ISABELLA BANK CORP (Form: 8-K, Received: 12/19/2008 09:25:40)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 17, 2008

ISABELLA BANK CORPORATION

(Exact name of registrant as specified in its charter)

MICHIGAN
(State or other jurisdiction of incorporation)


000-18415 (Commission File Number)		38-2830092 (IRS Employer Identification No.)


200 East Broadway, Mt. Pleasant, Michigan		48858
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (989) 772-9471

Not Applicable
(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.l4a-l2)

o Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240.l4d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.l3e-4(c))

TABLE OF CONTENTS


Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 9.01. Financial Statements and Exhibits
SIGNATURES
EX-10.1
EX-10.2
EX-10.3

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers .

(e) On December 17, 2008, the registrant amended and restated the Isabella Bank Corporation Retirement Bonus Plan, with an effective date of July 1, 2008 (“Retirement Bonus Plan”), the Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors, with an effective date of July 1, 2008 (“Deferred Compensation Plan for Directors”), and the Isabella Bank Corporation Death Benefit Plan, with an effective date of January 1, 2008 (“Death Benefit Plan”) (collectively, “Plans”). The Retirement Bonus Plan and the Deferred Compensation Plan for Directors were amended and restated for the primary purpose of complying with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations issued thereunder (“Section 409A”). Other terms of the Plans, which have been previously disclosed, were modified, as well. The following brief descriptions of the Plans are qualified in their entirety by reference to the full text of the Plans, copies of which are attached as Exhibits 10.1, 10.2, and 10.3 and incorporated herein by reference.

The Retirement Bonus Plan

The Retirement Bonus Plan is a non-qualified, deferred compensation plan that allows certain highly compensated officers to defer receipt of taxable income and thereby defer income taxes and assist in saving for retirement. The Retirement Bonus Plan covers certain highly compensated officers, who may include the Company’s named executive officers, who are participants in the frozen Isabella Bank and Trust Executive Supplemental Income Agreement. Other highly compensated officers may be permitted to participate in the sole and exclusive discretion of the registrant’s Board of Directors. Under the Retirement Bonus Plan, participants are eligible to receive quarterly credits to a recordkeeping account based on an annual allocation schedule adopted in the sole and exclusive discretion of the registrant’s Board of Directors. In addition, amounts credited to accounts will be credited with earnings based on the mid-term applicable federal rate for January 1 of the calendar year in which the income is credited.

In general, the amount in a participant’s account is payable on the earlier of the participant’s retirement date, the date of the participant’s separation from service, or the date of the participant’s termination of employment on account of disability. A participant may elect between receiving payment in a single cash lump sum or receiving equal monthly installment payments over a period of 10, 15 or 20 years.

The Deferred Compensation Plan for Directors

The Deferred Compensation Plan for Directors is a non-qualified, deferred compensation plan that allows directors to defer receipt of taxable income and thereby defer income taxes and assist in saving for retirement. Under the Deferred Compensation Plan for Directors, each member of the registrant’s Board of Directors, which may include the registrant’s named executive officers, and members of the Boards of Directors of certain affiliated entities, may elect to defer receipt of all or any portion (subject to a minimum required deferral of at least 25%) of his or her annual director’s salary (if any), retainer and board of directors and/or committee fees and receive credits to a deferred compensation account. Dollar amounts that are credited to a director’s deferred compensation account are converted into actual shares of the registrant’s common stock on a quarterly basis; the number of resulting full shares are credited to the director’s stock account; and the aggregate fair market value of such shares are charged to the director’s deferred compensation account. A director’s deferred compensation account will be credited with additional amounts whenever dividends are paid on the registrant’s common stock based on the number of shares credited to the director’s stock account as of the dividend record date. In the case of a stock dividend or stock split, additional credits will be made to a director’s stock account as appropriate.

In general, the shares of the registrant’s common stock in a director’s stock account will be distributed to the director (or to his or her beneficiary in the event of the director’s death) in-kind in a single lump sum on the earliest of: (1) the director’s attainment of age 70, (2) the date of the director’s separation from service as a director on account of disability, (3) the director’s death, (4) the occurrence of an unforeseeable emergency, (5) a change in control of the registrant, or (6) the director’s severance from service. Upon the occurrence of one of these events, any amounts remaining in a director’s deferred compensation account will, in general, be converted to registrant common stock and distributed, as well.

The Death Benefit Plan

The Death Benefit Plan is a split-dollar life insurance plan that is intended to be exempt from the requirements of Section 409A as a death benefit only plan. Under the Death Benefit Plan, the registrant, through individual life insurance policies, provides death benefits to select highly compensated employees, who may include the Company’s named executive officers. The registrant is the sole owner of each life insurance policy, pays all premiums due under the policies, and is the beneficiary of any death benefit payable from the policies to the extent that such amounts exceed the benefits that are payable pursuant to the terms of the plan. Upon a participant’s death, the participant’s beneficiaries will be paid the amounts specified under the plan unless the participant’s employment has terminated under certain circumstances.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:


Exhibit No.		Description

10.1		Isabella Bank Corporation Retirement Bonus Plan

10.2		Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors

10.3		Isabella Bank Corporation Death Benefit Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	ISABELLA BANK CORPORATION
Dated: December 19, 2008.	By:	/s/ Dennis P. Angner
		Dennis P. Angner, President and CEO

Exhibit 10.1

ISABELLA BANK CORPORATION

RETIREMENT BONUS PLAN

July 1, 2008

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

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.

