FIRST DEFIANCE FINANCIAL CORP
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>exhibit10-1.txt
<TEXT>
                                                                    Exhibit 10.1
                         FIRST DEFIANCE FINANCIAL CORP.
                             1996 STOCK OPTION PLAN


                                    ARTICLE I
                            ESTABLISHMENT OF THE PLAN

     First Defiance Financial Corp. (the "Corporation")  hereby establishes this
1996 Stock Option Plan (the "Plan")  upon the terms and  conditions  hereinafter
stated.


                                   ARTICLE II
                               PURPOSE OF THE PLAN

     The purpose of this Plan is to improve the growth and  profitability of the
Corporation and its Subsidiary Companies by providing Employees and Non-Employee
Directors  with a  proprietary  interest in the  Corporation  as an incentive to
contribute to the success of the Corporation and its Subsidiary  Companies,  and
rewarding  those  Employees for  outstanding  performance  and the attainment of
targeted goals.  All Incentive Stock Options issued under this Plan are intended
to comply with the  requirements of Section 422 of the Code, and the regulations
thereunder,  and all provisions hereunder shall be read, interpreted and applied
with that purpose in mind.


                                   ARTICLE III
                                   DEFINITIONS

     3.01 "Award" means an Option or Stock  Appreciation  Right granted pursuant
to the terms of this Plan.

     3.02  "Association"  means First Federal Savings and Loan, the wholly owned
subsidiary of the Corporation.

     3.03 "Board" means the Board of Directors of the Corporation.

     3.04 "Code" means the Internal Revenue Code of 1986, as amended.

     3.05  "Committee"  means a committee of two or more directors  appointed by
the Board  pursuant  to Article  IV hereof,  none of whom shall be an Officer or
Employee of the Corporation,  and each of whom shall be a "disinterested person"
within the  meaning of Rule  16b-3  under the  Exchange  Act,  or any  successor
thereto.

     3.06 "Common  Stock" means shares of the common stock,  $0.01 par value per
share, of the Corporation.


<PAGE>


     3.07  "Disability"  means any physical or mental impairment which qualifies
an Employee for disability  benefits under the applicable  long-term  disability
plan maintained by the Corporation or a Subsidiary Company,  or, if no such plan
applies,  which would qualify such Employee for  disability  benefits  under the
Federal Social Security System.

     3.08 "Effective  Date" means the day upon which the holders of Common Stock
approve this Plan.

     3.09  "Employee"  means any person who is employed by the  Corporation or a
Subsidiary Company, or is an Officer of the Corporation or a Subsidiary Company,
but not including  directors who are not also Officers of or otherwise  employed
by the Corporation or a Subsidiary Company.

     3.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     3.11 "Fair Market  Value" shall be equal to the fair market value per share
of the Corporation's  Common Stock on the date an Award is granted. For purposes
hereof,  the Fair Market  Value of a share of Common  Stock shall be the closing
sale price of a share of Common  Stock on the date in question  (or, if such day
is not a trading day in the U.S. markets, on the nearest preceding trading day),
as  reported  with  respect to the  principal  market (or the  composite  of the
markets, if more than one) or national quotation system in which such shares are
then traded,  or if no such closing  prices are  reported,  the mean between the
high bid and low asked  prices  that day on the  principal  market  or  national
quotation system then in use, or if no such quotations are available,  the price
furnished by a  professional  securities  dealer  making a market in such shares
selected by the Committee.

     3.12  "Incentive  Stock  Option"  means any Option  granted under this Plan
which the Board  intends (at the time it is granted)  to be an  incentive  stock
option within the meaning of Section 422 of the Code or any successor thereto.

     3.13  "Non-Employee  Director"  means a member  of the  Board who is not an
Officer or Employee of the Corporation or any Subsidiary Company.

     3.14 "Non-Qualified  Option" means any Option granted under this Plan which
is not an Incentive Stock Option.

     3.15  "Offering"  means the offering of Common Stock to the public pursuant
to a Plan of Conversion and Agreement and Plan of Reorganization  adopted by the
Association and First Federal Mutual Holding Company.

     3.16  "Officer"  means an Employee  whose  position in the  Corporation  or
Subsidiary Company is that of a corporate officer, as determined by the Board.

     3.17 "OTS" means the Office of Thrift Supervision.

