Exhibit 10.1
ISABELLA BANK CORPORATION
RETIREMENT BONUS PLAN
July 1, 2008

 

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TABLE OF CONTENTS

         
Section 1. Purpose
    1  
Section 2. Definitions
    1  
Section 3. Participation/Establishment of Accounts
    3  
Section 4. Allocations to Account
    3  
Section 5. Vesting
    4  
Section 6. Commencement of Distribution
    4  
Section 7. Manner and Form of Distribution
    6  
Section 8. Conditions
    7  
Section 9. Death Benefit
    8  
Section 10. Unsecured Unfunded Plan
    8  
Section 11. Plan Amendment and Termination
    8  
Section 12. Expenses and Taxes
    10  
Section 13. Nonassignability
    10  
Section 14. Employment Status
    10  
Section 15. Administration
    10  
Section 16. Claims Procedure
    11  
Section 17. Binding Effect
    13  
Section 18. Incompetency
    13  
Section 19. Severability
    13  
Section 20. Construction
    13  

 

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ISABELLA BANK CORPORATION
RETIREMENT BONUS PLAN
     Isabella Bank Corporation (Isabella) established a nonqualified plan of
deferred compensation benefits for its eligible employees effective January 1,
2007, pursuant to Section 409A of the Internal Revenue Code. The Plan is
intended to postpone taxation of such deferred compensation benefits until those
benefits are paid to the employees as provided in the Plan. The provisions of
this Plan are hereby restated on and after July 1, 2008, as set forth below.
Section 1. Purpose.
     The Plan is intended to provide eligible employees with additional
compensation, payable as set forth in the Plan, in order to reward the
individuals who contribute to the success of Company.
Section 2. Definitions.
     The following words and phrases shall, when used in this Plan, have the
meanings set forth below unless their context clearly indicates otherwise:
     2.01 Administrator or Plan Administrator means Isabella which may, from
time to time in its sole discretion, appoint a person or persons to assist in
the administration of the Plan.
     2.02 Allocation Date means March 31, June 30, September 30 or December 31
of each Plan Year.
     2.03 Board of Directors means Company’s governing body according to law and
Company’s governing documents.
     2.04 Change of Control means a sale which results in a change in the
ownership of Company, a change in the effective control of Company, or a change
in the ownership of a substantial portion of Company’s assets. The change shall
not be deemed a “Change of Control” for purposes of this Plan unless the change
(whether made in a single transaction or in successive multiple transactions)
effectively transfers the controlling interest of Company to an unrelated third
party(ies) (as defined under the attribution rules of Code Sections 318 and 414)
and said change results in the unrelated third party(ies) owning more than fifty
percent (50%) of the fair market value or the total voting power of the stock of
Company. In addition to the foregoing, the Change of Control must satisfy the
provisions of Q & A-11 through 14 of IRS Notice 2005-1 and IRS. Reg.
1.409A-3(i)(5) and subsequent guidance.
     2.05 Code means the Internal Revenue Code of 1986, as amended.

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     2.06 Committee or Administrative Committee means the committee described in
Section 15.
     2.07 Company means Isabella Bank Corporation, Isabella Bank or their
respective successor or successors, and any other entity whose Board of
Directors authorizes participation in this Plan where Isabella by its Board of
Directors has approved such participation.
     2.08 Deferred Compensation Account or Account means the bookkeeping account
maintained on behalf of Participant to record Company contributions made
pursuant to Section 4.01.
     2.09 Disability means Participant is:
          (a) unable to engage in any substantial gainful activity by reason of
any medically determinable or physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, or
          (b) by reason of any medically determinable or physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering Employees of Company.
     2.10 Early Retirement Age means Participant’s attainment of age 55.
     2.11 Effective Date means July 1, 2008, the date on which the provisions of
this restated Plan become effective.
     2.12 Employee means an individual who is employed by Company on January 1,
2007, and who is a participant in Company’s frozen Executive Supplemental Income
Agreement, provided the individual is an officer of Company and has completed at
least ten (10) years of service with Company as of December 31, 2006. Company
has sole and exclusive discretion to add new Participants to the Plan by
authorizing such participation pursuant to action of Company’s Board of
Directors.
     2.13 Just Cause means that Company has determined in its sole and exclusive
discretion that Participant has engaged in theft, fraud, embezzlement or willful
misconduct. In the event Participant is discharged for Just Cause, Participant
agrees to consent to the revocation of the benefit payable under the Plan. In
the event of such revocation, this Plan shall be null and void with respect to
the affected Participant, and the Participant shall not have a claim under the
Plan against Company.
     2.14 Normal Retirement Age means Participant’s attainment of age 65.
     2.15 Participant means an Employee who participates in the Plan.
     2.16 Plan means the Isabella Bank Corporation Retirement Bonus Plan, as
amended from time to time.

