Exhibit 10.4
Execution Copy
EXECUTIVE EMPLOYEE SALARY CONTINUATION AGREEMENT
FOR
TED T. AWERKAMP
(As Amended and Restated Effective January 1, 2009)
Mercantile Bank
Quincy, Illinois
     THIS AGREEMENT originally made effective as of the 8th day of December,
1994, between Mercantile Bank (formerly known as Mercantile Trust & Savings
Bank), an Illinois corporation (the “Company”) and Ted T. Awerkamp (the
“Participant”), and subsequently amended is hereby amended and restated in its
entirety, effective January 1, 2009.
     WHEREAS, the Participant is an executive employee of the Company and as
such has materially contributed to the Company’s position; and
     WHEREAS, the Company wishes to establish this Agreement for purposes of
promoting in the Participant the strongest interest in the successful operation
of the Company and increased efficiency in his work and to provide the
Participant benefits upon retirement, death or other termination of employment,
in consideration of services to be performed after the date of this Agreement
but prior to his retirement.
     NOW, THEREFORE, in consideration of the premises, the parties hereto agree
as follows:
     1. Definitions.
          A. Administrative Committee — “Administrative Committee” shall mean
the Retirement Committee appointed from time to time by the Board of Directors
of the Company.
          B. Age — “Age” shall mean the age of the person as of his last
birthday.

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          C. Change in Control — “Change in Control” shall mean the first to
occur of any of the following events: (a) any person or entity (other than
Mercantile Bancorp, Inc.) becomes, subsequent to the date of this Agreement, the
beneficial owner, directly or indirectly, of 51% or more of the then issued and
outstanding voting stock of the Company (and, for the purposes hereof, a person
will be considered to be a beneficial owner of such stock if such person,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares voting power, which includes the power
to vote or to direct the voting of such stock, or investment power, which
includes the power to dispose or to direct the disposition of such stock);
(b) the Company merges or consolidates with or reorganizes with or into any
other corporation or corporations other than its affiliates or engages in any
other similar business combination or reorganization; or (c) the Company sells,
assigns or transfers all or substantially all of its business and assets, in one
or a series of related transactions, except any such sales to affiliates.
          D. Disability — “Disability” shall mean, if the Participant: (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable 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 twelve
(12) months; or (ii) is, by reason of any mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering the Employer’s employees.

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          E. Discharge for Cause — “Discharge for Cause” shall mean the
termination of the Participant’s employment with the Company because of (a) the
Participant’s willful and continued failure to substantially perform his duties
(other than any such failure resulting from his incapacity due to physical or
mental illness), after a demand for substantial performance is delivered to him
by the Company which specifically identifies the manner in which the Company
believes he has not substantially performed his duties; (b) any willful act of
misconduct by the Participant which is materially injurious to the Company,
monetarily or otherwise; (c) a criminal conviction of the Participant for any
act involving the business and affairs of the Company; (d) a criminal conviction
of the Participant for commission of a felony; or (e) the removal of the
Participant by a regulatory agency. For purposes of this definition, no act or
failure to act on the Participant’s part will be considered “willful” unless
done or omitted by him not in good faith and without reasonable belief that his
act or omission was in the best interest of the Company.
          F. Early Retirement Date — “Early Retirement Date” shall mean the
first day of the month following the month in which the Participant reaches Age
60 years.
          G. Good Reason — “Good Reason” shall mean any one or more of the
following occurring without the Participant’s consent:
               (a) a reduction in Participant’s titles, duties or
responsibilities,
               (b) a significant reduction in Participant’s salary,
               (c) a change in Participant’s situs of employment.
For purposes of the foregoing, the Participant’s base salary shall be deemed to
be significantly reduced if any cutback is imposed except as part of an overall
cutback applied proportionately

