Document:

KMPR 2011 9.30.2011 EX-10.16 Non-Qualified Deferred Compensation Plan

KEMPER CORPORATION 
NON-QUALIFIED DEFERRED COMPENSATION PLAN
As Amended and Restated Effective August 25, 2011

TABLE OF CONTENTS

	
				
	 
	Page
	 

	ARTICLE I
	DEFINITIONS
	1
	

	ARTICLE II
	ELIGIBILITY
	4
	

	ARTICLE III
	DEFERRALS
	5
	

	ARTICLE IV
	FUNDING
	6
	

	ARTICLE V
	INVESTMENT OF FUNDS, ACCOUNT MAINTENANCE AND VESTING
	8
	

	ARTICLE VI
	PAYMENT OF BENEFITS
	9
	

	ARTICLE VII
	PAYMENTS UPON DEATH
	11
	

	ARTICLE VIII
	ADMINISTRATION OF THE PLAN
	12
	

	ARTICLE IX
	AMENDMENT OR TERMINATION
	13
	

	ARTICLE X
	GENERAL PROVISIONS
	13
	

KEMPER CORPORATION 
NON-QUALIFIED DEFERRED COMPENSATION PLAN
The Unitrin, Inc. Non-Qualified Deferred Compensation Plan was adopted effective January 1, 2002, was amended and restated effective January 1, 2008 to comply with Code Section 409A and was further amended and restated effective January 1, 2009 to clarify the operation of the Plan and its compliance with Code Section 409A.  Effective August 25, 2011, Unitrin, Inc. changed its name to Kemper Corporation (the “Company”).  As a result of the corporate name change, the plan set forth herein is now known as the Kemper Corporation Non-Qualified Deferred Compensation Plan (the “Plan”) and the Plan is hereby amended and restated effective as of August 25, 2011 to incorporate that name change.  
The purpose of the Plan is to provide a benefit to directors who are not employees of Kemper Corporation and select executives of Kemper Corporation or one of its subsidiaries.  Plan Participants are allowed the opportunity to elect to defer a portion of their Eligible Compensation (as defined in Section 1.14) to some future period.  The Plan is intended to be an unfunded “top hat plan” exempt from certain provisions of ERISA.
ARTICLE 1
 DEFINITIONS
1.1    General.  For purposes of the Plan, the following terms, when capitalized, will have the following meanings.  The masculine pronoun wherever used herein will include the feminine gender, the singular number will include the plural, and the plural will include the singular, unless the context clearly indicates a different meaning.
1.2    “Account” means the aggregate of a Participant’s bookkeeping sub-accounts established pursuant to Section 5.1.
1.3    “Administrative Committee” means the Administrative Committee of the Kemper Corporation 401(k) Savings Plan.
1.4    “Affiliated Company” or “Affiliate” means any corporation, trade or business entity which is a member of a controlled group of corporations, trades or businesses of which the Company is also a member, as provided in Code Sections 414(b) or (c).
1.5    “Beneficiary Designation Form” means a written document, the form of which the Company shall determine from time to time, on which a Participant shall have the right to designate a beneficiary.
1.6    “Board” means the Board of Directors of the Company.
1.7    “Bonus Compensation” means the annual formula and annual discretionary management bonuses earned in a given year and generally paid in the following year.  Bonus Compensation does not include other bonuses such as a relocation bonus, a hiring bonus, Multi-Year Incentive Compensation or other periodic bonuses.

1

1.8    “Change of Control” means Change of Control as defined in Section 4.3.
1.9    “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.
1.10    “Committee” means the Compensation Committee of the Board.
1.11    “Company” means Kemper Corporation, a Delaware corporation, or, to the extent provided in Section 10.9, any successor corporation or other entity resulting from a reorganization, merger or consolidation into or with the Company, or a transfer or sale of substantially all of the assets of the Company.
1.12    “Deferral Election” means the following: (a) for Employee Participants, an election to defer all or a part of such Participant’s Regular Base Salary, such Participant’s Bonus Compensation, or such Participant’s Multi-Year Incentive Compensation, all pursuant to Section 3.1, and (b) for Outside Director Participants, an election to defer Director Fees pursuant to Section 3.1.  A Participant’s Deferral Election shall also include an election by the Participant specifying the calendar year in which payments shall commence and the method of payment with respect to the payout of all future benefits attributable to deferrals for the Plan Year.
1.13    “Director Fees” means the cash fees Outside Directors earn.
1.14    “Eligible Compensation” means Regular Base Salary, Bonus Compensation, Multi-Year Incentive Compensation or Director Fees.
1.15    “Eligible Employees” means a select group of management employees of the Company or an Affiliate.
1.16    “Employee Participant” means with respect to any Plan Year, an Eligible Employee who has been designated in writing as a Participant pursuant to Section 2.1.
1.17    “Employer” means the Company and its Affiliates.
1.18    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.
1.19    “401(a)(17) Limit” means the amount of compensation which may be considered by a plan sponsor for purposes of determining benefits under a qualified retirement plan.  This amount is automatically adjusted annually by the Secretary of the Treasury for increases in the cost-of-living and such adjustment shall automatically be taken into account by the Plan.
1.20    “Investment Preference Form” means a written document, the form of which the Company shall determine from time to time, on which a Participant shall communicate his or her investment preference.
1.21    “Multi-Year Incentive Compensation” means compensation based on the achievement of one or more performance goals measured over more than a one year period.  Multi-Year Incentive 

2

Compensation does not include Bonus Compensation.
1.22    “Outside Directors” mean the directors of the Board who are not employees of the Company.
1.23    “Outside Director Participant” means with respect to any Plan Year, a Participant who is an Outside Director for that Plan Year.
1.24    “Participation Date” means the date on which an Eligible Employee or an Outside Director is eligible to participate in the Plan, as set forth in Section 2.2.
1.25    “Participant” means an Employee Participant or an Outside Director Participant.
1.26    “Plan” means the Kemper Corporation Non-Qualified Deferred Compensation Plan.
1.27    “Plan Administrator” means the Committee.
1.28    “Plan Year” means any calendar year during which the Plan is in effect.
1.29    “Regular Base Salary” means the annual scheduled base salary, excluding, without limitation, stock option income, severance pay, and income included in pay due to fringe benefits.
1.30    “Regulations” means the regulations, as amended from time to time, which are issued under Code Section 409A.
1.31    “Separation from Service” means the Participant’s termination from employment from the Employer, subject to the following and other provisions of the Regulations:
(a)    The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Employer under an applicable statute or by contract.  A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.  If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period.
(b)    In determining whether a Separation from Service has occurred, the following presumptions, which may be rebutted as provided in the Regulations, shall apply:
(i)    A Participant is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20% or less of the average level of services performed by the Participant during the immediately preceding 36-month period.
(ii)    A Participant will be presumed not to have separated from service 