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.

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

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

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.

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);

(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

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;

(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.

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

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.

	(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.

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;

(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;

(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

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.

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 .

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

Exhibit 10.2

ISABELLA BANK CORPORATION
AND RELATED COMPANIES
DEFERRED COMPENSATION PLAN
FOR DIRECTORS

July 1, 2008

TABLE OF CONTENTS


Section 1. Purpose			1
Section 2. Definitions			1
Section 3. Enrollment/Establishment of Account			4
Section 4. Allocations to Account			4
Section 5. Vesting			5
Section 6. Commencement of Distribution			5
Section 7. Manner and Form of Distribution			8
Section 8. Payout/Suspensions for Unforeseeable Financial Emergency			10
Section 9. Death Benefit			11
Section 10. Unsecured Unfunded Plan			12
Section 11. Plan Amendment and Termination			12
Section 12. Expenses			14
Section 13. Nonassignability			14
Section 14. Director/Employee Status			14
Section 15. Administration			15
Section 16. Claims Procedure			15
Section 17. No Rights as a Shareholder			17
Section 18. Legality of Issuance			17
Section 19. Binding Effect			18
Section 20. Incompetency			18
Section 21. Construction			18

ISABELLA BANK CORPORATION
AND RELATED COMPANIES
DEFERRED COMPENSATION PLAN
FOR DIRECTORS

Isabella Bank Corporation ( A Isabella @ ) has established a nonqualified plan of deferred compensation benefits for participating Directors effective January 1, 2006, 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 Directors as provided in the Plan. The Plan has been restated and the provisions of the restated Plan shall be effective on and after July 1, 2008, unless otherwise provided herein.

Section 1. Purpose.

The Plan is intended to provide participating Directors with the opportunity to have the payment and the related taxation of compensation postponed as set forth in the Plan, in order to reward the individuals who contribute to the success of the Company.

Section 2. Definitions.

The following words and phrases shall, when used in this Plan, have the following respective meanings 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 Beneficiary means the person(s) or entity designated by Participant to receive any undistributed deferred compensation benefits which become payable in the event of Participant’s death.

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 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 the 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 the 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 Claimant means a Participant or a Beneficiary who files a claim for benefits under Section 16 below.

2.06 Code means the Internal Revenue Code of 1986, as amended.

2.07 Committee or Administrative Committee means the committee described in Section 15.

2.08 Company means Isabella Bank Corporation and 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.

2.09 Deferred Compensation Account means the bookkeeping account maintained on behalf of Participant to record Company contributions made pursuant to Section 4.01.

2.10 Director means any elected or appointed member of the Board of Directors of the Company, without regard to said member’s status as an employee of the Company. This Section 2.10 shall be effective January 1, 2006.

2.11 Disability means the Participant is 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.

2.12 Disability Retirement Date means the date of Participant = s separation from service as a Director of the Company on account of Participant = s Disability.

2.13 Distribution Event means a distributable event as set forth in Section 6 below.

2.14 Effective Date means July 1, 2008, the date on which the provisions of this restated Plan became effective.

2.15 Final Valuation Date means the Valuation Date immediately following the date of the Distribution Event.

2.16 Normal Retirement Age means Participant = s attainment of age 70.

2.17 Normal Retirement Date means the date Participant attains Normal Retirement Age, without regard to Participant = s continued service as a Director of the Company.

2.18 Participant means any Director of the Company who (1) is receiving a Director = s salary, retainer or board fees, and (2) has elected to participate in the Plan by providing written notice of said participation to the Company, in the form prescribed by the Company.

2.19 Payment Date means the first day of the first month after the Valuation Date that immediately follows the earliest Distribution Event; provided, however, in the case of a

distribution to a Participant who is a “key employee” (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) on account of the Participant’s Severance From Service, Payment Date means the first day of the seventh month after the Valuation Date that immediately follows the Distribution Event.

2.20 Plan means the Isabella Bank Corporation and Related Companies Deferred Compensation Plan for Directors, as amended from time to time.

2.21 Plan Year means the consecutive 12-month period beginning on January 1 and ending on December 31.

2.22 Retirement means with respect to a Participant, separation from service with all participating Companies for any reason other than death or Disability on or after the attainment of Normal Retirement Age.

2.23 Severance From Service means the date on which the Participant has severed from service with the Company and all participating Companies for any reason other than Retirement, death or Disability. Whether a person has severed from service with the Company for purposes of this Plan is based on whether the facts and circumstances indicate that the Company and the Participant reasonably anticipate that either: (i) the Participant will perform no further services after the specified severance date; or (ii) the level of bona fide services that the Participant would perform for the Company after the specified severance date was permanently decreased to not more than 20% of the average level of bona fide services performed over the consecutive 36-month period that immediately precedes the specified severance date or, if the Participant has been providing services to the Company for less than 36 months, then over the full period during which the Participant provided services to the Company.

2.24 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).

2.25 Stock Account means the bookkeeping account maintained on behalf of Participant to record Company contributions made pursuant to Section 4.02.

2.26 Unforeseeable Financial Emergency means an unforeseeable emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant, the Participant = s spouse, or a dependent (as defined in Code Section 152(a)) of the Participant, (ii) a loss of the Participant = s property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee, in accordance with applicable law.

2.27 Valuation Dates means March 1, June 1, September 1 and December 1.

Section 3. Enrollment/Establishment of Accounts.