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to all of the Company’s management employees or if the Participant fails to
receive periodic increases substantially proportionate to and coincident with
the increases granted to management employees.
          H. Involuntary Termination — “Involuntary Termination” shall mean
either: (i) the termination of the Participant’s employment by the Company other
than a Discharge for Cause, or (ii) the voluntary termination of Participant’s
employment for Good Reason.
          I. Normal Retirement Date — “Normal Retirement Date” shall mean the
first day of the month following the month in which the Participant reaches Age
65 years.
          J. Specified Employee — “Specified Employee” means an employee who at
the time of Termination of Employment is a key employee of the Company, if any
stock of the Company is publicly traded on an established securities market or
otherwise. For purposes of this Agreement, an employee is a key employee if the
employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii)
(applied in accordance with the regulations thereunder and disregarding section
416(i)(5)) at any time during the 12-month period ending on December 31 (the
“identification period”). If the employee is a key employee during an
identification period, the employee is treated as a key employee for purposes of
this Agreement during the twelve (12) month period that begins on the first day
of April following the close of the identification period.
          K. Termination of Employment — “Termination of Employment” means
termination of the Participant’s employment with the Company for reasons other
than death. Whether a termination of employment has occurred is determined based
on whether the facts and circumstances indicate that the Company and the
Participant reasonably anticipated that no

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further services would be performed after a certain date or that the level of
bona fide services the Participant would perform after such date (whether as an
employee or as an independent contractor) would permanently decrease to no more
than twenty percent (20%) of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding thirty-six (36)
month period (or the full period of services to the Company if the Participant
has been providing services to the Company less than
thirty-six (36) months).
          L. Vesting — For the purposes of this Agreement and the attached
Salary Continuation Vesting Schedule, which is attached hereto and made a part
hereof as Exhibit A, the Participant shall have zero vesting until he reaches
Age 55 years at which time he shall become fully 100% vested.
     2. Eligibility.
          The Participant is eligible for the benefits provided herein in
accordance with the terms of this Agreement upon the execution hereof.
          The Participant shall cease to be the Participant at Termination of
Employment. However, the employment of the Participant shall not be deemed to be
terminated by reason of an approved leave of absence granted in accordance with
uniform rules applied in a non—discriminatory manner.
     3. Payment of Benefits.
          3.1. Normal Retirement Benefit.
          Upon the Participant’s Termination of Employment on or after the
Normal Retirement Date, the Company shall pay to the Participant, as
compensation for services

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rendered prior to such date, the sum of Sixty-Eight Thousand Nine Hundred
Dollars ($68,900) per year, payable in monthly installments of Five Thousand
Seven Hundred Forty-One Dollars and Sixty-Six Cents ($5,741.66) each, commencing
on the first day of the month coincident with or next following the date of
Termination of Employment and continuing on the first day of each month
thereafter for the life of the Participant, but in any event until a minimum of
one hundred eighty (180) payments have been made to the Participant or the
Participant’s beneficiary per Section 3.6(b).
          3.2. Early Retirement Benefit.
          Upon the Participant’s Termination of Employment on or after the Early
Retirement Date but prior to the Normal Retirement Date, the Company shall pay
to the Participant, as compensation for services rendered prior to such date,
monthly payments equal to one-twelfth (1/12th) the “Annual Benefit” for the
Participant’s Age at the time of Termination of Employment as described in the
attached Schedule A. Such payments shall commence on the first day of the month
coincident with or next following the date of Termination of Employment, and
shall continue on the first day of each month thereafter for a period of fifteen
(15) years, but in any event until a minimum of one hundred eighty
(180) payments have been made to the Participant or the Participant’s
beneficiary per Section 3.6(b).
          3.3. Benefits Upon Disability.
          Upon the Participant’s Termination of Employment prior to the Normal
Retirement Date due to Disability, the Company shall pay to the Participant, as
compensation for services rendered prior to such date, monthly payments equal to
one-twelfth (1/12th) the “Annual Benefit” (regardless of vesting) for the
Participant’s Age at the time of such Disability

