Exhibit 10.10

 

SUPPLEMENTAL RETIREMENT AND

DEFERRED COMPENSATION PLAN

RESTATED AND AMENDED

Effective as of January 1, 1998

 

RECITALS

 

This Kanawha Insurance Company Supplemental Retirement and Deferred Compensation
Plan (the Plan) is adopted by Kanawha Insurance Company and Kanawha Healthcare
Solutions, Inc. (the Employer) for certain of its executive or highly
compensated employees.  The purpose of the Plan is to provide those employees
with supplemental retirement income and to offer those employees an opportunity
to elect to defer the receipt of compensation in order to provide termination of
employment and related benefits taxable pursuant to Section 451 of the Internal
Revenue Code of 1986, as amended (the Code).  The Plan is intended to be a Top
Hat Plan (i.e., an unfunded deferred compensation plan maintained for a select
group of management or highly compensated employees) under Sections 201(2),
301(a)(3), and 401(a)(1) of the Employee Retirement Income Security Act of 1974
(ERlSA).

 

Accordingly, the following Plan is adopted.

 

ARTICLE I. DEFINITIONS

 

1.1                               ACCOUNT means the balance credited to a
Participant’s or Beneficiary’s Plan account, including contribution credits and
deemed income, gains, and losses (to the extent realized as determined by the
Employer, in its discretion) credited thereto.  A Participant’s or Beneficiary’s
Account shall be determined as of the date of reference.

 

1.2                               BENEFICIARY means any person or persons so
designated in accordance with the provisions of Article VII.

 

1.3                               CODE means the Internal Revenue Code of 1986
and the regulations thereunder, as amended from time to time.

 

1.4                                COMPENSATION means the total current cash
remuneration paid by the Employer to an Eligible Employee with respect to his or
her service for the Employer (as determined by the Employer).

 

1.5                                 DESIGNATION DATE means the date or dates as
of which a designation of deemed investment directions by an individual pursuant
to Section 4.5, or any change in a prior designation of deemed investment
directions by an individual pursuant to Section 4.5, shall become effective. 
The Designation Dates in any Plan Year shall be designated by the Employer.

 

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1.6                                 EFFECTIVE DATE means the effective date of
the restatement of the Plan, which shall be January 1, 1998.

 

1.7                                 ELIGIBLE EMPLOYEE means, for any Plan Year
(or applicable portion thereof), a person employed by the Employer who is
determined by the Employer to be a member of a select group of management or
highly compensated employees and who is designated by the Employer to be an
Eligible Employee under the Plan.  By each November 1, the Employer shall notify
those individuals, if any, who will be Eligible Employees for the next Plan
Year.  If the Employer determines that an individual first becomes an Eligible
Employee during a Plan Year, the Employer shall notify such individual of its
determination and of the date during the Plan Year on which the individual shall
first become an Eligible Employee.

 

1.8                                 EMPLOYER means Kanawha Insurance Company
(Kanawha) and its successors and assigns unless otherwise herein provided, or
any other corporation or business organization that, with the consent of Kanawha
or its successors or assigns, assumes the Employer’s obligations hereunder, or
any other corporation or business organization that agrees, with the consent of
Kanawha, to become a party to the Plan.

 

1.9                                 ENTRY DATE with respect to an individual
means the first day of the pay period following the date on which the individual
first becomes an Eligible Employee.

 

1.10                           PARTICIPANT means any person so designated in
accordance with the provisions of Article II, including, where appropriate
according to the context of the Plan, any former employee who is or may become
(or whose Beneficiaries may become) eligible to receive a benefit under the
Plan.

 

1.11                           PARTICIPANT ENROLLMENT AND ELECTION FORM means
the form on which a Participant elects to defer Compensation hereunder and on
which the Participant makes certain other designations as required thereon.

 

1.12                           PLAN means this Kanawha Insurance Company
Supplemental Retirement and Deferred Compensation Plan, as amended from time to
time.

 

1.13                           PLAN YEAR means the twelve (12) month period
ending on the December 31 of each year during which the Plan is in effect.

 

1.14                           TRUST means the trust fund established pursuant
to the Plan.

 

1.15                           TRUSTEES means the trustees named in the
agreement establishing the Trust and such successor and/or additional trustees
as may be named pursuant to the terms of the agreement establishing the Trust.

 

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1.16                         VALUATION DATE means the December 31 of each Plan
Year and any other date that the Employer, in its sole discretion, designates as
a Valuation Date.

 

ARTICLE II. ELIGIBILITY AND PARTICIPATION

 

2.1                                 REQUIREMENTS.  Every Eligible Employee on
the Effective Date shall be eligible to become a Participant on the Effective
Date.  Every other Eligible Employee shall be eligible to become a Participant
on the first Entry Date occurring on, or after the date on which he or she
becomes an Eligible Employee.  No individual shall become a Participant,
however, if he or she is not an Eligible Employee on the date his or her
participation is to begin.

 

Participation in the Plan is voluntary.  In order to participate, an otherwise
eligible Employee must make written application in such manner as may be
required by Section 3.1 and by the Employer and must agree to make Compensation
Deferrals as provided in Article III.

 

2.2                                 REEMPLOYMENT.  If a Participant whose
employment with the Employer is terminated is subsequently reemployed, he or she
shall become a Participant in accordance with the provisions of Section 2.1.

 

2.3                                 CHANGE OF EMPLOYMENT CATEGORY.  During any
period in which a Participant remains in the employ of the Employer, but ceases
to be an Eligible Employee, he or she shall not be eligible to make Compensation
Deferrals hereunder.

 

ARTICLE III. CONTRIBUTIONS AND CREDITS

 

3.1                                 CONTRIBUTION TO THE PLAN PRIOR TO JANUARY 1,
1998.  Subject to the provisions of Section 3.3 below, all contributions and
accrued interest additions to the Plan prior to January 1, 1998 shall be held by
the Trustees in the Balanced Fund Account identified in Article VIII.  The
Employer shall establish and maintain a separate Plan account in the name of
each Participant or Beneficiary as the case may be.  The Account shall at all
times be one hundred percent (100%) vested in the Participant or Beneficiary and
to which shall be credited or debited: (a) amounts equal to the Participant’s
Compensation Deferrals and (b) amounts equal to any deemed income, gains, or
losses (to the extent realized, based upon deemed fair market value of the
account’s deemed assets, as determined by the Employer, in its discretion),
attributable or allocable to (a).  The Employer shall have the discretion to
allocate such deemed income, gains, or losses among Plan Accounts pursuant to
such allocation rules as the Employer deems to be reasonable and
administratively practicable.  As to the contribution and accrued additions
under this Section 3.1, the Employer shall maintain an Allocation Account for
each

 

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Participant.  The Allocation Account of each Participant shall be credited on
the last day of each calendar quarter with the interest on the averaged monthly
ending balance in such Account during such calendar quarter.  The amount
equivalent to interest shall be at the prime rate of interest charged by
Manufacturers Hanover Trust Company, New York City (or another major New York
City bank, if the named bank is not in business or has merged or become inactive
in the commercial field) on the date such credit is made.