3

where the level of bona fide services performed continues at a level that is 50% or more of the average level of services performed by the Participant during the immediately preceding 36-month period.
No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20% but less than 50% of the average level of bona fide services performed during the immediately preceding 36-month period.  If a Participant had not performed services for the Employer for 36 months, the full period that the Participant has performed services for the Employer shall be substituted for 36 months.
(c)    For purposes of this Section, the term “Employer” has the meaning set forth in Section 1.17 provided that the following shall apply in determining whether a person is an Affiliate as defined in Section 1.4:
(i)    In applying Code Sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code Sections 1563(a)(1), (2) and (3); and
(ii)    In applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treas. Reg. Section 1.414(c)-2.
(d)    In the event of the sale or other disposition of assets by the Company or an Affiliate (the “Seller”) to an unrelated service recipient (the “Buyer”), the Seller and the Buyer may specify whether a Separation from Service has occurred for a Participant who would otherwise experience a Separation from Service with the Seller, in accordance with the rules set forth in Section 1.409A-1(h)(4) of the Regulations.
1.32    “Trust” means a so-called “rabbi trust,” the assets of which shall remain, for all purposes, a part of the general unrestricted assets of the Company.
1.33    “Valuation Date” means each day that the New York Stock Exchange is open for business.  The determination of the Valuation Date as of which changes in investment preferences under the Plan are effected shall be made in accordance with rules and procedures established by the Company.
ARTICLE II 
ELIGIBILITY
2.1    Eligibility.  The Board may, in its discretion, or an Affiliate may, in its discretion and subject to the approval of the Board, designate in writing any Eligible Employee as a Participant who is eligible to participate in the Plan.  An Outside Director is automatically eligible to participate in the Plan.
2.2    Participation Date and Notice.  An Eligible Employee designated as a Participant 

4

pursuant to Section 2.1 shall become a Participant as of the first day of the Plan Year following such designation.  An Outside Director shall become a Participant as of the date he or she is elected a director of the Board.  The date that an Eligible Employee or Outside Director is eligible to participate in the Plan shall be known as the Participation Date.  The Company will provide the Participant with notice of the Participant’s Participation Date and the forms needed to make an election pursuant to Section 3.2 as soon as reasonably practicable after the Company is informed of a Participant’s Participation Date.
ARTICLE III
DEFERRALS
3.1    Deferral Amounts.  Participants may elect to defer Eligible Compensation subject to the limits described below.  A separate election for Regular Base Salary, Bonus Compensation, Multi-Year Incentive Compensation and Director Fees must be made.  Outside Director Participants may elect to defer up to 100% of their Director Fees.  Employee Participants may elect to defer up to 100% of their Regular Base Salary in excess of the 401(a)(17) Limit in effect for the year of payment.  Employee Participants may also elect to defer up to 100% of their Bonus Compensation to the extent that Bonus Compensation plus non-deferred Regular Base Salary is in excess of the 401(a)(17) Limit in effect for the year in which such bonus is earned, instead of for the year of payment.  Employee Participants may also elect to defer up to 100% of their Multi-Year Incentive Compensation to the extent that Multi-Year Incentive Compensation plus Bonus Compensation plus non-deferred Regular Base Salary is in excess of the 401(a)(17) Limit in effect for the last year of the performance period for the Multi-Year Incentive Compensation,  instead of for the year of payment.  The first Multi-Year Incentive Compensation which an Employee Participant may elect to defer shall be Multi-Year Incentive Compensation for which the performance period begins on January 1, 2011.
3.2    Deferral Election.  The Company shall provide each Participant, upon becoming a Participant and thereafter annually, with a Deferral Election to be filed by the Participant, in accordance with such procedures as may be established by the Company but subject to the following:
(a)    An Employee Participant desiring to participate in the Plan must file with the Company a Deferral Election not later than the close of the Participant’s taxable year next preceding the period of service for which the right to the compensation arises, at which time the election shall become irrevocable.  For avoidance of doubt, this means that with respect to Multi-Year Incentive Compensation with a three year performance period, a Deferral Election must be filed prior to the beginning of the first year of the three year performance period.  A Deferral Election shall be effective on the first day of the Plan Year following the filing thereof.
(b)    A Director Participant desiring to participate in the Plan must file with the Company an initial Deferral Election within 30 days (or such lesser number of days as the Company shall determine) following such Participant’s Participation Date at which time the election shall become irrevocable.  Such initial election shall be effective commencing with the first day of the first month following such filing.  Thereafter, a Deferral Election must be filed by a Director Participant prior to the beginning of the Plan Year to which it pertains, at which time the election 

5

shall become irrevocable.  Such Deferral Election shall be effective on the first day of the Plan Year following the filing thereof.
(c)    In no event shall a Participant be permitted to defer Eligible Compensation for any period that has commenced prior to the date on which the Plan is effective or the date on which a Deferral Election is signed by the Participant and accepted by the Company.
(d)    Upon receipt of a properly completed and executed Deferral Election, the Company shall notify the payroll department of the Participant’s Employer to withhold that portion of the Participant’s Eligible Compensation specified in the agreement.  All amounts shall be withheld ratably throughout the Plan Year except for any bonus or incentive amounts, which shall be withheld in a single lump sum.  In no event shall the Participant be permitted to defer more than the amount specified by the Plan.
ARTICLE IV
FUNDING
4.1    Unsecured Obligation.  Individual Participant deferrals of Eligible Compensation and the hypothetical investment earnings/losses thereon shall be reflected in book entries maintained by or on behalf of the Company, as set forth in Section 5.1.  The existence of such book entries shall not create a trust of any kind, or a fiduciary relationship between the Company, any third party record keeper and the Participant, his or her designated beneficiary, or other beneficiaries provided for under the Plan.  The bookkeeping entries represent an unsecured obligation of the Company to pay deferred Eligible Compensation and the investment earnings/losses thereon to a Participant at a future date.
4.2    Discretionary Rabbi Trust.  If the Company so determines, in its sole discretion, payments to a Participant or his or her designated beneficiary or any other beneficiary hereunder may be made from assets held in a Trust.  No person shall have any interest in such assets by virtue of the Plan.  The Company’s obligations hereunder shall be an unfunded and unsecured promise to pay money in the future.  Any Participant having a right to receive payments pursuant to the provisions of the Plan shall have no greater rights than any unsecured general creditor of the Company in the event of the Company’s insolvency or bankruptcy, and no person shall have nor acquire any legal or equitable right, claim or interest in or to any property or assets of the Company.  In no event shall the assets accumulated in the Trust be construed as creating a funded plan under the applicable provisions of ERISA, or under the Code, or under the provisions of any other applicable statute or regulation.
4.3    Change in Control.
(a)    Upon a Change of Control the Company shall, as soon as possible, but in no event longer than 30 days following the Change of Control, make an irrevocable contribution to the Trust in an amount that is sufficient to pay each Participant or beneficiary the benefits to which such Participant(s) or their beneficiaries would be entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred.  For purposes of the Plan “Change of Control” 

