Exhibit 10.3
ISABELLA BANK CORPORATION
RESTRICTED STOCK PLAN

AWARD AGREEMENT
FOR
JEROME SCHWIND

JUNE 24, 2020

This Award Agreement is entered into effective as of June 24, 2020, by Jerome
Schwind (the “Grantee”) and the Company (as defined in the Plan) pursuant to the
Isabella Bank Corporation Restricted Stock Plan (“Plan”), as amended from time
to time.
1.    Agreement. The Grantee and the Company agree to be bound by the terms of
the Plan and the terms of this Award Agreement with respect to the Award
represented by any and all Restricted Shares issuable pursuant to this Award
Agreement. The terms of the Plan are incorporated into this Award Agreement by
reference. Capitalized terms not otherwise defined in this Award Agreement have
the meaning given in the Plan. In the event of a conflict between the terms of
the Plan and the terms of this Award Agreement, the terms of the Plan shall
control except as specifically provided otherwise in the Plan. The terms of this
Award Agreement do not affect and are not affected by any other Award Agreements
under the Plan.
2.    Restricted Share Award. Isabella Bank Corporation hereby grants to the
Grantee a number of Restricted Shares with a value (determined as of the Award
payout date) equal to 30% of Grantee’s annual salary pursuant and subject to the
terms of the Plan and this Award Agreement. The number of Restricted Shares
granted under this Award Agreement is subject to adjustment as provided in the
Plan.
3.    Grant Date. The grant date of this Award is June 24, 2020.
4.    Grant Conditions. The grant of the Restricted Shares is subject to the
grant conditions set forth in Appendix A. The Restricted Shares will be issued
only upon the satisfaction of the grant conditions set forth in Appendix A. If
the grant conditions set forth in Appendix A are not satisfied as required in
Appendix A, then this Award and the grant of the Restricted Shares shall lapse.
Further, if the Grantee satisfies the grant conditions but prior to the end of
the applicable Plan Year terminates employment with the Company this Award and
the grant of the Restricted Shares shall lapse unless the Grantee: (a) Separates
from Service due to Retirement; or (b) terminates employment with the Company
due to death or Disability, in which case the number of Restricted Shares issued
hereunder shall equal the number of Restricted Shares otherwise issuable,
multiplied by a fraction the numerator of which is the number of days the
Grantee was actively employed during the Plan Year and the denominator is 365.
5.    Vesting Conditions. (Choose 1 of the 2 options noted below)
[ ] The Plan’s default vesting rules in Section 4.2 will apply to the Grantee’s
Restricted Shares. No special vesting schedule will apply.

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[x] The vesting of the Restricted Shares is subject to the vesting conditions
set forth in Appendix B. The Restricted Shares will be issued only upon the
satisfaction of the vesting conditions set forth in Appendix B. If the vesting
conditions set forth in Appendix B are not satisfied as required in Appendix B,
then this Award and the vesting of the Restricted Shares shall lapse.
6.    Clawback. In the event that the Committee determines, in its sole
discretion, that a Clawback Event has occurred and that the Grantee was issued,
is entitled to be issued, or has vested with respect to Restricted Shares or
another benefit under the Plan or this Award Agreement that exceeds what the
Grantee would have been issued or to which the Grantee would have been entitled,
or in which the Grantee would have vested had the Clawback Event not occurred,
then the Committee may require the Grantee to forfeit the Restricted Shares or
other benefit or repay to the Company the value of Restricted Shares that are no
longer owned by the Grantee that the Committee determines, in its sole
discretion, to have been excessive. A “Clawback Event” has occurred if the
Committee determines, in its sole discretion, that (a) the Company is required
to issue a material restatement of its financial statements; (b) the financial
information or performance metrics used to determine the amount or attainment of
a Grant are materially inaccurate, in each case regardless of individual fault;
(c) the Grantee has engaged in intentional misconduct; (d) the Grantee has
committed an ethical or criminal violation; (e) the Grantee’s conduct is not in
good faith and materially disrupts, damages, impairs or interferes with the
business of the Company and/or its Affiliates; or (f) the Company is otherwise
required by applicable law to recoup. The Committee shall have sole discretion
to determine whether, and to what extent, to enforce this Section 6, and may
make determinations that are not uniform among the Company’s employees, and the
Grantee shall be bound by the Committee’s determination, which shall be final
when made.
7.    Definition of Cause. With respect to the Grantee, “Cause” for purposes of
the Plan has the meaning given in any employment agreement between the Grantee
and the Company, but if the Grantee is not a party to an employment agreement
with the Company in which “Cause” is defined, the term “Cause” means the
existence of any of the following circumstances:
a.    the conviction of the Grantee by a court of competent jurisdiction of, or
the Grantee’s guilty plea or plea of no lo contendere to, any (1) felony or (2)
crime that involves moral turpitude;
b.    the Grantee’s gross failure or gross refusal to perform the usual and
customary duties of the Grantee’s employment;
c.    the Grantee’s material breach of any agreement between the Grantee and the
Company, or of the Grantee’s responsibilities and obligations as communicated to
the Grantee by the Grantee’s superiors or as set forth in any employment
agreement, job description, or Company policy or procedure;
d.     the Grantee’s theft, embezzlement, or misappropriation from the Company;
or
e.    conduct by the Grantee that is unprofessional, unethical, immoral,
dishonest, or fraudulent, or which significantly discredits the Company’s
reputation.