 

At such time as the Participant (or his or her Beneficiary) is entitled to
receive benefits under Article VI, or shall elect to transfer any portion of the
Plan Account from the Balanced Fund Account to another investment option
provided by the Plan, the Employer will compare the amount of the Participant’s
Compensation Deferrals, plus accumulated interest, as shown in the Participant’s
Allocation Account, to the total shown in the Participant’s Balanced Fund
Account.  Should the amount in the Allocation Account be greater than the amount
in the Balanced Fund Account, then in such event, the Employer will contribute
the amount of this difference to the Participant's Balanced Account.

 

Should a portion of the Balanced Fund be transferred the computation above shall
be made and in the event the Allocation Account is greater, a prorated amount
shall be contributed to the Balanced Fund Account.

 

During the payout period, an amount determined as stated above, shall be paid to
the Participants or Beneficiary as determined in Article VI.  This interest
amount shall be computed each calendar quarter on the average unpaid monthly
ending balances during each calendar quarter, during the period of payment of
benefits under Article VI.

 

The Participant or Beneficiary shall have the opportunity under the provision of
Article IV to make an irreversible transfer of any portion of the contribution
and amounts equal to any deemed income, gains or losses, to other investment
options provided by the Plan.  As to such funds transferred, the guarantee of
the prime rate of interest shall cease.

 

3.2                                 PARTICIPANT COMPENSATION DEFERRALS AND
EMPLOYER CONTRIBUTION CREDITS ON OR AFTER JANUARY 1, 1998.  In accordance with
rules established by the Employer, a Participant may elect to defer Compensation
that is due to be earned and that would otherwise be paid to the Participant, in
a lump sum or in any fixed periodic dollar amounts designated by the
Participant.  Amounts so deferred will be considered a Participant’s
“Compensation Deferrals.” Ordinarily, a Participant shall make such an election
with respect to a coming twelve (12) month Plan Year during the period beginning
on the November 1 and ending on the December 31 of the prior Plan Year or during
such other period established by the Employer.

 

Compensation Deferrals shall be made through regular payroll deductions or
through an election by the Participant to defer the payment of a bonus not yet
payable to him or her at the time of the election.  The Participant may reduce
his or her payroll deduction Compensation deferral amount as of, and by written
notice delivered to the Employer at

 

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least thirty (30) days prior to, the beginning of any regular payroll period,
with such reduction being first effective for Compensation to be earned in that
payroll period.  Once made, a Compensation Deferral payroll deduction election
shall continue in force indefinitely, until changed by the Participant on a
subsequent Participant Enrollment and Election Form provided by the Employer. 
Compensation Deferrals shall be deducted by the Employer from the pay of a
deferring Participant and shall be credited to the Account of the deferring
Participant.

 

There shall be established and maintained by the Employer a separate Plan
Account in the name of each Participant, which shall at all times be one hundred
percent (100%) vested in the Participant and to which shall be credited or
debited: (a) an amount per Plan Year beginning in the first Plan Year of the
Participant’s participation and ending the Plan Year prior to the Plan Year in
which the Participant terminates employment, equal to a percentage of
Compensation (from 0% to 35%) determined by the Employer for the Plan Year; a
percentage of any anticipated bonus (from 0% to 100%) determined by the Employer
for the Plan Year; and the difference in the amount elected to be contributed to
the Participants’ 401(k) Plan and the amount of the contribution actually
contributed due to non-discrimination test required by law; and (c) amounts
equal to any deemed income, gains, or losses (to the extent realized, based upon
deemed fair market value of the Account’s deemed assets, as determined by the
Employer, in its discretion), attributable or allocable to (a).  The Employer
shall have the discretion to allocate such deemed income, gains, or losses among
Plan Accounts pursuant to such allocation rules as the Employer deems to be
reasonable and administratively practicable.

 

Amounts equal to the Compensation Deferrals and Employer contribution credits
will be paid by the Employer to the Trust with reasonable promptness after the
total of such Compensation Deferrals and Employer contribution credits during
any month or other period has been determined.

 

3.3                                 PARTICIPANTS IN PAYOUT STATUS.  Participants
who are receiving monthly payments under the Plan on December 31, 1997, shall
continue to have their Fund Accounts held by the Employer, and will receive
payments under the terms of the Plan and its rules of operation in effect at the
time their first payment was received.

 

3.4                                 EMPLOYER DISCRETIONARY CONTRIBUTION.  The
Employer may, in its sole discretion, credit to the Account of any Participant
employed by the Employer, an amount determined by the Employer in its sole
discretion (an “Employer Discretionary Contribution”) for a Plan Year.  Any
Employer Discretionary Contribution for a Plan Year will be credited to a
Participant’s Account as of the Valuation Date Specified by the Employer.

 

3.5                                 ADDITIONAL EMPLOYER CONTRIBUTION.  For each
Plan year under the Employer’s Noncontributory Retirement Plan during which a
Participant in this Plan is also a participant in the Noncontributory Retirement
Plan, there shall be credited to the Account

 

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of such Participant an amount equal to the actuarial equivalent single sum value
of any additional accrued benefit the Participant would have earned under the
Noncontributory Retirement Plan for such Plan Year if the Participant had not
elected to defer compensation under this Plan during such Plan Year.

 

3.6                                 OBLIGATION TO PAY AN UNSECURED DEBT.  The
obligation to pay Participant the amount deferred, with the adjustments provided
for in the Plan, shall be carried on the books of the Employer as an unsecured
debt (the “Deferred Account”).  The balance at any time in the Deferral Account
is not held in trust for Participant, and neither Participant, his or her estate
or personal representative(s) nor his or her beneficiaries shall have any right,
title or interest in or to any funds in the Deferral Account, which is
established by the Employer merely for the purpose of recording such unsecured
contractual obligation.  All funds in the Deferral Account shall continue to be
part of the general funds of the Employer and subject to the claims of its
general creditors.

