FIRST DEFIANCE FINANCIAL CORP
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>5
<FILENAME>exhibit10-7.txt
<TEXT>

                                                                    Exhibit 10.7
                              EMPLOYMENT AGREEMENT

     THIS  EMPLOYMENT  AGREEMENT  (this  "Agreement")  is dated  this 1st day of
January,  2000, by and among First Defiance Financial Corp. ("First  Defiance"),
an Ohio corporation and savings and loan holding company,  First Federal Savings
Bank of the Midwest ("First Federal"),  a federally chartered savings bank, both
of which are located in Defiance,  Ohio,  and James L. Rohrs (the  "Executive").
First  Defiance  and  First  Federal  are  referred  to  jointly  herein  as the
"Companies."


                              W I T N E S S E T H:

     WHEREAS,  the Companies  desire to retain the  Executive's  services as the
Executive Vice President of First Defiance and the President and Chief Operating
Officer of First Federal; and

     WHEREAS,  in order to induce the  Executive to enter into and remain in the
employ of the  Companies and in  consideration  of the  Executive's  agreeing to
enter into and  remain in the employ of the  Companies,  the  parties  desire to
specify the terms of such employment;

     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  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, or such fewer number of years as the Executive
shall have been employed by the Companies 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.



<PAGE>


     (e)  Change in  Control  of First  Defiance.  "Change  in  Control of First
Defiance"  shall mean a change in control of a nature  that would be required to
be  reported  in  response  to  Item  6(e) of  Schedule  14A of  Regulation  14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),  or any successor  thereto,  whether or not First  Defiance is registered
under the Exchange Act;  provided  that,  without  limitation,  such a change in
control  shall be deemed to have  occurred if (i) any  "person" (as such term is
used in  Sections  13(d)  and  14(d)  of the  Exchange  Act) is or  becomes  the
"beneficial owner"(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly,  of securities  of First  Defiance  representing  25% or more of the
combined voting power of the then outstanding  securities of First Defiance;  or
(ii)  during  any  period  of  two  consecutive  years,  individuals  who at the
beginning of such period  constitute  the Board of  Directors of First  Defiance
cease for any  reason to  constitute  at least a  majority  thereof  unless  the
election,  or the nomination for election by shareholders,  of each new director
was approved by a vote of at least  two-thirds  of the  directors  then still in
office who were directors at the beginning of the period.

     (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
which  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) The occurrence of any of the following events,  without the Executive's
express written consent: (A) the assignment by the Companies to the Executive of
any duties which, 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


                                       2
<PAGE>


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 President and Chief  Operating  Officer 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 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  which  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
9 hereof.

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

     (l)  Notice of  Termination.  "Notice  of  Termination"  shall mean a dated
notice which (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 the Executive's  employment  under
the provision so indicated,  (iii) specifies a Date of Termination,  and (iv) is
given in the manner specified in Section 10 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.


                                       3
<PAGE>


     (a) The Companies  hereby employ the  Executive,  and the Executive  hereby
accepts  employment  with the  Companies  and agrees to render  services  to the
Companies on the terms and conditions set forth in this  Agreement.  The term of
employment  under this  Agreement  shall  commence  on January 1, 2000 and shall
terminate on December  31, 2002,  unless  extended by the  Companies'  Boards of
Directors in the manner  provided  below,  or unless  sooner  terminated  by the
Companies or the Executive pursuant to Section 5 of this Agreement.

     (b) At a meeting of the Companies'  Boards of Directors  prior to the first
anniversary of the date of this Agreement and each anniversary  thereafter,  the
Board of  Directors  of the  Companies  shall  consider  and  review a  one-year
extension  of the term under this  Agreement,  and (with  appropriate  corporate
documentation  thereof,  and after  taking  into  account all  relevant  factors
including the Executive's  performance  hereunder and the merits of a three-year
agreement) the term shall be extended, 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.

     (c) 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'  Boards  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 which 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 $120,000
(the "Base Salary"), which may be increased from time to time in such amounts as
may be determined by the Companies' Boards of Directors and may not be decreased
without the Executive's express written consent. In addition to the Base Salary,
the  Executive  shall be entitled  to receive  each year during the term of this
Agreement a bonus based on targets 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 the Rotary Club


                                       4
<PAGE>


and the Kettenring Country Club; (ii) the Companies shall provide Executive with
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
practice of the  Companies);  and (iii) First  Federal  shall provide a cellular
telephone for use by the Executive in the performance of the Executive's  duties
under this  Agreement.  The Companies  shall not make any changes in such plans,
benefits  or  privileges  which 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 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 established from time to time by
the Boards 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 Boards 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 Boards 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.   Notwithstanding  the
foregoing,  if the Executive terminates his employment for any reason other than
Good Reason,  the Executive  agrees that, for a period of one year following the
termination of the  Executive's  employment by the  Executive,  he shall not (i)
either as principal,  agent,  owner,  shareholder or investor of more than 3% of
the  stock,  officer,   director,   partner,  lender,   independent  contractor,
consultant or in any other capacity,  engage in, have a financial interest in or
be in any way connected or affiliated with, or render advice or services to, any
person or entity that  engages in any  activity  which would  compete in any way
with the  business  operated  by the  Companies  in the  counties  where they do
business,  or  (ii)  directly  or  indirectly,  solicit,  divert,  take  away or
interfere with,


