ex10-3.htm


     

    Exhibit
      10.3

    
 

    
      EMPLOYMENT
        AGREEMENT

    

    
      


    

    
      AGREEMENT,
        dated this 27th day of September, 2007, 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,
        and
        John C. Wahl (the "Executive"). First Defiance and First Federal are referred
        to
        jointly herein as the "Companies."

    

    
      


    

    
      WITNESSETH:

    

    
      


    

    
      WHEREAS,
        the Executive is presently Executive Vice President and chief Financial Officer
        of First Defiance and Executive Vice President and Chief Financial Officer
        of
        First Federal;

    

    
      


    

    
      WHEREAS,
        the Companies desire to continue to retain the Executive's services in such
        capacities; and

    

    
      


    

    
      WHEREAS,
        the Executive is serving the Companies pursuant to the terms of a previous
        Agreement dated September 29, 1997 (the “Prior Agreement”);

    

    
      


    

    
      WHEREAS,
        parties desire to amend and restate the Prior Agreement;

    

    
      


    

    
      NOW
        THEREFORE, in consideration of the premises and the mutual agreements herein
        contained, the parties hereby agree as follows:

    

    
      


    

    
      1.           Definitions.
        The following words and terms shall have the meanings set forth below for
        the
        purposes of this Agreement:

    

    
      


    

    
      (a)           Annual
        Compensation. The Executive's "Annual Compensation" for purposes of this
        Agreement shall be deemed to mean the average annual Compensation paid to
        the
        Executive by the Companies during the five most recent taxable years ending
        prior to the date of termination.

    

    
      


    

    
      (b)           Base
        Salary.  "Base Salary" shall have the meaning set forth in Section
        3(a) hereof.

       

    

    
      (c)           Bonus.  "Bonus"
        shall have the meaning set forth in Section 3(a) hereof.

    

    
      


    

    
      (d)           Cause.  "Cause"
        shall mean personal dishonesty, incompetence, willful misconduct, breach
        of
        fiduciary duty involving personal profit, intentional failure to perform
        stated
        duties, willful violation of any law, rule or regulation (other than traffic
        violations or similar offenses) or final cease-and-desist order or material
        breach of any provision of this  Agreement.  For purposes of
        this paragraph, no act or failure to act on the Executive's part shall be
        considered "willful" unless done, or omitted to be done, by the Executive
        not in
        good faith and without reasonable belief that the Executive's action or omission
        was in the best interest of the Companies.

    

    


    
      
        
           

        

        
          1

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      (e)           Change
        in Control of First Defiance. "Change in Control" of First Defiance shall
        have
        the meaning set forth in Section 409A(a)(2)(A)(v) of the
        Code.

    

    
      


    

    
      (f)           Code.  "Code"
        shall mean the Internal Revenue Code of 1986, as amended.

    

    
      


    

    
      (g)           Compensation.  "Compensation"
        shall have the meaning set forth in Section 3(a) hereof.

    

    
      


    

    
      (h)           Date
        of Termination.  "Date of Termination" shall mean (i) if the
        Executive's employment is terminated by the Companies for any reason, the
        date
        on which a Notice of Termination is given or such later date as may be specified
        by the Companies in such Notice, or (ii) if the Executive's employment is
        terminated by the Executive, the date of termination shall be a date not
        less
        than 30 days from the date the Notice of Termination is delivered by the
        Executive to the Companies, unless the Companies, in their sole discretion,
        designate an earlier date.

    

    
      


    

    
      (i)           Disability.
        "Disability" shall mean any physical or mental impairment that qualifies
        the
        Executive for disability benefits under the applicable long-term disability
        plan
        maintained by the Companies or any subsidiary or, if no such plan applies,
        which
        would qualify the Executive for disability benefits under the Federal Social
        Security System.

