Document:

KMPR 2013 12.31.2013 EX 10.28 Performance-Based Agreement RSU, as of February 4, 2014

Exhibit 10.28

Kemper Corporation 2011 Omnibus Equity Plan
PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
This PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (“Agreement”) is made as of this ______ day of ___________, ____ (“Grant Date”) between KEMPER CORPORATION, a Delaware corporation (the “Company”), and «name» (the “Award Holder”) for an Award of an aggregate of «shares» («shares») restricted stock units (the “RSUs”), each representing the right to receive one share of the Company’s common stock (“Common Stock”) on the terms and conditions set forth in this Agreement.
SIGNATURES
As of the date set forth above, the parties have accepted the terms of this Agreement by signing this Agreement by an electronic signature, and each party agrees that such signature shall not be denied legal effect, validity or enforceability solely because it was submitted or executed electronically.
KEMPER CORPORATION         AWARD HOLDER
By:   «CEO Signature and Title»    By: «name»
            
RECITALS
A.    The Board of Directors of the Company has adopted the Kemper Corporation 2011 Omnibus Equity Plan (the “Plan”), including all amendments to date, to be administered by the Compensation Committee of the Company’s Board of Directors or any subcommittee thereof, or any other committee designated by the Board to administer the Plan (the “Committee”). Capitalized terms that are not defined herein shall be defined in accordance with the Plan.
B.    The Plan authorizes the Committee to grant to selected employees, directors and Third Party Service Providers of the Company or any Affiliate of the Company awards of various types, including restricted stock units providing the right to receive shares of Common Stock under specified terms and conditions.
C.    Pursuant to the Plan, the Committee has determined that it is in the best interest of the Company and its shareholders to grant the Award Holder an Award of restricted stock units 

1

under the terms and conditions specified in this Agreement as an inducement to remain in the service of the Company and an incentive for increased effort during such service.
NOW, THEREFORE, the parties hereto agree as follows:
1.    Grant.  The Company grants the RSUs to the Award Holder, subject to the terms and conditions set forth in this Agreement.  Except as otherwise set forth herein, the RSUs shall not entitle the Award Holder to any rights of a shareholder of Common Stock.
2.    Vesting and Forfeiture.
(a)    Restricted Period.  The RSUs shall be restricted during a period (the “Restricted Period”) beginning on the Grant Date and expiring on the date(s) that they vest in accordance with Exhibit A (the “Vesting Date”), provided that the RSUs have not been forfeited pursuant to Section E of Exhibit A and:  (i) the Award Holder is in Service (as hereafter defined) on the Vesting Date; or (ii) the Award Holder is Retirement Eligible (as hereafter defined) prior to the date the Award Holder terminates Service and the Award Holder has not, at any time prior to or on the Vesting Date, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. The RSUs will vest on the Vesting Date only to the extent provided in and in accordance with the provisions of Exhibit A.
(b)      Certain Definitions.
(i) “Service” means that the Award Holder is employed by, or a Third Party Service Provider or member of the board of directors of, the Company or an Affiliate.  
(ii) “Retirement Eligible” means that the Award Holder has either attained age 60 and completed 10 years of Service as an Employee or attained age 65 and completed 5 years of Service as an Employee.
3.     Conversion of RSUs; Issuance of Common Stock.  Except as otherwise provided in Section 8, the Company shall cause one share of Common Stock to be issued, within the time period provided below, for each RSU that is vesting upon the applicable Vesting Date.
Any issuance of Common Stock shall be subject to applicable tax withholding obligations as described in Section 6 and shall be in book-entry form, registered in the Award Holder’s name (or in the name of the Award Holder’s Representative, as the case may be), in payment of whole RSUs.  Except as otherwise provided in Section 8, in no event shall the date that Common Stock is issued to the Award Holder (“Settlement Date”) occur later than the first to occur of (a) March 15th following the calendar year in which the Vesting Date occurred, or (b) ninety (90) days following the applicable Vesting Date.
4.     Dividend Equivalents. If a cash dividend is declared and paid by the Company with respect to the Common Stock during the Restricted Period, the Award Holder shall be entitled to receive a cash payment equal to the total cash dividend the Award Holder would have received had 

2

the RSUs been actual shares of Common Stock, subject to applicable tax withholding obligations as described in Section 6.  The cash payment shall be made on the date that the dividends are payable to holders of Common Stock (the “Dividend Payment Date”).  The rules of Treas. Reg. § 1.409A-3(d) shall be applied in determining whether a cash payment is made on the Dividend Payment Date.
5.    Fair Market Value of Common Stock.  The fair market value (“Fair Market Value”) of a share of Common Stock shall be determined for purposes of this Agreement by reference to the closing price of a share of Common Stock as reported by the New York Stock Exchange (or such other exchange on which the shares of Common Stock are primarily traded) for the Grant Date or Vesting Date, as applicable, or if no prices are reported for that day, the last preceding day on which such prices are reported (or, if for any reason no such price is available, in such other manner as the Committee in its sole discretion may deem appropriate to reflect the fair market value thereof).
6.    Withholding of Taxes.  The Award Holder acknowledges that the conversion of the RSUs to Common Stock upon the Vesting Date will result in the Award Holder being subject to income taxes and payroll taxes, to the extent that payroll taxes have not previously become due.  The Company will deduct from the number of RSUs that are scheduled to vest on the Vesting Date(s) whole shares of Common Stock having a Fair Market Value equal to the amount determined by the Company to satisfy any applicable minimum statutory withholding or other tax obligations that may arise upon such vesting, and the Award Holder shall remit to the Company in cash any and all applicable withholding taxes that exceed the amount available to the Company using whole shares.
The Company shall withhold from any dividend equivalents paid during the Restricted Period only the amounts the Company is required to withhold to satisfy any applicable tax withholding requirements with respect to such dividend equivalents based on minimum statutory withholding rates for federal and state tax purposes, including any payroll taxes.
7.    Section 409A.  The Company intends that the Award hereunder shall either be exempt from the application of, or compliant with, the requirements of Section 409A and this Award Agreement shall be interpreted and administered in accordance with such intent.  In no event shall the Company and/or its Affiliates be liable for any tax, interest or penalties that may be imposed on the Award Holder (or the Award Holder’s estate) under Section 409A.
8.    Shares to be Issued in Compliance with Federal Securities Laws and Other Rules.  No shares of Common Stock issuable in settlement of the RSUs shall be issued and delivered unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all applicable listing requirements of the New York Stock Exchange (or such other exchange(s) or market(s) on which shares of the same class are then listed) and any other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery.  The Company shall use its best efforts and take all necessary or appropriate actions to assure that such full compliance on the part of the Company is made.  By signing this Agreement, the Award Holder represents and warrants that none of the shares to be acquired in settlement of the RSUs will be acquired with a view towards any sale, transfer or distribution of said shares in violation of the Securities Act of 1933, as amended (the “Act”), and the rules and regulations promulgated thereunder, or any 