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     2.17 Plan Year means the consecutive 12-month period beginning on January 1
and ending on December 31.
     2.18 Retirement means, with respect to a Participant, severance from
service with Company for any reason on or after the attainment of Early
Retirement Age; provided, however, with respect to a Participant who is entitled
to a distribution on account of Participant’s Disability or Separation From
Service, Retirement means the later of attainment of Early Retirement Age or
Participant’s actual severance date.
     2.19 Separation From Service means Participant’s severance of employment
with Company either voluntarily or involuntarily without Just Cause, within the
30-day period preceding or the 12-month period following a Change of Control.
     2.20 Similar Arrangement means an agreement, method, program or other
arrangement sponsored by the Company with respect to which deferrals are treated
as having been deferred under a single plan under IRS Reg. 1.409A-1(c)(2).
Section 3. Participation/Establishment of Accounts.
     3.01 Initial Participation. Any individual who was an eligible Employee on
January 1, 2007, commenced participation in the Plan on said date.
     3.02 Subsequent Participation. Any individual who becomes eligible to
participate in the Plan after the Effective Date shall commence participation in
the Plan on the date the Committee determines, in its sole discretion.
     3.03 Accounts. Company agrees to create a Deferred Compensation Account to
be maintained on the books of Company in the name of each Participant, as
described in Section 4 below.
Section 4. Allocations to Account.
     4.01 Company Contributions. Each Participant who commences participation in
the Plan on January 1, 2007, had an initial amount credited to his Deferred
Compensation Account on said date. Subsequent amounts shall be credited to
Participant’s Deferred Compensation Account on each Allocation Date thereafter.
The amount of the initial allocation and Participant’s annual allocation shall
be determined pursuant to a payment schedule adopted in the sole and exclusive
discretion of the Board of Directors, as set forth in the Addendum to this Plan,
as amended from time to time. Following the initial allocation, one-fourth (1/4)
of each annual allocation shall be credited to Participant’s Deferred
Compensation Account on the applicable Allocation Date, provided Participant is
employed by Company on the Allocation Date.
     4.02 Earnings Allocation. Subject to Section 10, amounts credited to
Participant’s Deferred Compensation Account shall be adjusted on each Allocation
Date for earnings as described in this Section 4.02. Such adjustments shall
continue quarterly until the date when all benefits payable under the Plan have
been distributed to Participant. The income allocated to