    

    
      


    

    
      (j)           Good
        Reason.  "Good Reason" shall mean:

    

    
      


    

    
      (i)           Without
        the Executive's express written consent:

    

    
      


    

    
      (a)           the
        assignment by the Companies to the Executive of any duties that, in the
        Executive's good faith determination, are materially inconsistent with the
        Executive's positions, duties, responsibilities and status with the Companies
        immediately prior to such assignment, or in the event of a Change in Control,
        immediately prior to such a Change in Control of First
        Defiance;

    

    
      


    

    
      (b)           in
        the Executive's good faith determination, a material change in the Executive's
        reporting responsibilities, titles or offices as an employee and as in effect
        immediately prior to such change or, in the event of a Change in Control,
        immediately prior to such a Change in Control of First Defiance;
        or

    

    
      


    

    
      (c)           any
        removal of the Executive from or any failure to re-elect the Executive to
        the
        offices of Executive Vice President of First Defiance and Executive Vice
        President of First Federal, except in connection with cause, Disability,
        Retirement, or the Executive's death;

    

    
      


    

    
      (ii)           Without
        the Executive's express written consent, a reduction by the Companies in
        the
        Executive's Base Salary, as the same may be increased

    

    


    
      
        
           

        

        
          2

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      from
        time
        to time, or fringe benefits;

    

    
      


    

    
      (iii)           The
        principal executive office of the Companies is relocated outside of the
        Defiance, Ohio area or, without the Executive's express written consent,
        the
        Companies require the Executive to be based anywhere other than an area in
        which
        the Companies' principal executive office is located, except for required
        travel
        on business of the Companies to an extent substantially consistent with the
        Executive's present business travel obligations;

    

    
      


    

    
      (iv)           Without
        the Executive's express written consent, the Companies fail to provide the
        Executive with the same fringe benefits that were provided to the Executive
        immediately prior to a Change in Control of First Defiance, or with a package
        of
        fringe benefits (including paid vacations) that, though one or more of such
        benefits may vary from those in effect immediately prior to such Change in
        Control, is substantially comparable in all material respects to such fringe
        benefits taken as a whole;

    

    
      


    

    
      (v)           Any
        purported termination of the Executive's employment for Cause, Disability
        or
        Retirement that is not effected pursuant to a Notice of Termination satisfying
        the requirements of paragraph (1) below; or

    

    
      


    

    
      (vi)           The
        failure by First Defiance to obtain the assumption of and agreement to perform
        this Agreement by any successor as contemplated in Section 10
        hereof.

    

    
      


    

    
      (k)           IRS.  “IRS”
        shall mean the Internal Revenue Service.

    

    


    
      (l)           Notice
        of Termination.  "Notice of Termination" shall mean a dated notice
        that (i) indicates the specific termination provision in this Agreement relied
        upon, (ii) 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, (iii) specifies a Date of Termination, and (iv) is given in
        the
        manner specified in Section 11 hereof.

    

    
      


    

    
      (m)           Retirement.  "Retirement"
        shall mean voluntary termination by the Employee in accordance with the
        Companies' retirement policies, including early retirement, generally applicable
        to their salaried employees.

    

    
      


    

    
      2.           Term
        of Employment.

    

    
      


    

    
      (a)           The
        Companies hereby employ the Executive as Executive Vice President of First
        Defiance and Executive Vice President of First Federal.  Executive
        hereby accepts said employment and agrees to render such services to the
        Companies on the terms and conditions set forth in this Agreement. The term
        of
        employment under this Agreement shall be a three-year term, which shall be
        deemed to have commenced on January 1, 2007. However, at a meeting of the
        Companies' Board of Directors no later than 30 days prior to the first
        anniversary of the date

    

    


    
      
        
           

        

        
          3

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      of
        this
        Agreement and each anniversary thereafter, the Board of Directors of the
        Companies shall consider and review (with appropriate corporate documentation
        thereof, and after taking into account all relevant factors including the
        Executive's performance and the merits of a three-year agreement) a one-year
        extension of the term under this Agreement, and the term shall continue to
        extend, unless either the Board of Directors does not approve such extension
        and
        provides written notice to the Executive of such event or the Executive gives
        written notice to the Companies of the Executive's election not to extend
        the
        term, in each case, with such written notice to be given not less than thirty
        (30) days prior to any such anniversary date. References herein to the term
        of
        this Agreement shall refer both to the initial term and successive
        terms.