6

shall mean the occurrence of any of the following events:
		
	(i)
	any “Person” (defined below) is or becomes the “Beneficial Owner,” (defined below) 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 its “Affiliate” (defined below)) 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 (1) of subparagraph (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 December 31, 2008, constituted 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 still in office who either were directors on December 31, 2008 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 direct or indirect subsidiary of the Company with any other corporation, other than (1) a merger or consolidation which results in the directors of the Company 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 (2) a merger or consolidation effected to implement a recapitalization 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 its Affiliate) 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 

7

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.
(b)    As used in this Change of Control section:
		
	(i)
	“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

		
	(ii)
	“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act; and

		
	(iii)
	“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 (1) the Company or any entity, more than 50% of the voting securities of which are Beneficially Owned by the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, (4) 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, (5) 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 (6) Singleton Group LLC or any successor in interest to such entity.

ARTICLE V
INVESTMENT OF FUNDS, ACCOUNT MAINTENANCE AND VESTING
5.1    Record Keeper.  The Company shall appoint a Plan record keeper which shall establish and maintain an individual bookkeeping Account on behalf of each Participant for purposes of determining each Participant’s benefits under the Plan.  Separate sub-accounts shall be established for each Participant with respect to each year’s Deferral Election and for which a different form of payment or payment start date has been elected.
5.2    Account Adjustments.
(a)    The Plan record keeper shall adjust each Participant’s Account for amounts representing:
(i)    Participant deferrals,
(ii)    Hypothetical investment earnings/losses,

8

(iii)    Expenses, and
(iv)    Distributions paid to the Participant or beneficiaries.
(b)    Each Participant electing to defer Eligible Compensation pursuant to the Plan shall also specify at the time the Deferral Election is made, the hypothetical measure(s) of investment performance from among the choices made available from time to time to Plan participants by the Trust Administrative Committee of the Kemper Corporation 401(k) Savings Plan.  If the Participant fails to specify the hypothetical measure of investment performance, the Company shall do so.  The Participant’s bookkeeping account shall be deemed to be invested in the hypothetical investment selected by the Participant, or if none, by the Company.  Investment preferences selected by the Participant are used only to determine the value of a Participant’s Account and in no event is the Company required to follow these investment preferences for actual plan investments.  A Participant’s investment preference shall be communicated to the Company by completion and delivery to the Company of an Investment Preference Form in such form as the Company shall determine from time to time.  Participants shall indicate their initial investment preferences by filing an Investment Preference Form with the Company prior to the date on which deferrals commence under the terms of the Participant’s Deferral Election.  Once elected, investment preferences shall be valid until revoked by filing a new Investment Preference Form.  Participants shall have the opportunity to change their investment preferences with respect to (i) new deferrals, (ii) their entire existing balances or (iii) deferrals made for a specific Plan Year, in accordance with such procedures as may be established by the Company.
(c)    The Plan record keeper shall determine the value of all Accounts maintained under the terms of the Plan on each Valuation Date.  The Plan record keeper shall provide each Participant with a statement of his or her individual bookkeeping Account reflecting adjustments to such Account during the period from the last statement date.  Such statement shall be provided to Participants as soon as administratively feasible following the end of each calendar quarter.
ARTICLE VI
PAYMENT OF BENEFITS
6.1    Distributions.  A Participant’s or beneficiary’s benefit payable under the Plan shall be determined by reference to the value of each bookkeeping sub-account balance at the time of distribution.  Sub-accounts shall be maintained for each Plan Year’s deferrals.  Benefit payments from the Plan shall be payable from the general assets of the Company which include any assets held in the Trust.
6.2    Timing of Payments.  Subject to Section 6.4 through Section 6.9, each of a Participant’s subaccounts shall be paid or payment shall begin within 30 days following the specific date elected on the Participant’s applicable Deferral Election.  Except as set forth in Section 6.7 through Section 6.9, no Participant or beneficiary shall have any right to receive payment of his or her benefit under the Plan prior to the specific date elected on the applicable Deferral Election.
6.3    Form of Payments.  Each of a Participant’s subaccounts shall be paid as a lump sum or in installments as elected in the applicable Deferral Election.  A different form of payment, as to 

9

amount and timing, may be elected with respect to each year’s Deferral Election.  Except as otherwise provided in Section 6.4, once a Deferral Election is made with respect to amounts deferred for a Plan Year, it cannot be altered and is irrevocable.  A Participant’s account balance shall be distributed to the Participant or his or her beneficiary in the form of cash only.  Notwithstanding the foregoing, an election made by a Participant prior to January 1, 2009 to change the specific date for payment and the form of payment for one or more of his or her subaccounts shall be recognized to the extent permitted by IRS Notice 2007-86 and administrative procedures adopted by the Company.
6.4    Subsequent Deferral.  A Participant may elect to delay payment or change the form of payment of any of his or her sub-accounts if all of the following conditions are met with respect to such sub-account:
(a)    Such election shall not take effect until at least 12 months after the date on which the election is made;
(b)    Payment must be deferred for a period of not less than five years from the date such payment would otherwise have been paid; and
(c)    Any election must be made not less than 12 months before the first day of the calendar year in which payment of such sub-account would otherwise be made or commence.
The right to a series of installment payments, as defined in the Regulations, shall be treated as a right to a single payment.
6.5    Acceleration Prohibited.  Except as provided in Section 6.7 through 6.9, acceleration of the time of payment of any portion of the balance of a Participant’s Account is prohibited.
6.6    Payments in Violation of Federal Securities Laws.  To the extent permitted by the Regulations, the Company may delay a benefit payment where the Company reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law.  Such a benefit payment shall be made at the earliest date at which the Company reasonably anticipates that the making of the benefit payment will not cause such violation and, if the Participant had elected installment payments, the first payment to the Participant shall include the payments that the Participant would have received had payments begun as of the date such payments were scheduled to begin.  Notwithstanding the foregoing, if a benefit payment to a Participant is delayed until the Participant’s Separation from Service, then the benefit payment shall not be made before the first day of the seventh month after the Participant’s Separation from Service or, if earlier, the date of death of the Participant.
6.7    Accelerated Payment for Domestic Relations Orders.  To the extent necessary to fulfill a domestic relations order (as defined in Code Section 414(p)(1)(B)) and as permitted by the Regulations, the Company, in its sole discretion, may accelerate the time or schedule of a benefit payment under the Plan to an individual other than the Participant, or a benefit payment under the Plan may be made to an individual other than the Participant.
6.8    Accelerated Payment for Failure to Comply with Code Section 409A.  To the extent 

