
acknowledges that Executive is not entitled to receive, and will not receive,
any payments pursuant to this Agreement unless and until Executive provides the
Company with said Release prior to the first (1st) date that payment is to be
made or is to commence; and if the release execution period begins in one
(1) taxable year and ends in another taxable year, payment shall not be made
until the beginning of the second (2nd) taxable year.

 

12

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(g) Coordination of Benefits. If Executive’s employment is terminated for
Disability or by the Company without Cause or by Executive for Good Reason and,
after such termination, Executive becomes entitled to payments based on the
Change in Control Severance Multiple, Executive shall receive the payments
pursuant to the Change in Control Severance Multiple, in a lump sum at the time
of the Change in Control, less the amount of any payments previously paid
pursuant to Sections 5(a) and 5(b) of this Agreement.

6. Attorneys’ Fees. It is the intent of the Company that Executive obtain the
benefits of this Agreement without reduction due to the need to expend funds to
pay costs or expenses (including attorneys’ fees) to enforce this Agreement.
Therefore, in the event Executive determines it is necessary to expend such
funds to enforce the terms and conditions of this Agreement, the Company shall
indemnify and hold harmless Executive for all reasonable costs and expenses
(including attorneys’ fees) incurred by Executive to enforce this Agreement, and
the Company shall, upon demand by Executive, promptly advance or reimburse
Executive for such costs and expenses as incurred. Executive shall repay such
funds to such Company if and only if Executive brings a legal action to enforce
this Agreement and a final non-appealable order is entered in such action that
all of Executive’s claims are frivolous.

7. Withholding. All payments required to be made by the Company hereunder to
Executive shall be subject to the withholding of such amounts, if any, relating
to federal, state and local tax and other payroll deductions as the Company may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

8. Indemnification; Insurance.

(a) Indemnification. The Company agrees to indemnify Executive to the fullest
extent permitted under applicable law and regulations and the organizational
documents of the Company, on a basis no less favorable than that applicable to
other directors and senior executives of the Company.

(b) Insurance. During the Employment Term and thereafter for so long as the
potential for liability exists, the Company shall provide Executive (and his
heirs, executors and administrators) with coverage under a directors’ and
officers’ liability policy at the Company’s expense at least equivalent to such
coverage otherwise provided to the other directors and senior executives of the
Company.

9. No Duty of Mitigation. Executive shall not be required to mitigate the amount
of any payment made pursuant to Section 5 of this Agreement if Executive accepts
other compensation for employment with another entity.

10. Special Regulatory Events. Notwithstanding anything to the contrary
contained herein, Executive acknowledges and agrees that any payments made to
Executive pursuant to this Agreement are subject to and conditioned on
compliance with the provisions of 12 U.S.C. § 1828(k) and Part 359 of the
Federal Deposit Insurance Corporation (“FDIC”) regulations (12 C.F.R. Part 359),
which contain certain prohibitions and limitations on the making of “golden
parachute” and certain indemnification payments by FDIC-insured institutions and
their holding companies. In the event any payments to Executive pursuant to this
Agreement are prohibited or limited by the provisions of such statute or
regulation, the Company will use its commercially reasonable efforts to obtain
the consent of the appropriate regulatory authorities to the payment to
Executive of the maximum amount that is permitted (up to the full amount due
under the terms of this Agreement).

 

13

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11. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall
preclude the Company from consolidating with, merging into or transferring all,
or substantially all, of its assets to another corporation that assumes all its
obligations and undertakings hereunder. Upon such a consolidation, merger or
transfer of assets, the term “Company” as used herein shall mean such other
corporation or entity, and this Agreement shall continue in full force and
effect.