     3.18  "Option"  means a right  granted  under this Plan to purchase  Common
Stock.


                                       2
<PAGE>


     3.19  "Optionee"  means an  Employee  or  Non-Employee  Director  or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.

     3.20 "Stock  Appreciation  Right"  means a right to  surrender an Option in
consideration  for a payment by the  Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.11.

     3.21 "Subsidiary  Companies"  means those  subsidiaries of the Corporation,
including the Bank, which meet the definition of "subsidiary  corporations"  set
forth in Section  425(f) of the Code,  at the time of  granting of the Option in
question.


                                   ARTICLE IV
                           ADMINISTRATION OF THE PLAN

     4.01  Duties  of  the  Committee.   The  Plan  shall  be  administered  and
interpreted  by the  Committee,  as  appointed  from  time to time by the  Board
pursuant  to Section  4.02.  Subject to  compliance  with OTS  regulations,  the
Committee  shall have the authority in its absolute  discretion to adopt,  amend
and rescind such rules,  regulations  and procedures as, in its opinion,  may be
advisable in the  administration  of the Plan,  including,  without  limitation,
rules,  regulations  and  procedures  which  (i) deal  with  satisfaction  of an
Optionee's tax  withholding  obligation  pursuant to Section 12.02 hereof,  (ii)
include  arrangements  to facilitate the Optionee's  ability to borrow funds for
payment of the  exercise  or purchase  price of an Award,  if  applicable,  from
securities brokers and dealers, and (iii) include arrangements which provide for
the payment of some or all of such  exercise  or  purchase  price by delivery of
previously  owned shares of Common Stock or other property and/or by withholding
some of the shares of Common Stock which are being acquired.  The interpretation
and  construction  by the  Committee of any  provisions  of the Plan,  any rule,
regulation or procedure  adopted by it pursuant thereto or of any Award shall be
final and binding.

     4.02  Appointment  and  Operation  of the  Committee.  The  members  of the
Committee  shall be appointed  by, and will serve at the pleasure of, the Board.
The Board from time to time may remove  members  from,  or add  members  to, the
Committee,  provided  the  Committee  shall  continue  to consist of two or more
members of the  Board,  none of whom  shall be an  officer  or  employee  of the
Corporation,  and each of whom  shall be a  "disinterested  person"  within  the
meaning of Rule 16b-3 under the Exchange Act. The Committee shall act by vote or
written consent of a majority of its members.  Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures  as it deems  appropriate  for the  conduct  of its  affairs.  It may
appoint  one of its  members to be  chairman  and any  person,  whether or not a
member, to be its secretary or agent. The Committee shall report its actions and
decisions to the Board at  appropriate  times but in no event less than one time
per calendar year.

     4.03 Revocation for Misconduct. The Committee may by resolution immediately
revoke,  rescind and terminate any Option, or portion thereof, to the extent not
yet vested,  or any

                                       3
<PAGE>

Stock Appreciation Right, to the extent not yet exercised, previously granted or
awarded under this Plan to an Employee who is discharged  from the employ of the
Corporation or a Subsidiary Company for cause, which, for purposes hereof, shall
mean termination  because of the Employee's 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.  Options  granted  to a  Non-Employee  Director  who is
removed for cause pursuant to the  Corporation's  Certificate  of  Incorporation
shall terminate as of the effective date of such removal.



     4.04  Limitation on Liability.  No member of the Committee  shall be liable
for any action or determination made in good faith with respect to the Plan, any
rule,  regulation  or  procedure  adopted by it  pursuant  thereto or any Awards
granted under it. If a member of the Committee is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal,  administrative or investigative, by reason of anything
done or not done by him in such capacity  under or with respect to the Plan, the
Corporation   shall,   subject  to  the  requirements  of  applicable  laws  and
regulations,   indemnify  such  member  against  all  liabilities  and  expenses
(including  attorneys'  fees),  judgments,  fines and amounts paid in settlement
actually and reasonably  incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he  reasonably  believed to
be in the best interests of the  Corporation  and its Subsidiary  Companies and,
with respect to any criminal  action or proceeding,  had no reasonable  cause to
believe his conduct was unlawful.