10

permitted by the Regulations, at any time the Plan fails to meet the requirements of Code Section 409A and the Regulations, the Company may accelerate the time or schedule of a payment, or a payment under the Plan may be made; provided, however, that such payment shall not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A and the Regulations.
6.9    Small Benefits.  If, upon the first day of the seventh month following a Participant’s Separation from Service (“Payment Date”), a Participant’s Account is less than or equal to the applicable dollar limit under Code Section 402(g)(1)(B) and results in the determination and liquidation of the entirety of the Participant’s interest under all agreements, methods, programs or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 1.409A-1(c)(2) of the Regulations, the Company may pay such Account to the Participant or his or her beneficiary in a single lump sum, in lieu of any further benefit payments hereunder, on the Payment Date.
ARTICLE VII
PAYMENTS UPON DEATH
7.1    Payment to Beneficiary.  Any benefit which a deceased Participant is entitled to receive under the Plan shall be paid to such Participant’s beneficiary.  Such death benefit shall be paid in the form and at the time elected in accordance with the Participant’s Deferral Elections.
7.2    Designation of Beneficiary.  A Participant shall have the right to designate a beneficiary on the Beneficiary Designation Form and to amend or revoke such designation at any time in writing.  Such designation, amendment or revocation shall be effective only when filed with the Company.  Any beneficiary designation, amendment or revocation shall apply to all past and present Deferral Elections.
If no Beneficiary Designation Form is filed with the Company, or if the Beneficiary Designation Form is held invalid, or if no beneficiary survives the Participant and benefits remain payable following the Participant’s death, the Company shall direct that payment of benefits be made to the person or persons in the first category in which there is a survivor.  The categories of successor beneficiaries, in order, are (a) the Participant’s spouse and (b) the Participant’s estate.
ARTICLE VIII
ADMINISTRATION OF THE PLAN
8.1    Plan Administration.  The Plan Administrator is the Committee.  The Committee has complete authority to interpret and administer the Plan.  The Committee’s responsibilities and obligations may be delegated as deemed necessary by the Committee from time to time.  The Committee may establish administrative practices as necessary for the establishment and ongoing maintenance of the Plan.  The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan.  The decisions 

11

made by and the actions taken by the Plan Administrator in the administration and interpretation of the Plan shall be final and conclusive for all persons.  If, after reading the Plan, Participants have questions about the Plan, such questions should be directed to the designated contact at the Company.
8.2    Claims.
Any Participant or beneficiary who believes that there was an error in the calculation of his or her account balance or in the payment of benefits under the Plan shall file a claim with the Plan Administrator.  The claim must be filed, signed and dated within 90 days of the date on which the claimant learned of the facts from which such claim arises.  The claim must be sent by certified mail or presented in person to the Plan Administrator.
The Plan Administrator, acting through the Company, shall respond in writing to the claimant within a reasonable period of time but not later than 90 days after receipt of the claim unless special circumstances require an extension of time for processing.  If such extension of time is required, the Plan Administrator, acting through the Company, shall furnish written notice of the extension to the claimant prior to the termination of the initial 90 day period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan Administrator, acting through the Company, expects to render a final decision.  In no event shall such extension exceed a period of 90 days from the end of the initial period.
8.3    Appeals.
Any claimant not satisfied with the Plan Administrator’s decision of a claim shall have the right to appeal to the Plan Administrator.  The appeal must be signed and dated by the claimant and include a copy of the claim submitted to the Plan Administrator as well as a copy of the Plan Administrator’s decision.  The appeal should explain why the claimant does not agree with the Plan Administrator’s decision.  The appeal must be filed within 60 days of the receipt of the Plan Administrator’s decision.  The appeal must be sent by certified mail or presented in person to the Plan Administrator.
The Plan Administrator shall promptly advise the claimant of its decision on the claimant’s appeal.  Such decision shall be written in layman’s terms, shall include specific reasons for the decision and shall contain specific references to pertinent Plan provisions upon which the decision is based.  The decision on appeal shall be made no later than 60 days after the Plan Administrator’s receipt of the appeal, unless special circumstances require an extension of the time for processing.  If such an extension of time is required, the Plan Administrator shall furnish written notice of the extension to the claimant prior to the termination of the 60 day period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render a final decision.  If an extension of time is required, a decision shall be rendered as soon as possible, but not later than 120 days following receipt of the appeal.
ARTICLE IX
AMENDMENT OR TERMINATION
9.1    Amendment or Termination.  The Company intends the Plan to be permanent but 

12

reserves the right, subject to Section 9.2, to amend or terminate the Plan when, in the sole opinion of the Company, such amendment or termination is advisable.  However, no amendment shall deprive a Participant or beneficiary of any of the benefits which he or she has accrued under the Plan or otherwise adversely affect the Participant’s Account with respect to amounts credited thereto prior to the date such amendment is made.  The Administrative Committee of the Kemper Corporation 401(k) Savings Plan (the “Administrative Committee”) shall have the authority, on behalf of the Company, to amend the Plan in any manner permitted by Article IX of the Plan as the Administrative Committee considers desirable, appropriate or necessary, provided that no such amendments, either individually or in the aggregate, have a material adverse financial impact on the Company and the Employers.  The Board reserves the authority to make any other amendments to the Plan, including, but not limited to, amendments that the Administrative Committee deems desirable, appropriate or necessary which would have a material adverse financial impact on the Company and the Employers.
9.2    Effect of Amendment or Termination.  No amendment or termination of the Plan shall, without the express written consent of the affected current or former Participant or beneficiary, reduce or alter any benefit entitlement of such Participant or beneficiary.  Upon Plan termination, no further deferrals shall be made.  In such event, the Participant or his or her beneficiary, as the case may be, shall be entitled to receive any benefit attributable to the deferrals accrued as of the day preceding the effective date of termination, plus hypothetical investment earnings and less hypothetical investment losses, taxes and expenses chargeable to the Participant’s Account up to the benefit distribution date.  The Plan Administrator shall make distributions of the Participant’s benefit (a) in accordance with the Participant elections then in effect, or (b) if permitted by the Regulations and elected by the Company, in a single lump sum payment that is paid at such time as is permitted by Section 1.409A-3(j)(4)(ix) of the Regulations.
ARTICLE X
GENERAL PROVISIONS
10.1    Taxes.  The Company shall have the right to (a) require any Participant or beneficiary to pay the Company the amount of any taxes which the Company may be required to withhold with respect to any benefits earned under, or distributions from, the Plan or (b) deduct from all amounts paid the amount of any taxes which the Company may be required to withhold with respect to any such distributions.
10.2    Entire Agreement.  The Plan document along with the Deferral Election, Investment Preference Form, Beneficiary Designation Form and other administration forms required of Participants, and made known to them by the Company, shall constitute the entire agreement or contract between the Company and the Participant regarding the Plan.  No oral statement regarding the Plan may be relied upon by the Participant or any other person claiming through or under the Participant.
10.3    Construction.  Any mention of “Articles,” “Sections” and subsections thereof, unless stated specifically to the contrary, refers to Articles, Sections or subsections in the Plan.  Headings of Articles, Sections and subsections are for convenient reference.  The headings are not part of the 