3

applicable “blue sky” laws, and that the Award Holder hereby agrees to indemnify the Company in the event of any violation by the Award Holder of such Act, rules, regulations or laws.  The Company will use its best efforts to complete all actions necessary for such compliance so that settlement can occur within the period specified in Section 3; provided that if the Company reasonably anticipates that settlement within such period will cause a violation of applicable law, settlement may be delayed provided that settlement occurs at the earliest date at which the Company reasonably anticipates that such settlement will not cause a violation of applicable law, all in accordance with Treas. Reg. § 1.409A-2(b)(7)(ii).
9.    No Assignment or Other Transfer.  During the Restricted Period, neither this Agreement, the RSU nor any rights and privileges granted hereby may be transferred, assigned, pledged or hypothecated in any way, whether by operation of the law or otherwise, except by will or the laws of descent and distribution.  Without limiting the generality of the preceding sentence, no rights or privileges granted hereby may be assigned or otherwise transferred during the Restricted Period to the spouse or former spouse of the Award Holder pursuant to any divorce proceedings, settlement or judgment.  Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Agreement, the RSUs or any other rights or privileges granted hereby contrary to the provisions hereof shall be null and void and of no force or effect.
10.    Certain Adjustments.  The provisions of Sections 4.4 and 19.2 of the Plan relating to certain adjustments in the case of stock splits, reorganizations, equity restructurings and similar matters described therein are hereby incorporated in and made a part of this Agreement.  Any such adjustments shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive.  No fractional shares of Common Stock shall be issued under the Plan on any such adjustment.
11.    Participation by Award Holder in Other Company Plans.  Nothing herein contained shall affect the right of the Award Holder to participate in and receive benefits under and in accordance with the then current provisions of any retirement plan or employee welfare benefit plan or program of the Company or of any Affiliate of the Company, subject in each case, to the terms and conditions of any such plan or program.
12.    Not an Employment or Service Contract.  Nothing herein contained shall be construed as an agreement by the Company or any of its Affiliates, expressed or implied, to employ or contract for the services of the Award Holder, to restrict the right of the Company or any of its Affiliates to discharge the Award Holder or cease contracting for the Award Holder’s services or to modify, extend or otherwise affect in any manner whatsoever, the terms of any employment agreement or contract for services which may exist between the Award Holder and the Company or any of its Affiliates.
13.    Agreement Subject to the Plan.  The RSUs hereby granted are subject to, and the Company and the Award Holder agree to be bound by, all of the terms and conditions of the Plan, as the same may be amended from time to time hereafter in accordance with the terms thereof, but no such amendment shall adversely affect the Award Holder’s rights under this Agreement without 

4

his or her prior written consent.  To the extent that the terms or conditions of this Agreement conflict with the terms or conditions of the Plan, the Plan shall govern.
14.    Arbitration.  Notwithstanding the terms of any other agreement in effect between the parties, all disputes related to this Agreement or any RSUs granted hereunder shall be submitted to final and binding arbitration with the American Arbitration Association (“AAA”) pursuant to the AAA Employment Arbitration Rules and Mediation Procedures (“AAA Rules”) as amended from time to time.  A copy of the AAA Rules is available to the Award Holder upon written request to the Company’s Director of Human Resources at One East Wacker Drive, Chicago, Illinois 60601 (or such other address as the Company may specify from time to time), or may be obtained online at: www.adr.org.
To initiate arbitration, either party must file a Demand for Arbitration (“Demand”) in the manner described in the AAA Rules.  After a Demand has been filed and served, either party may request that the dispute initially be mediated pursuant to the AAA Rules, in which event such dispute shall be mediated.  If mediation does not fully resolve the dispute or if neither party  requests mediation, then the matter will be subject to arbitration before a single arbitrator who shall have the power to award any types of legal or equitable relief (other than punitive damages) available in a court of competent jurisdiction, including, but not limited to, attorneys’ fees and costs, and all defenses that would be applicable in a court of competent jurisdiction shall be available.  Unless provided otherwise in the arbitrator’s award, each party will pay its own attorneys’ fees and costs. To the extent required by law or the AAA Rules, all administrative costs of arbitration (including reimbursement of filing fees) and the fees of the arbitrator will be paid by the Company.  The parties agree that no class action proceedings (or joinder or consolidation with claims of any other person) may be brought in connection with this Agreement without the written consent of both parties.
15.    Governing Law.  This Agreement and any disputes hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without application of its conflicts of laws principles, and the Federal Arbitration Act.
16.    Miscellaneous.  This Agreement, together with the Plan, is the entire agreement of the parties with respect to the RSUs granted hereby and may not be amended except in a writing signed by both the Company and the Award Holder. If any provision of this Agreement is deemed invalid, it shall be modified to the extent possible and minimally necessary to be enforceable, and, in any event, the remainder of this Agreement will be in full force and effect.
ADDITIONAL PROVISIONS APPLICABLE ONLY TO EXECUTIVE OFFICERS OF THE COMPANY:
17.    Clawbacks.  Notwithstanding the terms regarding vesting and forfeiture or any other provision set forth in this Agreement, including (but not limited to) Section 2 above, the rights, payments, and benefits with respect to this Award are subject to reduction, cancellation, forfeiture, or recoupment by the Company if and to the extent required by applicable law, regulation of the Securities and Exchange Commission, or rule or listing requirement of the New York Stock 

5

Exchange (collectively “Applicable Requirements”) in connection with an accounting restatement or under such other circumstances as specified in the Applicable Requirements.  Any action taken by the Company under this provision shall be made pursuant to the Committee’s determination, which shall be final, binding and conclusive.
18.    Stock Holding Period.  The Award Holder agrees to hold the shares of Common Stock acquired upon the vesting of the RSUs for a minimum of twelve months following their Vesting Date.  This holding period shall not apply to shares of Common Stock withheld by the Company to settle tax liabilities related to vesting, and as otherwise may be provided under the Company’s Stock Ownership Policy.

6

EXHIBIT A
Vesting Schedule for the Award Agreement
A.  Definition of Terms:
“Additional Shares” means any shares of Common Stock to be issued to the Award Holder on the Vesting Date in the event that the Company’s Relative TSR Percentile Rank exceeds the Target Performance Level.
“Award Agreement” means the Performance-Based Restricted Stock Unit Award Agreement to which this Exhibit is a part, pursuant to which an award of performance-based RSUs has been granted.
“Company’s Relative TSR Percentile Rank” means the Company’s TSR Percentile Rank relative to the companies in the Peer Group as determined by the Committee for the Performance Period.
“Disability” means that the Award Holder either: (A) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and, with respect to an Award Holder who is an Employee, is receiving income replacement benefits for a period of not less than three months under an accident and health plan (e.g. a long term disability plan) covering Employees of the Company or Affiliate that employs the Award Holder; or (B)  has been determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.
“Grant Date” is defined in the Award Agreement.
“Peer Group” means the peer group approved by the Committee which shall be the companies that comprised the S&P Supercomposite Insurance Index at the beginning of the Performance Period (other than the Company), adjusted as of the end of the Performance Period to remove any such companies which are no longer included in the S&P Supercomposite Insurance Index as of the last day of the Performance Period.
“Performance Period” means the three-year period ending on the December 31 immediately preceding the three-year anniversary of the Grant Date.
“Separation from Service” has the meaning ascribed to such term in Section 409A.
“Target Shares” means the number of shares of performance-based RSUs granted on the Grant Date pursuant to the Award Agreement.
“Target Performance Level” means the Company’s Relative TSR Percentile Rank at the 50th percentile.
“TSR” means Total Shareholder Return as determined by the Committee for the Performance Period.