    

    
      


    

    
      (b)           During
        the term of this Agreement, the Executive shall perform such executive services
        for the Companies as may be consistent with his titles and from time to time
        assigned to him by the Companies' Board of Directors; provided, however,
        that
        the Executive shall not be precluded from (i) vacations and other leave time
        in
        accordance with section 3(c) below; (ii) reasonable participation in community,
        civic, charitable, or similar organizations; (iii) reasonable participation
        in
        industry-related activities; or (iv) pursuing personal investments that do
        not
        interfere or conflict with the performance of Executive's duties to the
        Companies.

    

    
      


    

    
      3.           Compensation
        and Benefits.

    

    
      


    

    
      (a)           The
        Companies shall compensate and pay Executive for his services during the
        term of
        this Agreement at a minimum base annual salary of $161,400.00 ("Base Salary"),
        which may be increased from time to time in such amounts as may be determined
        by
        the Companies' Board of Directors and may not be decreased without the
        Executive's express written consent. In addition to his Base Salary, the
        Executive shall be entitled to receive during the term of this Agreement
        a bonus
        based on such terms and conditions as are set forth from time to time in
        the
        Companies' incentive bonus program (the "Bonus"). The Executive's Base Salary
        and Bonus are referred to herein as his "Compensation."

    

    
      


    

    
      (b)           During
        the term of the Agreement, Executive shall be entitled to participate in
        and
        receive the benefits of any pension or other retirement benefit plan, deferred
        compensation, profit sharing, stock option, management recognition, employee
        stock ownership, or other plans, benefits and privileges given to employees
        and
        executives of the Companies, to the extent commensurate with his then duties
        and
        responsibilities, as fixed by the Board of Directors of the Companies including,
        but not limited to, the following: (i) the Companies shall pay membership
        dues
        for the Executive for membership in such organizations, including country
        clubs
        and professional organizations, as are approved by the Companies from time
        to
        time; and (ii) the Companies shall, at their discretion, provide the use
        of an
        automobile (the terms and conditions for the Executive's use and possession
        of
        the automobile and the quality of the automobile provided for the Executive's
        use shall be consistent with, or not less favorable than, the past practices
        of
        the Companies) or an automobile expense reimbursement. The Companies shall
        not
        make any changes in such plans, benefits or privileges that would adversely
        affect Executive's rights or benefits thereunder, unless such change occurs
        pursuant to a program applicable to all executive officers of the Companies
        and
        does not result in a proportionately greater adverse change in the rights
        of or
        benefits to Executive as compared with any other

    

    


    
      
        
           

        

        
          4

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      executive
        officer of the Companies. Nothing paid to Executive under any plan or
        arrangement presently in effect or made available in the future shall be
        deemed
        to be in lieu of the salary payable to Executive pursuant to Section 3(a)
        hereof.

    

    
      


    

    
      (c)           During
        the term of this Agreement, Executive shall be entitled to paid annual vacation
        in accordance with the policies as established from time to time by the Board
        of
        Directors of the Companies, which shall in no event be less than four weeks
        per
        annum. Executive shall not be entitled to receive any additional compensation
        from the Companies for failure to take a vacation, nor shall Executive be
        able
        to accumulate unused vacation time from one year to the next, except to the
        extent authorized by the Board of Directors of the Companies.

    

    
      


    

    
      4.           Expenses.  The
        Companies shall reimburse Executive or otherwise provide for or pay for all
        reasonable expenses incurred by Executive in furtherance or in connection
        with
        the business of the Companies, including, but not by way of limitation,
        traveling expenses and all reasonable entertainment expenses (whether incurred
        at the Executive's residence, while traveling or otherwise), subject to such
        reasonable documentation and other limitations as may be established by the
        Board of Directors of the Companies. If such expenses are paid in the first
        instance by Executive, the Companies shall reimburse the Executive
        therefor.