12. Noncompetition and Nonsolicitation Covenant. Executive agrees that, during
the Employment Term, including any extension thereof, and for a period of one
(1) year following Executive’s termination of his employment for any reason,
Executive shall not, without the express written consent of the Company:

(a) be engaged, directly or indirectly, within those counties in which the
Company is engaged in deposit-taking activities at the time of Executive’s
termination of employment, as a partner, officer, director, employee,
consultant, independent contractor, security holder or owner of any entity
engaged in any business activity competitive with that of the Company or its
Affiliates; provided, however, nothing in this Agreement shall prevent Executive
from owning or acquiring an interest in any entity engaged in any competitive
business activity if such interest does not constitute “control” as defined in
12 C.F.R. Section 303.81(c);

(b) call upon or solicit, either for Executive or for any other person or firm
that engages in competition with any business operation actively conducted by
the Company or any of its Affiliates during the Employment Term, any customer
with whom the Company or any of its Affiliates directly conducts business during
the Employment Term, or interfere with any relationship, contractual or
otherwise, between the Company or any of its Affiliates and any customer with
whom the Company or any of its Affiliates directly conducts business during the
Employment Term; or

(c) induce or solicit any person who is at the date of termination or was during
the twelve (12) months preceding termination an employee, officer or agent of
the Company or any Affiliate to terminate said relationship, except as pursuant
to Executive’s duties for the Company.

In the event of a breach by Executive of any covenant set forth in this
Section 12, the term of such covenant will be extended by the period of the
duration of such breach and such covenant as so extended will survive any
termination of this Agreement, but only for the limited period of such
extension.

The restrictions on competition provided herein may be enforced by the Company
and/or any successor thereto by an action to recover payments made under this
Agreement, an action for injunction and/or an action for damages. The provisions
of this Section 12 constitute an essential element of this Agreement without
which the Company would not have entered into this Agreement. Notwithstanding
any other remedy available to the Company at law or in equity, the parties
hereto agree that the Company or any successor thereto will have the right, at
any and all times, to seek injunctive relief so as to enforce the terms and
conditions of this Section 12.

 

14

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If the scope of any restriction contained in this Section 12 is too broad to
permit enforcement of such restriction to its fullest extent, then such
restriction will be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.

13. Confidential Information. Executive will hold in a fiduciary capacity, for
the benefit of the Company, all secret or confidential information, knowledge
and data relating to the Company and any of its Affiliates (“Confidential
Information”) that shall have been obtained by Executive in connection his
employment with the Company and that is not public knowledge (other than by acts
by Executive or his representatives in violation of this Agreement). During the
Employment Term and after termination of Executive’s employment with the
Company, Executive will not, without the prior written consent of the Company,
communicate or divulge any material non-public Confidential Information to
anyone other than the Company or those designated by the Company, unless the
communication of such information, knowledge or data is required pursuant to a
compulsory proceeding in which Executive’s failure to provide such information,
knowledge or data would subject Executive to criminal or civil sanctions and
then only if Executive provides notice to the Company prior to disclosure.

The restrictions imposed on the release of information described in this
Section 13 may be enforced by the Company and/or any successor thereto by an
action for injunction or an action for damages. The provisions of this
Section 13 constitute an essential element of this Agreement without which the
Company would not have entered into this Agreement. Notwithstanding any other
remedy available to the Company at law or in equity, the parties hereto agree
that the Company or any successor thereto will have the right, at any and all
times, to seek injunctive relief so as to enforce the terms and conditions of
this Section 13.

If the scope of any restriction contained in this Section 13 is too broad to
permit enforcement of such restriction to its fullest extent, then such
restriction will be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.

By executing this Agreement, Executive acknowledges that he hereby has been
notified by this writing, in accordance with the Defend Trade Secrets Act of
2016, that (i) an individual shall not be held criminally or civilly liable
under any federal or state trade secret law for the disclosure of a trade secret
that is made in confidence to a federal, state or local government official, or
to an attorney, solely for the purpose of reporting or investigating a suspected
violation of law; (ii) an individual shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade
secret that is made in a complaint or other document filed in a lawsuit or other
proceeding if such filing is made under seal; and (iii) an individual who files
a lawsuit for retaliation by an employer for reporting a suspected violation of
law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding if the individual files any
document containing the trade secret under seal and does not disclose the trade
secret except pursuant to court order.