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8.     Tax Consequences. Grantee has reviewed with his or her own tax advisors
the U.S. federal, state and local tax consequence of this investment and the
transactions contemplated by this Award Agreement. With respect to such matters,
Grantee relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. Grantee
understands that Grantee (and not the Company) shall be responsible for
Grantee’s own tax liability that may arise as a result of this investment or the
transactions contemplated by this Award Agreement.
9.     Death of Grantee. Any distribution or delivery to be made to Grantee
under this Award Agreement will, if Grantee is then deceased, be made to
Grantee’s designated beneficiary, or if no beneficiary survives Grantee, the
administrator or executor of Grantee’s estate.
10.    Tax Obligations.
a.     Grantee acknowledges that, regardless of any action taken by the Company,
the ultimate liability for any tax and/or social insurance liability obligations
and requirements in connection with the Restricted Shares, including without
limitation, (i) all federal, state and local taxes (including the Grantee’s
Federal Insurance Contributions Act (FICA) obligation) that are required to be
withheld by the Company or other payment of tax-related items related to
Grantee’s participation in the Plan and legally applicable to Grantee, (ii) the
Grantee’s filing of an 83(b) election with respect to the Restricted Shares, or
the sale of Restricted Shares, and (iii) any other Company taxes the
responsibility for which the Grantee has, or has agreed to bear, with respect to
the Restricted Shares (collectively, the “Tax Obligations”), is and remains
Grantee’s responsibility and may exceed the amount actually withheld by the
Company. Grantee further acknowledges that the Company (A) makes no
representations or undertakings regarding the treatment of any Tax Obligations
in connection with any aspect of the Restricted Shares, including, but not
limited to, the grant or vesting of the Restricted Shares, the filing of an
83(b) election with respect to the Restricted Shares, the subsequent sale of
Restricted Shares acquired pursuant to this Award Agreement and the receipt of
any dividends or other distributions, and (B) does not commit to and is under no
obligation to structure the terms of the grant or any aspect of the Award of
Restricted Shares to reduce or eliminate Grantee’s liability for Tax Obligations
or achieve any particular tax result. If Grantee fails to make satisfactory
arrangements for the payment of any required Tax Obligations hereunder at the
time of the applicable taxable event, Grantee acknowledges and agrees that the
Company may refuse to issue or deliver the Restricted Shares. Grantee
understands that Code Section 83 taxes as ordinary income the difference between
the purchase price, if any, for the Restricted Shares and the fair market value
of the Restricted Shares as of each vesting date. If Grantee is a U.S. taxpayer,
Grantee understands that Grantee may elect, for purposes of U.S. tax law, to be
taxed at the time the Restricted Shares are issued rather than when such
Restricted Shares vest by filing an election under Code Section 83(b) (the
“83(b) Election”) with the IRS within thirty (30) days from the issue date of
the Restricted Shares.
b.     Notwithstanding any contrary provision of this Award Agreement, no
certificate representing the Restricted Shares may be issued unless and until
satisfactory arrangements (as determined by the Committee) will have been made
by the Grantee with respect to the payment of all Tax Obligations. Prior to
vesting of the Restricted Shares, Grantee will pay or make adequate arrangements
satisfactory to the Company to satisfy all Tax Obligations. Pursuant to such
procedures as the Committee may specify from time to time, the Company shall
withhold the amount required to be withheld for the payment of Tax Obligations.
The Committee,