                                       5
<PAGE>



or attempt to solicit,  divert, take away or interfere with, the relationship of
the Companies or any of their  subsidiaries  with any person or entity who is or
was a  customer,  or  employee  or  supplier  of the  Companies  or any of their
subsidiaries  immediately prior to the Date of Termination.  Notwithstanding the
foregoing,  nothing  contained  herein shall  prevent the  Executive,  after the
termination  of this  Agreement by the Executive  pursuant to this Section 5(b),
from  engaging  directly  or  indirectly  in any banking or  financial  industry
business in a county or counties in which the  Companies  are doing  business if
the only  activity  conducted  in such county or counties  is the  servicing  of
loans.

     The parties  hereto  acknowledge  and agree that the  duration and area for
which  the  covenant  not to  compete  and  other  covenants  set  forth in this
Agreement  are to be  effective  are  fair  and  reasonable  and are  reasonably
required  for the  protection  of the  Companies.  In the  event  that any court
determines  that the time period or the area, or both of them, are  unreasonable
as to any covenant and that such covenant is to that extent  unenforceable,  the
parties hereto agree that the covenant shall remain in full force and effect for
the  greatest  time  period  and in the  greatest  area that would not render it
unenforceable.

     (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, which failure has not been
cured within  twenty-five  (25) days after a notice of  non-compliance  has been
given by Executive to the Companies, or (ii) for Good Reason, then the Companies
shall, subject to the provisions of Section 6 hereof, if applicable:

          (1) pay to the Executive,  at the option of the  Executive,  in a lump
          sum payment or in thirty-six (36) equal monthly installments beginning
          with  the  first  business  day of the  month  following  the  Date of
          Termination,  an amount  equal to 2.99 times the Annual  Compensation;
          and

          (2) 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  or (ii) 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 (2)), 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



                                       6
<PAGE>



          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 (2) 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 which the Executive was entitled to receive under such plans,
          programs   and   arrangements   immediately   prior  to  the  Date  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  which  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, which 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
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 of
such 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 and (ii)
the Companies may request, and 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
<PAGE>


7.       Mitigation; Non-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  which 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. 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.

     10.  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, or to such other address as either party may
have  specified  in a prior  notice  given to the other  party in the manner set
forth in this section:

     To First Defiance:                First Defiance Financial Corp.
                                       601 Clinton Street
                                       Defiance, Ohio 43512

     To First Federal:                 First Federal Savings Bank of the Midwest
                                       601 Clinton Street
                                       Defiance, Ohio 43512

     To the Executive:                 James L. Rohrs
                                       824 Lincoln Dr.
                                       Defiance, Ohio 43512


                                       8
<PAGE>


     11.  Amendment;  Waiver.  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 Boards 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.

     12.   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.

     13. Nature of Obligations. Nothing contained herein shall create or require
the  Companies to create a trust of any kind to fund any  benefits  which 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.

     14.  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.

     15. 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.

     16.   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.

     17. Regulatory Actions. The following provisions shall be applicable to the
parties  to the extent  that they are  required  to be  included  in  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.ss.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.ss.ss.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.


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<PAGE>


     (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.ss.ss.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.ss.1813(x)(1)),  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.  ss.  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"), 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.  ss.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.

     18.  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.

     19. Confidentiality. The Executive hereby agrees that he shall at all times
keep and maintain the confidentiality of all confidential  information regarding
the companies and any of their  subsidiaries.  The Executive further agrees that
he shall not, at anytime, either directly or indirectly, use, either directly or
indirectly,  any  Confidential  Information  regarding  the Companies and any of
their  subsidiaries  for his  benefit or to the  benefit of any other  person or
entity, or divulge,  disclose,  reveal or otherwise communicate any confidential
information  regarding the Companies and any of their subsidiaries to any person
or entity in any manner  whatsoever,  except to the extend otherwise required by
law. The  obligations of this Paragraph 19 shall survive the  termination of the
Executive's employment.




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


                                       10
<PAGE>


Attest:                               FIRST DEFIANCE FINANCIAL CORP.



/s/ John W. Boesling                 By:/s/ William J. Small
--------------------                 -----------------------
                                           William J. Small, Chairman of
                                           the Board of Directors



Attest:                              FIRST FEDERAL SAVINGS BANK
                                     OF THE MIDWEST


/s/ John W. Boesling                 By:/s/ William J. Small
--------------------                 -----------------------
                                           William J. Small, Chairman of
                                           the Board of Directors



Witness:



/s/ John W. Boesling                 /s/ James L. Rohrs
--------------------                 ------------------
                                         James L. Rohrs

                                       11


</TEXT>
</DOCUMENT>