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Participant’s Deferred Compensation Account shall be the mid-term applicable
federal rate (as defined in Code Section 1274(d)) for January 1 of the calendar
year in which the income is credited, such interest to be compounded annually.
     Company does not guarantee the preservation of the principal amount
credited to Participant’s Account or a minimum rate of return on any such
investments.
Section 5. Vesting.
     Subject to satisfying the distribution events set forth in Section 6 below,
Participant’s interest in his Deferred Compensation Account shall be 100% vested
and nonforfeitable upon the first to occur of a Participant’s Retirement,
Separation From Service or experiencing a Disability. Notwithstanding the
provisions of Section 4.01, in the event of Participant’s Separation From
Service or Disability, Participant’s interest in his Deferred Compensation
Account balance shall be the amount he would have received at Early Retirement
Age had he continued to participate in the Plan and retired upon reaching Early
Retirement Age; provided, however, if the Participant elects a delayed
distribution date (not to exceed the Participant’s attainment of Normal
Retirement Age), in accordance with Section 6.02, Participant’s vested interest
in his Deferred Compensation Account shall be the amount he would have received
on the delayed distribution date had he continued to participate in the Plan and
retired on the delayed distribution date.
Section 6. Commencement of Distribution.
     6.01 Distribution Dates. The form and manner in which distributions will be
made from the Plan shall be determined in accordance with Section 7 below. No
amount standing from time to time to the credit of Participant in his Deferred
Compensation Account shall be assignable or alienable by Participant, nor may
any such payment be used as collateral or in any other fashion by Participant
prior to payment by Company. Subject to Section 6.03 below, no amount standing
from time to time to the credit of Participant in his Deferred Compensation
Account shall be payable to Participant until the earliest of the following
distribution dates:
          (a) Participant’s Retirement date;
          (b) The date of Participant’s Separation From Service; or
          (c) The date of Participant’s termination of employment on account of
his Disability.
     6.02 Time of Distribution. When the amounts credited to Participant’s
Deferred Compensation Account become payable pursuant to Section 6.01 (a) or
(b) above, distribution of such benefit shall begin on the first day of the
seventh month after the first Allocation Date that immediately follows the
earliest distribution date, or as soon as administratively practicable
thereafter. Distribution of a benefit payable pursuant to Section 6.01(c) above
shall begin on the first day of the first month after the Allocation Date that
immediately follows the event, or as soon as administratively possible
thereafter.

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          Notwithstanding the foregoing, Participant may elect a delayed
distribution date. The delayed distribution date may be a specific future date
or the attainment of a specified age by the Participant (not to exceed the
Participant’s attainment of age 65), so long as the delayed distribution date
is:
          (a) requested at least twelve (12) months prior to the earliest
distribution date;
          (b) the election does not take effect until at least twelve
(12) months after the date on which the election is made; and
          (c) the payment is postponed for a period of not less than five
(5) years from the date the payment would otherwise have been made.
     6.03 Accelerating the Time of Payment. Notwithstanding the distribution
dates set forth in Section 6.01 above, an early distribution may be made as soon
as administratively possible in accordance with IRS Reg. 1.409A-3(j)(4) and
subsequent guidance following the occurrence of any of the following events :
          (a) to fulfill the requirements of a domestic relations order;
          (b) as necessary to comply with a certificate of divestiture as
defined in Code Section 1043(b)(2);
          (c) to make payment of certain employment and/or income taxes;
          (d) de minimis cashout amounts not exceeding $10,000; or
          (e) certain arrangement terminations of the Plan as described in
Section 11 below.
     In the case of an accelerated payment due to Section 6.03(a) above, a
payment under the Plan may be made to an individual other than the Participant
to the extent necessary to fulfill the terms of a domestic relations order that
is issued by a court of competent jurisdiction. The Plan’s rules regarding
changes in the time and form of payment do not apply to changes in the time and
form of payment that are required by such a domestic relations order, so long as
the payment that is made pursuant to the domestic relations order will be made
to the alternate payee who is named in the domestic relations order and not to
the Participant. The Plan will make such a payment at the time and in the form
specified in the domestic relations order. If the domestic relations order
requires that the alternate payee be given an election as to the time and form
of payment, the Plan will follow such an alternate payee’s election of a time
and form of payment so long as the alternate payee makes said election in
accordance with the Plan’s rules and procedures relating to time and form of
payment elections. The Plan may make such a payment to someone other than a
Participant pursuant to a domestic relations order only with regard to deferrals
resulting from Compensation paid for services that were rendered after
December 31, 2004, and investment gains and losses thereon. The Participant to
whom the domestic relations order relates must pay to the Company whatever
amount is charged by the Company for processing the domestic relations order and
making the payment to someone other than the