3.01 Enrollment. As a condition to participation, each Director who is eligible to participate in the Plan effective as of the first day of a Plan Year shall complete, execute and return to the Committee an election form and a Beneficiary designation form, prior to the first day of such Plan Year, or such other earlier deadline as may be established by the Committee in its sole discretion. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.

3.02 Initial Participation. A Director who first becomes eligible to participate in this Plan after the first day of a Plan Year may become a Participant by submitting a completed enrollment form to the Committee within thirty (30) days after the date the Director first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Committee, in its sole discretion, in order to participate for that Plan Year. Such person = s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to this Section 3.02 and such person shall not be permitted to defer under this Plan any portion of his Director’s salary, retainer or fees that are paid with respect to services performed prior to his participation commencement date, except to the extent permissible under Code Section 409A and related Treasury guidance or Regulations.

3.03 Annual Enrollment. Each eligible Director who elects to participate in the Plan after the initial participation date described in Section 3.02 above, shall commence said participation on the January 1 as of which the Committee determines, in its sole discretion, that the Director has met all enrollment requirements set forth in Section 3.01 of this Plan, including returning all required documents to the Committee within the specified time period. Notwithstanding the foregoing, the Committee shall process the Participant = s deferral election as soon as administratively practicable after such deferral election is submitted to and accepted by the Committee.

If a Director fails to meet all requirements contained in this Section 3 within the period required, the Director shall not be eligible to participate in the Plan during the Plan Year for which the election is made.

3.04 Accounts. Company agrees to create a Deferred Compensation Account and a Stock Account as described in Section 4 below to be maintained on the books of Company in the name of each Participant.

Section 4. Allocations to Account.

4.01 Participant Contributions. Each Participant may defer all or any portion (subject to a minimum required deferral percentage of at least 25%) of his Director = s salary, retainer and fees that are earned for the year from any participating Company commencing after the date of said election as he may specify in written notice to the Company. Such amounts so deferred shall be paid only as provided in the Plan. Participant may change the amount of, or suspend, future deferrals with respect to the Director = s salary, fees and retainers earned for years

commencing after the date of change or suspension as he may specify by written notice to the Company; provided such change is made prior to January 1 of the calendar year in which the amount to be deferred is earned.

4.02 Contribution to Deferred Compensation and Stock Accounts. For each Participant electing to participate in this Plan, the Company for which the Participant has made a deferral election shall maintain a Deferred Compensation Account and a Stock Account. Each Participant shall be furnished with a quarterly statement of his Accounts.

The deferred salary, retainers and fees of each Participant shall be credited as a dollar amount to the Participant = s Deferred Compensation Account on the date the amount would otherwise be paid to the Participant, and effective on and after July 1, 2008, shall be converted into actual Isabella common stock on each Valuation Date by (1) dividing the Deferred Compensation Account balance of each Participant by the total amount credited to all Deferred Compensation Accounts under the Plan as of the Valuation Date and then (2) multiplying this amount by the total number of shares of Isabella common stock purchased under the Plan as of said Valuation Date. The number of shares of stock for full shares so determined shall be credited to each Participant = s Stock Account, and the aggregate fair market value of the stock on said Valuation Date shall be charged to the Participant = s Deferred Compensation Account. Any credit balance remaining in the Participant = s Deferred Compensation Account after such charge shall remain in the Deferred Compensation Account until the next Valuation Date to be converted into additional shares of Isabella stock.

Additional credits will be made to each Participant = s Deferred Compensation Account in dollar amounts equal to the cash dividends (or the fair market value of dividends paid in property) the Participant would have received from time to time had he been the owner on the record dates with respect to the stock, said credit to be based on the number of shares of Isabella common stock credited to his Stock Account on said dates. In the case of a stock dividend or stock split, additional credits will be made to each Participant = s Stock Account based on the number of full shares of Isabella common stock the Participant would have received had he been the owner on the record dates with respect to the number of shares of Isabella common stock credited to his Stock Account on said dates.

Section 5. Vesting.

Subject to satisfying the distribution events set forth in Section 6 below, Participant’s interest in his Deferred Compensation Account and his Stock Account shall be 100% vested and nonforfeitable at all times.

Section 6. Commencement of Distribution.

6.01 Distribution Dates. The manner and form 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 the Participant in his Deferred Compensation Account or his Stock 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 the Company. Subject to Section 6.03 below, no amount standing from time to time to the credit of Participant in his Deferred Compensation Account or his Stock Account shall be payable to Participant (or to Participant = s Beneficiary) until the earliest of the following distribution dates:

	(a)		Participant’s Normal Retirement Date;

	(b)		Participant’s Disability Retirement Date;

	(c)		Participant = s death;

	(d)		an Unforeseeable Financial Emergency;

	(e)		a Change of Control; or

	(f)		Participant = s Severance From Service.

6.02 Time of Distribution.

	(a)		When the amounts credited to Participant = s Deferred Compensation Account and Stock Account become payable pursuant to Sections 6.01(a), (b), (c), (d) or (f) above, distribution of such benefit shall begin on the Payment Date, or as soon as administratively practicable thereafter, but in no event more than 30 days after the Payment Date.

	(b)		When the amounts credited to a Participant’s Deferred Compensation Account become payable pursuant to Section 6.01(e) above, distribution of said benefit shall be made as set forth below.

	(i)		Form of Payment. All payments shall consist of shares of Isabella common stock and shall be paid in one lump sum.

	(ii)		Time of Payment. All payments shall be made not later than 75 days after the date on which the Change of Control event has occurred.