7

“TSR Percentile Rank” means the percentile performance of the Company and each of the companies in the Peer Group based on the TSR for such company as determined by the Committee for the Performance Period.
“Vesting Date” means the three-year anniversary of the Grant Date, except as otherwise provided in subsections E(1), E(2) and E(3) below, but in no event shall the Vesting Date be later than the date on which the Award Holder’s RSUs are no longer subject to a substantial risk of forfeiture, as such term is defined for purposes of Section 409A.

B.  Determination of Vesting Date Events:
As soon as practicable following the end of the Performance Period, the Committee will determine the Company’s Relative TSR Percentile Rank in accordance with the methodology described in the next section below.  The Company’s Relative TSR Percentile Rank will determine the number of Target Shares that will vest or be forfeited on the Vesting Date, and the number of Additional Shares, if any, that will be issued to the Award Holder on the Vesting Date, as described below under “Vesting Determination.”
C.  TSR Percentile Rank Calculation Methodology:
The Company’s Relative TSR Percentile Rank will be calculated in a two-step process.  First, the TSR will be calculated for the Company and each company in the Peer Group.  Then, the TSR Percentile Rank for the Company and each of the companies in the Peer Group will be determined.  The TSR and the TSR Percentile Rank will be determined by the Committee in accordance with the formula and methods approved by the Committee, as described below.
Formula for Calculating TSR
For purposes of this Exhibit A to the Award Agreement, the TSR for the Company and each of the companies comprising the Peer Group will be calculated as follows:
Ending Stock Price – Beginning Stock Price + Dividends Reinvested on all Ex-Dividend Dates
Beginning Stock Price
Share Price Averaging Period
The beginning and ending stock prices in the above formula for TSR will be calculated using a trailing average approach (i.e., average of the closing stock prices for 20 consecutive trading days prior to the beginning and end of the Performance Period).
Reinvestment of Dividends and Other Adjustments
The above TSR formula assumes that dividends are paid and reinvested into additional shares of common stock on their ex-dividend dates. TSR will be adjusted for stock dividends, stock splits, spin-offs and other corporate changes having a similar effect.

8

Calculation of TSR Percentile Rank
The percentile performance for determining the TSR Percentile Rank will be measured using the Microsoft Excel function PERCENTRANK.
D.  Vesting Determination:
Except as otherwise provided in Section E, the RSUs held by the Award Holder will vest, to the extent earned for the Performance Period, on the Vesting Date only if the Award Holder has not had a Separation from Service prior to such date.  Once the Company’s Relative TSR Percentile Rank is determined by the Committee, the Company will confirm the number of Target Shares that will vest or be forfeited on the Vesting Date, and the number of Additional Shares, if any, that will be issued to the Award Holder on the Vesting Date consistent with the following provisions:
		
	•
	If the Company’s Relative TSR Percentile Rank is at the Target Performance Level, 100% of the Target Shares will vest on the Vesting Date.  If the Company’s Relative TSR Percentile Rank is above the Target Performance Level, Additional Shares will also be issued to the Award Holder on the Vesting Date. If the Company’s Relative TSR Percentile Rank is less than the Target Performance Level, some or all of the Target Shares will be forfeited.

		
	•
	The number of the Target Shares that will vest on the Vesting Date, and the number of any Additional Shares that will be issued to the Award Holder on the Vesting Date, will be determined in accordance with the table set forth below.  Any Target Shares that do not vest in accordance with the table will be forfeited on the Vesting Date.

If the Company’s Relative TSR Percentile Rank for the Performance Period falls between the percentile levels specified in the first column of the table, the number of Shares that will vest or be granted or forfeited on the Vesting Date shall equal the number corresponding to the percentage interpolated on a straight-line basis from the percentages specified in the second column of the table.

	
		
	

Company’s Relative TSR Percentile Rank

	

Total Shares to Vest (and/or to be Granted) on Vesting Date as Percentage of Target Shares

	90th  or Higher
	200%

	75th
	150%

	50th
	100%

	25th
	50%

	Below 25th
	0%

E.  Determination of Vesting in Case of Certain Terminations and Other Events:
Notwithstanding any contrary provisions of the Plan:

9

(1)    Retirement Eligible.  (a) Except as otherwise provided in (1)(b) or another subsection of this Section E, if the Award Holder is Retirement Eligible but not in Service on the last day of the Performance Period (“Vesting Date”), all RSUs held by the Award Holder will vest on the Vesting Date, to the extent earned for the Performance Period, in an amount equal to the number of Target Shares that would vest in accordance with the provisions of Sections A – D above, if any, multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was actively in Service, and the denominator of which is the total number of months in the Performance Period.  A partial month worked shall be counted as a full month if the Award Holder was actively working for fifteen (15) days or more in that month.  All RSUs that do not vest in accordance with this provision shall be forfeited.
(b)  If, on or prior to the Vesting Date, as defined in (1)(a) above, the Award Holder is Retirement Eligible and either (i) becomes an employee of a competitor of the Company or any of its Affiliates or otherwise engages in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion, or (ii) the Award Holder’s Service is terminated for Substantial Cause, then any of the RSUs that are restricted on the date of such employment, activity or termination shall be forfeited to the Company.
(2)    Termination on Death or Disability.  The Vesting Date shall be the date of the Award Holder’s death or Disability if the Award Holder dies or becomes Disabled prior to the three-year anniversary of the Grant Date: (i) while in Service; or (ii) after terminating Service if the Award Holder (A) was Retirement Eligible on the date of such termination of Service for a reason other than Substantial Cause, and (B) had not, at any time prior to the date of the Award Holder’s death or Disability, become an employee of a competitor of the Company or any of its Affiliates or otherwise engaged in any activity that is competitive with the Company or any of its Affiliates, as determined by the Company in its sole discretion. On such Vesting Date:  (a) the Performance Period shall be deemed to have been completed; (b) a number of RSUs shall vest in an amount equal to the number of Target Shares multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was actively in Service, and the denominator of which is the total number of months in the original Performance Period (a partial month worked shall be counted as a full month if the Award Holder was actively in Service for fifteen (15) days or more in that month); (c) no Additional Shares shall be issued to the Award Holder; and (d) all RSUs that do not vest in accordance with this provision shall be forfeited.
(3)    Termination on Divestiture.  In the event that, prior to the three-year anniversary of the Grant Date, the Award Holder is no longer employed by the Company or an Affiliate upon and as result of the divestiture by the Company of its controlling interest in the Award Holder’s Employer, or other cessation of the Company’s control of such Employer, the Performance Period and vesting determination set forth in Sections A – D above shall be deemed revised as follows, provided that the Award Holder does not otherwise continue in Service with the Company or another Affiliate:
		
	•
	The Performance Period shall be deemed revised to end on the effective date of such divestiture or cessation of control (“Vesting Date”); 

10

		
	•
	The Company’s Relative TSR Percentile Rank will be determined for such truncated Performance Period by the Committee in accordance with the methodology set forth above.  