 

15

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Furthermore, and notwithstanding anything to the contrary herein, nothing in
this Agreement shall (x) limit Executive’s right to voluntarily communicate with
the Equal Employment Opportunity Commission, the Department of Labor, the
National Labor Relations Board, the Securities and Exchange Commission, or any
other federal, state or local government agency or to discuss the terms and
conditions of Executive’s employment with others to the extent permitted by
Section 7 of the National Labor Relations Act, (y) limit Executive’s ability to
communicate with or participate in any investigation or proceeding (including by
providing documents or other information without notice to the Company)
regarding possible violations of federal securities laws that may be conducted
by the Securities and Exchange Commission, the Department of Justice, the
Consumer Financial Protection Bureau or the Commodity Futures Trading Commission
or (z) prohibit Executive from making truthful statements in response to any
subpoena or other legal process, or as otherwise required or protected by
applicable law.

14. Non-Assignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Executive or his beneficiaries or legal
representatives without the Company’s prior written consent; provided, however,
that nothing in this Section 14 shall preclude Executive from designating a
beneficiary to receive any benefits payable hereunder upon his death or the
executors, administrators or legal representatives of Executive or his estate
from assigning any rights hereunder to the person or persons entitled thereto.

15. No Attachment. Except as required by law, no right to receive payment under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process of assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.

16. Binding Agreement. This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Company and their successors and assigns.

17. Amendment of Agreement. This Agreement may not be modified or amended,
except by an instrument in writing signed by the parties hereto.

18. Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be an estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than the act specifically
waived.

19. Severability. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect the other provisions of this Agreement
not held so invalid, and each such other provision shall, to the full extent
consistent with applicable law, continue in full force and effect.

20. Headings. The headings of the sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

 

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21. Effect of Prior Agreements. This Agreement contains the entire understanding
between the parties hereto and supersedes and replaces any prior employment
agreement between the Company or any of its Affiliates or any predecessor of the
Company or any of its Affiliates, on the one hand, and Executive, on the other
hand, including the Prior Employment Agreement, as of the Effective Date.

22. Governing Law. This Agreement has been executed and delivered in the State
of Ohio and its validity, interpretation, performance and enforcement shall be
governed by the laws of the State of Ohio, without reference to principles of
conflict of laws, except to the extent that federal law is governing.

23. WAIVER OF JURY TRIAL. THE COMPANY AND EXECUTIVE, EACH AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING OUT OF, OR RELATED TO, THIS AGREEMENT. NO PARTY SHALL SEEK TO
CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY LITIGATION IN WHICH A JURY TRIAL
HAS BEEN WAIVED WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT BE OR HAS
NOT BEEN WAIVED.

24. Notices. Any notice required or permitted under this Agreement shall be in
writing and either delivered personally or sent by nationally recognized
overnight courier, express mail or certified or registered mail, postage
prepaid, return receipt requested, at the following respective address unless
the party notifies the other party in writing of a change of address:

If to the Company:

First Defiance Financial Corp.

601 Clinton Street

Defiance, Ohio 43512

Attn: Chairman of the Board

With a copy to:

Barack Ferrazzano Kirshbaum & Nagleberg LLP

200 West Madison Street

Suite 3900

Chicago, Illinois 60606

Attention: Robert M. Fleetwood, Esq.

Electronic mail: robert.fleetwood@bfkn.com

If to Executive:

Gary M. Small

At the last address on file with the Company

A notice delivered personally shall be deemed delivered and effective as of the
date of delivery. A notice sent by overnight courier or express mail shall be
deemed delivered and effective one (1) business day after it is deposited with
the postal authority or commercial carrier.

 

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A notice sent by certified or registered mail shall be deemed delivered and
effective two (2) business days after it is deposited with the postal authority.