	(iii)		Special Rule for Plan Termination. If the Plan is terminated during the 30-day period preceding the 12-month period following the occurrence of a Change of Control Event, then Plan benefit payments shall occur in accordance with Plan Section11(b).

(c)

the Participant = s attainment of age 75), so long as the election of the delayed distribution date:

	(i)		does not take effect for at least twelve (12) months after the date on which the election is made;

	(ii)		postpones the payment for a period of not less than five (5) years from the date the payment would otherwise have been made; and

	(iii)		for a payment previously elected at a specified time or pursuant to a fixed schedule, the election to delay is requested at least twelve (12) months prior to the scheduled payment date in the most current election form on file with the Committee.

6.03 Accelerating the Time of Payment. Notwithstanding the distribution dates set forth in Section 6.01 above, an early distribution of Isabella common stock may be made as soon as administratively possible after the occurrence of any of the following events in accordance with IRS Reg. 1.409A-3(j)(4) and subsequent guidance:

	(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)		a de minimis cashout amount not exceeding the amount set forth in Code Section 402(g);

	(e)		in accordance with an Unforeseeable Financial Emergency as described in Section 8 below; or

	(f)		certain Plan terminations as described in Section 11 below.

In the case of an accelerated payment due to subsection 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 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)(7) (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 shall be made to the Participant (or to his Beneficiary) on the earliest date as of which the 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, the Participant shall receive a distribution of Isabella common stock as described below.

(a)

The entire balance in his Deferred Compensation Account maintained with a participating Company, if any, remaining after the Final Valuation Date shall be converted to the extent possible into stock as set forth in Section 4.02 above and credited to the Participant = s Stock Account. The aggregate value thereof shall then be charged to the Participant = s Deferred Compensation Account. In the event a credit balance remains in the Participant = s Deferred Compensation Account after such charge, an additional amount shall be credited, as a Company contribution, to the

			Participant = s Deferred Compensation Account, such additional contribution to equal the amount that, when added to the remaining credit balance prior to the contribution, is sufficient to convert the balance of the Deferred Compensation Account into a single share of stock as set forth in this Section 7.01(a). Said single share of stock shall then be credited to the Participant = s Stock Account and charged to the Participant = s Deferred Compensation Account as set forth in this Section 7.01(a). The Valuation Date for purposes of all conversions made under this Section 7.01(a) shall be the Participant = s Final Valuation Date.

	(b)		Distribution of the balance in the Participant = s Stock Account maintained with the participating Company as of the date of the Distribution Event, shall be made in shares of Isabella common stock.

	(c)		Notwithstanding any provision of the Plan to the contrary, no cash distribution shall be made either directly or indirectly from the Plan including, but not limited to, the Participant receiving cash from the Company by exercising a A put option @ right, if any. Consequently, pursuant to the Plan there shall exist no liquidation feature of any kind on the part of any participating Company. Therefore, Participants shall have no mechanism other than the marketplace to ultimately sell their respective shares of Isabella common stock to obtain cash. A participating Company is under no obligation to, has no intention to, and shall not repurchase the Isabella shares earned under the Plan.

7.02 Form of Distribution. Participant = s benefit payable from the Plan shall be distributed in common stock of Isabella in a single lump sum, unless (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 distribution from a lump sum to installment payments of said stock, by submitting an amended election form to the Committee in accordance with the procedures set forth in Section 6.02 above; provided, however, payments of stock made pursuant to Section 6.01(e) shall be made in a single lump sum.

Installment payments made under this Section 7.02 shall be equal annual 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 before all installment payments have been made, all remaining payments shall be aggregated and distributed to Participant’s Beneficiary in a single payment of Isabella in common stock as set forth in Section 9.01 below. The installment payments to which the Participant would have been entitled during the first six (6) months following the date of his Severance From Service shall be aggregated and paid as of the first day of the seventh month following the date of his Severance From Service. The six (6) 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).

Section 8. Payout/Suspensions for Unforeseeable Financial Emergency .

	(a)		If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee to suspend deferrals to the extent deemed necessary by the Committee to satisfy the Unforeseeable Financial Emergency. If suspension of deferrals is not sufficient to satisfy the Participant = s Unforeseeable Financial Emergency, or if suspension of deferrals is not required under Code Section 409A and other applicable tax law, the Participant may further petition the Committee to receive a partial or full payout from the Plan. The Participant shall receive a payout from the Plan only to the extent such payout is deemed necessary by the Committee to satisfy the Participant = s Unforeseeable Financial Emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution.

			Deferrals made under the Plan may also be suspended if the Participant is required under IRS Regulation 1.401(k) — 1(d)(3) to cancel all deferral elections to be eligible to receive a hardship distribution under an arrangement subject to Code Section 401(k).

			Any subsequent election to resume deferral elections under the Plan after the termination of a deferral election due to an Unforeseeable Emergency shall not be effective until January 1 of the Plan Year following the date of said election, provided the Participant reenrolls in the Plan in accordance with Section 3.02 above.

	(b)		The payout for an Unforeseeable Financial Emergency shall not exceed the lesser of (i) the vested balance in the Participant = s Accounts, calculated as of the close of business on or about the date on which the amount becomes payable, as determined by the Committee in its sole discretion, or (ii) the amount necessary to satisfy the Unforeseeable Financial Emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution. Notwithstanding the foregoing, a Participant may not receive a payout from the Plan to the extent that the Unforeseeable Financial Emergency is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant = s assets, to the extent the liquidation of such

			assets would not itself cause severe financial hardship or (iii) by suspension of deferrals under this Plan, if the Committee, in its sole discretion, determines that suspension is required by Code Section 409A and other applicable tax law.