		
	•
	The Target Shares will vest or be forfeited on the Vesting Date in accordance with the table set forth below, but no Additional Shares will be issued to the Award Holder; and

		
	•
	If the Company’s Relative TSR Percentile Rank for the truncated Performance Period falls between the percentile levels specified in the first column of the table set forth below, the number of Target Shares that will vest on the Vesting Date shall equal the number corresponding to the percentage interpolated on a straight-line basis from the percentages specified in the second column of the table.

	
		
	

Company’s Relative TSR Percentile Rank

	

Total Shares to Vest on Vesting Date as Percentage of Target Shares

	50th or Higher
	100%

	25th
	50%

	Below 25th
	0%

(4)    Other Termination of Service.  If the Award Holder ceases to be in Service (including, without limitation, by reason of a divestiture or cessation of control of an Affiliate), and is not Retirement Eligible, under circumstances other than those set forth in the foregoing subsections (1) – (3) of this Section E, all unvested RSUs held by the Award Holder shall be forfeited to the Company on the date of such cessation of Service, and no Additional Shares shall be issued to the Award Holder. 
(5)    Leave of Absence.  In the event that the Award Holder is on an approved Leave of Absence (other than a short-term disability leave) at the end of the Performance Period or takes such a leave of absence at any time during the Performance Period, then the RSUs will vest, forfeit or be granted, as applicable, to the extent earned for the Performance Period, in an amount equal to the number of Target Shares that would vest and the number of Additional Shares that would be issued in accordance with the provisions of Sections A – D above, if any, multiplied by a fraction, the numerator of which is the number of full months in the Performance Period during which the Award Holder was an active Employee not on such leave of absence and the denominator of which is the total number of months in the Performance Period.
(6)    Change of Control.  This Award may be subject to termination or early vesting in connection with a Change in Control in accordance with the provisions of Section 18.3 of the Plan.

11

F.  Interpretations Related to Calculations and Determinations Related to Performance:
(1)    Interpretations.  The Company shall have the reasonable discretion to interpret or construe ambiguous, unclear or implied terms applicable to this Award Agreement, and to make any findings of fact necessary to make a calculation or determination hereunder.
(2)    Disagreements.  A decision made in good faith by the Company shall govern and be binding in the event of any dispute regarding a method of calculation of performance or a determination of vesting or forfeiture in connection with this Award.
(3)    Method of Calculating Final Number of Vested or Forfeited Target Shares.
The following methods shall apply in determining the number of Target Shares that will vest or be forfeited on the Vesting Date pursuant to Section D above.  As a general rule, the determination for performance that falls between Percentile Rank points in the table in Section D above would be interpolated on a straight-line basis, as stated in Section D.
Specifically, the formula to be used to calculate the final number of Target Shares that will vest or be forfeited is as follows:

		
	•
	For TSR performance between the 25th & 50th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals:   50% + [(Actual Percentile Rank - 25)/50]%

		
	•
	For TSR performance between the 50th & 75th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals:   100% + [(Actual Percentile Rank - 50)/50]%

		
	•
	For TSR performance between the 75th & 90th Percentile Ranks, the number of Target Shares that will vest as a % of the total number of Target Shares equals:    150% + [(Actual Percentile Rank - 75)/30]%

Note that since the interval between the 75th & 90th Percentile Rank is shorter (15 percentiles) compared to the other quadrants (25 percentiles), the vesting result for this particular quadrant would be higher compared to the other quadrants.
(4)    Rounding Conventions.
		
	•
	Regarding rounding of TSRs, percentages for each company in the Peer Group shall be computed to two decimal points, i.e., XX.XX%)

		
	•
	Regarding TSR Percentile Rank, the percentile rankings for each company in the Peer Group shall be rounded to the nearest percentage (e.g., 85% rather than 85.4166666%) before calculating the linearly interpolated payout, and the final payout percentage shall be rounded to the nearest percentage (e.g., 183% rather than 183.333333%).

12

		
	•
	Target Shares that will vest and any Additional Shares that will result from the application of the methods and formula set forth in the foregoing subsection F(3) and Section D above shall only be paid out in whole shares.  Any fractional shares that would otherwise result from such application shall be rounded down to the nearest whole number of shares.

13KMPR 2013 12.31.2013 EX 10.32 2009 Performance Incentive Plan, as amended and restated effective February 4, 2014

Exhibit 10.32

KEMPER CORPORATION
2009 Performance Incentive Plan
Amended and Restated as of February 4, 2014

TABLE OF CONTENTS

	
					
	 
	 
	 
	Page
	

	Article
	1
	Establishment, Purpose, and Duration
	1
	

	 
	1.1
	Establishment
	1
	

	 
	1.2
	Purpose of this Plan
	1
	

	Article
	2
	Definitions
	1
	

	 
	2.1
	“Affiliate”
	1
	

	 
	2.2
	“Annual Incentive Award”
	1
	

	 
	2.3
	“Award”
	1
	

	 
	2.4
	“Award Instrument”
	1
	

	 
	2.5
	“Board” or “Board of Directors”
	1
	

	 
	2.6
	“Code”
	2
	

	 
	2.7
	“Committee”
	2
	

	 
	2.8
	“Company”
	2
	

	 
	2.9
	“Corporate Performance Measures”
	2
	

	 
	2.10
	“Disability or Disabled”
	2
	

	 
	2.11
	“Effective Date”
	2
	

	 
	2.12
	“Employee”
	2
	

	 
	2.13
	“Employer”
	2
	

	 
	2.14
	“Individual Performance Measures”
	2
	

	 
	2.15
	“Multi-Year Incentive Award”
	2
	

	 
	2.16
	“Participant”
	2
	

	 
	2.17
	“Performance Measures”
	2
	

	 
	2.18
	“Performance Period”
	2
	

	 
	2.19
	“Plan”
	2
	

	 
	2.20
	“Plan Year”
	2
	

	 
	2.21
	“Retirement” or “Retires”
	3
	

	 
	2.22
	“Section 409A”
	3
	

	 
	2.23
	“Subject Employees”
	3
	

	Article
	3
	Eligibility and Participation
	3
	

	 
	3.1
	Eligibility
	3
	

	 
	3.2
	Actual Participation
	3
	

	Article
	4
	Grant, Earning and Payment of Awards 
	3
	

	 
	4.1
	Grant of Awards
	3
	

	 
	4.2
	Award Instruments
	3
	

	 
	4.3
	Determination of Any Pay Outs Under Awards to Subject Employees
	4
	

	 
	4.4
	Determination of Any Pay Outs Under Awards to Other Participants
	4
	

	 
	4.5
	Timing of Payments
	4
	

	Article
	5
	Performance Measures
	4
	

	 
	5.1
	Performance Measures
	4
	

	 
	5.2
	Individual Performance Measures
	4
	

	 
	5.3
	Corporate Performance Measures
	5
	

	 
	5.4
	Adjustments
	6
	

i

TABLE OF CONTENTS
(continued)

	
					
	 
	 