 

ARTICLE IV. ALLOCATION OF FUNDS

 

4.1                                ALLOCATION OF DEEMED EARNINGS OR LOSSES ON
ACCOUNTS.  Pursuant to Section 4.5, each Participant shall have the right to
direct the Employer as to how amounts in his or her Plan Account shall be deemed
to be invested.  In such a case, the Employer shall direct the Trustees to
invest the Account maintained in the Trust on behalf of the Participant pursuant
to the direction the Employer has received from that Participant.  The Trustees
may, in their sole discretion, comply with a Participant’s direction with
respect to investment of assets of the Trust that are equal to the value of the
Participant’s Account in the investment options.  The Trustees shall provide the
investment options stated in Article VIII.  The Participant’s Plan Account will
be credited or debited with the increase or decrease in the realizable net asset
value or credited interest, as applicable, of the designated deemed investments,
as follows.  As of each Valuation Date, an amount equal to the net increase or
decrease in realizable net asset value or credited interest, as applicable (as
determined by the Employer), of each deemed investment option within the Trust
since the preceding Valuation Date shall be allocated among all Participants'
Accounts deemed to be invested in that investment option in accordance with the
ratio that the portion of the Account of each Participant that is deemed to be
invested within that investment option, determined as provided herein, bears to
the aggregate of all amounts deemed to be invested within that investment
option.

 

4.2                                ACCOUNTING FOR DISTRIBUTIONS.  As of the date
of any distribution hereunder, the distribution to a Participant or his or her
Beneficiary or Beneficiaries shall be charged to such Participant’s Account.

 

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4.3                                 SEPARATE ACCOUNTS.  A separate account under
the Plan shall be established and maintained by the Employer to reflect the
Account for each Participant with subaccounts to show separately the deemed
earnings and losses credited or debited to such Account and the applicable
deemed investments of the Account.

 

4.4                                 INTERIM VALUATIONS.  If it is determined by
the Employer that the value of the Trust as of any date on which distributions
are to be made differs materially from the value of the Trust on the prior
Valuation Date upon which the distribution is to be based, the Employer, in its
discretion, shall have the right to designate any date in the interim as a
Valuation Date for the purpose of revaluing the Trust so that the Account from
which the distribution is being made will, prior to the distribution, reflect
its share of such material difference in value.

 

4.5                                 DEEMED INVESTMENT DIRECTIONS OF
PARTICIPANTS.  Subject to such limitations as may from time to time be required
by law, imposed by the Employer or the Trustees, or contained elsewhere in the
Plan, and subject to such operating rules and procedures as may be imposed from
time to time by the Employer or the Trustees, prior to and effective for each
Designation Date, each Participant may communicate to the Employer a direction
as to how his or her Account should be deemed to be invested among such
categories of deemed investments as may be made available by the Employer
hereunder.  Such direction shall designate the percentage (in whole percentages
in multiples of five) of each portion of the Participant’s Account that is
requested to be deemed to be invested in such categories of deemed investments
and shall be subject to the following rules:

 

(a)                    Any initial or subsequent deemed investment direction
shall be in writing, on a form supplied by and filed with the Employer, and
shall be effective as of the next Designation Date that is at least ten
(10) business days after such filing.

 

(b)                   All amounts credited to the Participant’s Account shall be
deemed to be invested in accordance with the then effective deemed investment
direction, and, as of the effective date of any new deemed investment direction,
all or a portion of the Participant’s Account at that date shall be reallocated
among the designated deemed investment funds according to the percentages
specified in the new deemed investment direction unless and until a subsequent
deemed investment direction shall be filed and become effective.  An election
concerning deemed investment choices shall continue indefinitely as provided in
the Participant’s most recent Participant Enrollment and Election Form or other
form specified by the Employer.

 

(c)                     If the Employer receives an initial or revised deemed
investment direction that it deems to be incomplete, unclear, or improper, the
Participant’s investment direction then in effect shall remain in effect (or, in
the case of a deficiency in an initial deemed investment direction, the
Participant shall be deemed to have filed

 

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no deemed investment direction) until the next Designation Date, unless the
Employer provides for, and permits the application of corrective action prior
thereto.

 

(d)                    If the Employer possesses at any time directions as to
the deemed investment of less than all of a Participant’s Account, the
Participant shall be deemed to have directed that the undesignated portion of
the Account be deemed to be invested in The Balanced Fund Account made available
under the Plan as determined by the Employer in its discretion and set forth in
Article VII.

 

(e)                     Each Participant hereunder, as a condition to his or her
participation hereunder, agrees to indemnify and hold harmless the Employer and
Its agents and representatives from any losses or damages of any kind relating
to the deemed investment of the Participant’s Account hereunder.

 

(f)                       Each reference in this Section to a Participant shall
be deemed to include, where applicable, a reference to a Beneficiary.

 

The Trustees, may in their sole discretion, comply with a Participant’s
direction with respect to investment of assets of the Trust that are equal to
the value of the Participant’s Account in the investment options.

 

ARTICLE V. ENTITLEMENT TO BENEFITS

 

5.1                                 TERMINATION OF EMPLOYMENT.  When a
Participant terminates employment with the Employer for any reason or because of
death, on or after the Participant’s early retirement date, as that term is
defined in the Employer’s Non-Contributory Retirement Plan, the Participant’s
Plan Account at such date of termination or death shall be valued and payable
according to the provisions of Article VI.

 

5.2                                 HARDSHIP DISTRIBUTIONS.  In the event of
financial hardship of the Participant, as hereinafter defined, the Participant
may apply to the Employer for the distribution of all or any part of his or her
Account.  The Employer shall consider the circumstances of each such case and
the best interests of the Participant and his or her family and shall have the
right, in its sole discretion, if applicable, to allow such distribution, or, if
applicable, to direct a distribution of part of the amount requested or to
refuse to allow any distribution.  Upon a finding of financial hardship, the
Employer shall instruct the Trustees to make the appropriate distribution to the
Participant from amounts contributed to the Trust by the Employer in respect of
the Participant’s Account.  In no event shall the aggregate amount of the
distribution exceed either the full value of the Participant’s Account or the
amount determined by the Employer to be necessary to alleviate the Participant’s
financial hardship (which financial hardship may be considered to include any
taxes due because of the

 

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distribution occurring because of this Section), and that is not reasonably
available from other resources of the Participant.  For purposes of this
Section, the value of the Participant’s Account shall be determined as of the
date of the distribution.  Financial hardship means (a) a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in Code
Section 152(a)) of the Participant, (b) loss of the Participant’s property due
to casualty, or (c) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant, each as
determined to exist by the Employer.  A distribution may be made under this
Section only with the consent of the Employer’s board of directors.