    

    
      


    

    
      5.           Termination.

    

    
      


    

    
      (a)           The
        Companies shall have the right, at any time upon prior Notice of Termination,
        to
        terminate the Executive's employment hereunder for any reason, including
        without
        limitation termination for Cause, Disability or Retirement.

    

    
      


    

    
      (b)           Executive
        shall have the right, upon prior Notice of Termination, to terminate his
        employment hereunder for any reason.

    

    
      


    

    
      (c)           In
        the event that (i) Executive's employment is terminated by the Companies
        for
        Cause, Disability or Retirement or in the event of the Executive's death,
        or
        (ii) Executive terminates his employment hereunder other than for Good Reason,
        Executive shall have no right pursuant to this Agreement to compensation
        or
        other benefits for any period after the applicable Date of
        Termination.

    

    
      


    

    
      (d)           In
        the event that Executive's employment is terminated by the Companies for
        other
        than Cause, Disability, Retirement or the Executive's death or such employment
        is terminated by the Executive (i) due to failure by the Companies to comply
        with any material provision of this Agreement, or (ii) for Good Reason, in
        either case which failure or Good Reason has not been cured within a period
        of
        thirty (30) days after a written notice of non-compliance has been given
        by
        Executive to the Companies, then the Companies shall, subject to the provisions
        of Section 6 hereof, if applicable;

    

    
      


    

    
      
        	
              	
                (1)

              	
                pay
                  to the Executive, in a lump sum payment on the first business day
                  of the
                  month following the Date of Termination, an amount equal to 2.00
                  times the
                  Annual Compensation but not more than twice the annual compensation
                  limitation in effect under Section 401(a)(17) for the year which
                  includes
                  the Date of Termination; and

              


      

    

    


    
      
        
           

        

        
          5

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      


    

    
      
        	
              	
                (2)

              	
                pay
                  to the Executive, in a lump sum payment on the first business day
                  of the
                  seventh month following the Date of Termination, an amount equal
                  to the
                  excess of 2.99 times the Annual Compensation over the amount of
                  the
                  payment made to the Executive under subparagraph (d)(i);
                  and

              


      

    

    
      


    

    
      
        	
              	
                (3)

              	
                maintain
                  and provide for a period ending at the earlier of (i) the expiration
                  of
                  the remaining term of employment pursuant hereto prior to the Notice
                  of
                  Termination, (ii) the end of the second full calendar year following
                  the
                  year which includes the date of termination, or (iii) the date
                  of the
                  Executive's full-time employment by another employer (provided
                  that the
                  Executive is entitled under the terms of such employment to benefits
                  substantially similar to those described in this subparagraph (3)),
                  at no
                  cost to the Executive, the Executive's continued participation
                  in all
                  group insurance, life insurance, health and accident, disability
                  and other
                  employee benefit plans, programs and arrangements in which the
                  Executive
                  was entitled to participate  immediately prior to the Date of
                  Termination (other than retirement plans or stock compensation
                  plans of
                  the Companies), provided that in the event that the Executive's
                  participation in any plan, program or arrangement as provided in
                  this
                  subparagraph (3) is barred, or during such period any such plan,
                  program
                  or arrangement is discontinued or the benefits thereunder are materially
                  reduced, the Companies shall arrange to provide the Executive with
                  benefits substantially similar to those that the Executive was
                  entitled to
                  receive under such plans, programs and arrangements immediately
                  prior to
                  the Date of Termination.  Notwithstanding the forgoing, the
                  Companies may in lieu of providing for continuation of the forgoing
                  benefits, pay to the Executive in a lump sum cash payment an amount
                  equal
                  to the Companies’ cost of providing such benefits to Executive during the
                  month immediately prior to the Executive’s termination of employment,
                  times the number of months that were remaining in the term of Executive’s
                  employment prior to the Notice of
                  Termination.