     4.05  Compliance  with Law and  Regulations.  All Awards granted  hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation  shall not be required to issue or deliver any  certificates for
shares  of  Common  Stock  prior  to  the  completion  of  any  registration  or
qualification  of or  obtaining  of consents or  approvals  with respect to such
shares  under  any  Federal  or  state  law or any  rule  or  regulation  of any
government body, which the Corporation shall, in its sole discretion,  determine
to be necessary or advisable.  Moreover,  no Option or Stock  Appreciation Right
may be  exercised  if such  exercise  would be contrary to  applicable  laws and
regulations.

     4.06 Restrictions on Transfer.  The Corporation may place a legend upon any
certificate  representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.


                                    ARTICLE V
                                   ELIGIBILITY

     Awards may be granted to such  Employees or  Non-Employee  Directors of the
Corporation and its Subsidiary  Companies as may be designated from time to time
by the Committee. Awards may not be granted to individuals who are not Employees
or Non-Employee Directors of either the Corporation or its Subsidiary Companies.
Non-Employee  Directors shall he eligible to receive only Non-Qualified  Options
pursuant to Section 8.02 of the Plan.


                                       4
<PAGE>

                                   ARTICLE VI
                        COMMON STOCK COVERED BY THE PLAN

     6.01 Option  Shares.  The aggregate  number of shares of Common Stock which
may be issued  pursuant  to this Plan,  subject to  adjustment  as  provided  in
Article IX,  shall be 647,691  shares,  which is equal to 10.0% of the shares of
Conversion  Stock  issued  in the  Offering.  None of such  shares  shall be the
subject of more than one Award at any time, but if an Option as to any shares is
surrendered  before  exercise,  or expires or terminates  for any reason without
having been exercised in full, or for any other reason ceases to be exercisable,
the number of shares  covered  thereby  shall again become  available  for grant
under the Plan as if no Awards had been previously  granted with respect to such
shares. Notwithstanding the foregoing, if an Option is surrendered in connection
with the exercise of a Stock  Appreciation  Right,  the number of shares covered
thereby  shall not be available  for grant under the Plan.  During the time this
Plan remains in effect,  grants to each Employee and each Non-Employee  Director
shall not exceed 25% and 5% of the shares of Common  Stock  available  under the
Plan,  respectively.  In  addition,  grants  to  Non-Employee  Directors  in the
aggregate shall not exceed 30% of the shares of Common Stock available under the
Plan.

     6.02 Source of Shares. The shares of Common Stock issued under the Plan may
be authorized but unissued  shares,  treasury shares or shares  purchased by the
Corporation on the open market or from private sources for use under the Plan.


                                   ARTICLE VII
                                DETERMINATION OF
                         AWARDS, NUMBER OF SHARES, ETC.

     The Committee  shall, in its discretion,  determine from time to time which
Employees  will be granted Awards under the Plan, the number of shares of Common
Stock subject to each Award,  and whether each Option will be an Incentive Stock
Option or a Non-Qualified Stock Option. In making all such determinations  there
shall be taken into account the duties, responsibilities and performance of each
respective Employee,  his present and potential  contributions to the growth and
success of the  Corporation,  his salary and such other factors as the Committee
shall deem  relevant to  accomplishing  the  purposes of the Plan.  Non-Employee
Directors shall be eligible to receive only  Non-Qualified  Options  pursuant to
Section 8.02 of the Plan.


                                       5
<PAGE>


                                  ARTICLE VIII
                      OPTIONS AND STOCK APPRECIATION RIGHTS

     Each  Option  granted  hereunder  shall  be  on  the  following  terms  and
conditions:

     8.01  Stock  Option  Agreement.  The  proper  Officers  on  behalf  of  the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common  Stock to which it pertains,  the
exercise  price,  whether it is a  Non-Qualified  Option or an  Incentive  Stock
Option,  and such other terms,  conditions,  restrictions  and privileges as the
Committee  in each  instance  shall  deem  appropriate,  provided  they  are not
inconsistent  with the terms,  conditions  and  provisions  of this  Plan.  Each
Optionee shall receive a copy of his executed Stock Option Agreement.