 

5.3                                 REEMPLOYMENT OF RECIPIENT.  If a Participant
receiving installment distributions pursuant to Section 6.2 is reemployed by the
Employer, the remaining distributions due to the Participant shall be suspended
until such time as the Participant (or his or her Beneficiary) once again
becomes eligible for benefits under Section 5.1, 5.2, or 5.3, at which time such
distribution shall commence, subject to the limitations and conditions contained
in this Plan.

 

ARTICLE VI. DISTRIBUTION OF BENEFITS

 

6.1                                 AMOUNT.  A Participant (or his or her
Beneficiary) shall become entitled to receive, on or about the date of the
Participant’s termination of employment with the Employer, a distribution in an
aggregate amount equal to the Participant’s Account, which amount, depending on
(a) the performance of the deemed investments elected from time to time by the
Participant, the Beneficiary, and/or the Employer, as applicable, and (b) the
extent to which the investments of the Trust relating to the Participant’s
deemed investments under Sections 4.1 and 4.5 actually are realized by the
Trust, may be less than, equal to, or greater than the aggregate amount of the
Participant’s Compensation Deferrals.  Any payment due hereunder from the Trust
that is not paid by the Trust will be paid by the Employer from its general
assets.

 

6.2                                 METHOD OF PAYMENT.

 

(a)                     Cash Payments.  All payments under the Plan shall be
made in cash.  Accounts with an aggregate amount of $20,000.00 or less will be
paid in a lump sum.

 

(b)                    Timing and Manner of Payment.  In the case of
distributions to a Participant or his or her Beneficiary by virtue of an
entitlement pursuant to Section 5.2, an aggregate amount equal, to the
Participant’s Account will be paid by the Trust or the Employer, as provided by
Section 6.1, in a lump sum.

 

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In the event a Participant becomes entitled to benefits under Section 5.1, an
aggregate amount equal to the Participant’s Account will be paid by the Trust or
the Employer, as provided by Section 6.1, in a lump sum, on or about the date of
the Participant’s termination, or in annual installments made aver a period
selected by the Participant.  Such installments may be deferred for a period of
time not to exceed age 75 of the Participant.  Such amount may be paid in the
form of an annuity for the life of the Participant (or the joint lives of the
Participant and his or her spouse) of actuarially equivalent value to the
Participant’s lump sum benefit.  The timing and manner of payments of
distributions of Participant Account established to comply with Section 3.1,
must be paid in accordance with the Schedule stated in Article XIII, for the
guarantee of interest set forth in Section 3.1 to continue.

 

All such selections must be made by the Participant prior to his or her death or
termination of employment.  If a Participant fails to designate properly the
manner of payment of the Participant’s benefit under the Plan, such payment will
be made in accordance with the Schedule of Payment stated in Article XIII, to
begin on or about the date of the Participant’s death or termination of
employment.

 

If the whole or any part of a payment hereunder by the Trust of the Employer is
to be in installments, the total to be so paid shall continue to be deemed to be
invested pursuant to Sections 4.1 and 4.5 under such procedures as the Employer
may establish, in which case, subject to the limitations of Section 6.1, any
deemed income, gain, or loss attributable thereto (to the extent realized, as
determined by the Employer, in its discretion) shall be reflected in the
installment payments, in such equitable manner as the Employer shall determine.

 

6.3                                 DEATH BENEFITS.  If a Participant dies
before terminating his or her employment with the Employer or before the
commencement of payments to the Participant hereunder, the entire value of the
Participant’s Account shall be paid, as provided in Section 6.2, to the person
or persons designated in accordance with Section 7.1.

 

Upon the death of a Participant after payments hereunder have begun but before
he or she has received all payments to which he or she is entitled under the
Plan, the remaining benefit payments shall be paid to the person or persons
designated in accordance with Section 7.1, in the manner in which such benefits
were payable to the Participant, unless the Beneficiary elects a more rapid form
or schedule of distribution.

 

ARTICLE VII. BENEFICIARIES; PARTICIPANT DATA

 

7.1                                 DESIGNATION OF BENEFICIARIES.  Each
Participant from time to time may designate any person or persons (who may be
named contingently or successively) to

 

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receive such benefits as may be payable under the Plan upon or after the
Participant’s death, and such designation may be changed from time to time by
the Participant by filing a new designation.  Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Employer, and will be effective only when filed in writing with the Employer
during the Participant’s lifetime.

 

In the absence of a valid Beneficiary designation, or if, at the time any
benefit payment is due to a Beneficiary, there is no living Beneficiary validly
named by the Participant, the Employer shall pay any such benefit payment to the
Participant’s spouse, if then living, but otherwise to the Participant’s then
living descendants, if any, per stirpes, but, if none, to the Participant’s
estate.  In determining the existence or identity of anyone entitled to a
benefit payment, the Employer may rely conclusively upon information supplied by
the Participant’s personal representative, executor, or administrator.  If a
question arises as to the existence or identity of anyone entitled to receive a
benefit payment as aforesaid, or if a dispute arises with respect to any such
payment, then, notwithstanding the foregoing, the Employer, in its sole
discretion, may distribute such payment to the Participant’s estate without
liability for any tax or other consequences that might flow therefrom or may
take such other action as the Employer deems to be appropriate.

 

7.2                                 INFORMATION TO BE FURNISHED BY PARTICIPANTS
AND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES.  Any
communication, statement, or notice addressed to a Participant or to a
Beneficiary at his or her last post office address as shown on the Employer’s
records shall be binding on the Participant or Beneficiary for all purposes of
the Plan.  The Employer shall not be obliged to search for any Participant or
Beneficiary beyond the sending of a registered letter to such last known
address.  If the Employer notifies any Participant or Beneficiary that he or she
is entitled to an amount under the Plan and the Participant or Beneficiary fails
to claim such amount or make his or her location known to the Employer within
three (3) years thereafter, then, except as otherwise required by law, if the
location of one or more of the next of kin of the Participant is known to the
Employer, the Employer may direct distribution of such amount to any one or more
or all of such next of kin, and in such proportions as the Employer determines. 
If the location of none of the foregoing persons can be determined, the Employer
shall have the right to direct that the amount payable shall be deemed to be a
forfeiture, except that the dollar amount of the forfeiture, unadjusted for
deemed gains or losses in the interim, shall be paid by the Employer if a claim
for the benefit subsequently is made by the Participant or the Beneficiary to
whom it was payable.  If a benefit payable to an unlocated Participant or
Beneficiary is subject to escheat pursuant to applicable state law, the Employer
shall not be liable to any person for any payment made in accordance with such
law.