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termination (determined by the Company), as described in the attached
Schedule A. Such payments shall commence on the first day of the month
coincident with or next following the date of Termination of Employment, and
shall continue on the first day of each month thereafter for a period of fifteen
(15) years, but in any event until a minimum of one hundred eighty
(180) payments have been made to the Participant or the Participant’s
beneficiary per Section 3.6(b).
          3.4. Other Terminations of Employment.
               (a) Voluntary Termination of Employment Prior to the Early
Retirement Date. Upon the Participant’s voluntary Termination of Employment
prior to reaching the Early Retirement Date, for reasons other than death or
Disability, the Company shall pay the vested “Annual Benefit,” if any, for the
Participant’s Age at the time of voluntary Termination of Employment as
described in the attached Schedule A, and the Participant shall have no further
right to receive any additional benefit hereunder. The Company shall pay the
benefit to the Participant in one hundred eighty (180) equal monthly
installments commencing on the first day of the month coincident with or next
following the date of Termination of Employment.
               (b) Involuntary Termination of Employment Prior to the Early
Retirement Date. Upon the Participant’s Involuntary Termination of Employment
prior to reaching the Early Retirement Date, for reasons other than death,
Disability or Discharge for Cause, the Company shall pay shall pay to the
Participant, as compensation for services rendered prior to such date, monthly
payments equal to one-twelfth (1/12th) the “Annual Benefit” (regardless of
vesting) for the Participant’s Age at the time of such Disability

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termination, as described in the attached Schedule A. Such payments shall
commence on the first day of the month coincident with or next following the
date of Termination of Employment, and shall continue on the first day of each
month thereafter for a period of fifteen (15) years, but in any event until a
minimum of one hundred eighty (180) payments have been made to the Participant
or the Participant’s beneficiary per Section 3.6(b).
               (c) Involuntary Termination of Employment for Cause. Upon the
Participant’s Discharge for Cause at any time, the Participant shall forfeit any
and all rights, vested and unvested, that the Participant has in and to any
benefits under this Agreement and the Company shall have no obligation to pay
any benefit to the Participant under the terms of this Agreement.
          3.5. Change in Control Benefits.
     If there occurs a Change in Control while the Participant is in the service
of the Company (where such Change in Control also qualifies as a “change in
control event” permitted under Code Section 409A), but prior to reaching Normal
Retirement Date, the Company shall pay to the Participant the Normal Retirement
Benefit provided in Section 3.1 of this Agreement, with such payments commencing
as of the first day of the month following the Normal Retirement Date
          3.6. Survivorship Benefits.
               (a) Prior to Commencement of Normal or Early Retirement Benefits.
If the Participant dies while in the service of the Company (whether or not he
is fully vested) or after a Termination of Employment where Participant was or
became entitled to a benefit under this Agreement prior to or upon such
termination, but prior to commencement of any

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benefit payments under this Agreement, the Company shall pay to the
Participant’s beneficiary a survivor’s benefit of one hundred eighty (180) equal
monthly installments of Five Thousand Seven Hundred Forty-one and 66/100 Dollars
($5,741.66) commencing on the first day of the month after the Participant’s
death and continuing on the first day of each month thereafter until all such
payments are completed. In the event a beneficiary dies before receiving all the
survivor’s benefit payments, the remaining payments shall be paid to the legal
representative of the beneficiary’s estate. Payment of the survivor’s benefit
shall relieve the Company of the obligation to pay any other benefit which the
Participant would have otherwise received, under the terms of this Agreement.
               (b) After Commencement of Benefits. If the Participant dies after
any benefit payments have commenced, but prior to receiving all of the scheduled
minimum number of monthly payments, the Company shall pay the remaining monthly
payments to the Participant’s beneficiary. In the event a beneficiary dies
before receiving all the remaining payments, the then-remaining payments shall
be paid to the legal representative of the beneficiary’s estate.
          3.7. Recipients of Payments: Designation of Beneficiary.
          All payments to be made by the Company shall be made to the
Participant, if living. In the event of the Participant’s death prior to the
receipt of all benefit payments, all subsequent payments to be made under this
Agreement shall be to the beneficiary or beneficiaries of the Participant. The
Participant shall designate a beneficiary by filing a written notice of such
designation with the Company in such form as the Company may prescribe. The
Participant may revoke or modify said designation at any time by a further
written