13

Plan and are not to be considered in its construction.  All references to statutory sections shall include the section as amended from time to time.
10.4    Employment Rights.  Neither the establishment of the Plan nor any modification thereof, nor the creation of any trust or account, nor the payment of any benefits, shall be construed as conferring upon a Participant the right to continue to be employed by the Company in his or her present capacity, or in any capacity, or the right to continue to serve as an Outside Director.  The Plan relates to the payment of deferred compensation as provided herein, and is not intended to be an employment contract.
10.5    Benefit Transfers.  Neither the Participant nor his or her designated or other beneficiary under the Plan shall have any right to transfer, assign, anticipate, hypothecate or otherwise encumber all or any part of the amounts payable under the Plan, except as provided in Section 6.7.  No such amounts shall be subject to seizure by any creditor of any such Participant or beneficiary, by a proceeding at law or in equity, nor shall any such amounts be transferable by operation of law in the event of bankruptcy, insolvency or death of the Participant, his or her designated beneficiary or any other beneficiary hereunder.  Any attempted assignment or transfer in contravention of this provision shall be void.
10.6    Governing Law.  Construction, validity and administration of the Plan shall be governed by applicable Federal law and the laws of the State of Illinois.
10.7    Inurement.  The Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Participant, his or her successors, heirs, executors, administrators and beneficiaries.
10.8    Notices.  Any notice (other than pursuant to enrollment materials) required or permitted to be given pursuant to the Plan shall be in writing, and shall be signed by the person giving the notice.  If such notice is mailed, it shall be sent by United States first class mail, postage prepaid, addressed to such person’s last known address as shown on the records of the Company.  The date of such mailing shall be deemed to be the date of notice, but the notice shall not be effective until actually received.  The Company or the Participant may change the address to which notice is sent by giving notice of such change in the manner above.
10.9    Corporate Successor.  The Plan shall not be automatically terminated by a Change of Control event, but the Plan shall be continued after such Change of Control event only if and to the extent that the transferee, purchaser or successor entity agrees to continue the Plan.  In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall terminate subject to the provisions of Section 9.2.
10.10    Unclaimed Benefit.  Each Participant shall keep the Company informed of his or her current address and the current address of his or her beneficiary.  The Company shall not be obligated to search for the whereabouts of any person.  The Company is authorized to adopt procedures regarding unclaimed benefits that provide for the irrevocable forfeiture of a benefit if the Company is unable to locate the Participant, or if the Participant is deceased, his or her beneficiary.  Such procedures shall be consistent with the Regulations and any other guidance issued by the Internal 

14

Revenue Service.
10.11    Limitations on Liability.  Notwithstanding any of the preceding provisions of the Plan, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, beneficiary or any other person for any claim, loss, liability or expense incurred in connection with the Plan.
10.12    No Guaranty of Benefits.  Nothing contained in the Plan shall constitute a guaranty by the Company or any other entity or person that the assets of the Company will be sufficient to pay any benefit hereunder.
10.13    409A Compliance. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Code Section 409A and the Regulations, and shall be interpreted and operated consistent with such intent.  If any ambiguity exists in the terms of the Plan, it shall be interpreted to be consistent with this purpose.
IN WITNESS WHEREOF, a duly appointed member of the Administrative Committee has executed the Plan on this 31st day of October, 2011.
KEMPER CORPORATION
By:       /s/ Lisa M. King

Its:       Vice President

15KMPR 2011 9.30.2011 EX 10.17 Form of Severance Agreement

Exhibit 10.17

[DATE]

[NAME AND ADDRESS]

Dear [NAME]:

Kemper Corporation (the “Company”) considers you to be a valued employee of the Employer (as defined below).  In recognition of the value of your continued services to the Employer, the Company’s shareholders and other relevant constituencies, the Company proposes the following agreement (the “Agreement”) to provide you with certain severance payments and benefits if your employment terminates following a “Change in Control” (as defined below).
ARTICLE I 
 
DEFINITIONS
1.1    Definitions
Whenever used in this Agreement, the following capitalized terms shall have the meanings set forth in this Section, certain other capitalized terms being defined elsewhere in this Agreement:
(a)    “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
(b)    “Annualized Compensation” shall mean your rate of annual base salary as in effect immediately prior to your Qualifying Termination, without regard to any decrease in such salary which would give rise to Good Reason.
(c)    “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Exchange Act.
(d)    “Board of Directors” shall mean the Board of Directors of the Company, or any successor thereto.
(e)    A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs 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 Subsidiaries or Affiliates) representing 25% or more of the 

Exhibit 10.17

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 date hereof, 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 date hereof 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 direct or indirect subsidiary of the Company with any other corporation, other than (A) a merger or consolidation which results in the directors of the Company immediately prior to such merger or consolidation continuing to constitute at least a majority of the board of directors of the Company, the surviving entity or any parent thereof or (B) a merger or consolidation effected to implement a recapitalization 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 Subsidiaries or 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.
(f)    “Code” shall mean the Internal Revenue Code of 1986, as amended.
(g)    “Company” shall mean Kemper Corporation, a Delaware corporation, and any successor as provided in Article IV.
(h)    “Disability” shall mean a physical or mental condition entitling you to benefits under the applicable long-term disability plan of the Company or any of its Subsidiaries or Affiliates, or if no such plan exists, causing you to be unable to substantially perform your duties with the Employer for at least 6 months in any 12-

Exhibit 10.17

month period.
(i)    Your “Employer” shall mean the Company or any Subsidiary or Affiliate of the Company by which you are employed.
(j)    “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
(k)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(l)    “Good Reason” shall mean the occurrence after any Change in Control, or prior to a Change in Control under the circumstances described in clause (ii) of the second and third sentences of Section 2.1 hereof (treating all references in paragraphs (i) through (iv) below to a “Change in Control” as references to a “Potential Change in Control”), of any one or more of the following events without your express written consent:
(i)    a reduction in your base salary as in effect immediately prior to the Change in Control, or a material reduction in the compensation and benefit plans, arrangements, policies and procedures, taken as a whole, provided to you from those, taken as a whole, provided to you immediately prior to the Change in Control;
(ii)    a material reduction in your job authority and responsibility;
(iii)    the Employer requires you to change the location of your job or office, so that you will be based at a location more than thirty miles from the location of your job or office immediately prior to the Change in Control; 
(iv)    a successor company fails or refuses to assume the Company’s obligations under this Agreement, as required by Article IV hereof; or
(v)    any purported termination of your employment which is not effected pursuant to the terms of Section 7.5 hereof. 
Notwithstanding any of the foregoing to the contrary, a termination by you shall not constitute termination for Good Reason unless you 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 90 days after the occurrence of such event), and there shall have passed a reasonable time (not less than 30 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 you. 
(m)    “Just Cause” shall mean, with respect to a termination of your employment with the Employer, (i) fraud, misappropriation of or intentional material damage to the property or business of the Company (including its Subsidiaries and Affiliates), which in any such case is materially injurious to the Company (including its 