	(c)		If the Committee, in its sole discretion, approves a Participant = s petition for suspension, the Participant = s deferrals under this Plan shall be suspended as of the date of such approval. If the Committee, in its sole discretion, approves a Participant = s petition for suspension and payout, the Participant = s deferrals under this Plan shall be suspended as of the date of such approval and the Participant shall receive a distribution from the Plan in a single payment of Isabella common stock within sixty (60) days of the date of such approval.

	(d)		Notwithstanding the foregoing, the Committee shall interpret all provisions relating to suspension and/or payout under this Section 8 in a manner that is consistent with Code Section 409A and other applicable tax law, including but not limited to Treasury guidance and Regulations issued after the Effective Date.

Section 9. Death Benefit.

9.01 Beneficiary Designation. Participant may designate a Beneficiary to receive any benefit payable to Participant from this Plan in the event of Participant’s death prior to the complete distribution of benefits payable under the Plan. The benefit (or if applicable, the remaining benefit) shall be aggregated and distributed in a single payment of Isabella common stock.

9.02 Payment of Death Benefit. The death benefit payable under the Plan shall be paid in accordance with the rules described in Section 9.02(a) through (e) below.

	(a)		The designation of a Beneficiary shall be effective when made on a form supplied by the Committee, signed by Participant and actually received and approved in writing by the Committee.

	(b)		No Beneficiary shall have any rights under this Plan until the death of Participant. Participant may revoke a Beneficiary designation at any time prior to Participant’s demise and designate an alternative death benefit Beneficiary. Participant may designate primary and contingent Beneficiaries. A contingent Beneficiary designation will become effective only after the death of any and all primary Beneficiaries.

	(c)		If more than one Beneficiary is named in either category (primary or contingent), benefits will be paid according to the following rules:

	(i)		Beneficiaries may be designated to share equally or to receive specific percentages of the amount distributed; and

	(ii)		If a Beneficiary dies before Participant dies, only surviving Beneficiaries will be eligible to receive any benefits in the event of the death of the Participant. If more than two Beneficiaries are originally named to receive different percentages of the benefit, surviving Beneficiaries will share in the same proportion to each other as indicated in the original designation.

	(d)		A person, trust, estate or any other legal entity may be designated as a Beneficiary.

	(e)		If a Beneficiary has not been designated, or if a Beneficiary designation is ineffective for any reason, Participant’s estate shall be the Beneficiary.

Section 10. Unsecured Unfunded Plan.

Participant = s Deferred Compensation Account and Stock Account shall be bookkeeping accounts only, and Company shall not be required in any way to fund the Accounts. 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, Isabella may enter into a trust agreement (“Trust Agreement”), whereby Isabella may agree to contribute to a trust (“Trust”) sums for the purpose of accumulating assets to fund benefit payments to Participants under the Plan. Isabella may contribute amounts to the Trust from time to time as determined by Isabella’s Board of Directors. 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 or his Beneficiary. No amendment or termination shall adversely affect the benefit to which Participant or his Beneficiary is entitled under the Plan prior to the date of such amendment or termination. In the event of Plan termination, all amounts credited to Participant’s Deferred Compensation Account and Stock

Account shall be paid after said Plan termination to Participant or his Beneficiary at the time and in the form set forth in Sections 6 and 7 above.

(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.

	(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. All liquidations under this Plan shall be distributed in one lump sum of Isabella common stock.

	(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 (i) all Isabella common stock credited to the Participant’s Stock Account shall be distributed to Participant within this period in one lump sum, and (ii) 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.

Section 12. Expenses.

Company shall pay all costs, charges and expenses relating to the establishment and operation of the Plan.

Section 13. Nonassignability .

Except as provided in Section 6.03 above, 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. Director/Employee Status.

The Plan does not, and will not, give any Participant the right to continue as a Director or employee of a 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 Boards of Directors of the participating Companies 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. Such interpretations 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 the Participant from seeking legal recourse for any claim he may have under this Plan.

Benefits under the Plan shall be paid only if the Committee decides in its sole discretion that the Claimant is entitled to them. 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 each participating Company to its respective Participants;

	(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 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;

	(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.

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. No Rights as a Shareholder .

No Participant shall have any voting or other rights or privileges of a shareholder of Isabella common stock by reason of crediting shares of stock to the Participant = s Stock Account.

Section 18. Legality of Issuance .

No shares of Isabella common stock shall be issued under this Plan unless and until Isabella has determined that all applicable provisions of state and federal law have been satisfied.

Section 19. 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 each participating Company, and upon the heirs and legal representatives of the Participant.

Section 20. 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, or is a minor, 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 determined pursuant to the Uniform Gift to Minors Act, or to any person deemed by the Company to have incurred expense for such person otherwise entitled to payment as the Company may determine. Any such payment shall be a complete discharge of the liabilities of the Company under this Plan.