              


      

    

    
      


    

    
      6.           Limitation
        of Benefits under Certain Circumstances.  If the payments and benefits
        pursuant to Section 5 hereof, either alone or together with other payments
        and
        benefits that Executive has the right to receive from the Companies, would
        constitute a "parachute payment" under Section 280G of the Code, the payments
        and benefits pursuant to Section 5 hereof shall be reduced, in the manner
        determined by the Executive, by the amount, if any, that is the minimum
        necessary to result in no portion of the payments and benefits under Section
        5
        being non-deductible to either of the Companies pursuant to Section 280G
        of the
        Code and subject to the excise tax imposed under Section 4999 of the Code.
        The
        determination of any reduction in the payments and benefits to be made pursuant
        to Section 5 shall be based upon the opinion of independent tax counsel selected
        by the Companies' independent public accountants and paid by the
        Companies.  Such counsel shall be reasonably acceptable to the
        Companies and

    

    


    
      
        
           

        

        
          6

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      Executive;
        shall promptly prepare the foregoing opinion, but in no event later than
        thirty
        (30) days from the Date of Termination; and may use such actuaries as such
        counsel deems necessary or advisable for the purpose. In the event that the
        Companies and/or the Executive do not agree with the opinion of such counsel,
        (i) the Companies shall pay to the Executive the maximum amount of payments
        and
        benefits pursuant to Section 5, as selected by the Executive, which such
        opinion
        indicates that there is a high probability do not result in any payments
        and
        benefits being non-deductible to the Companies and subject to the imposition
        of
        the excise tax imposed under Section 4999 of the Code (the “Permitted Amount”),
        and (ii) the Companies may request, and provided that the amount not paid
        to the
        Executive because it was above the Permitted Amount exceeds 5% of the total
        amount of payments and benefits owed to Executive by the Companies pursuant
        to
        the terms of this Agreement, Executive shall have the right to demand that
        the
        Companies request, a ruling from the IRS as to whether the disputed payments
        and
        benefits pursuant to Section 5 hereof have such consequences. Any such request
        for a ruling from the IRS shall be promptly prepared and filed by the Companies,
        but in no event later than thirty (30) days from the date of the opinion
        of
        counsel referred to above, and shall be subject to the Executive's approval
        prior to filing, which shall not be unreasonably withheld. The Companies
        and
        Executive agree to be bound by any ruling received from the IRS and to make
        appropriate payments to each other to reflect any such rulings, together
        with
        interest at the applicable federal rate provided for in Section 7872(f)(2)
        of
        the Code. Nothing contained herein shall result in a reduction of any payments
        or benefits to which the Executive may be entitled upon termination of
        employment under any circumstances other than as specified in this Section
        6, or
        a reduction in the payments and benefits specified in Section 5 below
        zero.

    

    
      


    

    
      7.           Mitigation;
        Exclusivity of Benefits.

    

    
      


    

    
      (a)           The
        Executive shall not be required to mitigate the amount of any benefits hereunder
        by seeking other employment or otherwise, nor shall the amount of any such
        benefits be reduced by any compensation earned by the Executive as a result
        of
        employment by another employer after the Date of Termination or
        otherwise.

    

    
      


    

    
      (b)           The
        specific arrangements referred to herein are not intended to exclude any
        other
        benefits that may be available to the Executive upon a termination of employment
        with the Companies pursuant to employee benefit plans of the Companies or
        otherwise.

    

    
      


    

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

    

    
      


    

    
      9.           Covenant
        Not to Compete and Confidential Information

    

    


    (a)           Throughout
      the employment of Executive under this Agreement and for a period of one year
      after termination of employment for any reason, Executive agrees that he will
      not, except on behalf of the Companies or with the written consent of the
      Companies:

    


    
      	
               

            	
              (1)

            	
              engage
                in any business activity, directly or indirectly, on his
                own

            


    

    


    
      
        
           

        

        
          7

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    behalf
      or
      as a partner, stockholder (except by ownership of less than 1% of the
      outstanding stock of a publicly held corporation), director, trustee, principal,
      agent, employee, consultant or otherwise of any person, firm or corporation,
      which is engaged in any activity in which the Companies or any parent,
      subsidiary or affiliate of the Companies is engaged at the time;

    


    
      	
               

            	
              (2)

            	
              allow
                the use of his name by or in connection with any business that is
                competitive with any activity in which the Companies or any parent,
                subsidiary or affiliate of the Companies is engaged,
                or

            


    

    


    
      	
               

            	
              (3)

            	
              offer
                employment to or employ, for himself or on behalf of any competitor
                of the
                Companies or any parent, subsidiary or affiliate, any person who
                at any
                time within the prior three years shall have been employed by the
                Companies or any parent, subsidiary or affiliate of the
                Companies.