Exhibit 10.17

Subsidiaries and Affiliates), monetarily or otherwise, or (ii) your conviction for the commission of a felony.
(n)    “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Subsidiaries or Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries or 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.
(o)    A “Potential Change in Control” shall be deemed to occur in the event that (a) the Company enters into an agreement, the consummation of which would result in a Change in Control, (b) the Company or any Person publicly announces an intention to take or to consider taking action which, if consummated, would constitute a Change in Control, (c) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or any of its Subsidiaries or Affiliates) or (d) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.
(p)    “Qualifying Termination” shall mean a termination of employment pursuant to Section 2.1 entitling you to a Severance Payment pursuant to the terms of this Agreement.
(q)    “Separation from Service” shall mean a separation from service as defined in Code section 409A and the applicable regulations thereunder, without giving effect to any elective provisions that may be available under such definition except that in determining whether there is a separation from service with the employer, the employer shall be determined as follows:
(i)    In applying Code section 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in Code section 1563(a)(1), (2) and (3); and
(ii)    In applying Treas. Reg. section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treas. Reg. 

Exhibit 10.17

section 1.414(c)-2.
(r)    “Severance Payment” shall mean the payment described in Section 2.2.
(s)    “Subsidiary” shall mean any entity at least 50% of the voting securities of which are Beneficially Owned by the Company.
ARTICLE II     
 
SEVERANCE PAYMENTS
2.1    Right to Severance Payment
You shall be entitled to receive a Severance Payment from the Company in the amount provided in Section 2.2 if (x) there has been a Change in Control, (y) you are an active employee at the time of the Change in Control, and (z) within two years from and including the date of the Change in Control, your employment is terminated by the Employer for any reason (other than Just Cause or your death or Disability), or you terminate your employment for Good Reason.  In addition, if prior to a Change in Control (i) your employment is terminated by the Employer for any reason (other than Just Cause or your death or Disability) or (ii) you terminate your employment following the occurrence of any event that would give rise to Good Reason, and you reasonably demonstrate that such termination or event giving rise to Good Reason, as the case may be, (a) occurred at the request of a Person who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (b) otherwise occurred in connection with, or in anticipation of, a Change in Control (whether or not a Change in Control actually occurs), then for all purposes of this Agreement the termination of your employment shall be deemed to have occurred immediately following a Change in Control.  There shall be an irrebuttable presumption that (i) if your employment is terminated by the Employer for any reason (other than Just Cause or your death or Disability) within ninety (90) calendar days prior to the date of a Change in Control, or (ii) if you terminate your employment following the occurrence of an event that would give rise to Good Reason, which occurs within ninety (90) calendar days prior to the date of a Change in Control, you will have made (in either case (i) or (ii)) the showing required by the preceding sentence.  For purposes of subclause (y) above, to the extent permitted by Section 409A of the Code, you will still be considered to be an active employee if you are on sick leave, military leave or any other leave of absence approved by the Employer.  
2.2    Amount of Severance Payment
(a)    If you become entitled to a Severance Payment under this Agreement, the Company shall pay to you a lump sum payment equal to [two (2)] [three (3)] times one year’s Annualized Compensation.
(b)    To the extent you become entitled to severance payments under the Kemper Corporation Employee General Severance Pay Plan, notwithstanding anything therein to the contrary, such payments shall be paid to you, in cash and in full, on the first day of the seventh month after your Separation from Service.  In the event that you become entitled to a Severance Payment under this Agreement, such Severance Payment shall be in lieu of payments and benefits 

Exhibit 10.17

under any other severance plan or arrangement, including, without limitation, the Kemper Corporation Employee General Severance Pay Plan.

2.3    Limitation on Payments

(a)    Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by you (including any payment or benefit received in connection with a Change in Control or the termination of your employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the payments and benefits under Section 2.2 of this Agreement, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the cash severance payments shall first be reduced, and the noncash severance payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which you would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).  The Total Payments shall be reduced by the Employer in its reasonable discretion in the following order: (A) reduction of any cash payment, excluding any cash payment with respect to the acceleration of equity awards, that is otherwise payable to you that is exempt from Section 409A of the Code, (B) reduction of any other payments or benefits otherwise payable to you on a pro-rata basis or such other manner that complies with Section 409A of the Code and (C) reduction of any payment with respect to the acceleration of equity awards that is otherwise payable to you that is exempt from Section 409A of the Code.  

(b)    For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which you shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the written opinion of independent auditors of nationally recognized standing (“Independent Advisors”) selected by the Employer, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Independent Advisors, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined in Section 280G(b)(3) of the Code) allocable 

Exhibit 10.17

to such reasonable compensation, and (iii) the value of any non cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

2.4    No Duty of Mitigation
The Company acknowledges that it would be very difficult and generally impracticable to determine your ability to, or extent to which you may, mitigate any damages or injuries you may incur by reason of the Change in Control.  The Company has taken this into account in entering into this Agreement and, accordingly, the Company acknowledges and agrees that you shall have no duty to mitigate any such damages and that you shall be entitled to receive your entire Severance Payment regardless of any income which you may receive from other sources following your termination after any Change in Control.
2.5    Time of Severance Payment
The Severance Payment to which you are entitled shall be paid to you, in cash and in full, on the first day of the seventh month after your Separation from Service.  If you should die before all amounts payable to you have been paid, such unpaid amounts shall be paid within thirty (30) days of your death to your beneficiary under this Agreement or, if you have not designated such a beneficiary in writing to the Company, to the personal representative(s) of your estate.
2.6    Life and Health Insurance Coverage

If you are entitled to receive a Severance Payment under Section 2.1, the Company shall also provide you with the following additional benefits:
(a)    Life insurance coverage for you and your dependents having a face amount at least equal to the greater of (i) the amount in effect for you (in your case) and/or your dependents (in the case of your dependents) immediately prior to the Change in Control, or (ii) the amount in effect for you (in your case) and/or your dependents (in the case of your dependents) immediately prior to the Date of Termination, such coverage to be provided under the same plan or plans under which you (in your case) or your dependents (in the case of your dependents) were covered immediately prior to the Change in Control (or Date of Termination, as applicable) or substantially similar plan(s) established by the Company or any of its Subsidiaries or Affiliates thereafter, and at no greater cost  (the “Active Employee Cost”) to you (in your case) or your dependents (in the case of your dependents) than was imposed pursuant to the plan(s) under which you (in your case) and/or your dependents (in the case of your dependents) were covered immediately prior to the Change in Control (or Date of Termination, as applicable), provided, however, that until the first day of the seventh month following your Separation from Service, you shall pay the entire cost of such coverage and shall be reimbursed by the Company for the difference between such payments and the Active Employee Cost on the first day of the seventh month following your Separation from Service.  This coverage will continue for the period hereinafter provided.