25. Code Section 409A Requirements.

(a) Treatment of Reimbursements and/or In-Kind Benefits. Notwithstanding
anything in this Agreement to the contrary, any reimbursements or in-kind
benefits provided under this Agreement (including any reimbursement for or
provision or in-kind medical benefits beyond the period of time described in
Treasury Regulation § 1.409A-1(b)(9)) shall be made or provided in accordance
with the requirements of Code Section 409A, including, where applicable, the
requirements that (i) any reimbursement is for expenses incurred during the
period of time specified in this Agreement, (ii) the amount of expenses eligible
for reimbursement, or in-kind benefits provided, during any taxable year of
Executive may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year of Executive, (iii) the
reimbursement of an eligible expense will be made no later than the last day of
Executive’s taxable year following the year in which the expense is incurred and
(iv) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

(b) Six (6)-Month Distribution Delay for Specified Employees. Notwithstanding
anything in this Agreement to the contrary, in the event that Executive is a
“specified employee” (as defined in Code Section 409A) of the Company or any of
its Affiliates, as determined pursuant to the Company’s policies for identifying
specified employees, on the date of Executive’s termination of employment and
Executive is entitled to a payment and/or a benefit under this Agreement that is
required to be delayed pursuant to Code Section 409A(a)(2)(B)(i), then such
payment or benefit, as applicable, shall not be paid or provided (or begin to be
paid or provided) until the first (1st) day of the seventh (7th) month following
the date of Executive’s termination of employment (or, if earlier, the date of
Executive’s death). The first (1st) payment that can be made to Executive
following such period shall include the cumulative amount of any payments or
benefits that could not be paid or provided during such period due to the
application of Code Section 409A(a)(2)(B)(i).

(c) Compliance with Code Section 409A. The parties intend that this Agreement
comply with, or be exempt from, the requirements of Code Section 409A, as
applicable, and, to the maximum extent permitted by law, shall administer,
operate and construe this Agreement accordingly. For purposes of the limitations
on nonqualified deferred compensation under Code Section 409A, each payment of
compensation under this Agreement shall be treated as a separate payment of
compensation for purposes of applying the deferral election rules of Code
Section 409A and the exclusion from Code Section 409A for certain “short-term
deferrals.” Any amounts payable solely on account of an “involuntary separation
from service” within the meaning of Code Section 409A shall be excludible from
the requirements of Code Section 409A, either as “separation pay” or as a
“short-term deferral” to the maximum possible extent. Nothing herein shall be
construed as the guarantee of any particular tax treatment to Executive, and
none of the Company, its Affiliates or their respective boards of directors
shall have any liability with respect to any failure to comply with the
requirements of Code Section 409A.

 

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26. Survivability. The provisions of this Agreement that by their terms call for
performance subsequent to the termination of either Executive’s employment or
this Agreement (including the terms of Sections 5, 6, 8, 12 and 13) shall so
survive such termination.

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and Executive has signed this Agreement, each as of the
day and year first above written.

 

FIRST DEFIANCE FINANCIAL CORP. By:  

/s/ Paul Nungester

Name:   Paul Nungester Title:   CFO FIRST FEDERAL BANK OF THE MIDWEST By:  

/s/ Paul Nungester

Name:   Paul Nungester Title:   CFO EXECUTIVE:

/s/ Gary M. Small

Name:   Gary M. Small

 

 

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FORM OF WAIVER AND RELEASE

The parties to this Waiver and Release (this “Agreement”), First Defiance
Financial Corp. (“First Defiance”), an Ohio-chartered corporation and savings
and loan holding company, First Federal Bank of the Midwest (“First Federal”), a
federally chartered stock savings bank, both of which are located in Defiance,
Ohio, and their respective affiliates, parents, successors, predecessors and
subsidiaries (collectively, the “Company”) and Gary M. Small, an individual
(hereinafter referred to as the “Executive”), agree that:

Executive and the Company now wish to terminate their employment relationship
effective _______________, 20__ in a manner that is satisfactory to both
Executive and the Company.