     8.02 (a)  Initial  Grants  to  Non-Employee  Directors.  Each  Non-Employee
Director  as of the  day  that  the  Plan is  approved  by  stockholders  of the
Corporation  shall be granted an Option to  purchase  15,544 per share  exercise
price  equal to the Fair Market  Value of a share of Common  Stock on such date.
Each Non-Employee Director appointed or elected following the date that the Plan
is approved by  stockholders  of the  Corporation  shall be granted an Option to
purchase  15,544  shares  of  Common  Stock  effective  as of  the  date  of his
appointment  or election to the Board and with a per share  exercise price equal
to the Fair  Market  Value of a share of Common  Stock on such  date:  provided,
however, that in no case shall grants to Non-Employee Directors in the aggregate
exceed 30% of the shares of Common Stock available under the Plan.

     (b) Subsequent Grants. Each Non-Employee Director one year from the date of
the  initial  grants  pursuant  to Section  8.02(a)  shall  receive an Option to
purchase  1,943 shares of Common Stock at such time and on the next  anniversary
date  thereafter at the per share  exercise price equal to the Fair Market Value
of a share of Common Stock on such dates.

     8.03 Option Exercise Price.

     (a)  Incentive  Stock  Options.  The per share  price at which the  subject
Common Stock may be purchased  upon exercise of an Incentive  Stock Option shall
be no less than one hundred  percent  (100%) of the Fair Market Value of a share
of Common Stock at the time such  Incentive  Stock Option is granted,  except as
provided in Section 8.10(b).

     (b) Non-Qualified  Options. The per share price at which the subject Common
Stock may be purchased upon exercise of a Non-Qualified  Option shall be no less
than one hundred  percent  (100%) of the Fair Market  Value of a share of Common
Stock at the time such Non-Qualified Option is granted.

     8.04 Vesting and Exercise of Options.

     (a)  General  Rules.  Incentive  Stock  Options and  Non-Qualified  Options
granted  hereunder  shall become vested and  exercisable  at the rate of 20% per
year on each  annual  anniversary  of the date the Option was  granted,  and the
right to exercise shall be cumulative. Notwithstanding the foregoing, no vesting
shall occur on or after an Employee's  employment  with the  Corporation and all
Subsidiary  Companies  is  terminated  for any  reason  other  than his death or
Disability.  In determining the number of shares of Common Stock with respect to
which Options are vested and/or  exercisable,  fractional shares will be rounded
up to the nearest whole number if the fraction is 0.5 or higher,  and down if it
is less.


                                       6
<PAGE>


     (b)  Accelerated  Vesting Upon Death or  Disability.  Unless the  Committee
shall specifically state otherwise at the time an Option is granted, all Options
granted  hereunder  shall become vested and  exercisable  in full on the date an
Optionee  terminates  his  employment  with or service to the  Corporation  or a
Subsidiary Company because of his death or Disability.

     8.05 Duration of Options.

     (a) General  Rule.  Except as provided in Sections  8.05(b) and 8.10,  each
Option or portion thereof granted to Employees and Non-Employee  Directors shall
be  exercisable at any time on or after it vests and becomes  exercisable  until
the  earlier  of (i) ten (10)  years  after its date of grant or (ii)  three (3)
months  after the date on which the  Optionee  ceases to be employed  (or in the
service of the Board of Directors in the case of Non-Employee  Directors) by the
Corporation and all Subsidiary Companies, unless the Committee in its discretion
decides at the time of grant or  thereafter  to extend  such  period of exercise
upon  termination of employment or service from three (3) months to a period not
exceeding one (1) year.

     (b) Exception for  Termination  Due to Death or Disability.  If an Employee
dies  while  in the  employ  of  the  Corporation  or a  Subsidiary  Company  or
terminates  employment with the Corporation or a Subsidiary  Company as a result
of Disability  without having fully  exercised his Options,  the Optionee or the
executors, administrators, legatees or distributees of his estate shall have the
right,  during the  twelve-month  period  following  the earlier of his death or
Disability,  to exercise  such Options to the extent  vested on the date of such
death  or  Disability.  If a  Non-Employee  Director  dies  while  serving  as a
Non-Employee   Director   without  having  fully  exercised  his  Options,   the
Non-Employee Director's executors,  administrators,  legatees or distributees of
his estate shall have the right,  during the twelve-month  period following such
death,  to exercise  such  Options.  In no event,  however,  shall any Option be
exercisable  within six (6) months after the date of grant or more than ten (10)
years from the date it was granted.