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Participant. This payment to the Company cannot be deducted from the amount
credited to the Participant’s Plan Account.
     6.04 Delaying Payments Under Certain Circumstances. A payment may be
delayed in accordance with IRS Reg. 1.409A-2(b)(5) (and such other guidance
published after the Effective Date) under the following circumstances as
described in the Regulation:
          (a) Payments subject to Code Section 162(m) where the Company
reasonably anticipates that its deduction with respect to such payment would be
limited or eliminated by the application of Code Section 162(m).
          (b) Payments that would violate a loan covenant or similar contractual
requirement of the Company, where such violation would cause material harm to
the Company and the Company entered into the agreement or covenant for
legitimate business reasons and not to avoid restrictions under Code
Section 409A;
          (c) Payments that would violate Federal securities laws or other
applicable laws; or
          (d) Such other events and conditions as permitted by applicable law.
          Any missed or delayed payments (and the related earnings) shall be
made to Participant’s Deferred Compensation Account at the earliest date on
which Company reasonably anticipates that the payment will not cause the harm to
be avoided by the application of this Section 6.04.
Section 7. Manner and Form of Distribution.
     7.01 Manner of Payment. Upon the occurrence of a distribution event set
forth in Section 6, Participant shall receive payment in cash of the balance in
his Deferred Compensation Account maintained with Company, if any, remaining
after the last Allocation Date occurring in the calendar year of the
distribution event, but after the date of the distribution event.
     7.02 Form of Payment. Subject to Section 11, the Participant’s benefit
payable from his Deferred Compensation Account shall be distributed in a single
cash lump sum, unless, with respect to benefits payable under Sections 6.01(a)
and (c), (1) the Participant elects, on his initial election form, to receive
his benefit in installments, or (2) the Participant changes his election of the
form of payment from a lump sum to installments by submitting an amended
election form to the Committee in accordance with the procedures set forth in
Section 6.02 above.
          Installment payments made under this Section 7.02 shall be equal
monthly installments payable over a period of ten (10), fifteen (15) or twenty
(20) years, said installment payments to be treated as a single payment pursuant
to IRS Reg. 1.409A-2(b)(2)(iii) and future guidance; provided, however, pursuant
to IRS Reg. 1.409A-2(j)(1) and any other applicable law, if Participant dies
after the installment payments have commenced, but before all installment
payments have been made, all remaining payments shall be aggregated and
distributed to Participant’s beneficiary in a single cash payment.

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     The lump sum, or if applicable, monthly installment payment(s) to which the
Participant would have been entitled during the first six months following the
date of his severance on account of Retirement or Separation From Service shall
be aggregated (if applicable) and paid on the first day of the seventh month
following the date of Participant’s severance on account of Retirement or
Separation From Service. The six month postponement that is imposed by this
Section 7.02 shall not apply to (1) a payment due pursuant to a domestic
relations order; (2) a payment that is necessary to comply with a certificate of
divestiture as defined in Code Section 1043(b)(2); or (3) a payment of
employment taxes that is described in IRS Reg. 1.409A-3(h)(2)(v).
     Notwithstanding the foregoing, the Committee shall interpret all provisions
relating to changing the form of benefit payment under this Section 7.02 in a
manner that is consistent with Code Section 409A and other applicable tax law,
including but not limited to Treasury guidance or Regulations issued after the
Effective Date.
Section 8. Conditions.
     (a) Normal Employment. The payment of benefits under this Plan to
Participant is conditioned upon Participant’s continuous employment (periods of
temporary disability and authorized leaves of absence shall be considered as
periods of employment) with Company from the date of execution of this Plan
until the date Participant reaches Retirement. Payment is further conditioned
upon Participant’s compliance with the terms of this Plan so long as Participant
lives and payments are due under the terms of this Plan. However, in the event
of a Change of Control, continuous employment of Participant shall be required
only until the date of Participant’s voluntary termination or discharge without
Just Cause.
     (b) Service. Payment of benefits is also conditioned upon Participant
rendering such reasonable business consulting and advisory services as Company’s
Board of Directors may call upon Participant to provide, for a period from
Participant’s Early or Normal Retirement Age (whichever is applicable) until
Participant’s death, or until prior Disability.
          (1) It is understood that such services shall not require Participant
to be active in Company’s day-to-day activities, and that Participant shall
perform services as requested by management.
          (2) It is further understood that Participant shall be compensated for
such services in an amount to the then agreed upon, and shall be reimbursed for
all expenses incurred in performing such services.
     (c) Noncompetition. Payment of benefits is further conditioned upon
Participant not acting in any similar employment capacity for any business
enterprise which competes to a substantial degree with Company, or any affiliate
of Company (as defined in Rule 144 under the Securities Act of 1933, as
amended), nor engaging in any activity involving substantial competition with
Company or any affiliate, during employment with Company or any affiliate, after
retirement from Company or any affiliate, or after prior Disability while
receiving