Executive and the Company, for the good and valuable consideration stated below,
the sufficiency of which is acknowledged, agree as follows:

A. In exchange for the severance payments and benefits under Section [•] of the
Employment Agreement between Executive and the Company, dated as of [•] (the
“Employment Agreement”), Executive, including Executive’s heirs, administrators,
executors, spouse, if any, successors, estate, representatives and assigns and
all others claiming by or through Executive, voluntarily and knowingly releases
the Company, its parent companies and their subsidiaries, divisions, affiliates,
related companies, predecessors, successors, partners, members, directors,
officers, trustees, employees, independent contractors, consultants,
stockholders, owners, attorneys, agents, benefit plans, subrogees, insurers,
representatives and assigns, whether alleged to have acted in their official
capacities or personally (collectively, the “Released Parties”), completely and
forever from any and all claims, causes of action, suits, contracts, promises,
or demands of any kind that Executive may now have, whether known or unknown,
intentional or otherwise, from the beginning of time to the Effective Date of
this Agreement, with the sole and limited exception of the rights and claims
reserved in Paragraph B. The “Effective Date” of this Agreement is the date it
is signed by Executive.

B. Executive understands and agrees that this Agreement covers all claims
described in Paragraph A, including, but not limited to, any alleged violation
of:

 

  •  

the Civil Rights Act of 1991;

 

  •  

Title VII of the Civil Rights Act of 1964, as amended;

 

  •  

the Americans with Disabilities Act;

 

  •  

the Employee Retirement Income Security Act;

 

  •  

the Worker Adjustment and Retraining Notification Act;

 

  •  

the Family Medical Leave Act;

 

  •  

the Age Discrimination in Employment Act as amended by the Older Workers Benefit
Protection Act;

 

A-1

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  •  

the Fair Labor Standards Act, to the extent permitted by law;

 

  •  

the Occupational Safety and Health Act of 1970;

 

  •  

the Ohio Fair Employment Practices Law, including but not limited to O.R.C.
Title 41 § 4112.01 et seq.;

 

  •  

the Ohio Fair Employment Practices Law, ORC, Title 41 § 4112-01 et seq., as
amended;

 

  •  

the Ohio Civil Rights Commission Policy Statement on AIDS;

 

  •  

the Ohio Equal Pay Law, O.R.C. Title 41 § 4111.13, 4111.17, and 4111.99, et
seq., as amended;

 

  •  

the retaliation for exercise of rights under the Ohio Workers’ Compensation Law;

 

  •  

the Workers’ Compensation Anti-Retaliation Act, Ohio Rev. Code § 4123.90;

 

  •  

the Whistleblower Protection Act for Public Employees, Ohio Rev. Code § 124.341;

 

  •  

the Ohio Whistleblower Statute, Ohio Rev. Code § 4113.52;

 

  •  

the Ohio State Wage Payment and Work Hour Laws—Ohio Rev. Code Ann. § 4111.01, et
seq.;

 

  •  

the Ohio Political Action of Employees Laws;

 

  •  

the Ohio Witness and Juror Leave Laws—Ohio Rev. Code Ann. § 2313.18, et seq.;

 

  •  

the Ohio Voting Leave Laws—Ohio Rev. Code Ann. § 3599.06, et seq.;

 

  •  

the Ohio Military Family Medical Leave Act—Ohio Rev. Code Ann. § 5906.01, et
seq.;

 

  •  

any other federal, state or local civil, labor, pension, wage-hour or human
rights law, federal or state public policy, contract or tort law;

 

  •  

any claim arising under federal or state common law, including, but not limited
to, constructive or wrongful discharge or intentional or negligent infliction of
emotional distress; and

 

  •  

any claim for costs or attorneys’ fees, except any claim specifically providing
for payment of Executive’s attorneys’ fees by the Company, including but not
necessarily limited to Section 6 of the Employment Agreement.

