ex10-2.htm


    EXHIBIT
10.2

    


    FIRST
DEFIANCE FINANCIAL CORPORATION

     

    LONG
TERM INCENTIVE COMPENSATION PLAN

     

    CONTINGENT
AWARD AGREEMENT

     

    


     

    


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

    


    RECITALS

    


    
      	
              A.

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

            


    

    


    
      	
              B.

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

            


    

    


    
      	
              C.

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

            


    

    


    
      	
              D.

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

            


    

    


    AGREEMENT

    


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

    


    
      	
              1.

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

            


    

    


    
      	
              2.

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

            


    

    


    
      	
              3.

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

            


    

    


    
      	
              4.

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

            


    

    



    
      
         


      

      
        16

        
          

        

      

      
         


      

    


    Schedule
A

    
      	
              Annual
      EPS Growth Rate

              During
      Performance Period

            	
              Three-Year
      Cumulative Fully

              Diluted
      EPS for

              the
      Performance Period

            	
              Percent

              of
      Target Award

              Earned
      (1)

            
	
              15.0%

            	
              $7.98

            	
              150%

            
	
              12.5%

            	
              $7.63

            	
              125%

            
	
              10.0%

            	
              $7.34

            	
              100%

            
	
               
      9.0%

            	
              $7.15

            	
               
      75%

            
	
               
      7.0%

            	
              $6.88

            	
               
      50%

            
	
               
      5.0%

            	
              $6.61

            	
               
      25%

            


    

     

    


    Schedule
B

    
      	
              Average
      Annual ROA over

              Performance
      Period

            	
              Percent
      of EPS Award Paid (1)

            
	
              1.20
      %

            	
              120
      %

            
	
              1.10
      %

            	
              110
      %

            
	
              1.00
      %

            	
              100
      %

            
	
              .90
      %

            	
              75
      %

            
	
              .80
      %

            	
              50
      %

            


    

     

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

    


    
      	
              5.

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

            


    

    


    
      	
              6.

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

            


    

    


    
      	
              7.

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

            


    

    


    
      	
              8.

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

            


    


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


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

    


    
      	
              9.

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

            
	 	 


    

    
      	
              10.

            	
              Non-compete, Non-solicitation
      and Business Protection.

            


    

    


    
      	
               
      

            	
              A.

            	
              Noncompetition
      Agreement and Nonsolicitation.

            


    

    


    
      	
               
      

            	
              1.

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

            


    

    


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

    


    
      	
               
      

            	
              2.

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

            


    


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


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

    


    
      	
               
      

            	
              3.

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

            


    

    


    
      	
               
      

            	
              4.

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

            


    

    


    
      	
               
      

            	
              B.

            	
              Confidential
      Information.

            


    

    


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

    


    
      	
               
      

            	
              C.

            	
              Effect
      of Breach; FDF’s Remedies

            


    

    


    
      	
               
      

            	
              1.

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

            


    

    


    
      	
               
      

            	
              2.

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

            


    

    


    
      	
               
      

            	
              3.

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

            


    


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


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

    


    
      	
               
      

            	
              4.

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

            


    

    


    
      	
              11.

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

            


    

    


    
      	
              12.

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

            


    

    


    
      	
              13.

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

            


    

    


    
      	
              14.

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

            


    

    


    
      	
              15.

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

            


    

    


    
      	
              16.

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

            


    

    


    
      	
              17.

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

            


    

    


    
      	
              18.

            	
              Miscellaneous.

            


    


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              A.

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

            


    

    


    
      	
               
      

            	
              B.

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

            


    

    


    
      	
               
      

            	
              C.

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

            


    

    


    
      	
               
      

            	
              D.

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

            


    

    


    
      	
               
      

            	
              E.

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

            


    

    


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

    


    
      	
              FIRST
      DEFIANCE FINANCIAL CORP.

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	 
      	 
      	
              Date:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              EMPLOYEE

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	 
      	 
      	
              Date:

            	 
      
	 
      	 
      	 
      	 
      	 
      


    


    
      
         


      

      
        21

        
          

        

      

      
         


      

    


    Election to Name
Beneficiary

    


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

    


    


    
      	 
      	 
      	 
      
	
              Signature

            	 
      	
              Date

            
	 
      	 
      	 
      


    

    


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

    
 

     

     

     

    22