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benefits under this Plan. In the event of violation of this provision, all
future payments (if any) shall be cancelled and discontinued. The Board of
Directors may waive these conditions.
Section 9. Death Benefit.
     No death benefit shall be payable under the Plan; however, if Participant
has elected an installment form of payment and the installments have commenced,
then a benefit shall be payable to the Participant’s beneficiary as provided in
Section 7.02 above.
Section 10. Unsecured Unfunded Plan.
     Participant’s Deferred Compensation Account shall be a bookkeeping account
only, and Company shall not be required in any way to fund the Account. Company
shall have no obligation to set aside, earmark, or entrust any fund, policy or
money with which to pay its obligation under this Plan. Participant, or any
successor in interest, shall be and remain a general creditor of Company with
respect to amounts deferred under this Plan in the same manner as any other
unsecured creditor who has a general claim for an unpaid liability. Company
shall be the sole owner and beneficiary of any assets acquired for its general
account under this Plan. Company shall not make any loans or extend credit to
Participant, or any successor in interest, which shall be offset by benefits
payable under this Plan.
     Notwithstanding the foregoing, Company may enter into a trust agreement
(“Trust Agreement”), whereby Company may agree to contribute to a trust
(“Trust”) sums for the purpose of accumulating assets to fund benefit payments
to Participants under the Plan. Company may contribute amounts to the Trust from
time to time as determined by the Board of Directors of Company. Such Trust
Agreement shall be substantially in the form of the model trust agreement set
forth in Revenue Procedure 92-64, or any subsequent Internal Revenue Service
Revenue Procedure, and shall include provisions required in such model trust
agreement that all assets of the Trust shall be subject to the creditors of
Company in the event of insolvency.
Section 11. Plan Amendment and Termination.
     Isabella may amend or terminate the Plan by action of its Board of
Directors at any time in its sole discretion without the consent of Participant.
No amendment or termination shall adversely affect the benefit to which
Participant is entitled under the Plan prior to the date of such amendment or
termination.
     In the event of Plan termination, all amounts credited to Plan Accounts
shall be retained by the Company and paid pursuant to Participant elections that
have been made in accordance with the Plan. Notwithstanding the foregoing, Plan
Accounts shall be paid to Plan Participants on Plan termination if, and only if,
at least one of the three circumstances described in (a), (b) and (c) below is
true as to the Plan.

  (a)   General Rule. Payment of all benefits shall occur on Plan termination if
the Company meets all of the requirements listed in (1), (2), (3) and (4) below.

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  (1)   The Company and all participating Companies terminate and liquidate all
Similar Arrangements with regard to which the Participant made deferrals if said
Arrangements would be combined with the Plan under the plan aggregation rules of
IRS Reg. 1.409A-1(c)(2). All such terminations shall be effective as of the
effective date of the termination of this Plan.     (2)   No payments in
liquidation of the Plan (other than those otherwise payable under the terms of
the Plan and all Similar Arrangements maintained by the Company and all
participating Companies absent termination of the Plan and the Arrangements) are
made within 12 months following the termination of the Plan and the Similar
Arrangements, and all payments on liquidation of the Plan are completed within
24 months after the termination of the Plan and those Similar Arrangements.    
(3)   The Company and all participating Companies do not adopt any new plan or
arrangement that would be combined with the Plan under the plan aggregation
rules of IRS Reg.1.409A-1(c)(2) for a period of three years following the date
of Plan termination, if the same individual participated in both the Plan and
the new arrangement at any time during said three-year period.     (4)   The
termination and liquidation does not occur proximate to a downturn in the
financial health of the Company or any of the participating Companies.