            


    

    


    (b)           The
      parties acknowledge that this Section 9 is fair and reasonable under the
      circumstances.  It is the desire and intent of the parties that the
      provisions of this Section 9 shall be enforced to the fullest extent permitted
      by law.  Accordingly, if any particular portion of this Section 9
      shall be adjudicated to be invalid or unenforceable, this Section 9 shall be
      deemed amended to:

    


    
      	
               

            	
              (1)

            	
              reform
                the particular portion to provide for such maximum restrictions as
                will be
                valid and enforceable, or if that is not
                possible,

            


    

    


    
      	
               

            	
              (2)

            	
              delete
                the portion found invalid or unenforceable, such reformation or deletion
                to apply only with respect to the operation of this Section 9 in
                the
                particular jurisdiction in which such adjudication is
                made.

            


    

    


    (c)           During
      the term of Executive’s employment, the covenants contained in this Section 9
      shall apply without regard to geographic location.  Upon the
      termination of Executive’s employment, the covenants contained in this Section 9
      shall be limited to a twenty-five (25) mile radius of any office of the
      Companies.

    


    (d)           Notwithstanding
      any other provision of this Agreement to the contrary, in the event Executive
      violates the above restrictive covenants, all amounts otherwise owing to
      Executive by the Companies shall be forfeited by Executive and the Companies,
      in
      addition to any other remedy, shall be under no further obligation to
      Executive.

    


    (e)           Executive
      shall not at any time, in any manner, while employed by the Companies or
      thereafter, either directly or indirectly, except in the course of carrying
      out
      the Companies business or as previously authorized in writing on behalf of
      the
      Companies, disclose or communicate to any person, firm, or corporation, any
      information of any kind concerning any matters affecting or relating to the
      Companies’ business or any of its data, figures, projections, estimates,
      customer lists, tax records, personnel histories, and accounting procedures,
      without

    


    
      
        
           

        

        
          8

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    regard
      to
      whether any or all of such information would otherwise be deemed confidential
      or
      material.

    


    
      10.           Assignability.
        The Companies may assign this Agreement and their rights hereunder in whole,
        but
        not in part, to any corporation, bank or other entity with or into which
        either
        of the Companies may hereafter merge or consolidate or to which either of
        the
        Companies may transfer all or substantially all of their respective assets,
        if
        in any such case said corporation, bank or other entity shall by operation
        of
        law or expressly in writing assume all obligations of the Companies hereunder
        as
        fully as if it had been originally made a party hereto, but may not otherwise
        assign this Agreement or its rights hereunder. The Executive may not assign
        or
        transfer this Agreement or any rights or obligations
        hereunder.

    

    
      


    

    
      11.           Notice.  For
        the purposes of this Agreement, notices and all other communications provided
        for in this Agreement shall be in writing and shall be deemed to have been
        duly
        given when delivered or mailed by certified or registered mail, return receipt
        requested, postage prepaid, addressed to the respective address set forth
        below:

    

    
      


    

    
      


    

    
      	
              To
                First Defiance:

            	
              First
                Federal Financial Corp.