     8.06  Nonassignability.  Options shall not be  transferable  by an Optionee
except by will or the laws of descent or distribution,  and during an Optionee's
lifetime shall be exercisable  only by such Optionee or the Optionee's  guardian
or legal representative.

     8.07 Manner of  Exercise.  Options may be exercised in part or in whole and
at one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided for in Section 8.01 above.

     8.08 Payment for Shares.  Payment in full of the purchase  price for shares
of Common Stock  purchased  pursuant to the exercise of any Option shall be made
to the Corporation  upon exercise of the Option.  All shares sold under the Plan
shall be fully  paid and


                                       7
<PAGE>

nonassessable. Payment for shares may be made by the Optionee in cash or, at the
discretion of the  Committee in the case of Awards to  Employees,  by delivering
shares of Common Stock (including shares acquired pursuant to the exercise of an
Option) or other  property  equal in Fair Market Value to the purchase  price of
the shares to be acquired  pursuant to the Option,  by  withholding  some of the
shares of Common Stock which are being purchased upon exercise of an Option,  or
any combination of the foregoing.

     8.09  Voting and  Dividend  Rights.  No  Optionee  shall have any voting or
dividend  rights or other  rights of a  stockholder  in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the  Corporation's  stockholder  ledger as the  holder of record of such  shares
acquired pursuant to an exercise of an Option.

     8.10 Additional  Terms  Applicable to Incentive Stock Options.  All Options
issued under the Plan as Incentive Stock Options will be subject, in addition to
the terms  detailed in Sections 8.01 to 8.09 above,  to those  contained in this
Section 8.10.

     (a)  Notwithstanding  any contrary  provisions  contained elsewhere in this
Plan and as long as  required  by Section 422 of the Code,  the  aggregate  Fair
Market Value, determined as of the time an Incentive Stock Option is granted, of
the Common Stock with respect to which  Incentive  Stock Options are exercisable
for the first time by the Optionee during any calendar year, under this Plan and
stock options that satisfy the requirements of Section 422 of the Code under any
other stock option plan or plans maintained by the Corporation (or any parent or
Subsidiary Company), shall not exceed $100,000.

     (b)  Limitation on Ten Percent  Stockholders.  The price at which shares of
Common Stock may he purchased upon exercise of an Incentive Stock Option granted
to an individual who, at the time such Incentive Stock Option is granted,  owns,
directly or indirectly, more than ten percent (10%) of the total combined voting
power of all classes of stock issued to  stockholders  of the Corporation or any
Subsidiary Company,  shall be no less than one hundred and ten percent (110%) of
the Fair Market Value of a share of the Common Stock of the  Corporation  at the
time of  grant,  and such  Incentive  Stock  Option  shall by its  terms  not be
exercisable  after the earlier of the date determined  under Section 8.04 or the
expiration  of five (5)  years  from the date  such  Incentive  Stock  Option is
granted.

     (c)  Notice  of  Disposition;   Withholding;   Escrow.  An  Optionee  shall
immediately notify the Corporation in writing of any sale, transfer,  assignment
or other disposition (or action constituting a disqualifying  disposition within
the meaning of Section 421 of the Code) of any shares of Common  Stock  acquired
through  exercise of an Incentive  Stock Option,  within two (2) years after the
grant  of such  Incentive  Stock  Option  or  within  one  (1)  year  after  the
acquisition  of such shares,  setting forth the date and manner of  disposition,
the  number  of  shares  disposed  of and the price at which  such  shares  were
disposed of. The Corporation shall be entitled to withhold from any compensation
or other  payments then or thereafter due to the Optionee such amounts as may be
necessary  to satisfy any  withholding  requirements  of Federal or state law or
regulation  and,  further,  to collect from the Optionee any additional  amounts
which may be required for such purpose.  The Committee  may, in its  discretion,
require  shares of Common  Stock  acquired  by an Optionee  upon  exercise of an
Incentive  Stock Option to be held in an escrow  arrangement  for the purpose of
enabling compliance with the provisions of this Section 8.10(c).