 

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ARTICLE VIII. THE TRUST

 

8.1                               ESTABLISHMENT OF TRUST.  The Employer shall
establish the Trust with the Trustees, pursuant to such terms and conditions as
are set forth in the Trust agreement to be entered into between the Employer and
the Trustees.  The Trust is intended to be treated as a grantor trust under the
Code, and the establishment of the Trust is not intended to cause Participants
to realize current income on amounts contributed thereto and the Trust shall be
so interpreted.

 

8.2                                INVESTMENT OPTIONS.  The Trust shall provide
investments in the following Funds of the American Funds Group.  The Trustees,
may in their sole discretion, comply with a Participant’s direction with respect
to investment of assets of the Trust that are equal to the value of the
Participant’s Account In the investment options.

 

Growth Funds:

 

EuroPacific Growth Fund

 

The Growth Fund of America

 

Smallcap World Fund

 

Growth and Income Funds

 

Washington Mutual Investors Fund

 

Balanced Funds

 

American Balanced Fund

 

Income Funds

 

The Bond Fund of America

 

Money Market Funds

 

The Cash Management Trust of America

 

ARTICLE IX. ADMINISTRATION

 

9.1                                 ADMINISTRATIVE AUTHORITY.  Except as
otherwise specifically provided herein, the Employer shall have the sole
responsibility for and the sole control of the operation and administration of
the Plan and shall have the power and authority to take all action and to make
all decisions and interpretations that may be necessary or appropriate in order
to administer and operate the Plan, including, without limiting the generality
of the foregoing, the power, duty, and responsibility to

 

(a)                    Resolve and determine all disputes or questions arising
under the Plan, including the power to determine the rights of Eligible
Employees, Participants, and Beneficiaries, and their respective benefits, and
to remedy any ambiguities, inconsistencies, or omissions in the Plan.

 

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(b)                   Adopt such rules of procedure and regulations as in its
opinion may be necessary for the proper and efficient administration of the Plan
and as are consistent with the Plan.

 

(c)                    Implement the Plan in accordance with its terms and the
rules and regulations adopted as above.

 

(d)                   Make determinations with respect to the eligibility of any
Eligible Employee as a Participant and make determinations concerning the
crediting and distribution of Plan Accounts.

 

(e)                    Appoint any persons or firms, or otherwise act to secure
specialized advice or assistance, as it deems necessary or desirable in
connection with the administration and operation of the Plan, and the Employer
shall be entitled to rely conclusively upon, and shall be fully protected in any
action or omission taken by it in good faith reliance upon, the advice or
opinion of such firms or persons.  The Employer shall have the power and
authority to delegate from time to time by written instrument all or any part of
its duties, powers, or responsibilities under the Plan, both ministerial and
discretionary, as it deems appropriate, to any person or committee, and in the
same manner to revoke any such delegation of duties, powers, or
responsibilities.  Any action of such person or committee in the exercise of
such delegated duties, powers, or responsibilities shall have the same force and
effect for all purposes hereunder as if such action had been taken by the
Employer.  Further, the Employer may authorize one or more persons to execute
any certificate or document on behalf of the Employer, in which event any person
notified by the Employer of such authorization shall be entitled to accept and
conclusively rely upon any such certificate or document executed by such person
as representing action by the Employer until such third person shall have been
notified of the revocation of such authority.

 

9.2                                 MUTUAL EXCLUSION OF RESPONSIBILITY.  Neither
the Trustees nor the Employer shall be obliged to inquire into or be responsible
for any act or failure to act, or the authority therefor, on the part of the
other.

 

9.3                                 UNIFORMITY OF DISCRETIONARY ACTS.  Whenever
in the administration or operation of the Plan discretionary actions by the
Employer are required or permitted, such actions shall be consistently and
uniformly applied to all persons similarly situated, and no such action shall be
taken that shall discriminate in favor of any particular person or group of
persons.

 

9.4                                 LITIGATION.  Except as may be otherwise
required by law, in any action or judicial proceeding affecting the Plan, no
Participant or Beneficiary shall be entitled to any notice or service of
process, and any final judgment entered in such action shall be binding on all
persons interested in, or claiming under, the Plan.

 

13

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9.5                                 PAYMENT OF ADMINISTRATION EXPENSES.  All
expenses incurred in the administration and operation of the Plan and the Trust,
including any taxes payable by the Employer in respect of the Plan or Trust or
payable by or from the Trust pursuant to its terms, shall be paid by the
Employer.

 

9.6                                 CLAIMS PROCEDURE.  Any person claiming a
benefit under the Plan (a Claimant) shall present the claim, in writing, to the
Employer, and the Employer shall respond in writing.  If the claim is denied,
the written notice of denial shall state, in a manner calculated to be
understood by the Claimant:

 

(a)                     The specific reason or reasons for the denial, with
specific references to the Plan provisions on which the denial is based;

 

(b)                    A description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation of why
such material or information is necessary; and

 

(c)                     An explanation of the Plan’s claims review procedure.

 

The written notice denying or granting the Claimant’s claim shall be provided to
the Claimant within ninety (90) days after the Employer’s receipt of the claim,
unless special circumstances require an extension of time for processing the
claim.  If such an extension is required, written notice of the extension shall
be furnished by the Employer to the Claimant within the initial ninety (90) day
period and in no event shall such an extension exceed a period of ninety (90)
days from the end of the initial ninety (90) day period.  Any extension notice
shall indicate the special circumstances requiring the extension and the date on
which the Employer expects to render a decision on the claim.  Any claim not
granted or denied within the period noted above shall be deemed to have been
denied.

 

Any Claimant whose claim is denied or deemed to have been denied under the
preceding sentence (or such Claimant’s authorized representative) may, within
sixty (60) days after the Claimant’s receipt of notice of the denial or after
the date of the deemed denial, request a review of the denial by notice given,
in writing, to the Employer.  Upon such a request for review, the claim shall be
reviewed by the Employer (or its designated representative), which may, but
shall not be required to, grant the Claimant a hearing.  In connection with the
review, the Claimant may have representation, may examine pertinent documents,
and may submit issues and comments in writing.