            
	 	
              601
                Clinton Street

            
	 	
              Defiance,
                Ohio 43512

            
	 	 
	
              To
                First Federal:

            	
              First
                Federal Bank of the Midwest

            
	 	
              601
                Clinton Street

            
	 	
              Defiance,
                Ohio 43512

            
	 	 
	
              To
                the Executive:

            	
              John
                C. Wahl

            
	 	
              1651
                Stonemore Dr.

            
	 	
              Defiance,
                OH 43512

            


    

    
      


    

    
      


    

    
      12.           Supersedes
        Prior Agreement; Amendment; Waiver.  This Agreement supersedes the
        Prior Agreement.  No provisions of this Agreement may be modified,
        waived or discharged unless such waiver, modification or discharge is agreed
        to
        in writing signed by the Executive and such officer or officers as may be
        specifically designated by the Board of Directors of the Companies to sign
        on
        their behalf. No waiver by any party hereto at any time of any breach by
        any
        other party hereto of, or compliance with, any condition or provision of
        this
        Agreement to be performed by such other party shall be deemed a waiver of
        similar or dissimilar provisions or conditions at the same or at any prior
        or
        subsequent time.

    

    
      


    

    
      13.           Governing
        Law.  The validity, interpretation, construction and performance of
        this Agreement shall be governed by the laws of the United States where
        applicable and otherwise by the substantive laws of the State of
        Ohio.

    

    
      


    

    
      14.           Nature
        of Obligations.  Nothing contained herein shall create or require the
        Companies to create a trust of any kind to fund any benefits that may be
        payable
        hereunder, and to the extent that the Executive acquires a right to receive
        benefits from the Companies hereunder, such right shall be no greater than
        the
        right of any unsecured general creditor of the Companies.

    

    


    
      
        
           

        

        
          9

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      


    

    
      15.           Headings.  The
        section headings contained in this Agreement are for reference purposes only
        and
        shall not affect in any way the meaning or interpretation of this
        Agreement.

    

    
      


    

    
      16.           Validity.  The
        invalidity or unenforceability of any provision of this Agreement shall not
        affect the validity or enforceability of any other provisions of this Agreement,
        which shall remain in full force and effect.

    

    
      


    

    
      17.           Counterparts.  This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed to be an original but all of which together will constitute one and
        the
        same instrument.

    

    
      


    

    
      18.           Regulatory
        Actions.  The following provisions shall be applicable to the parties
        to the extent that they are required to be included in the employment agreements
        between a savings association and its employees pursuant to Section 563.39
        (b)
        of the Regulations Applicable to All Savings Associations, 12 C.F.R. 563.39(b),
        or any successor thereto, and shall be controlling in the event of a conflict
        with any other provision of this Agreement, including without limitation
        Section
        5 hereof.

    

    
      


    

    
      (a)           If
        Executive is suspended from office and/or temporarily prohibited from
        participating in the conduct of the Companies' affairs pursuant to notice
        served
        under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance
        Act
        ("FDIA")(12 U.S.C. 1818 (e)(3) and 1818(g)(1)), the Companies' obligations
        under
        this Agreement shall be suspended as of the date of service,
        unless  stayed by appropriate proceedings.  If the charges
        in the notice are dismissed, the Companies may, in their discretion: (i)
        pay
        Executive all or part of the compensation withheld while its obligations
        under
        this Agreement were suspended, and (ii) reinstate (in whole or in part) any
        of
        its obligations which were suspended.

    

    
      


    

    
      (b)           If
        Executive is removed from office and/or permanently prohibited from
        participating in the conduct of the Companies' affairs by an order issued
        under
        Section 8(e)(4) or Section  8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4)
        and (g)(1)), all obligations of the Companies under this Agreement shall
        terminate as of the effective date of the order, but vested rights of Executive
        and the Companies as of the date of termination shall not be
        affected.

    

    
      


    

    
      (c)           If
        the Companies are in default, as defined in Section 3(x)(1) of the FDIA (12
        U.S.C. 1813(x)(l)), all obligations under this Agreement shall terminate
        as of
        the date of default, but vested rights of Executive and the Companies as
        of the
        date of termination shall not be affected.