 

A-2

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This Agreement does not include, and Executive does not waive, any rights or
claims (1) that may arise after Executive signs this Agreement; (2) for alleged
workplace injuries or occupational disease that arise under any state’s workers’
compensation laws (Executive does waive and fully release the Released Parties
from any claims under Ohio Rev. Code § 4123.90); (3) for benefits in which
Executive has a vested right under any pension plans; (4) that cannot be
released by law; (5) to enforce this Agreement and the rights to the payments
and benefits under Section(s) [•] of the Employment Agreement; (6) for
indemnification under applicable law, the Company’s governing documents or
Section 8 of the Employment Agreement; (7) related to his rights as a
shareholder of the Company; or (8) to participate in any proceedings before an
administrative agency responsible for enforcing labor and/or employment laws,
e.g., the Equal Employment Opportunity Commission. Executive agrees, however, to
waive and release any right to receive any monetary award from such proceedings.
Nothing in this Agreement (including the confidentiality and non-disparagement
provisions) shall be construed to limit Executive’s right to participate in
administrative proceedings, as described in this Paragraph B, to provide
information to an agency responsible for enforcing unemployment compensation
laws or to file an action to enforce this Agreement.

Nothing in this Agreement (including the confidentiality and non-disparagement
provisions) shall be construed to limit Executive’s right to (1) respond
accurately and fully to any question, inquiry or request for information when
required by legal process or from initiating communications directly with, or
responding to any inquiry from, or providing testimony before, any
self-regulatory organization or state or federal regulatory authority, regarding
the Company, Executive’s employment, or this Agreement. Executive is not
required to contact the Company regarding the subject matter of any such
communications before engaging in such communications; (2) disclose information
to an administrative agency responsible for enforcing labor and/or employment
laws; or (3) to provide information to an agency responsible for enforcing
unemployment compensation laws.

C. Executive agrees to keep the terms of this Agreement confidential and not to
disclose the terms of this Agreement to any third party at any time, other than
to Executive’s attorneys, taxing authorities or accountants, or as otherwise
required by law. Executive agrees to use his best efforts to ensure that the
terms of this Agreement are kept confidential by his spouse, heirs, assigns,
attorneys, etc.

Executive is not prohibited from disclosing the terms of this Agreement to his
spouse, if any, attorney, if any, or accountant, in a proceeding to enforce its
terms or as otherwise required by law or court order. Should Executive receive
legal papers or process that he believes would require him to disclose the terms
of this Agreement, Executive agrees to notify, in writing and within seven
(7) days of his receipt of such legal papers or process, [•].

D. In exchange for Executive’s promises contained herein, the Company agrees to
pay Executive in accordance with Section [•] of the Employment Agreement.

E. The parties agree that if any provision of this Agreement is declared illegal
or unenforceable by any court of competent jurisdiction and cannot be modified
to be enforceable, including the general release language, the provision
declared illegal or unenforceable will immediately become null and void, leaving
the remainder of this Agreement in full force and effect.

 

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F. Executive is hereby advised to consult with an attorney regarding the terms,
meaning and impact of this Agreement. IN ADDITION, EXECUTIVE UNDERSTANDS AND
AGREES THAT (A) BY SIGNING THIS AGREEMENT, EXECUTIVE WAIVES AND RELEASES ANY
CLAIMS EXECUTIVE MIGHT HAVE AGAINST ANY OF THE RELEASED PARTIES, INCLUDING, BUT
NOT LIMITED TO, ANY CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF
1967; (B) EXECUTIVE HAS TWENTY-ONE (21) DAYS FROM THE DATE OF RECEIPT OF THIS
AGREEMENT TO CONSIDER WHETHER OR NOT TO EXECUTE THIS AGREEMENT, WHICH EXECUTIVE
WAIVES BY VIRTUE OF HIS EXECUTION OF THE AGREEMENT DURING THE CONSIDERATION
PERIOD; AND (C) AFTER EXECUTIVE SIGNS THIS AGREEMENT AND IT BECOMES EFFECTIVE,
EXECUTIVE HAS SEVEN (7) DAYS FROM THAT DATE TO CHANGE HIS MIND AND REVOKE THIS
AGREEMENT. TO REVOKE THIS AGREEMENT, EXECUTIVE MUST CLEARLY COMMUNICATE
EXECUTIVE’S DECISION IN WRITING TO THE COMPANY AS PROVIDED IN PARAGRAPH C BY THE
SEVENTH (7th) DAY FOLLOWING THE EFFECTIVE DATE OF THIS AGREEMENT. EXECUTIVE
UNDERSTANDS AND AGREES THAT SHOULD HE REVOKE HIS RELEASE AND WAIVER AS TO CLAIMS
UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, THE
COMPANY’S OBLIGATIONS UNDER THIS AGREEMENT WILL BECOME NULL AND VOID.