 

The decision on review normally shall be made within sixty (60) days of the
Employer’s receipt of the request for review.  If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Employer, and the time limit for the decision on review shall be
extended to one hundred twenty (120) days.  The decision on review shall be in
writing and shall state, in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include

 

14

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references to the relevant Plan provisions on which the decision is based.  The
written decision on review shall be given to the Claimant within the sixty (60)
day (or, if applicable, the one hundred twenty (120) day) time limit discussed
above.  If the decision on review is not communicated to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120) day) period
discussed above, the claim shall be deemed to have been denied upon review.  All
decisions on review shall be final and binding with respect to all concerned
parties.

 

ARTICLE X. AMENDMENT

 

10.1                           RIGHT TO AMEND.  The Employer, by written
instrument executed by the Employer, shall have the right to amend the Plan, at
any time and with respect to any provisions hereof, and all parties hereto or
claiming any interest hereunder shall be bound by such amendment; provided,
however, that no such amendment shall deprive a Participant or a Beneficiary of
a right accrued hereunder prior to the date of the amendment.

 

10.2                           AMENDMENTS TO ENSURE PROPER CHARACTERIZATION OF
PLAN.  Notwithstanding the provisions of Section 10.1, the Plan and the Trust
agreement may be amended by the Employer at any time, retroactively if required,
if found necessary, in the opinion of the Employer, in order to ensure that the
Plan is characterized as a plan of deferred compensation maintained for a select
group of management or highly compensated employees as described under ERISA
Sections 201(2), 301(a)(3), and 401(a)(1) and to conform the Plan to the
provisions and requirements of any applicable law (including ERISA and the
Code).  No such amendment shall be considered prejudicial to any interest of a
Participant or a Beneficiary hereunder.

 

ARTICLE XI. TERMINATION

 

11.1                           EMPLOYER’S RIGHT TO TERMINATE OR SUSPEND PLAN. 
The Employer reserves the right, at any time, to terminate the Plan and/or its
obligation to make further credits to Plan accounts.  The Employer also reserves
the right, at any time, to suspend the operation of the Plan for a fixed or
indeterminate period of time.

 

11.2                           AUTOMATIC TERMINATION OF PLAN.  The Plan, but not
the Trust, automatically shall terminate upon the dissolution of the Employer or
upon its merger into or consolidation with any other corporation or business
organization if there is a failure by the surviving corporation or business
organization to adopt specifically and agree to continue the Plan.

 

15

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11.3                           SUSPENSION OF DEFERRALS.  In the event of a
suspension of the Plan, the Employer shall continue all aspects of the Plan,
other than Compensation Deferrals and Employer contribution credits under
Section 3.1, during the period of the suspension, in which event payments
hereunder will continue to be made during the period of the suspension in
accordance with Articles V and VI.

 

11.4                           ALLOCATION AND DISTRIBUTION.  This Section shall
become operative upon a complete termination of the Plan.  The provisions of
this Section also shall become operative in the event of a partial termination
of the Plan, as determined by the Employer, but only with respect to that
portion of the Plan attributable to the Participants to whom the partial
termination is applicable.  Upon the effective date of any such event,
notwithstanding any other provisions of the Plan, (i) no persons who were not
theretofore Participants shall be eligible to become Participants, and (ii) the
value of the interest of all Participants and Beneficiaries shall be determined
and, after deduction of estimated expenses in liquidating and, if applicable,
paying Plan benefits, paid to them as soon as is practicable after such
termination.

 

11.5                           SUCCESSOR TO EMPLOYER.  Any corporation or other
business organization that is a successor to the Employer by reason of a
consolidation, merger, or purchase of substantially all of the assets of the
Employer shall have the right to become a party to the Plan by adopting the same
by resolution of the entity’s board of directors or other appropriate governing
body.  If, within ninety (90) days from the effective date of such
consolidation, merger, or sale of assets, such new entity does not become a
party hereto, as above provided, the Plan automatically shall be terminated, and
the provisions of Section 11.4 shall become operative.

 

ARTICLE XII. MISCELLANEOUS

 

12.1                         LIMITATIONS ON LIABILITY OF EMPLOYER.  Neither the
establishment of the Plan or any modification thereof, nor the creation of any
account under the Plan, nor the payment of any benefits under the Plan shall be
construed as giving to any Participant or other person any legal or equitable
right against the Employer or any officer or employer thereof, except as
provided by law or by any Plan provision.  Except as to the provisions of
Article 3.1, the Employer does not in any way guarantee any Participant’s
Account from loss or depreciation, whether caused by poor investment performance
of a deemed investment or the inability to realize upon an investment due to an
insolvency affecting an investment vehicle or any other reason.  In no event
shall the Employer, or any successor, employee, officer, director, or
stockholder of the Employer, be liable to any person on account of any claim
arising by reason of the provisions of the Plan or of any instrument or
instruments implementing its provisions, or for the failure of any Participant,
Beneficiary, or other person to be entitled to any particular tax consequences
with respect to the Plan, or any credit or distribution hereunder.

 

16

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12.2                          CONSTRUCTION.  If any provision of the Plan is
held to be illegal or void, such illegality or invalidity shall not affect the
remaining provisions of the Plan, but shall be fully severable, and the Plan
shall be construed and enforced as if said illegal or invalid provision had
never been inserted herein.  For all purposes of the Plan, where the context
admits, the singular shall include the plural, and the plural shall include the
singular.  Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction of the
Plan.  The laws of the state of South Carolina shall govern, control, and
determine all questions of law arising with respect to the Plan and the
interpretation and validity of its respective provisions, except where those
laws are preempted by the laws of the United States.  Participation under the
Plan will not give any Participant the right to be retained in the service of
the Employer nor any right or claim to any benefit under the Plan unless such
right or claim has specifically accrued hereunder.

 

The Plan is intended to be and at all times shall be interpreted and
administered so as to qualify as an unfunded deferred compensation plan, and no
provision of the Plan shall be interpreted so as to give any individual any
right in any assets of the Employer which right is greater than the rights of a
general unsecured creditor of the Employer.

 

12.3                          SPENDTHRIFT PROVISION.  No amount payable to a
Participant or a Beneficiary under the Plan will, except as otherwise
specifically provided by law, be subject in any manner to anticipation,
alienation attachment, garnishment, sale, transfer, assignment (either at law or
in equity), levy, execution, pledge, encumbrance, charge, or any other legal or
equitable process, and any attempt to do so will be void; nor will any benefit
be in any manner liable for or subject to the debts, contracts, liabilities,
engagements, or torts of the person entitled thereto.  Further, the withholding
of taxes from Plan benefit payments; the recovery under the Plan of overpayments
of benefits previously made to a Participant or Beneficiary; if applicable, the
transfer of benefit rights from the Plan to another plan; or the direct deposit
of benefit payments to an account in a banking institution (if not actually part
of an arrangement constituting an assignment or alienation) shall not be
construed as an assignment or alienation.