Section 21. 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

Exhibit 10.3

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN

January 1, 2008

TABLE OF CONTENTS


INTRODUCTION			1

Article 1—Definitions			1
1.1 Base Annual Salary			1
1.2 Change of Control			1
1.3 Company			1
1.4 Disability			1
1.5 Early Retirement Age			2
1.6 Insured			2
1.7 Insurer			2
1.8 Isabella			2
1.9 Just Cause			2
1.10 Normal Retirement Age			2
1.11 Participant			2
1.12 Policy or Policies			2
1.13 Plan			2
1.14 Severance From Service			2
1.15 Termination of Employment			2
Article 2—Policy Ownership/Interests			3
2.1 Company Ownership			3
2.2 Participant’s Interest			3
2.3 Termination of Plan Upon Termination of Employment Prior to Early Retirement Age			3
2.4 Benefit Not Terminated on Disability or Severance From Service			3
2.5 Forfeitures			4
2.6 Payments From the Policy			4
Article 3—Premiums			4
3.1 Premium Payment			4
3.2 Imputed Income			4
Article 4—Assignment			5
Article 5—Insurer			5
Article 6—Claims Procedure			5
6.1 Claims Procedure			5
6.2 Review Procedure			5
Article 7—Amendments and Termination			6
Article 8—Miscellaneous			6
8.1 Binding Effect			6
8.2 Source of Payment			6
8.3 No Guarantee of Employment			6
8.4 Applicable Law			6
8.5 Reorganization			6
8.6 Notice			6
8.7 Entire Agreement			6
8.8 Administration			7


8.9 Named Fiduciary			7
8.10 Severability			7
8.11 Headings			7
8.12 Effective Date			7

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN

INTRODUCTION

Isabella Bank Corporation would like to attract and retain highly qualified employees. To further this objective, the Company is willing to divide the death proceeds of certain life insurance policies that are owned by the Company on the lives of the participating employees with the employee’s respective designated beneficiaries. The Company previously adopted the Death Benefit Only Agreement on February 25, 2002, to accomplish this objective. That plan is hereby restated effective January 1, 2008 as the Isabella Bank Corporation Death Benefit Plan as set forth below. The Plan shall accompany a Split Dollar Policy Endorsement entered into by and between the Company and the Participant.

Article 1
Definitions

Whenever used in this Plan, the following terms shall have the meanings specified unless the context clearly indicates otherwise.

1.1 “ Base Annual Salary” means the Participant’s current base annual salary (as set forth by the Company’s Board of Directors) on the Participant’s last day of employment with the Company.

1.2 “ Change of Control ” means a sale that 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.

1.3 “ Company ” means Isabella Bank Corporation, Isabella Bank, their successor or successors, and any other entity whose Board of Directors authorizes participation in this Plan where Isabella by its Board has approved such participation.

1.4 “ Disability ” means Participant is:

1.5 “ Early Retirement Age ” means the date the Participant reaches age fifty-five (55).

1.6 “ Insured ” means the individual whose life is insured.

1.7 “ Insurer ” means the insurance company issuing life insurance policy(ies) on the life of the Insured.

1.8 “ Isabella ” means Isabella Bank Corporation.

1.9 “ 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.

1.10 “ Normal Retirement Age ” means the date the Participant reaches age sixty-five (65).

1.11 “ Participant ” means an employee of the Company who (1) is selected by the Company’s Board of Directors to participate in the Plan and (2) signs a Split Dollar Policy Endorsement for the Policy(ies) under which he or she is the Insured. The initial Participants are identified in Appendix A to the Plan.

1.12 “ Policy ” or “ Policies ” means the individual insurance policy or policies acquired by the Company for purposes of insuring a Participant’s life under this Plan.

1.13 “ Plan ” means the Isabella Bank Corporation Death Benefit Plan, as amended from time to time.

1.14 “ Severance From Service ” means Participant’s severance of employment with Company either voluntarily or involuntarily without Just Cause, within the consecutive 30-day period preceding or the consecutive 12-month period following a Change of Control.

1.15 “ Termination of Employment ” means the Participant’s severance of employment with the Company prior to reaching Early Retirement Age for any reason whatsoever, other than the Participant’s Disability or Severance From Service; but including voluntary or involuntary termination. For purposes of this Plan, if there is a dispute over the employment status of the Participant or the date of the Participant’s Termination of Employment, the Company shall have the sole and absolute discretion to determine the Participant’s termination date.

Article 2
Policy Ownership/Interests

2.1 Company Ownership . The Company is the sole owner of the Policy(ies) and shall have the sole right to exercise all incidents of ownership. The Company shall be the beneficiary of any death benefit payable under the Plan, less the Participant’s interest determined in accordance with Section 2.2 below.

2.2 Participant’s Interest . Subject to Section 2.6 below, the benefit payable on behalf of the Participant is the benefit described in this Section 2.2.

(a) Pre-Retirement Benefit. If the Participant dies prior to his or her Termination of Employment with the Company, the Participant’s designated beneficiary shall have the right to receive a death benefit equal to the lesser of (i) two times (2x) the Participant’s Base Annual Salary on the date of death, or (ii) $750,000.

(b) Post-Retirement Benefit. If the Participant dies on or after the date of his or her Termination of Employment, subject to Sections 2.2(c) and 2.3 below, the Participant’s designated beneficiary shall have the right to receive a death benefit equal to the lesser of (i) one times (1x) the Participant’s Base Annual Salary on the date of his or her Termination of Employment, or (ii) $500,000.

Notwithstanding the foregoing, if the Participant’s Termination of Employment occurs prior to the Participant’s attainment of Normal Retirement Age, the death benefit otherwise payable to the beneficiary under Sections 2.2(b)(i) or (ii) above, shall be reduced by ten percent (10%) for each consecutive 12-month period that the Participant’s severance date precedes the Participant’s attainment of Normal Retirement Age.