Exhibit 10.17

(b)     The right to continue your health insurance coverage (including any dental coverage) for you and your dependents under the same plan or plans under which you were covered immediately prior to the Change in Control (or, if more favorable, immediately prior to the Date of Termination) or substantially similar plan(s) established by the Company or any of its Subsidiaries or Affiliates thereafter, upon your payment (on an after-tax basis) of the applicable premium (as defined by Code section 4980B(f)(4)) for such coverage, provided, however, that the Company shall pay to you the difference between such premium and the amount an active employee would pay for such coverage.  The first such payment by the Company shall be made on the first day of the seventh month following your Separation from Service and shall be equal to the difference between the aggregate premiums you paid prior to such date and the aggregate amount an active employee would have paid for such coverage.  Thereafter, reimbursement by the Company shall be paid on a monthly basis.
(c)    The benefits provided under this Section 2.6 shall continue for a period of [two (2)] [three (3)] years following the date of your Qualifying Termination; provided, however, that the benefits for medical coverage under the provisions of Section 2.6(b) shall end as of the date you become covered under any group health plan maintained by a subsequent employer which provides benefits to you (and anyone entitled to claim the benefits described in Section 2.6(b) under or through you) not materially less favorable than the benefits described in Section 2.6(b), and which does not exclude any pre-existing condition that you or your dependents may have at that time.
2.7    Outplacement Services
If you are entitled to receive a Severance Payment under Section 2.1, the Company shall also provide you with a full range of outplacement services provided for up to fifty-two (52) weeks by a reputable organization chosen by the Company.  These outplacement services will be paid for by the Company.
2.8    Withholding of Taxes
The Company or your Employer may withhold from any amounts payable under this Agreement all federal, state, city or other taxes required by applicable law to be withheld.
2.9    No Setoff
The Company’s obligation to make Severance Payments to you pursuant to this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, but not limited to, any setoff, counterclaim, recoupment, defense or other right which the Company or any of its Subsidiaries or Affiliates may have against you or others.
2.10    Benefits Under Other Plans

The benefits that you may be entitled to receive pursuant to Sections 2.6 and 2.7 of this Agreement are not intended to be duplicative of any similar benefits to which you may be 

Exhibit 10.17

entitled from the Company or any of its Subsidiaries or Affiliates under any other severance plan, agreement, policy or program maintained by the Company or any of its Subsidiaries or Affiliates.  Accordingly, the benefits to which you are entitled under Sections 2.6 and 2.7 shall be reduced to take account of any other similar benefits to which you are entitled from the Company or any of its Subsidiaries or Affiliates.
ARTICLE III     
 
OTHER RIGHTS AND BENEFITS NOT AFFECTED
3.1    Other Benefits
This Agreement does not provide a pension for you nor shall any payment hereunder be characterized as deferred compensation.  Except as set forth in Sections 2.2(b) and 2.10, neither the provisions of this Agreement nor the Severance Payment provided for hereunder shall reduce any amounts otherwise payable, or in any way diminish your rights as an employee, whether existing now or hereafter, under any benefit, incentive, retirement, stock option, stock bonus or stock purchase plan or any employment agreement or other plan or arrangement not related to severance.  Any such other amounts or benefits payable shall be included, as necessary, for making any of the calculations required under Section 2.3.
3.2    Employment Status
This Agreement does not constitute a contract of employment or impose on you any obligation to remain in the employ of the Employer, nor does it impose on the Company or any of its Subsidiaries or Affiliates any obligation to retain you in your present or any other position, or to change the status of your employment as an employee at will.  Nothing in this Agreement shall in any way require the Company or any of its Subsidiaries or Affiliates to provide you with any severance benefits prior to a Change in Control (except that the foregoing shall not modify the second and third sentences of Section 2.1), nor shall this Agreement ever be construed in any way as establishing any policies or requirements of the Company or any of its Subsidiaries or Affiliates for the termination of your employment or the payment of severance benefits to you if your employment terminates prior to a Change in Control, nor shall anything in this Agreement in any way affect the right of the Company or any of its Subsidiaries or Affiliates in its absolute discretion to change prior to a Change in Control one or more benefit plans, including but not limited to pension plans, dental plans, health care plans, savings plans, bonus plans, vacation pay plans, disability plans, and the like.
ARTICLE IV     
 
SUCCESSOR TO COMPANY 
The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company’s obligations under this Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.  

Exhibit 10.17

In such event, the term “Company,” as used in this Agreement, shall mean the Company as herein before defined and any successor or assignee to the business or assets which by reason hereof becomes bound by the terms and provisions of this Agreement.  
ARTICLE V     
 
LEGAL FEES AND EXPENSES
The Company shall pay as they become due, but no sooner than the first day of the seventh month following your Separation from Service, all legal fees, costs of litigation and other expenses incurred in good faith by you as a result of the Company’s refusal or failure to make the Severance Payment to which you become entitled under this Agreement, as a result of the Company’s contesting the validity, enforceability or interpretation of this Agreement or of your right to benefits hereunder.  You shall be conclusively presumed to have acted in good faith unless a court makes a final determination not otherwise subject to appeal to the contrary.
ARTICLE VI     
 
ARBITRATION
You shall have the right and option (but not the obligation) to elect (in lieu of litigation) to have any dispute or controversy arising under or in connection with this Agreement not otherwise resolved through the claims procedure set forth in Section 7.12 settled by arbitration, conducted before a panel of three arbitrators sitting in a location selected by you within fifty (50) miles from the location of your job with the Employer immediately prior to the Change in Control (determined without regard to any relocation thereof which would give rise to Good Reason), in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the award of the arbitrator in any court having jurisdiction.  All expenses of such arbitration, including the fees and expenses of your counsel, shall be borne, and paid as incurred, by the Company (but not earlier than the first day of the seventh month following your Separation from Service), provided that the Company shall only be required to pay your fees and expenses if they are incurred in good faith.  You shall be conclusively presumed to have acted in good faith unless and until the arbitrator makes a final determination to the contrary.  Notwithstanding any provision of this Agreement to the contrary, you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
ARTICLE VII     
 
MISCELLANEOUS
7.1    Applicable Law
To the extent not preempted by the laws of the United States and in the interest of interpreting this Agreement in a uniform manner with other similar agreements being entered into by the Company with other of its and its Subsidiaries’ and Affiliates’ employees regardless of 