 

In the event that any Participant’s or Beneficiary’s benefits hereunder are
garnished or attached by order of any court, the Employer may bring an action or
a declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan.  During the pendency
of said action, any benefits that become payable shall be held as credits to the
Participant’s or Beneficiary’s Account or, if the Employer prefers, paid into
the court as they become payable, to be distributed by the court to the
recipient as the court deems proper at the close of said action.

 

17

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ARTICLE XIII. SCHEDULE OF PAYMENTS

 

13.1               PAYMENT OF CERTAIN BENEFITS.  Benefit payments referencing
this Article XIII shall be paid as follows:

 

Participant’s Balance in
Deferred Compensation Account

 

How Benefits Are Paid

 

 

 

 

 

$20,000 or less

 

 

 

Lump Sum Paid

Over

 

Less Than

 

Equal monthly installments(1)

$20,000

 

50,000

 

 

60

$50,000

-

75,000

 

 

72

$75,000

-

100,000

 

 

84

$100,000

-

150,000

 

 

96

$150,000

-

200,000

 

 

108

$200,000 and above

 

120

 

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(1) Accumulated interest will be paid on or before March 1 of each year.

 

IN WITNESS WHEREOF, the Employer has caused the Plan to be executed and its seal
to be affixed hereto, effective as of the 1st day of January 1, 1998.

 

Attest:

 

Kanawha Insurance Company

 

 

 

/s/ Thomas W. Thomas

 

 

By:

/s/ Stanley D. Johnson

 

 

 

 

 

 

Date:

Feb. 16, 1998

 

 

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AMENDMENT NUMBER ONE

SUPPLEMENTAL RETIREMENT AND DEFERRED COMPENSATION PLAN

RESTATED AND AMENDED

Effective as of January 1, 1998

 

Article VI.  Distribution of Benefits is amended as follows:

 

Paragraph 6.2, subparagraph (b) is restated as follows:

 

(b)                                 Timing and Manner of Payment.  In the case
of distributions to a Participant or his or her Beneficiary by virtue of an
entitlement pursuant to Section 5.2, an aggregate amount equal, to the
Participant’s Account will be paid by the Trust or the Employer, as provided by
Section 6.1, in a lump sum.

 

In the event a Participant becomes entitled to benefits under Section 5.1, an
aggregate amount equal to the Participant’s Account will be paid by the Trust or
the Employer, as provided by Section 6.1, in a lump sum, on or about the date of
the Participant’s termination, or in installments made over a period selected by
the Participant.  Such installments may be deferred for a period of time not to
exceed age 75 of the Participant.  Such amount may be paid in the form of an
annuity for the life of the Participant (or the joint lives of the Participant
and his or her Primary Beneficiary) of actuarially equivalent value to the
Participant’s lump sum benefit.  The timing and manner of payments of
distributions of Participant Account established to comply with Section 3.1,
must be paid in accordance with the Schedule stated in Article XIII, for the
guarantee of interest set forth in Section 3.1 to continue.

 

All such selections must be made by the Participant prior to his or her death or
termination of employment.  If a Participant fails to designate properly the
manner of payment of the Participant’s benefit under the Plan, such payment will
be made in accordance with the Schedule of Payment stated in Article XIII, to
begin on or about the date of the Participant’s death or termination of
employment.

 

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed and
its seal to be affixed hereto, effective as of the first day of January, 1998.

 

ATTEST:

 

KANAWHA INSURANCE COMPANY

 

 

 

/s/ Thomas W. Thomas

 

 

/s/ Stanley D. Johnson

 

Secretary

 

President and Chief Executive Officer

 

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TRUST AGREEMENT

 

TRUST UNDER THE KANAWHA INSURANCE COMPANY

DEFERRED COMPENSATION PLAN

 

(a)                        This Agreement made this first day of January, 1998,
by and between Kanawha Insurance Company (Company) and the Trustees whose
signatures appear below.

 

(b)                       WHEREAS, Company has adopted the Nonqualified Deferred
Compensation Plans as listed in Appendix I;

 

(c)                        WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plans with respect to the individuals
participating in such Plans;

 

(d)                       WHEREAS, Company wishes to establish a trust
(hereinafter called “Trust”) and to contribute to the Trust assets that shall be
held therein, subject to the claims of Company’s creditors in the event of
Company’s Insolvency, as herein defined in Section 3(a), until paid to Plan
participants and their beneficiaries in such manner and at such times as
specified in the plans;

 

(e)                        WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect the status
of the Plans as an unfunded plan maintained for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees for purposes of Title I of the Employee Retirement Income Security Act
of 1974;

 

(f)                          WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of funds to assist in
the meeting of its liabilities under the Plans;

 

NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:

 

Section 1. Establishment of Trust.

 

(a)                        Company hereby deposits with Trustee in trust the
amount set forth in Exhibit A, referred to herein as the amount deposited which
shall become the principal of the Trust to be held, administered and disposed of
by Trustee as provided in this Trust Agreement.

 

(b)                       The Trust shall become irrevocable upon approval by
the Board of Directors.

 

(c)                        The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.

 

--------------------------------------------------------------------------------

 

(d)                       The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants and general creditors
as herein set forth.  Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust.  Any rights created under the Plans and this Trust Agreement shall be
mere unsecured contractual rights of Plan participants and their beneficiaries
against Company.  Any assets held by the Trust will be subject to the claims of
Company’s general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.

 

(e)                        Company, in its sole discretion, may at any time, or
from time to time, make additional deposits of cash or other property in trust
with Trustee to augment the principal to be held, administered and disposed of
by Trustee as provided in this Trust Agreement.  Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel such additional
deposits.

 

Section 2.  Payments to Plan Participants and Their Beneficiaries.

 

(a)                        Company shall deliver to Trustee a schedule (the
Payment Schedule) that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable, the
form in which such amount is to be paid (as provided for or available under the
Plans), and the time of commencement for payment of such amounts.  Except as
otherwise provided herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment Schedule.  The Trustee
shall make provisions for the reporting and withholding of any federal, state or
local taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plans and shall pay amounts withheld to
the appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Company.

 

(b)                       The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined by Company or such
party as it shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the Plans.

 

(c)                        Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plans.  Company shall notify Trustee of its decision to make payment of,
benefits directly prior to the time amounts are payable to participants or their
beneficiaries.  In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plans, Company shall make the balance of each such payment as it
falls due. Trustee shall notify Company where principal and earnings are not
sufficient.