  (b)   Change of Control Rule. If the Plan is terminated during the 30-day
period preceding or the 12-month period following a Change of Control event,
then (1) all amounts credited to the Participant’s Plan Account shall be paid to
Participant within this period in one lump sum, and (2) the Company shall,
within the period, also terminate all Similar Arrangements and pay in one lump
sum all amounts credited to all accounts under all such Arrangements within said
period. A Change of Control event shall have occurred for purposes of this
Section 11(b), only if it has occurred as defined in Code Section 409A(a)(2)(v)
and the related regulations.     (c)   Dissolution or Bankruptcy. The Plan may
be terminated upon a dissolution of the Company that is taxed under Code
Section 331, or with the approval of a bankruptcy court pursuant to 11 USC
Section 503(b)(1)(A), provided that in either case the amounts deferred under
the Plan are included in each of the respective Participant’s gross income by
the latest of (1) the calendar year in which the Plan termination occurs,
(2) the calendar year in which the amount is no longer subject to a substantial
risk of forfeiture, or (3) the first calendar year in which the payment is
administratively practicable.

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Section 12. Expenses and Taxes.
     Company shall pay all costs, charges and expenses relating to the
establishment and operation of the Plan. However, all taxes, with the exception
of Company’s portion of social security and medicare taxes, shall be the
responsibility of Participant.
Section 13. Nonassignability.
     The benefits payable under the Plan and the right to receive future
benefits under the Plan may not be anticipated, alienated, pledged, encumbered
or subject to any charge or legal process, and if any attempt is made to do so,
or if a person eligible for any benefits becomes bankrupt, the interests under
the Plan of the person affected may be terminated by the Administrator which, in
its sole discretion, may cause the same to be held or applied for the benefit of
one or more dependents of such person or make any other disposition of such
benefits that it deems appropriate.
Section 14. Employment Status.
     The Plan does not, and will not, give any Participant the right to continue
as an Employee of Company, nor will the Plan confer any right to any benefit
under the Plan unless such right has specifically accrued under the terms of the
Plan.
Section 15. Administration.
     The Board of Directors shall appoint an impartial Administrative Committee
consisting of individuals who are not participants in the Plan. The
Administrative Committee shall have the sole and exclusive discretionary
authority to construe and interpret the terms and provisions of this Plan, make
factual determinations and decide all questions of eligibility and the amount
and time of any benefit payment. Benefits under the Plan shall be paid only if
the Committee decides in its discretion that the Participant is entitled to them
and all interpretations of the Committee shall be final and binding on all
persons. No member of the Administrative Committee shall, in any event, be
liable to any person for any action taken or omitted in connection with the
interpretation, construction or administration of this Plan, so long as such
action or omission to act be made in good faith. In no event, however, shall the
provisions of Section 10 or any other provisions in this Plan prevent
Participant from seeking legal recourse for any claim he may have under this
Plan.
     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan as it shall,
from time to time, deem advisable. It may delegate such ministerial functions as
necessary for the operation of the Plan to its agents, including, but not
limited to:
          (a) maintenance of rules determining eligibility for participation and
benefits;
          (b) maintenance of records and bookkeeping, including but not limited
to the amount payable by Company to Participants;

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          (c) calculation and payment of benefits;
          (d) making recommendations to the Administrator with respect to Plan
administration; and
          (e) establishing and carrying out a funding policy and method
consistent with the objectives of the Plan.
     The Committee’s interpretations and determinations shall be final and
binding on all persons and parties concerned. The Committee may make such
provision to withhold any taxes which it is required to withhold from any
applicable benefit payment. Participant, however, shall be responsible for the
payment of all individual tax liabilities relating to any such payment.
Section 16. Claims Procedure.
     16.01 Presentation of Claim. Any Participant (such Participant being
referred to below as a “Claimant”) may deliver to the Committee a written claim
for a determination with respect to the amounts distributable to such Claimant
from the Plan. If such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within sixty (60) days after such notice
was received by the Claimant. All other claims must be made within 180 days of
the date on which the event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by the Claimant.
     16.02 Notification of Decision. The Committee shall consider a Claimant’s
claim within a reasonable time, but no later than ninety (90) days after
receiving the claim. If the Committee determines that special circumstances
require an extension of time for processing the claim, written notice of the
extension shall be furnished to the Claimant prior to the termination of the
initial ninety (90) day period. In no event shall such extension exceed a period
of ninety (90) days from the end of the initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Committee expects to render the benefit determination. The
Committee shall notify the Claimant in writing:
          (a) that the Claimant’s requested determination has been made, and
that the claim has been allowed in full; or
          (b) that the Committee has reached a conclusion contrary, in whole or
in part, to the Claimant’s requested determination, and such notice must set
forth in a manner calculated to be understood by the Claimant:
               (i) the specific reason(s) for the denial of the claim, or any
part of it;
               (ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
               (iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation of why such
material or information is necessary;