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designation. The Participant’s beneficiary designation shall be deemed
automatically revoked in the event of the death of the beneficiary or, if the
beneficiary is the Participant’s spouse, in the event of dissolution of
marriage. If no designation shall be in effect at the time any benefits payable
under this Agreement shall become due, the beneficiary shall be the spouse of
the Participant, or if no spouse is then living, the legal representative of the
Participant’s estate.
          3.8. Restriction on Timing of Distributions.
          Notwithstanding any provision of this Agreement to the contrary, if
the Participant is considered a Specified Employee, the provisions of this
Section 3.8 shall govern all distributions hereunder. If benefit distributions
which would otherwise be made to the Participant due to a Termination of
Employment are limited because the Participant is a Specified Employee, then
such distributions shall not be made during the first six (6) months following
Termination of Employment. Rather, any distribution which would otherwise be
paid to the Participant during such period shall be accumulated and paid to the
Participant in a lump sum on the first day of the seventh (7th) month following
the Termination of Employment. All subsequent distributions shall be paid in the
manner specified.
          3.9. Distributions Upon Income Inclusion Under Section 409A of the
Code.
          If, pursuant to Code Section 409A, the Federal Insurance Contributions
Act or other state, local or foreign tax, the Participant becomes subject to tax
on the amounts deferred hereunder, then the Company may make a limited
distribution to the Participant in accordance with the provisions of Treasury
Regulations Section 1.409A-3(j)(vi), (vii) and (xi). Any such distribution will
decrease the Participant’s benefit hereunder.

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          3.10. Change in Form or Timing of Distributions.
          All changes in the form or timing of distributions hereunder must
comply with the following requirements. The changes:
               (a) may not accelerate the time or schedule of any distribution,
except as provided in Code Section 409A and the regulations thereunder;
               (b) must, for benefits distributable under Sections 3.1, 3.2,
3.4(a) and 3.4(b), delay the commencement of distributions for a minimum of five
(5) years from the date the first distribution was originally scheduled to be
made; and
               (c) must take effect not less than twelve (12) months after the
election is made.
               (d) Notwithstanding the foregoing, to the extent that any changes
pursuant to the amendment and restatement of this Agreement which constitute a
change in the form or timing of distributions under Code Section 409A, such
changes shall be effective as of January 1, 2009, in accordance with the
transition relief provided under IRS Notice 2007-86.
     4. Administration and Interpretation of this Agreement.
          The Administrative Committee shall administer and interpret this
Agreement. Interpretation by the Administrative Committee shall be final and
binding upon the Participant. The Administrative Committee may adopt rules and
regulations relating to this Agreement as it may deem necessary or advisable for
the administration thereof.
     5. Claims Procedure.
          If the Participant or the Participant’s beneficiary (hereinafter
referred to as a “Claimant”) is denied all or a portion of an expected benefit
under this Plan for any reason, he

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or she may file a claim with the Administrative Committee. The Administrative
Committee shall notify the Claimant within sixty (60) days of allowance or
denial of the claim, unless the Claimant receives written notice from the
Administrative Committee prior to the end of the sixty (60) day period stating
that special circumstances require an extension of the time for decision. The
notice of the Administrative Committee’s decision shall be in writing, sent by
mail to Claimant’s last known address, and, if a denial of the claim, must
contain the following information:
               (a) the specific reasons for the denial;
               (b) specific reference to pertinent provisions of the Plan on
which the denial is based; and
               (c) if applicable, a description of any additional information or
material necessary to perfect the claim, an explanation of why such information
or material is necessary, and an explanation of the claims review procedure.
     6. Review Procedure.
               (a) A Claimant is entitled to request a review of any denial of
his or her claim by the Administrative Committee. The request for review must be
submitted in writing within sixty (60) days of mailing of notice of the denial.
Absent a request for review within the sixty (60) day period, the claim will be
deemed to be conclusively denied. The Claimant or his or her representative
shall be entitled to review all pertinent documents, and to submit issues and
comments orally and in writing.
               (b) If the request for review by a Claimant concerns the
interpretation and application of the provisions of the Agreement and the
Company’s