 

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Section 3.  Trustee Responsibility Regarding Payments to Trust Beneficiary When
Company Is Insolvent.

 

(a)                       Trustee shall cease payment of benefits to Plan
participants and their beneficiaries if the Company is Insolvent.  Company shall
be considered Insolvent for purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code, or (iii)
Company is determined to be insolvent by The South Carolina Director of
Insurance.

 

(b)                      At all times during the continuance of this Trust, as
provided in Section 1 (d) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of Company under federal and state law as
set forth below.

 

(1)                                  The Board of Directors and the Chief
Executive Officer of Company shall have the duty to inform Trustee in writing of
Company’s Insolvency.  If a person claiming to be a creditor of Company alleges
in writing to Trustee that Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.

 

(2)                                  Unless Trustee has actual knowledge of
Company’s insolvency, or has received notice from Company or a person claiming
to be a creditor alleging that Company is Insolvent, Trustee shall have no duty
to inquire whether Company is Insolvent.  Trustee may in all events rely on such
evidence concerning Company’s solvency as may be furnished to Trustee and that
provides Trustee with a reasonable basis for making a determination concerning
Company’s solvency.

 

(3)                                  If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the benefit of
Company’s general creditors.  Nothing in the Trust shall in any way diminish any
rights of Plan participants or their beneficiaries to pursue their rights as
general creditors of Company with respect to benefits due under the Plans or
otherwise.

 

(4)                                  Trustee shall resume the payment of
benefits to Plan participants or their beneficiaries in accordance with Section
2 of this Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).

 

(c)                       Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3 (b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plans for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company in lieu of the payments provided
for hereunder during any such period of discontinuance.

 

--------------------------------------------------------------------------------

 

Section 4.  Payments to Company.

 

Except as provided in Section 3 hereof, after the Trust has become irrevocable,
Company shall have no right or power to direct Trustee to return to Company or
to divert to others any of the Trust assets before all payments of benefits have
been made to Plan participants and their beneficiaries pursuant to the terms of
the Plans.

 

Section 5.  Investment Authority.

 

In no event may Trustee invest in securities (including stock or rights to
acquire stock) or obligations issued by Company, other than a de minimis amount
held in common investment vehicles in which Trustee invests.  All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable by or rest with Plan
participants.

 

Section 6.  Disposition of Income.

 

During the term of this Trust, all income received by the Trust, net of expenses
and taxes, shall be accumulated and reinvested.

 

Section 7.  Accounting by Trustee.

 

Trustee shall keep accurate and detailed records of all investments, receipts,
disbursements, and all other transactions required to be made, including such
specific records as shall be agreed upon in writing between Company and
Trustee.  Within 60 days following the close of each calendar year and within 30
days after the removal or resignation of Trustee, Trustee shall deliver to
Company a written account of its administration of the Trust during such year or
during the period from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts, disbursements
and other transactions effected by it, including a description of all securities
and investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being shown separately),
and showing all cash, securities and other property held in the Trust at the end
of such year or as of the date of such removal or resignation, as the case may
be.

 

Section 8.  Responsibility of Trustee.

 

(a)                      Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plans or this Trust and is given in writing
by Company.  In the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.

 

--------------------------------------------------------------------------------

 

(b)                      If Trustee undertakes or defends any litigation arising
in connection with this Trust, Company agrees to indemnify Trustee against
Trustee’s costs, expenses and liabilities (including, without limitation,
Attorney’s fees and expenses) relating thereto and to be primarily liable for
such payments.  If Company does not pay such costs, expenses and liabilities in
a reasonably timely manner, Trustee may obtain payment from the Trust.

 

(c)                       Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.

 

(d)                      Trustee shall have, without exclusion, all powers
conferred in Trustees by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an asset of
the Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the policy
to a different form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.

 

(d)                      Notwithstanding any powers granted to Trustee pursuant
to this Trust Agreement or to applicable law, Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.

 

Section 9.  Compensation and Expenses of Trustee.

 

Company shall pay all administrative and Trustee’s fees and expenses.  If not so
paid, the fees and expenses shall be paid from the Trust.

 

Section 10.  Resignation and Removal of Trustee.

 

(a)                       Trustee may resign at any time by written notice to
Company, which shall be effective 30 days after receipt of such notice unless
Company and Trustee agree otherwise.

 

(b)                      Trustee may be removed by Company on 60 days notice or
upon shorter notice accepted by Trustee.

 

(c)                       Upon resignation or removal of Trustee and appointment
of a successor Trustee, all assets shall subsequently be transferred to the
successor Trustee.  The transfer shall be completed within 60 days after receipt
of notice of resignation, removal or transfer, unless Company extends the time
limit.

 

(d)                      If trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraphs (a) or (b) of this section.  If no such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions.  All expenses
of Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.

 

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Section 11.  Appointment of Successor

 

(a)                       If Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or removal. 
The appointment shall be effective when accepted in writing by the new Trustee,
who shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets.  The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor Trustee
to evidence the transfer

 

(b)                      The successor Trustee need not examine the records and
acts of any prior Trustee and may retain or dispose of existing Trust assets,
subject to Sections 7 and 8 hereof.  The successor Trustee shall not be
responsible for and Company shall indemnify and defend the successor Trustee
from any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time it
becomes successor Trustee.

 

Section 12.  Amendment or Termination.

 

(a)                        This Trust Agreement may be amended by a written
instrument executed by Trustee and Company.  Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Plans or shall make the
Trust revocable after it has become irrevocable in accordance with Section 1(b)
hereof.

 

(b)                       The Trust shall not terminate until the date on which
Plan participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plans.

 

Section 13.  Miscellaneous.

 

(a)                        Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.

 

(b)                       Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.

 

(c)                        This Trust Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina.

 

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The effective date of this Trust Agreement shall be the first day of January,
1998.

 

 

KANAWHA INSURANCE COMPANY

 

TRUSTEE

 

 

 

By:

/s/ Stanley D. Johnson

 

 

By:

/s/ Stanley D. Johnson

 

 

President & CEO

 

 

 

/s/ Robert E. Matthews

 

 

 

 

 

 

/s/ Thomas W. Thomas

 

 

 

 

 

 

/s/ Arthur M. Burch

 

 

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APPENDIX I

 

NONQUALIFIED DEFERRED COMPENSATION PLANS

 

Kanawha Insurance Company Supplemental Retirement and Deferred Compensation Plan

 

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