	 
	Page
	

	 
	5.5
	Discretion
	6
	

	Article
	6
	Termination of Employment; Leave of Absence
	7
	

	 
	6.1
	Death or Disability
	7
	

	 
	6.2
	Retirement
	7
	

	 
	6.3
	Divestiture of Employer
	7
	

	 
	6.4
	Other Termination Provisions
	8
	

	 
	6.5
	Leave of Absence
	8
	

	Article
	7
	Transferability of Awards
	9
	

	 
	7.1
	Transferability
	9
	

	 
	7.2
	Domestic Relations Orders
	9
	

	Article
	8
	Arbitration
	9
	

	Article
	9
	Compliance with Section 409A
	9
	

	Article
	10
	Rights of Participants
	9
	

	 
	10.1
	Employment
	9
	

	 
	10.2
	Participation
	10
	

	Article
	11
	Change of Control
	10
	

	Article
	12
	Administration
	12
	

	 
	12.1
	General
	12
	

	 
	12.2
	Authority of the Committee
	13
	

	Article
	13
	Amendment, Modification, Suspension, and Termination
	13
	

	 
	13.1
	Amendment, Modification, Suspension, and Termination
	13
	

	 
	13.2
	Awards Previously Granted
	13
	

	Article
	14
	Tax Withholding
	13
	

	Article
	15
	Successors
	13
	

	Article
	16
	General Provisions
	14
	

	 
	16.1
	Forfeiture Events
	14
	

	 
	16.2
	Severability
	14
	

	 
	16.3
	Unfunded Plan
	14
	

	 
	16.4
	Non-exclusivity of this Plan
	14
	

	 
	16.5
	Governing Law
	14
	

	 
	16.6
	Beneficiaries
	14
	

	
			
	 
	ii
	 

Kemper Corporation  
2009 Performance Incentive Plan

Amended and Restated
Effective February 4, 2014 

Article 1Establishment, Purpose, and Duration
1.1    Establishment.  Kemper Corporation, a Delaware corporation (hereinafter referred to as the “Company”), established the Kemper Corporation 2009 Performance Incentive Plan (the “Plan”) effective as of February 3, 2009 (“Effective Date”).  The Company has amended and restated the Plan from time to time and most recently amended and restated the Plan effective February 4, 2014.  This Plan permits the grant by the Company and its Affiliates of Annual Incentive Awards and Multi-Year Incentive Awards, as defined hereafter.  
1.2    Purpose of this Plan.  The purpose of this Plan is to motivate and reward eligible executive-level Employees through annual and multi-year cash incentive awards tied to the results of performance measures established hereunder, and to attract and retain superior Employees through these incentives. 
Article 2    Definitions
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
2.1    “Affiliate” means any person or entity controlled directly or indirectly by the Company, whether by equity ownership, contract or otherwise and shall include direct or indirect subsidiaries of the Company and mutual companies the management of which is controlled by the Company and its subsidiaries.  
2.2    “Annual Incentive Award” means an arrangement under which a Participant is given the opportunity to earn a cash bonus based on the results of one or more performance measures assessed over a Performance Period of one year or less.
2.3    “Award”  means, individually or collectively, a grant under this Plan of an Annual Incentive Award or a Multi-Year Incentive Award, in each case subject to the terms of this Plan. 
2.4    “Award Instrument”  means either: (a) a written agreement between a Participant and the Company or his or her Employer setting forth the terms and conditions applicable to an Award, or (b) a written or electronic statement issued by the Company or an Employer to a Participant describing the terms and conditions of such Award.
2.5    “Board” or “Board of Directors”  means the Board of Directors of the Company. 

1
2-4-14

2.6    “Code”  means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
2.7    “Committee”  means the Compensation Committee of the Board or any subcommittee thereof, or any other committee designated by the Board to administer this Plan. 
2.8    “Company” means Kemper Corporation, a Delaware corporation, and any successor thereto as provided in Article 15 herein.
2.9    “Corporate Performance Measures” is defined in Section 5.3. 
2.10    “Disability or Disabled”  when used with respect to a particular Participant, means a physical or mental condition that: (a) is of a type that would generally trigger benefits under the Company’s long-term disability plan (as in effect from time to time), whether or not such Participant is actually enrolled in such plan; or (b) in the absence of any such plan, would cause such Participant to be unable to substantially perform his or her duties as an Employee, as determined in the sole discretion of the Committee.  Notwithstanding the foregoing, if an Award becomes subject to Section 409A, “Disability” and “Disabled” shall be defined as required thereunder. 
2.11    “Effective Date”  has the meaning set forth in Section 1.1.
2.12    “Employee”  means any employee of the Company or any Affiliate of the Company.
2.13    “Employer” means, with respect to a given Employee, whichever of the Company or its Affiliates is the employer of such Employee.
2.14    “Individual Performance Measures” is defined in Section 5.2.
2.15    “Multi-Year Incentive Award” means an arrangement under which a Participant is given the opportunity to earn a cash award based on the results of one or more performance measures assessed over a Performance Period of more than one year.
2.16    “Participant”  means any Employee to whom an Award is granted.
2.17    “Performance Measures”  means measures described in Article 5 on which performance metrics for Awards are based.  
2.18    “Performance Period”  means the period of time with respect to which the results of performance measures are assessed to determine the amount of the payout, if any, of an Award.
2.19    “Plan”  is defined in Section 1.1 above.
2.20    “Plan Year”  means a calendar year.

2
2-4-14

2.21    “Retirement” or “Retires”  means, (a) for Awards granted prior to February 2013, the voluntary termination of employment by a Participant who has attained age 55, is eligible for early retirement under a retirement plan sponsored by the Company, and makes an election to begin receiving retirement benefits under such retirement plan, (b) for Awards granted beginning in February 2013 through January 2014, the termination of employment by a Participant who has attained age 65 and completed at least five years of service with the Company and/or one or more of its Affiliates, and (c) for Awards granted beginning in February 2014, the definition set forth in the applicable Award Agreement.
2.22    “Section 409A”  means Section 409A of the Code, or any successor provision, and the regulations, rulings and other guidance issued thereunder by the Internal Revenue Service. 
2.23    “Subject Employees” means the individuals defined as Subject Employees under the Committee’s Charter as in effect from time to time. 
Article 3    Eligibility and Participation
3.1    Eligibility.  All executive-level and other key Employees, as determined in the discretion of the Committee or the Company’s Chief Executive Officer or other executive officer, shall be eligible to participate in this Plan.  An Employee or Subject Employee who participates in the Kemper Corporation Executive Performance Plan shall be eligible to participate in this Plan.
3.2    Actual Participation.  For Awards to Subject Employees, the Committee shall have the sole power and authority, in its discretion, to select Award recipients and determine the terms of Awards on its own initiative or to approve, modify or reject Award recommendations from the management of the Company or its Affiliates, and no such Awards shall be granted without the prior, express approval of the Committee.  For Awards to other Employees, the Company’s Chief Executive Officer (and such other executive officers of the Company as determined appropriate by the Company’s Chief Executive Officer in his or her discretion), has the power and authority to select such additional Award recipients and to approve and determine the terms of such Awards.
Article 4    Grant, Earning and Payment of Awards
4.1    Grant of Awards.  At any time and from time to time, Annual Awards and/or Multi-Year Awards may be granted to Participants under the terms and provisions of this Plan.  
4.2    Award Instruments.  Each Award to a Participant shall be evidenced by an Award Instrument that specifies the applicable Performance Period, Performance Measures, performance metrics or formulas, threshold, maximum and target payouts and such other provisions as have been approved for such Participant in accordance with this Plan, including, without limitation, such provisions as maybe determined necessary or advisable to comply with Article 9.