                                       8
<PAGE>


     8.11 Stock Appreciation Rights.

     (a) General  Terms and  Conditions.  The  Committee  may,  but shall not be
obligated to,  authorize  the  Corporation,  on such terms and  conditions as it
deems  appropriate  in each case,  to grant  rights to Optionees to surrender an
exercisable  Option, or any portion thereof, in consideration for the payment by
the Corporation of an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option,  or portion  thereof,  surrendered
over the  exercise  price of the Option  with  respect to such  shares (any such
authorized  surrender  and  payment  being  hereinafter  referred to as a "Stock
Appreciation Right").  Such payment, at the discretion of the Committee,  may be
made in shares of Common Stock valued at the then Fair Market Value thereof,  or
in cash, or partly in cash and partly in shares of Common Stock.

     The terms and conditions set with respect to a Stock Appreciation Right may
include (without  limitation),  subject to other provisions of this Section 8.11
and the Plan,  the period  during  which,  date by which or event upon which the
Stock  Appreciation  Right may be exercised (which shall be on the same terms as
the Option to which it relates pursuant to Section 8.04  hereunder);  the method
for valuing  shares of Common Stock for purposes of this Section 8.11; a ceiling
on the amount of consideration  which the Corporation may pay in connection with
exercise and cancellation of the Stock Appreciation  Right; and arrangements for
income  tax  withholding.  The  Committee  shall  have  complete  discretion  to
determine whether,  when and to whom Stock  Appreciation  Rights may be granted.
Notwithstanding the foregoing,  the Corporation may not permit the exercise of a
Stock  Appreciation Right issued pursuant to this Plan until the Corporation has
been subject to the reporting requirements of Section 13 of the Exchange Act for
a  period  of at  least  one  year  prior  to the  exercise  of any  such  Stock
Appreciation  Right and until a Stock Appreciation Right issued pursuant to this
Plan has been outstanding for at least six months from the date of grant.

     (b) Time Limitations.  If a holder of a Stock Appreciation Right terminates
service with the Corporation as an Officer or Employee,  the Stock  Appreciation
Right may be exercised only within the period,  if any,  within which the Option
to which  it  relates  may be  exercised.  Notwithstanding  the  foregoing,  any
election by an Optionee to exercise the Stock  Appreciation  Rights  provided in
this Plan shall be made during the period  beginning  on the third  business day
following  the  release  for  publication  of  quarterly  or  annual   financial
information required to be prepared and disseminated by the Corporation pursuant
to the  requirements of the Exchange Act and ending on the twelfth  business day
following such date. The required release of information shall be deemed to have
been  satisfied  when  the  specified  financial  data  appears  on or in a wire
service,  financial  news  service or  newspaper  of general  circulation  or is
otherwise first made publicly available.

     (c) Effects of Exercise of Stock Appreciation  Rights or Options.  Upon the
exercise of a Stock  Appreciation  Right,  the number of shares of Common  Stock
available  under the Option to which it relates shall decrease by a number equal
to the number of shares for which


                                       9
<PAGE>


the Stock Appreciation Right was exercised.  Upon the exercise of an Option, any
related Stock  Appreciation  Right shall terminate as to any number of shares of
Common  Stock  subject to the Stock  Appreciation  Right that  exceeds the total
number of shares for which the Option remains unexercised.

     (d) Time of Grant. A Stock Appreciation  Right may be granted  concurrently
with the  Option  to which it  relates  or at any time  thereafter  prior to the
exercise or expiration of such Option.

     (e)  Non-Transferable.  The  holder of a Stock  Appreciation  Right may not
transfer or assign the Stock  Appreciation  Right  otherwise  than by will or in
accordance with avis of descent and distribution, and during a holder's lifetime
a Stock Appreciation may be exercisable only by the holder.


                                   ARTICLE IX
                         ADJUSTMENTS FOR CAPITAL CHANGES

     The aggregate number of shares of Common Stock available for issuance under
this the number of shares to which any Award relates and the exercise  price per
share of Common Stock under any Option shall be proportionately adjusted for any
increase or decrease in the total number of  outstanding  shares of Common Stock
issued  subsequent  to  effective  date of this  Plan  resulting  from a  split,
subdivision  or  consolidation  of shares or any other capital  adjustment,  the
payment of a stock  dividend,  or other  increase  or  decrease  in such  shares
effected without receipt or payment of  consideration  by the  Corporation.  If,
upon a merger, consolidation,  reorganization,  liquidation, recapitalization or
the like of the Corporation,  the shares of the Corporation's Common Stock shall
be exchanged for other securities of the Corporation or of another  corporation,
each recipient Award shall be entitled, subject to the conditions herein stated,
to  purchase  or  acquire  number of  shares of Common  Stock or amount of other
securities of the Corporation or such other corporation as were exchangeable for
the number of shares of Common  Stock of the  Corporation  which such  optionees
would have been  entitled  to purchase or acquire  except for such  action,  and
appropriate  adjustments  shall  be made  to the per  share  exercise  price  of
outstanding Options.