Exhibit 10.17

the jurisdiction in which you are employed or any other factor, the laws of the State of Illinois shall be the controlling law in all matters relating to this Agreement, regardless of the choice-of-law rules of the State of Illinois or any other jurisdiction.
7.2    Construction
No term or provision of this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any present or future statute, law, ordinance, or regulation contrary to which the parties have no legal right to contract, the latter shall prevail, but in such event the affected provision of this Agreement shall be curtailed and limited only to the extent necessary to bring such provision within the requirements of the law.
7.3    Severability
If a provision of this Agreement shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining parts of this Agreement and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
7.4    Headings
The Section headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit, or extend or interpret the scope of this Agreement or of any particular Section.
7.5    Termination Procedures
(a)    Notice of Termination.  After a Change in Control and during the Term, any purported termination of your employment (other than by reason of death) shall be communicated by a written Notice of Termination from the Employer to you or by you to the Employer in accordance with Section 7.10 hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.  Further, a Notice of Termination for Just Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the board of directors of the Employer at a meeting of such board of directors which was called and held for the purpose of considering such termination (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before such board of directors) finding that, in the good faith opinion of such board of directors, you were guilty of conduct set forth in clause (i) or (ii) of the definition of Just Cause herein, and specifying the particulars thereof in detail.  
(b)    Date of Termination.  “Date of Termination,” with respect to any purported termination of your employment after a Change in Control and during the Term, shall mean (i) if your employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) day period), and (ii) if your 

Exhibit 10.17

employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Just Cause) and, in the case of a termination by you, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).
7.6    Assignability
Neither this Agreement nor any right or interest therein shall be assignable or transferable (whether by pledge, grant of a security interest, or otherwise) by you, your beneficiaries or legal representatives, except by will or by the laws of descent and distribution.  This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns, and you and shall be enforceable by them and your legal personal representatives.
7.7    Entire Agreement
This Agreement constitutes the entire agreement between the Company and you regarding the subject matter hereof and supersedes all prior agreements, if any, understandings and arrangements, written or oral, between the Company and you with respect to the subject matter hereof.
7.8    Term
The term of this Agreement (the “Term”) shall commence on February 15, 2011 and shall continue in effect through December 31, 2011; provided, however, that commencing on January 1, 2012 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or you shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.  If you become entitled to Severance Payments hereunder, this Agreement shall continue and be effective until you (or the person(s) specified in Section 2.5) shall have received in full all Severance Payments and other benefits to which you are entitled under this Agreement, at which time this Agreement shall terminate for all purposes.
7.9    Amendment
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and the Company.  No waiver by the Company or you at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time.  No agreement or representations, written or oral, express or implied, with respect to the subject matter hereof, have been made by either party which are not expressly set forth in this Agreement.
7.10    Notices
For purposes of this Agreement, notices and all other communications provided for herein 

Exhibit 10.17

shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company or the Employer shall be directed to the attention of the Board of Directors with a copy to the General Counsel of the Company.  All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon actual receipt.  No objection to the method of delivery may be made if the written notice or other communication is actually received.
7.11    Administration
The Company has entered into agreements similar to this Agreement herein with other employees of the Company and its Subsidiaries and Affiliates.  These agreements, taken together, constitute a welfare benefit plan within the meaning of Section 3(1) of ERISA.  The Administrator of such plan, within the meaning of Section 3(16) of ERISA, and the Named Fiduciary thereof, within the meaning of Section 402 of ERISA, is the Company.
7.12    Claims
If you believe you are entitled to a benefit under this Agreement, you may make a claim for such benefit by filing with the Company a written statement setting forth the amount and type of payment so claimed.  The statement shall also set forth the facts supporting the claim.  The claim may be filed by mailing or delivering it to the Secretary of the Company.  Within 90 calendar days after receipt of such a claim, the Company shall notify you in writing of its action on such claim and if such claim is not allowed in full, shall state the following in a manner calculated to be understood by you:
(a)    The specific reason or reasons for the denial;
(b)    Specific reference to pertinent provisions of this Agreement on which the denial is based;
(c)    A description of any additional material or information necessary for you to be entitled to the benefits that have been denied and an explanation of why such material or information is necessary; and
(d)    An explanation of this Agreement’s claim review procedure.
If you disagree with the action taken by the Company, you or your duly authorized representative may apply to the Company for a review of such action.  Such application shall be made within 60 calendar days after receipt by you of the notice of the Company’s action on your claim.  The application for review shall be filed in the same manner as the claim for benefits.  In connection with such review, you may inspect any documents or records pertinent to the matter and may submit issues and comments in writing to the Company.  A decision by the Company shall be communicated to you within 60 calendar days after receipt of the application (unless special circumstances require an extension of time, but in no event more than 120 days after such receipt).  The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated 

Exhibit 10.17

to be understood by you, and specific references to the pertinent provisions of this Agreement on which the decision is based.
7.13    Individual Severance Agreement
This Agreement constitutes an individual severance agreement for purposes of the Company’s Severance Plan (the “Severance Plan”).  Accordingly, you will not be eligible to receive any severance payments or other benefits under the Severance Plan.

7.14    409A Compliance

(a)    This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Code section 409A and the regulations and other guidance issued thereunder.

(b)    Notwithstanding anything in this Agreement to the contrary, to the extent that the requirements of Code section 409A apply to any amount or benefit that would otherwise be payable or distributable hereunder by reason of your termination of employment, such amount or benefit will not be payable or distributable to you by reason of such circumstance unless the circumstances giving rise to such termination of employment constitute a Separation from Service.  
(c)    Notwithstanding anything in this Agreement to the contrary, if any amount or benefit is nonqualified deferred compensation for purposes of Code section 409A that would otherwise be payable or distributable under this Agreement by reason of your Separation from Service, then, subject to any permissible acceleration of payment by the Company under Treas. Reg. section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

(i)    If the payment or distribution is payable in a lump sum, your right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of your death or the first day of the seventh month following your Separation from Service; and 

(ii)    If the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediately following your Separation from Service will be accumulated and your right to receive payment or distribution of such accumulated amount will be delayed until the earlier of your death or the first day of the seventh month following your Separation from Service, whereupon the accumulated amount will be paid or distributed to you on such date and the normal payment or distribution schedule for any remaining payments or distributions will resume.

(d)    With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits that are not exempt from Code section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, 

Exhibit 10.17

or in-kind benefits, provided during any of your taxable years shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any of your other taxable years, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Code section 105(b) solely because such arrangement provides for a limit on the amount of expenses that may be reimbursed over some or all of the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of your taxable year following the taxable year in which the expenses was incurred.

[signature page follows]

Exhibit 10.17

If this Agreement is acceptable to you, please sign the enclosed copy of this Agreement in the space provided below and return it to me.
Sincerely,
Donald G. Southwell
Chairman, President and Chief Executive Officer
ACCEPTED AND AGREED TO:
By:_________________________
      [NAME]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}]]