3
2-4-14

4.3    Determination of Any Payouts Under Awards to Subject Employees.  
(a)    Data and Calculations.  After each Performance Period, the Company shall compile data and perform calculations as may be necessary to assess results and achievements of any performance measures that were previously established for such Performance Period. 
(b)    Review of Performance Results.  After each Performance Period, the Company shall submit a written report to the Committee providing performance results under Awards granted to Subject Employees for such Performance Period, including such data and calculations necessary to enable the Committee to assess the results of any objective performance measures established for such Performance Period.   The Committee shall review such report and make a determination to certify the actual performance results for such Awards, or the applicable portions thereof, that are based on objective performance measures. 
(c)    Payout Amounts.  Prior to the payout of an Award to a Subject Employee, the Committee shall review and approve the basis and amount of such payout. The Committee, in its sole discretion, may reduce or increase the amount of the payout that otherwise would be due under an Award to a Subject Employee.      
4.4    Determination of Any Payouts Under Awards to Other Participants.  With respect to Awards to Participants other than Subject Employees, data shall be provided by the Company and a determination shall be made by the Company’s Chief Executive Officer or other executive officer as to the performance results for the Performance Period and the amount of any payout.
4.5    Timing of Payments.  Awards shall be paid, in cash, as soon as practicable after the end of a Performance Period in accordance with the terms of the Award Instrument, but in no event later than the earlier of (a) thirty (30) calendar days after the performance results have been made available pursuant to Section 4.3 or 4.4, as applicable, for the applicable Performance Period, or (b) two and one-half (21⁄2) months after the close of the Plan Year in which Participant becomes vested in the Participant’s Award under the Plan.
Article 5    Performance Measures
5.1    Performance Measures.  Performance metrics for Awards to Participants may be based on Individual Performance Measures, Corporate Performance Measures, or a combination of the two. 
5.2    Individual Performance Measures.  Performance metrics may be established for Awards to a Participant based on individual performance measures which may be quantitative or qualitative in nature (“Individual Performance Measures”). In the case of an Award based upon a combination of Individual Performance Measures and Corporate Performance Measures, specific limits may be imposed on the portion of the payout that is based upon Individual Performance Measures.  Such limits may be expressed in terms of the total dollar amount or the percentage of 

4
2-4-14

the Award’s payout that may be attributable to the attainment of Individual Performance Measures.
5.3    Corporate Performance Measures.  The corporate performance metrics upon which the payment of an Award may be conditioned include, but shall not be limited to, the following Performance Measures (“Corporate Performance Measures”): 
		
	(a)
	Net earnings or net income (before or after taxes); 

		
	(b)
	Operating earnings per share;

		
	(c)
	Net sales or revenue growth;

		
	(d)
	Operating income and/or average increase in dollars of operating income of the Company or any of its Affiliates or operating units;

		
	(e)
	Return measures (including, but not limited to, return on assets, capital, invested capital, investment portfolio performance returns or yields, equity, sales, or revenue);

		
	(f)
	Cash flow (including, but not limited to, operating cash flow, free cash flow, and cash flow return on equity);

		
	(g)
	Earnings before or after taxes, interest, depreciation, and/or amortization;

		
	(h)
	Gross or operating margins;

		
	(i)
	Productivity ratios;

		
	(j)
	Share price (including, but not limited to, growth measures and total shareholder return);

		
	(k)
	Expense targets;

		
	(l)
	Margins;

		
	(m)
	Operating efficiency;

		
	(n)
	Market share;

		
	(o)
	Customer satisfaction; 

		
	(p)
	Working capital targets; 

		
	(q)
	Bad debt experience; 

		
	(r)
	Reduction in costs; 

5
2-4-14

		
	(s)
	Income from continuing operations, before or after taxes; 

		
	(t)
	Value returned to shareholders, including or excluding dividends paid or share repurchases;

		
	(u)
	Economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital); and

		
	(v)
	Insurance company underwriting income, combined ratios, loss ratios or expense ratios.

Any Corporate Performance Measure(s) may be defined in accordance with generally acceptable accounting principles or otherwise, and may be used to measure the performance of the Company and its Affiliates on a consolidated basis, or any Affiliate or business unit or segment of the Company individually, or any combination thereof, as the Committee may deem appropriate.  Any Corporate Performance Measure may also be compared against similar measures for a group of comparator or peer companies, or against a published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may select Performance Measure (j) above as compared to various stock market indices.  Any Corporate Performance Measure that refers to “income” may include or exclude catastrophe losses, catastrophe loss adjustment expenses, and/or gains or losses on investments.
5.4    Adjustments.  The Committee may, in its sole discretion, at the time that it approves the terms of an Award or any time thereafter, adjust any Corporate Performance Measures to exclude the impact of any unusual or non-recurring item the Committee deems not reflective of the Company’s core operating performance, which occurs during a Performance Period including, but not limited to: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting or tax principles, or other laws or provisions affecting reported results; (d) any reorganization, restructuring or discontinued operations; (e) extraordinary nonrecurring items as determined by reference to accounting principles generally accepted in the United States and/or as described in the Company’s reports filed with the Securities and Exchange Commission for periods within the applicable Performance Period; (f) acquisitions or divestitures; (g) catastrophes; (h) foreign exchange gains or losses; (i) extraordinary events; (j) financing activities; and (k) recapitalizations (including stock splits and dividends).  In addition, the Committee may make, in its discretion, adjustments to the established performance metrics applicable to such Award to reflect changes to the job responsibilities of the Participant or the structure of the Company or its Affiliates that relate directly to such established performance metrics for all or a portion of the applicable Performance Period.   The Chief Executive Officer may approve adjustments of the type set forth in this Section 5.4 for Awards to Employees other than Subject Employees to the extent applicable and within the scope of the authority provided to Chief Executive Officer in Section 3.2 above.
5.5    Discretion.  The Committee or, with respect to Awards to Employees other than Subject Employees, the Chief Executive Officer to the extent applicable and within the scope of the authority provided to Chief Executive Officer in Section 3.2 above, shall have the authority 

6
2-4-14

in its or such officer’s discretion to alter the governing Performance Measures for outstanding Awards for any reason, including but not limited to applicable tax and/or securities laws changes subject to Section 13.2.
Article 6    Termination of Employment; Leave of Absence
6.1    Death or Disability.  Upon termination of the employment of a Participant due to death or Disability,  for each outstanding Award previously granted to the Participant, the Performance Period shall be deemed to have been completed and a payout of the Award shall be due to the Participant (or, in the case of death, to the Participant’s surviving spouse, or, if none, to the Participant’s estate) at the level defined in the Award Instrument as the “target” level as if the applicable performance goal(s) had been achieved at such target level, but reduced on a pro-rata basis by multiplying the amount that would have been payable under the Award at such target level for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period.  A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month.  The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of such completed Performance Period). 
6.2    Retirement.  