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in its sole discretion and pursuant to such procedures as it may specify from
time to time, may permit Grantee to satisfy such Tax Obligations, in whole or in
part (without limitation), if permissible by applicable law, by (i) paying cash,
(ii) electing to have the Company withhold otherwise deliverable Restricted
Shares having a fair market value equal to the minimum amount that is necessary
to met the withholding requirement for such Tax Obligations (or such greater
amount as Grantee may elect if permitted by the Committee, if such greater
amount would not result in adverse financial accounting consequences), (iii)
withholding the amount of such Tax Obligations from Grantee’s wages or other
cash compensation paid to Grantee by the Company, (iv) delivering to the Company
already vested and owned Shares having a fair market value equal to such Tax
Obligations, or (v) selling a sufficient number of such Restricted Shares
otherwise deliverable to Grantee through such means as the Company may determine
in its sole discretion (whether through a broker or otherwise) equal to the
minimum amount that is necessary to meet the withholding requirement for such
Tax Obligations (or such greater amount as Grantee may elect if permitted by the
Committee, if such greater amount would not result in adverse financial
accounting consequences). To the extent determined appropriate by the Company in
its discretion, it will have the right (but not the obligation) to satisfy any
Tax Obligations by reducing the number of Restricted Shares otherwise
deliverable to Grantee. If Grantee fails to make satisfactory arrangements for
the payment of such Tax Obligations hereunder at the time any applicable
Restricted Shares otherwise are scheduled to vest or at the time Grantee files a
timely 83(b) Election with the IRS, Grantee will permanently forfeit such
Restricted Shares and any right to receive Restricted Shares hereunder and such
Restricted Shares will be returned to the Company at no cost to the Company.
Grantee acknowledges and agrees that the Company may refuse to deliver the
Restricted Shares if such Tax Obligations are not paid at the time they are due.
11.    Amendment. The Plan’s amendment and termination provisions in Article VI
apply to this Award Agreement, as well. In addition, the Grantee and the Company
may agree to amend this Award Agreement.

[Signature Page Follows]

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This Award Agreement is effective upon the execution by the Grantee and by the
Company.

 
 
 
GRANTEE
 
 
 
 
 
 
 
 
 
 
Date:
June 24, 2020
 
/s/ Jerome Schwind
 
 
 
Jerome Schwind
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ISABELLA BANK CORPORATION
 
 
 
 
 
 
 
 
 
 
Date:
June 24, 2020
 
By:
/s/ David J. Maness
 
 
 
 
 
 
 
 
Name:
David J. Maness
 
 
 
 
 
 
 
 
Title:
Chairman
 
 
 
 
 
 
 
 
 
 
 
 
 
ISABELLA BANK
 
 
 
 
 
 
 
 
 
 
Date:
June 24, 2020
 
By:
/s/ David J. Maness
 
 
 
 
 
 
 
 
Name:
David J. Maness
 
 
 
 
 
 
 
 
Title:
Chairman

[Signature Page to Award Agreement]

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APPENDIX A

Grant Conditions

Stock award with a maximum potential of 30% of annual salary:

 
 
 
 
 
Incentive Achieved
 
Budget
 
Weight
 
15%
30%
Return on average equity
7.37%
 
50%
 
7.80%
8.58%
Total shareholder return
 
 
50%
 
7.00%
11.00%
 
 
 
100%
 
 
 

Please note: It shall be a condition to issuance of earned Restricted Shares
that the Grantee be actively employed with the Company on the Award payout date;
provided however, the active employment requirement shall not apply to a Grantee
who Separates from Service due to Retirement or terminates employment with the
Company due to death or Disability prior to the Award payout date.

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APPENDIX B

Vesting Conditions

3-Year Cliff Vesting:

Grantee shall be 0% vested in the Restricted Shares until the third anniversary
of the Award payout date. As of the third anniversary of the Award payout date
the Grantee shall be 100% vested in the Restricted Shares, provided Grantee is
an employee of the Company as of that date.

Additional Vesting Rules:

Grantee shall also vest 100% in the Restricted Shares if prior to the third
anniversary of the Award payout date:

(i)
Grantee incurs a Separation from Service due to Retirement;

(ii)
Grantee incurs an involuntary Separation from Service without Cause;

(iii)
Grantee dies or becomes Disabled while an employee of the Company; or

(iv)
there is a Change in Control that occurs while the Grantee is an employee of the
Company.

Grantee further acknowledges and agrees that this grant is subject to the
further requirement that Grantee maintain a Share ownership level of 1.0x base
salary, which shall include all Shares owned by Grantee and unvested Restricted
Shares. Grantee shall have a grow-in period of five years to attain this
ownership level. Until said ownership level is attained Grantee shall retain all
vested shares of Restricted Shares received under the Plan, except for those
Shares used by Grantee to pay any applicable taxes under the Plan.

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