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obligations, then the review shall be conducted by a separate committee
consisting of three (3) persons designated or appointed by the Administrative
Committee. The separate committee shall afford the Claimant a hearing and the
opportunity to review all pertinent documents and submit issues and comments
orally and in writing and shall render a review decision in writing, all within
sixty (60) days after receipt of a request for a review, provided that, in
special circumstances (such as the necessity of holding a hearing) the separate
committee may extend the time for decision by not more than sixty (60) days upon
written notice to the Claimant. The Claimant shall receive written notice of the
separate committee’s review decision, together with specific reasons for the
decision and reference to the pertinent provisions of this Agreement.
     7. Life Insurance and Funding.
          The Company in its discretion may apply for and procure as owner and
for its own benefit, insurance on the life of the Participant, in such amounts
and in such forms as the Company may choose. The Participant shall have no
interest whatsoever in any such policy or policies, but at the request of the
Company he shall submit to medical examinations and supply such information and
execute such documents as may be required by the insurance company or companies
to whom the Company has applied for insurance.
          The rights of the Participant, or his beneficiary, or estate, to
benefits under the Plan shall be solely those of an unsecured creditor of the
Company. Any insurance policy or other assets acquired by or held by the Company
in connection with the liabilities assumed by it pursuant to the Plan shall not
be deemed to be held under any trust for the benefit of the Participant, his
beneficiary, or his estate, or to be security for the performance of the

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obligations of the Company but shall be, and remain, a general, unpledged, and
unrestricted asset of the Company.
          If this Agreement is funded through insurance on the life of the
Participant, then in the event of the Participant’s death during the first two
(2) years after the effective date of this Agreement, and if the Participant’s
death was a result of suicide or if the Participant made any material
misstatement or failed to make a material disclosure of information in any
documentation which the Participant is requested to complete in connection with
this Agreement, then no death benefits under the terms of this Agreement will be
payable, unless and to the extent that the Board of Directors of Company, in
their absolute discretion, may otherwise determine.
     8. Assignment of Benefits.
          Neither the Participant nor any other beneficiary under the Plan shall
have any right to assign the right to receive any benefits hereunder, and in the
event of any attempted assignment or transfer, the Company shall have no further
liability hereunder.
     9. Employment Not Guaranteed by Agreement.
          Neither this Agreement nor any action taken hereunder shall be
construed as giving the Participant the right to be retained as an employee of
the Company for any period.
     10. Taxes.
          The Company shall deduct from all payments made hereunder all
applicable federal or state taxes required by law to be withheld from such
payments.

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     11. Amendments and Termination.
          11.1. Amendments.
          The Company may amend this Agreement unilaterally by written action.
          11.2. Plan Termination Generally.
          The Company may terminate this Agreement unilaterally by written
action. The benefit hereunder shall be the amount the Company has accrued with
respect to the Company’s obligations hereunder as of the date the Agreement is
terminated. Except as provided in Section 11.3, the termination of this
Agreement shall not cause a distribution of benefits under this Agreement.
Rather, after such termination benefit distributions will be made at the
earliest distribution event permitted under Article 3.
          11.3. Plan Terminations Under Section 409A.
          Notwithstanding anything to the contrary in Section 11.2, if this
Agreement terminates in the following circumstances:
               (a) Within thirty (30) days before or twelve (12) months after a
change in the ownership or effective control of the Company, or in the ownership
of a substantial portion of the assets of the Company as described in
Section 409A(a)(2)(A)(v)) of the Code, provided that all distributions are made
no later than twelve (12) months following such termination of the Agreement and
further provided that all the Company’s arrangements which are substantially
similar to the Agreement are terminated so the Participant and all participants
in the similar arrangements are required to receive all amounts of compensation
deferred under the terminated arrangements within twelve (12) months of the such
terminations;

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               (b) Upon the Company’s dissolution or with the approval of a
bankruptcy court provided that the amounts deferred under the Agreement are
included in the Participant’s gross income in the latest of (i) the calendar
year in which the Agreement terminates; (ii) the calendar year in which the
amount is no longer subject to a substantial risk of forfeiture; or (iii) the
first calendar year in which the distribution is administratively practical; or
               (c) Upon the Company’s termination of this and all other
arrangements that would be aggregated with this Agreement pursuant to Treasury
Regulations Section 1.409A-1(c) if the Participant participated in such
arrangements (“Similar Arrangements”), provided that (i) the termination and
liquidation does not occur proximate to a downturn in the financial health of
the Company, (ii) all termination distributions are made no earlier than twelve
(12) months and no later than twenty-four (24) months following such
termination, and (iii) the Company does not adopt any new arrangement that would
be a Similar Arrangement for a minimum of three (3) years following the date the
Company takes all necessary action to irrevocably terminate and liquidate the
Agreement;
          The Company may distribute the amount the Company has accrued with
respect to the Company’s obligations hereunder, determined as of the date of the
termination of the Agreement, to the Participant in a lump sum subject to the
above terms.
     12. Construction.
          This Agreement shall be construed according to the laws of the State
of Illinois.