    

    
      


    

    
      (d)           All
        obligations under this Agreement shall be terminated pursuant to 12 C.F.R.
        563.39(b)(5) (except to the extent that it is determined that continuation
        of
        the Agreement for the continued operation of the Companies is
        necessary):  (i) by the Director of the Office of Thrift Supervision
        ("OTS"),

    

    


    
      
        
           

        

        
          10

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      or
        his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
        or Resolution Trust Corporation enters into an agreement to provide assistance
        to or on behalf of First Federal under the authority contained in Section
        13 (c)
        of the FDIA (12 U.S.C. 1823(c)); or (ii) by the Director of the OTS, or his/her
        designee, at the time the Director or his/her designee approves a supervisory
        merger to resolve problems related to operation of the Companies or when
        the
        Companies are determined by the Director of the OTS to be in an unsafe or
        unsound condition, but vested rights of Executive and the Companies as of
        the
        date of termination shall not be affected.

    

    
      


    

    
      19.           Regulatory
        Prohibition.  Notwithstanding any other provision of this Agreement to
        the contrary, any payment made to the Executive pursuant to this Agreement,
        or
        otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
        Section 1828(K) and any regulations promulgated thereunder.

    

    
      


    

    
      20.           Additional
        Restriction on Distributions to Key Employees.

    

    
      


    

    
      (a)           Notwithstanding
        the provisions of this Agreement providing for payment of benefits upon
        termination of employment, if at the time a benefit would otherwise be payable,
        Executive is a “specified employee” [as defined below], and the payment provided
        for would be deferred compensation with the meaning of Code section 409A,
        the
        distribution of the Executive’s benefit may not be made until six months after
        the date of the Executive’s separation from service with the Company [as that
        term may be defined in Section 409A(a)(2)(A)(i) of the Code and relevant
        regulations], or, if earlier the date of death of the Executive. This
        requirement shall remain in effect only for periods in which the stock of
        the
        Company is publicly traded on an established securities
        market.

    

    


    (b)           For
      purposes of this Section 20 a “specified employee” shall mean any Executive of
      the Company who is a “key employee” of the Company within the meaning of Code
      section 416(i) as of the last day of the calendar year preceding the date
      of the termination of employment. This shall include any Executive who is
      (i) a 5-percent owner of the Company’s common stock, or (ii) an
      officer of the Company with annual compensation from the Company of $130,000.00
      or more, or (iii) a 1-percent owner of Company’s common stock with annual
      compensation from the Company of $150,000.00 or more (or such higher annual
      limit as may be in effect for years subsequent to 2005 pursuant to indexing
      section 416(i) of the Code).

    


    (c)           The
      provisions of this Section 20 have been adopted only in order to comply with
      the
      requirements added by Code section 409A. These provisions shall be
      interpreted and administered in a manner consistent with the requirements of
      Code section 409A, together with any regulations or other guidance which
      may be published by the Treasury Department or Internal Revenue Service
      interpreting such Code section 409A.

    
      


    

    


    
      
        
           

        

        
          11

          
            

          

        

        
           

          Exhibit
            10.3

        

      

    

    


    
      IN
        WITNESS WHEREOF, this Agreement has been executed as of the date first above
        written.


    

    
      


    

    
      	
              Attest:

            	
               

            	
              FIRST
                DEFIANCE FINANCIAL CORP.

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              /s/
                John W. Boesling

            	
               

            	
              By:

            	
              /s/
                William J. Small

            
	
               John
                W. Boesling, Secretary

            	
               

            	
               

            	
              Name:
                William J. Small

            
	
               

            	
               

            	
               

            	
              Title:  Chairman,
                President and C.E.O.

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              Attest:

            	
               

            	
              FIRST
                FEDERAL BANK

            
	
               

            	
               

            	
              OF
                THE MIDWEST

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              /s/
                John W. Boesling

            	
               

            	
              By:

            	
              /s/
                William J. Small

            
	
               John
                W. Boesling, Secretary

            	
               

            	
               

            	
              Name:
                William J. Small

            
	
               

            	
               

            	
               

            	
              Title:  Chairman
                and C.E.O.

            
	
               

            	
               

            	
               

            	
               

            
	
              Witness:

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              /s/
                Danielle Norden

            	
               

            	
               

            	
              /s/
                John C. Wahl

            
	
               

            	
               

            	
               

            	
              John
                C. Wahl

            


    

    


    12