G. Executive agrees that he will not, in any way, disparage the Company or any
of the Released Parties. The Company agrees that it will not, in any way,
disparage Executive. Further, Executive and the Company agree that they will not
make, nor solicit, any comments, statement, or the like to the media, or to
others, that may be considered to be derogatory or detrimental to the good name
or business reputation of Executive or the Company.

H. Executive acknowledges that, through his employment with the Company, he has
acquired and had access to the Company’s confidential and proprietary business
information and trade secrets (“Confidential Information”). Executive
acknowledges and agrees that the Company prohibits the use or disclosure of its
Confidential Information and that the Company has taken all reasonable steps
necessary to protect the secrecy of such Confidential Information. Executive
acknowledges and agrees that “Confidential Information” includes any data or
information that is valuable to the Company and not generally known to
competitors of the Company or other outsiders, regardless of whether the
Confidential Information is in printed, written or electronic form, retained in
Executive’s memory or has been compiled or created by Executive, including but
not limited to business plans; product designs, drawings and formulas; test and
development data; customer or prospective customer, vendor, supplier and
distributor information; financial information; marketing strategies; pending
projects and proposals; personnel and payroll records; pricing data; contract
terms; proprietary production processes; third-party information that the
Company has a duty to maintain as confidential; and other business-related
information that, if made available to the Company’s competitors or the public,
would be advantageous to such competitors and detrimental to the Company.
Executive agrees that Executive has not and in the future will not use, or
disclose to any third party, Confidential Information unless compelled by law
after reasonable advance notice to the Company, and

 

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further agrees to return all documents, disks, CDs, DVDs, drives, storage
devices or any other item or source containing Confidential Information, or any
other of the Company’s property, to the Company upon execution of this
Agreement. Executive understands that he shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade
secret that (1) is made (a) in confidence to a federal, state or local
government official, either directly or indirectly, or to an attorney, and
(b) solely for the purpose of reporting or investigating a suspected violation
of law; or (2) is made in a complaint or other document filed in a lawsuit or
other proceeding, if such filing is made under seal. Executive also understands
that disclosure of trade secrets to attorneys, made under seal, or pursuant to
court order is also protected in certain circumstances under 18 U.S. Code §
1833. If Executive has any question regarding what data or information would be
considered by the Company to be Confidential Information subject to this
provision, Executive agrees to contact [•].

I. THIS AGREEMENT CONTAINS THE COMPLETE UNDERSTANDING BETWEEN THE PARTIES. THE
PARTIES AGREE THAT NO PROMISES OR AGREEMENTS WILL BE BINDING OR WILL MODIFY THIS
UNDERSTANDING UNLESS IN WRITING AND SIGNED BY BOTH PARTIES. THIS AGREEMENT SHALL
NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY PRIOR WRITTEN AGREEMENTS BY AND
BETWEEN THE COMPANY AND EXECUTIVE.

J. This Agreement may be executed in multiple counterparts, each of which will
be considered an original, and all of which will be considered a single
memorandum. If Executive signs a facsimile copy of this Agreement, he also will
provide the Company with a conforming original copy.

K. The validity, construction and interpretation of this Agreement and the
rights and duties of the parties to this Agreement will be governed by the laws
of the State of Ohio without regard to any state conflict of law rules.

[signature page to follow]

 

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The parties agree that they have read this Agreement, understand and agree to
its terms, and have knowingly and voluntarily signed it on the dates written
below.

 

 

Gary M. Small

Date:  

 

[First Federal Bank of the Midwest] By:  

 

Date:  

 

[First Defiance Financial Corp.] By:  

 

Date:  

 

 

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