(c) Excluded Employees. The death benefit described in Sections 2.2(a) and (b) above shall not be provided to employees of Isabella Bank (or the beneficiaries of said employees) who are employed by Isabella Bank as a result of the Bank’s acquisition of Farwell State Savings Bank, to the extent the former Farwell State Savings Bank employees receive pre and post-retirement benefits under the Farwell State Savings Bank Executive Supplemental Income Agreements. With respect to any employee of the Farwell State Savings Bank division of Isabella Bank who is covered by the Plan (the “Farwell Participants”), the pre and/or post-retirement death benefits described in Sections 2.2(a) and (b) above shall be provided to the beneficiaries of the Farwell Participants in the amounts and to the individuals identified in attached Appendix B to the Plan.

2.3 Termination of Participation Upon Termination of Employment Prior to Early Retirement Age . In the event of the Participant’s Termination of Employment prior to the Participant’s attainment of his or her Early Retirement Age, the Participant and the Company agree that the Participant’s participation in the Plan will automatically terminate and that no benefits shall be payable under the Plan to the Participant’s beneficiary(ies).

2.4 Benefit Not Terminated on Disability or Severance From Service . In the event of Participant’s Disability or Severance From Service prior to the Participant’s attainment

of his or her Early Retirement Age, the Participant and the Company agree that the Participant will be deemed to have terminated employment with the Company after reaching Normal Retirement Age and shall be eligible for the post-retirement benefit described in Section 2.2(b) above.

2.5 Forfeitures . Notwithstanding any provision of the Plan to the contrary, benefits payable on behalf of the Participant shall be forfeited if:

(a) The Participant’s employment is terminated for Just Cause on or after reaching Early Retirement Age;

(b) The Insurer providing coverage fails;

(c) The Participant is not insurable at the time of the initial purchase of insurance or at the time of any subsequent purchase of insurance required to pay the benefit described in Section 2.2 above; or

(d) Subject to Section 2.4 above, the Participant’s Termination of Employment occurs before the Participant reaches Early Retirement Age.

2.6 Payments From the Policy . Notwithstanding Section 2.2 above, the benefit payable on behalf of the Participant shall not exceed the total amount of the death benefit of the Policy, minus the cash value of the Policy at the time of the Participant’s death (also known as the NAR or “net assets at risk”). Therefore, benefits under the Policy shall be paid in the following order to the extent funded:

(a) The Company will receive an amount equal to the greater of the total cash value of the Policy or the total premiums paid by the Company into the Policy;

(b) The Participant’s interest described in Section 2.2 above will be paid to the Participant’s beneficiary; and

Article 3
Premiums

3.1 Premium Payment . The Company shall pay all premiums due on all Policies.

3.2 Imputed Income . The Company shall annually impute income to each Participant for the benefits provided by this Plan as required under federal and state income tax laws, and each Participant shall be liable for such taxes.

Article 4
Assignment

Any Participant may assign without consideration all interests in the Policy(ies) and in this Plan to any person, entity or trust. In the event a Participant shall transfer all of his or her interest, all of the Participant’s interest shall be vested in the transferee, who shall be substituted as a party under the Plan, and the Participant shall have no further interest in the Policy(ies) or in this Plan.

Article 5
Insurer

The Insurer shall be bound only by the terms of the Policy(ies). Any payments the Insurer makes or actions it takes in accordance with the Policy(ies) shall fully discharge it from all claims, suits and demands of all persons or entities. The Insurer shall not be bound by or deemed to have notice of the provisions of the Plan.

Article 6
Claims Procedure

6.1 Claims Procedure . The Company shall notify any person or entity that makes a claim under this Plan (the “Claimant’) in writing, within 90 days of Claimant’s written application for benefits, of his or her eligibility or ineligibility for benefits under this Plan. Benefits under the Plan will be paid only if the Company decides in its sole discretion that the Claimant is entitled to them. If the Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of this Plan on which the denial is based, (3) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of this Plan’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wants to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made and may extend the time for up to an additional 90 days.

6.2 Review Procedure . If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have the claim reviewed by the Company by filing a petition for review with the Company within 60 days after receipt of the notice issued by the Company. Said petition shall state the specific reasons which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Company verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Claimant, and the

specific provisions of this Plan on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Company, but notice of this deferral shall be given to the Claimant.

Article 7
Amendments and Termination

Isabella may amend or terminate the Plan at any time in its sole discretion.

Article 8
Miscellaneous

8.1 Binding Effect . This Plan, in conjunction with each split dollar endorsement, shall bind each Participant and the Company and their beneficiaries, survivors, executors, administrators and transferees and any Policy beneficiary.

8.2 Source of Payment . The proceeds of the Policies purchased on behalf of Plan Participants shall be the sole source for the payment of benefits from the Plan; no other assets of the Company shall be used for such payments and the Company shall have no additional liability for the payment of benefits under the Plan.

8.3 No Guarantee of Employment . This Plan is not an employment policy or contract. It does not give a Participant the right to remain an employee of the Company, nor does it interfere with the Company’s right to discharge a Participant. It also does not require a Participant to remain an employee nor interfere with a Participant’s right to terminate employment at any time.

8.4 Applicable Law . The Plan and all rights hereunder shall be governed by and construed according to the laws of Michigan, except to the extent preempted by federal law.

8.5 Reorganization . The Company shall not merge or consolidate with or into another company, or reorganize, or sell substantially all of its assets to another company, firm or person unless such succeeding or continuing company, firm or person agrees to assume and discharge the obligations of the Company under this Plan.