(a)    for Awards granted beginning in February 2014, the vesting, forfeiture and other terms of payout for Awards that apply in the event that a Participant’s employment with the Company or any of its Affiliates terminates due to Retirement shall be determined as set forth in the applicable Award Agreement; 
(b)    for Awards granted prior to February 2014, the following terms apply: 
In the event that a Participant’s employment terminates due to Retirement, for each outstanding Award previously granted to the Participant, a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the original Performance Period, but reduced on a pro-rata basis by multiplying the amounts that would have been payable under the Award for the original Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee and the denominator of which is the total number of months in the original Performance Period.  A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month.  The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees (but in no event later than March 15 of the calendar year immediately following the end of the Performance Period). 
6.3    Divestiture of Employer.  In the event that a Participant’s employment terminates upon and as result of the sale or divestiture by the Company or any of its Affiliates of 

7
2-4-14

its controlling interest in any Employer (“Divestiture”), for each outstanding Award previously granted to such Participant, the term of the applicable Performance Period shall be deemed revised so that the Performance Period ends on the effective date of the Divestiture, and a payout of the Award shall be due, to the extent earned, based on the actual results relative to the applicable performance goal(s) for such Award for the revised Performance Period.  The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of such completed Performance Period).  
6.4    Other Termination Provisions.
(a)    Other Events.  In the event a Participant’s employment terminates for any reason other than death, Disability, Retirement, Divestiture, or an Event as defined in Article 11, including but not limited to, termination with or without cause by his or her Employer, or voluntary termination by the Participant, any outstanding Award shall be canceled and the Participant shall receive no payment for such Award under this Plan, unless, subject to Section 16.1, the Performance Period associated with any such Award had been completed at the time of the Participant’s termination of employment, in which case the payout, if any, pursuant to such Award shall be computed and paid in accordance with the relevant performance measures as if the Participant’s employment had not terminated. 
(b)    Other Provisions.  The Committee may, in its discretion, approve termination provisions in connection with particular Awards or Participants that differ from the terms of this Article 6 to the extent such provisions do not adversely affect any Award previously granted under this Plan in any material way without the written consent of the Participant holding such Award.
6.5    Leave of Absence.  In the event that the Participant is on an approved leave of absence (other than a short-term disability leave) at the end of the Performance Period, or takes such a leave of absence at any time during the Performance Period, a payout of the Award shall be due, to the extent earned, based upon the actual results relative to the applicable performance goal(s) for such Award for the Performance Period, but reduced on a pro-rata basis by multiplying the amount that would have been payable under the Award for the Performance Period by a fraction, the numerator of which is the number of full months in the Performance Period during which the Participant was an active Employee not on such leave of absence and the denominator of which is the total number of months in the Performance Period.  A partial month worked shall be counted as a full month if the Participant was an active Employee for fifteen (15) days or more in that month.  The Award shall be paid, in cash, as soon as practicable after the completion of the original Performance Period when Award payouts are made to active Employees,  but in no event later than the earlier of (a) thirty (30) calendar days after the performance results have been made available pursuant to Section 4.3 or 4.4, as applicable,  for the applicable Performance Period, or (b) two and one-half (21⁄2) months after the close of the Plan Year in which Participant becomes vested in the Participant’s Award under the Plan.

8
2-4-14

Article 7    Transferability of Awards
7.1    Transferability.  Awards shall not be transferable other than by will or the laws of descent and distribution.  No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void. 
7.2    Domestic Relations Orders.  Without limiting the generality of Section 7.1, no domestic relations order purporting to authorize a transfer of an Award or any interest in an Award shall be recognized as valid.
Article 8    Arbitration
As a condition to receiving an Award grant, a Participant may be required to agree in writing to submit all disputes or claims arising out of or relating to any such Award to binding arbitration in accordance with such terms as prescribed when the Award is approved.  
Article 9    Compliance with Section 409A
Each Award that is granted under this Plan shall be designed and administered so that the Award is either exempt from the application of, or compliant with, the requirements of Section 409A.  To the extent that the Committee determines that any Award granted under this Plan is subject to Section 409A, the Award Instrument shall include such terms and conditions as the Committee determines, in its discretion, are necessary or advisable to avoid the imposition on the Participant of an additional tax under Section 409A.  Notwithstanding any other provision of this Plan or any Award Instrument (unless the Award Instrument provides otherwise with specific reference to this Section):  (i) an Award shall not be granted, deferred, accelerated, extended, paid out, settled, substituted, adjusted or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A upon a Participant; and (ii) if an Award Instrument provides for the deferral of compensation within the meaning of Section 409A, no distribution or payment of any amount shall be made before a date that is six (6) months following the date of such participant’s separation from service (as defined in Section 409A) or, if earlier, the date of the Participant’s death.  Although the Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A, the Company does not warrant that any Award under this Plan will qualify for favorable tax treatment under Section 409A or any other provision of federal, state, local, or non-United States law.  Neither the Company, its Affiliates nor their respective directors, officers, employees or advisors shall be liable to any Participant (or any other individual claiming a benefit through the Participant) for any tax, interest or penalties the Participant may owe as a result of the grant, holding, vesting or payment of any Award under this Plan.
Article 10    Rights of Participants
10.1    Employment.  Nothing in this Plan or an Award Instrument shall interfere with or limit in any way the right of an Employer to terminate any Participant’s employment at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue 

9
2-4-14

his or her employment for any specified period of time.  Neither an Award, an Award Instrument, nor any benefit arising under this Plan shall constitute an employment contract with the Company or any of its Affiliates and, accordingly, subject to Articles 12 and 13, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates or their respective directors, officers, employees or advisors. 
10.2    Participation.  No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
Article 11    Change in Control
(a)    For Awards granted prior to February 2013.  Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all the property or more than eighty percent (80%) of the then outstanding Shares of the Company to another corporation (any of the foregoing, an “Event”), the applicable Performance Period for each Award then outstanding under this Plan shall be deemed revised so that such Performance Period ends on the effective date of the Event, and a payout of each such Award shall be due to the respective Participant in the amount which is the greater of the payout that would be due: (i) based upon the actual results for such revised Performance Period relative to the applicable performance goal(s) for such Award; or (ii) at the level defined in the respective Award Instrument as the “target” level for such Award for such revised Performance Period.   The Award shall be paid, in cash, as soon as practicable after the Event (but in no event later than March 15 of the calendar year immediately following the end of the revised Performance Period).
(b)    For Awards granted beginning in February 2013.  Upon a Change in Control, except as prohibited by applicable laws, rules, regulations or stock exchange requirements, as determined otherwise by the Committee in connection with particular Awards and set forth in the applicable Award Agreements, or as provided in any employment, change in control, severance or other plan or agreement between a Participant and the Company or an Affiliate, the Committee may provide, in its sole discretion, that the Plan shall be terminated and Participants paid out at a level prescribed by the Committee; provided that, absent a specific action or decision to the contrary by the Committee, if the employment of a Participant is terminated by the Company or an Affiliate without Substantial Cause or by the Participant for Good Reason within the twenty-four (24) month period following such Change in Control, the applicable Performance Period for each Award then outstanding under this Plan shall be deemed revised so that such Performance Period ends on the effective date of the termination of employment, and a payout of each such Award shall be due to the respective Participant in the amount which is the greater of the payout that would be due: (i) based upon the actual results for such revised Performance Period relative to the applicable performance goal(s) for such Award; or (ii) at the level defined in the respective Award Instrument as the “target” level for such Award for such revised Performance Period.  The Award shall be paid, in cash, as soon as practicable after the termination of employment (but in no event later than March 15 of the calendar year immediately following the end of the revised Performance Period).