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               (iv) an explanation of the claim review procedure set forth in
Section 16.03 below; and
               (v) a statement of the Claimant’s right to bring a civil action
following an adverse benefit determination on review.
     16.03 Review of a Denied Claim. On or before sixty (60) days after
receiving a notice from the Committee that a claim has been denied, in whole or
in part, a Claimant (or the Claimant’s duly authorized representative) may file
with the Committee a written request for a review of the denial of the claim.
The Claimant (or the Claimant’s duly authorized representative):
          (a) may, upon request and free of charge, have reasonable access to,
and copies of, all documents, records and other information relevant to the
claim for benefits;
          (b) may submit written comments or other documents; and/or
          (c) may request a hearing, which the Committee, in its sole
discretion, may grant.
     16.04 Decision on Review. The Committee shall render its decision on review
promptly, and no later than sixty (60) days after the Committee receives the
Claimant’s written request for a review of the denial of the claim. If the
Committee determines that special circumstances require an extension of time for
processing the claim, written notice of the extension shall be furnished to the
Claimant prior to the termination of the initial sixty (60) day period. In no
event shall such extension exceed a period of sixty (60) days from the end of
the initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the benefit determination. In rendering its decision, the
Committee shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination. The decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
          (a) specific reasons for the decision;
          (b) specific reference(s) to the pertinent Plan provisions upon which
the decision was based;
          (c) a statement that the Claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of, all documents, records
and other information relevant to the Claimant’s claim for benefits; and
          (d) a statement of the Claimant’s right to bring a civil action
following a final adverse decision.

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     16.05 Legal Action. A Claimant’s compliance with the foregoing provisions
of this Section 16 is a mandatory prerequisite to a Claimant’s right to commence
any legal action with respect to any claim for benefits under this Plan.
Section 17. Binding Effect.
     This Plan shall be binding upon and inure to the benefit of the parties to
the Plan and upon the successors and assigns of Company, and upon the heirs and
legal representatives of Participant.
Section 18. Incompetency.
     If Company shall find that any person to whom any payment is payable under
this Plan is unable to care for his affairs because of illness or accident, any
payment due (unless a prior claim therefore shall have been made by a duly
appointed guardian, a committee or other legal representative) may be paid to
the spouse, a child, a parent, a brother or sister, or a custodian, or to any
person deemed by Company to have incurred expense for such person otherwise
entitled to payment, in such manner and proportions as Company may determine.
Any such payment shall be a complete discharge of the liabilities of Company
under this Plan.
Section 19. Severability.
     In the event that any of the provisions of this Plan are held to be
inoperative or invalid by any court of competent jurisdiction, then: (1) insofar
as is reasonable, effect will be given to the intent manifested in the provision
held invalid or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
Section 20. Construction.
     This Plan shall be construed under the laws of the State of Michigan and
Code Section 409A and the Treasury guidance and Regulations promulgated
thereunder. The invalidity or unenforceability of any one or more provision of
the Plan shall not affect the validity or enforceability of the Plan, which
shall remain in full force and effect to the extent permitted by law.
     If any provisions of this Plan shall be held illegal or invalid for any
reason, said legality or invalidity shall not affect the remaining parts of this
Plan, and this Plan shall be construed and enforced as if said illegal and
invalid provision had not been included in the Plan.

                                      ISABELLA BANK CORPORATION
 
                   
Dated:
    , 2008         By:    
 
                   
 
                  Dennis P. Angner, President/CEO

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