8.6 Notice . Any notice, consent or demand required or permitted to be given under the provisions of this Plan by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to his/her last known address as shown in the records of the Company. The date of such mailing shall be deemed the date of such mailed notice, consent or demand.

8.7 Entire Agreement . This Plan constitutes the entire agreement between the Company and the Participant as to the subject matter hereof. No rights are granted to the Participants by virtue of this Plan other than those specifically set forth herein.

8.8 Administration . The Company shall have all powers and discretionary authority that are necessary to administer this Plan, including, but not limited to:

(a) interpreting the provisions of the Plan;

(b) establishing and revising the method of accounting for the Plan;

(d) establishing rules and prescribing any forms necessary or desirable to administer the Plan.

8.9 Named Fiduciary . For purposes of the Employee Retirement Income Security Act of 1974, if applicable, the Company shall be the named fiduciary and plan administrator under the Plan. The named fiduciary may delegate to others certain aspects of the management and operational responsibilities of the Plan to qualified individuals, including the employment of advisors and the delegation of ministerial duties.

8.10 Severability . If for any reason any provision of this Plan is held invalid, such invalidity shall not affect any other provision of this Plan and the other provisions shall, to the full extent consistent with the law, continue in full force and effect. If any provision of this Plan shall be held invalid in part, such invalidity shall in no way affect the remainder of the provision, and the remainder of the provision, together with all other provisions of this Plan shall, to the full extent consistent with the law, continue in full force and effect.

8.11 Headings . The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Plan.

8.12 Effective Date . The effective date of the Plan is January 1, 2008.


			ISABELLA BANK CORPORATION

Dated:	, 2008	By:

			Dennis P. Anger, President/CEO

			ISABELLA BANK

Dated:	, 2008	By:

			Richard J. Barz, President/CEO

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN
SPLIT DOLLAR POLICY ENDORSEMENT

Policy Number(s):

Insured:

Supplementing and amending the application for insurance to (“Insurer”) on , 20___, the applicant requests and directs that:

BENEFICIARIES

1. Isabella Bank Corporation (the “Company”) shall be the beneficiary of any proceeds remaining after the Insured’s interest has been paid pursuant to Section 2 below.

2. The beneficiary(ies) of the death benefit in the amount specified in Section 2.2 of Isabella Bank Corporation Death Benefit Plan dated January 1, 2008 (the “Plan”), shall be designated by the Insured or the Insured’s transferee, subject to the provisions of Section 5 below.

INSURED’S ACKNOWLEDGMENT

Insured acknowledges that the Isabella Bank Corporation Death Benefit Plan restates and replaces any and all death benefit only and/or split dollar arrangements offered by the Company, including the Death Benefit Only Agreement, dated February 25, 2002, previously offered by the Company, and that Insured’s entire death benefit only program provided by the Company shall be the death benefit set forth in the Isabella Bank Corporation Death Benefit Plan adopted effective January 1, 2008.

OWNERSHIP

3. The Owner of the Policy(ies) shall be the Company. The Owner shall have all ownership rights in the Policy(ies), except as may be specifically granted to the Insured or the Insured’s transferee in Section 4 of this Endorsement.

4. Subject to applicable law, the Insured or the Insured’s transferee shall have the right to assign his or her rights and interests in the Policy(ies) with respect to the death benefit provided for under the Plan and to exercise all related settlement options.

5. Notwithstanding the provisions of Section 4 above, and subject to Section 2.4 of the Plan, the Insured or the Insured’s transferee shall have no rights or interests in the death benefit provided under the Plan in the event of Termination of Employment prior to the attainment of Early Retirement Age as defined in the Plan.

MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY(IES)

Upon the death of the Insured, the interest of any collateral assignee of the Owner of the Policy(ies) designated in Section 3 above shall be limited to the portion of the proceeds described in Section 2 above.

OWNER’S AUTHORITY

The Insurer is hereby authorized to recognize the Owner’s claim to rights under this Endorsement without investigating the reason for any action taken by the Owner, including its statement of the amount of premiums it has paid on the Policy(ies). The signature of the Owner shall be sufficient for the exercise of any rights under this Endorsement and the receipt of the Owner for any sums received by it shall be a full discharge and release therefore to the Insurer.

Any transferee’s rights shall be subject to this Endorsement. The parties accept and agree to this Split Dollar Policy Endorsement.


		ISABELLA BANK CORPORATION

Dated:	, 2008	By:

			Dennis P. Angner, President/CEO

		INSURED:

Dated:	, 2008	By:

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN
BENEFICIARY DESIGNATION FORM

PRIMARY DESIGNATION:



Name		Relationship


Address

SECONDARY (CONTINGENT) DESIGNATION:



Name		Relationship


Address

All sums payable under the Isabella Bank Corporation Death Benefit Plan by reason of my death shall be paid to the Primary Beneficiary, if he or she survives me, and if no Primary Beneficiary shall survive me, then to the Secondary (Contingent) Beneficiary(ies).


Dated: , 20___

		Insured’s Signature

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN
APPENDIX A


Plan Participant		Entry Date

ISABELLA BANK CORPORATION
DEATH BENEFIT PLAN
APPENDIX B

DEATH BENEFITS FOR FARWELL PARTICIPANTS


A.	Pre-Retirement Benefit		Amount

		$
















B.	Post-Retirement Benefit		Amount

		$

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