10
2-4-14

For purposes of this Article 11(b):  
“Change in Control” means that the event set forth in any one of the following paragraphs (i) – (iv) shall have occurred: 
(i)    any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or any of its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; or 
(ii)    the following individuals cease for any reason to constitute a majority of the number of Directors then serving: individuals who, on the Effective Date, constitute the Board of Directors and any new Director (other than a Director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or 
(iii)    there is consummated a merger or consolidation of the Company or any Affiliate with any other corporation, other than (a) a merger or consolidation which results in the Directors immediately prior to such merger or consolidation continuing to constitute at least a majority of the Board of Directors of the surviving entity or any parent thereof, or (b) a merger or consolidation effected to implement a recapitalization or reincorporation of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or any of its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or 
(iv)    the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets immediately following which the individuals who comprise the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof. 
“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); 
“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified in Sections 13(d)(3) and 14(d)(2) thereof, except that such term shall not include (i) the Company or any entity, more than 50% of the voting securities of which are Beneficially Owned by the Company, (ii) a trustee or other fiduciary holding securities under an employee benefit 

11
2-4-14

plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, (v) any individual, entity or group whose ownership of securities of the Company is reported on Schedule 13G pursuant to Rule 13d-1 promulgated under the Exchange Act (but only for so long as such ownership is so reported) or (vi) Singleton Group LLC or any successor in interest to such entity.
“Good Reason” shall mean any action taken by the Participant’s Employer which results in a material negative change to the Participant in the employment relationship, such as the duties to be performed, the conditions under which such duties are to be performed or the compensation to be received for performing such services.  A termination by the Participant shall not constitute termination for Good Reason unless the Participant shall first have delivered to the Employer written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than ninety (90) calendar days after the occurrence of such event), and there shall have passed thirty (30) calendar days within which the Employer may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by the Participant.  
“Substantial Cause” means the (i) commission of a criminal act against, an action in derogation of the interests of, or misconduct which results in a financial loss to, the Company or an Affiliate; (ii) misconduct which obligates the Company to prepare an accounting restatement due to material noncompliance with applicable financial reporting requirements; (iii) knowing disclosure of confidential information about the Company or an Affiliate in breach of the Company’s Essential Standards of Conduct or an applicable contractual or other obligation, or using such information for personal gain, including, without limitation, by trading in Company securities on the basis of material, non-public information; or (iv) performance of any other action that the Committee, in its sole discretion, may deem to be sufficiently injurious to the interests or reputation of the Company or an Affiliate to constitute substantial cause for the termination of a Participant’s employment. Nothing in the Plan shall be construed to imply that a Participant’s employment or other relationship with the Company or its Affiliates may only be terminated for Substantial Cause. 
Article 12    Administration  
12.1    General.  The Committee shall be responsible for oversight of the administration of this Plan, subject to this Article 12 and the other provisions of this Plan.  The Committee may retain attorneys, consultants, accountants, or other advisors, and the Committee, the Company and its Affiliates, and their respective officers and directors shall be entitled to rely upon the advice, opinions, or valuations of any such advisors. The fees of any such advisors shall be paid by the Company.  All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Participants, beneficiaries, the Company, its Affiliates and all other interested individuals. 

12
2-4-14

12.2    Authority of the Committee.  
(a)    Power and Discretion.  The Committee shall have full and, except as otherwise expressly provided in this Plan, exclusive, power and discretion: (i) to interpret the terms and the intent of this Plan and any Award Instrument or other agreement or document ancillary to or in connection with this Plan,  and to adopt such rules, regulations, forms, instruments, and guidelines for administering this Plan as the Committee may deem necessary or proper;  (ii) subject to Article 13, to adopt modifications and amendments to this Plan or any Award Instrument, including without limitation, any that are necessary to comply with the laws of the jurisdictions in which the Company and its Affiliates operate or may operate.   
(b)    Delegation.  Notwithstanding the other provisions of this Plan, including Section 12.2(a), the Committee may in its discretion delegate such administrative duties or powers as it may deem advisable to one or more of its members and, except to the extent inconsistent with the Committee’s charter or any legal or regulatory provision, to one or more officers of the Company or its Affiliates.  
Article 13    Amendment, Modification, Suspension, and Termination
13.1    Amendment, Modification, Suspension, and Termination.  Subject to Article 9 and Section 13.2, the Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate this Plan in whole or in part; provided, however, that no amendment, modification, suspension or termination may impact the distribution of any Award that is subject to Section 409A. 
13.2    Awards Previously Granted.  Notwithstanding any other provision of this Plan to the contrary, no termination, amendment, suspension, or modification of this Plan or an Award Instrument shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award. 
Article 14    Tax Withholding  
An Employer shall have the power and the right to deduct or withhold, or require a Participant to remit to the Employer, the amount of any taxes which the Employer may be required to withhold with respect to any taxable event arising from such Participant’s Awards.
Article 15    Successors
All obligations of the Company or any Affiliate under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company or such Affiliate, whether the existence of such successor is the result of a direct or indirect purchase, sale, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company or such Affiliate.

13
2-4-14

Article 16    General Provisions
16.1    Forfeiture Events.  An Award Instrument may specify that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award.  Such events may include, but shall not be limited to, termination of employment for cause, violation of material Company and/or Affiliate policies, breach of non-competition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates. 
16.2    Severability.  In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
16.3    Unfunded Plan.  Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between any Participant and his or her Employer or the Company or any of its Affiliates.  Participants shall have no right, title, or interest whatsoever in or to any assets of their Employers or of the Company or any of its Affiliates with respect to the obligations arising out of any Awards.  To the extent that any person acquires a right to receive payments pursuant to an Award, such right shall be no greater than the right of a general unsecured creditor of the Participant’s Employer.  No special or separate fund shall be established and no segregation of assets shall be made to assure payment of amounts payable under this Plan.
16.4    Non-exclusivity of this Plan.  The adoption of this Plan shall not be construed as creating any limitations on the power of the Company or any of its Affiliates to adopt such other compensation arrangements as it may deem desirable for any Employee.
16.5    Governing Law.  This Plan and each Award Instrument shall be governed by the laws of the State of Illinois, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction.  Unless otherwise provided in the Award Instrument (or other written agreement related to arbitration pursuant to Article 8), each Participant is deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Illinois and the state in which such Participant’s regular office is located, to resolve any and all issues that may arise out of or relate to this Plan or any related Award Instrument.
16.6    Beneficiaries. In the event of a Participant’s death, any amounts remaining to be paid under this Plan shall be paid to the Participant’s surviving spouse, or, if none, to the Participant’s estate. 

14
2-4-14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00226-of-00352.parquet"}]]