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     13. Form of Communication.
          Any election, application, claim, notice or other communication
required or permitted to be made by the Participant to the Company shall be made
in writing and in such form as the Company shall prescribe. Such communication
shall be effective upon mailing, if sent by first class mail, postage pre—paid,
and addressed to the Company’s office at 440 Maine Street, Quincy, IL 62301.
     14. Captions.
          The captions at the head of a section or a paragraph of this Agreement
are designed for convenience of reference only and are not to be resorted to for
the purpose of interpreting any provision of this Agreement.
     15. Severability.
          The invalidity of any portion of this Agreement shall not invalidate
the remainder thereof, and said remainder shall continue in full force and
effect.
     16. Binding Effect.
          This Agreement shall be binding upon and shall inure to the benefit of
the Company and the Participant, and each of their successors, heirs, personal
representatives and permitted assigns. No sale of substantially all of the
Company’s assets shall be made without the buyer expressly assuming the
obligation of this Agreement. The Company further agrees that it will not be a
party to any merger, consolidation or reorganization unless and until its
obligations hereunder are expressly assumed by the successor or successors.

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     17. Compliance with Code Section 409A.
          This Agreement shall be interpreted and administered consistent with
Code Section 409A.

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     IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first set forth above.

            Mercantile Bank
Quincy, Illinois
      By   /s/ J. Blaine Strock III         J. Blaine Strock III
Its    President & CEO            /s/ Ted T. Awerkamp       Ted T. Awerkamp     
     

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Schedule A
Hypothetical Termination Benefits Schedule

     
Ted Awerkamp
   
Date of Birth
  8/24/1957
Plan Anniversary Date
  1/1/2010
Normal Retirement
  8/24/22, Age 65
Normal Retirement Payment
  Monthly for 15 years

                                              (1)   (2)   (3)   (4)   (5)      
      Normal                 Discount   Retirement   Account   Annual     Value
as of:   Rate   Benefit   Value   Benefit1   Vesting
Dec 2008
                    222,654       22,434       0 % 12/31/08 Rollover Accrual
Balance

 
                                       
12/31/20092
    6.00 %     68,900       245,123       24,698       0 %
Dec 2010
    6.00 %     68,900       268,978       27,102       0 %
Dec 2011
    6.00 %     68,900       294,305       29,654       0 %
Dec 2012
    6.00 %     68,900       321,193       32,363       100 %
Dec 2013
    6.00 %     68,900       349,740       35,239       100 %
Dec 2014
    6.00 %     68,900       380,048       38,293       100 %
Dec 2015
    6.00 %     68,900       412,225       41,535       100 %
Dec 2016
    6.00 %     68,900       446,387       44,977       100 %
Dec 2017
    6.00 %     68,900       482,655       48,632       100 %
Dec 2018
    6.00 %     68,900       521,161       52,512       100 %
Dec 2019
    6.00 %     68,900       562,041       56,631       100 %
Dec 2020
    6.00 %     68,900       605,443       61,004       100 %
Dec 2021
    6.00 %     68,900       651,522       65,647       100 %
Aug 2022
    6.00 %     68,900       683,810       68,900       100 %

 

1   The annual benefit amount will be distributed in 12 equal monthly payments
for a total of 180 monthly payments.   2   The first line reflects 12 months of
data, January 2009 to December 2009.

The purpose of this hypothetical illustration is to show the participant’s
annual benefit based on various termination assumptions. Actual benefits are
based on the terms and provisions of the plan agreement. Consequently, actual
benefits may differ from those shown on this Hypothetical Termination Benefits
Schedule.