                                    ARTICLE X
                      AMENDMENT AND TERMINATION OF THE PLAN

     The Board may, by resolution,  at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been  granted,
subject to regulations of the OTS and any required  stockholder  approval or any
stockholder  approval  which the Board may deem to be advisable  for any reason,
such as for the purpose of obtaining or retaining  any  statutory or  regulatory
benefits under tax,  securities or other laws or satisfying any applicable stock
exchange  listing  requirements.  The Board may not,  without the consent of the
holder of an Award,  alter or impair  any Award  previously  granted  or awarded
under this Plan as  specifically  authorized  herein.  Notwithstanding  anything
contained in this Plan to the  contrary,  the


                                       10
<PAGE>


provisions of Articles V, VII and VIII of this Plan  relating to Awards  granted
to Non-Employee  Directors shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee  Retirement  Income
Security Act of 1974, as amended, or the rules and regulations promulgated under
such statutes.


                                   ARTICLE XI
                                EMPLOYMENT RIGHTS

     Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any right
on the part of any Employee or  Non-Employee  Director of the  Corporation  or a
Subsidiary Company to continue in such capacity.


                                   ARTICLE XII
                                   WITHHOLDING

     12.01 Tax  Withholding.  The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable  withholding and
employment  taxes, and if the amount of such cash payment is  insufficient,  the
Corporation  may  require  the  Optionee  to pay to the  Corporation  the amount
required  to be  withheld  as a  condition  to  delivering  the shares  acquired
pursuant to an Award.  The Corporation also may withhold or collect amounts with
respect  to a  disqualifying  disposition  of shares of  Common  Stock  acquired
pursuant  to  exercise  of an  Incentive  Stock  Option,  as provided in Section
8.10(c).

     12.02  Methods of Tax  Withholding.  The  Committee is  authorized to adopt
rules,  regulations  or  procedures  which  provide for the  satisfaction  of an
Optionee's tax withholding obligation by the retention of shares of Common Stock
to which the Employee would otherwise be entitled pursuant to an Award and/or by
the  Optionee's  delivery of  previously  owned  shares of Common Stock or other
property.


                                  ARTICLE XIII
                        EFFECTIVE DATE OF THE PLAN; TERM

     13.01 Effective Date of the Plan.  This Plan shall become  effective on the
Effective Date, and Awards may be granted hereunder as of or after the Effective
Date and prior to the termination of the Plan,  provided that no Incentive Stock
Option  issued  pursuant to this Plan shall  qualify as such unless this Plan is
approved by the requisite vote of the holders of the  outstanding  voting shares
of the Corporation at a meeting of  stockholders of the Corporation  held within
twelve (12) months of the  Effective  Date.  Notwithstanding  the  foregoing  or
anything to the contrary in this Plan, the  implementation  of this Plan and any
Awards granted  pursuant hereto are subject to the  non-objection of the OTS and
approval of the Corporation's stockholders.



                                       11
<PAGE>

     13.02 Term of Plan.  Unless  sooner  terminated,  this Plan shall remain in
effect for a period of  Termination  shall  remain Term of Plan.  Unless  sooner
terminated,  this Plan shall  remain in effect for ten (10) years  ending on the
tenth  anniversary of the Effective Date of the Plan shall not affect any Awards
previously  granted  and such  Awards  valid and in effect  until they have been
fully  exercised  or earned,  are  surrendered  or by their terms  expire or are
forfeited.


                                   ARTICLE XIV
                                  MISCELLANEOUS

     14.01  Governing  Law. To the extent not governed by Federal law, this Plan
shall be construed under the laws of the State of Ohio.

     14.02 Pronouns.  Wherever appropriate,  the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.


                                       12





</TEXT>
</DOCUMENT>
