<PAGE>

                                                                   EXHIBIT 10.12

                  SOUTHERN STATES DEFERRED COMPENSATION PLAN

                     (As Restated Effective July 1, 1995)

                                  Including:

                                  1. First Amendment
                                        (Effective July 1, 1996)
                                  2. Second Amendment
                                        (Effective July 1, 1997)
                                  3. Third Amendment
                                        (Effective October 1, 1997)
                                  4. Fourth Amendment
                                        (Effective July 1, 1998)
                                  5. Fifth Amendment
                                        (Effective July 1, 1999)
                                  6. Sixth Amendment
                                        (Effective October 1, 1999)
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>
                                   ARTICLE I
                              Definition of Terms
                              -------------------

1.1    Act................................................................    1
1.2    Affiliated Employers...............................................    1
1.3    Administrator......................................................    1
1.4    Beneficiary........................................................    1
1.5    Benefit Commencement Date..........................................    1
1.6    Board..............................................................    2
1.7    Code...............................................................    2
1.8    Corporation........................................................    2
1.9    Deferred Thrift Benefit............................................    2
1.10   Earnings Fund Share................................................    2
1.11   Effective Date.....................................................    2
1.12   Eligible Employee..................................................    2
1.12A  Eligible Executives................................................    2
1.13   Employee...........................................................    2
1.14   Executive Bonus....................................................    2
1.15   Fiscal Year........................................................    2
1.16   Participant........................................................    3
1.17   Plan...............................................................    3
1.18   Plan Sponsor.......................................................    3
1.19   Plan Year..........................................................    3
1.20   Rabbi Trust........................................................    3
1.21   Reserve Account....................................................    3
1.22   Rollover Account...................................................    3
1.23   Salary.............................................................    3
1.24   Subsidiary.........................................................    3
1.25   Thrift Plan........................................................    3

                                  ARTICLE II
                                 Participation
                                 -------------

2.1    Participation......................................................    3
2.2    Termination of Participation.......................................    4


                                  ARTICLE III
                         Incentive Compensation Awards
                         -----------------------------

3.1    Earnings Fund Program..............................................    4
3.2    Executive Bonus Program............................................    6
3.3    Chief Executive Officer Incentive Program..........................    6
3.4    Eligible Executives Incentive Program .............................    6
</TABLE>
<PAGE>

<TABLE>
<S>                                                                       <C>

                                  ARTICLE IV
                              Elective Deferrals
                              ------------------

4.1    Deferral of Earnings Fund Share and Executive Bonus................    6
4.2    Deferral of Salary.................................................    6
4.3    Deferred Thrift Benefit............................................    6


                                   ARTICLE V
                 Allocations to and Vesting in Reserve Account
                 ---------------------------------------------

5.1    Allocations of Deferred Earnings Fund Share and Executive Bonus.....   7
5.2    Allocations of Deferred Salary......................................   7
5.3    Allocations of Deferred Thrift Benefit..............................   7
5.4    Subtractions from Reserve Account...................................   7
5.5    Deemed Earnings on Reserve Accounts.................................   7
5.6    Vesting in Reserve Account..........................................   8
5.7    Equitable Adjustment in Case of Error or Omission...................   8
5.8    Statement of Reserve Account Balance................................   8

                                  ARTICLE VI
                  Special Rules Relating to Rollover Account
                  ------------------------------------------

6.1    Transfer to Rollover Account.......................................    8
6.2    Deemed Earnings on Rollover Account................................    8
6.3    Subtractions from Rollover Account.................................    8
6.4    Vesting in Rollover Account........................................    8
6.5    Equitable Adjustment in Case of Error or Omission..................    8
6.6    Statement of Rollover Account Balance..............................    8
6.7    Death Benefits Attributable to Rollover Account....................    9
6.8    Disability Benefits Attributable to Rollover Account...............    9
6.9    Restrictions on Death or Disability Benefits.......................   10


                                  ARTICLE VII
                                    Funding
                                    -------

7.1    Funding............................................................   10
7.2    Use of Rabbi Trust Permitted.......................................   11


                                 ARTICLE VIII
                           Time and Form of Payment
                           ------------------------

8.1    Current Earning Fund Share and Executive Bonus Payments............   11
8.2    Distribution of Accounts...........................................   11
8.3    Death After Benefit Commencement...................................   13
8.4    Benefit Determination and Payment Procedure........................   14
8.5    Payments to Minors and Incompetents................................   14
8.6    Distribution of Benefit When Distributee Cannot Be Located.........   14
8.7    Claims Procedure...................................................   14
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<S>                                                                         <C>
                                   ARTICLE IX
                            Beneficiary Designation
                            -----------------------

9.1    Beneficiary Designation............................................   15

                                   ARTICLE X
                                  Withdrawals
                                  -----------

10.1   Severe Financial Hardship Withdrawals..............................   16
10.2   Other Withdrawals..................................................   16

                                  ARTICLE XI
                               Plan Administration
                               -------------------

11.1   Plan Administrator.................................................   16
11.2   Power and Authority of Administrator...............................   16

                                  ARTICLE XII
                       Amendment and Termination of Plan
                       ---------------------------------

12.1   Amendment or Termination of the Plan...............................   16

                                 ARTICLE XIII
                      Adoption by Additional Corporations
                      -----------------------------------

13.1   Adoption by Additional Corporations................................   17

                                  ARTICLE XIV
                                 Miscellaneous
                                 -------------

14.1   Non-assignability..................................................   17
14.2   Right to Require Information and Reliance Thereon..................   17
14.3   Notices and Elections..............................................   18
14.4   Delegation of Authority............................................   18
14.5   Service of Process.................................................   18
14.6   Governing Law......................................................   18
14.7   Binding Effect.....................................................   18
14.8   Severability.......................................................   18
14.9   No Effect on Employment Agreement..................................   18
14.10  Gender and Number..................................................   18
14.11  Titles and Captions................................................   18
</TABLE>

                                     -iii-
<PAGE>

    This Deferred Compensation Plan (hereinafter the "Plan" and formerly known
as the Deferred Incentive Compensation Plan) is amended and restated this 28th
day of June, 1995, effective July 1, 1995, unless otherwise specifically
stated, by Southern States Cooperative, Incorporated, a Virginia corporation
(hereinafter called the "Plan Sponsor");

                                  WITNESSETH:

    WHEREAS, the Plan was adopted to provide an incentive compensation program
for certain executives of the Corporation and to allow for the deferral of the
receipt of such incentive compensation; and

    WHEREAS, the Plan Sponsor deems it appropriate to expand the deferral
program to include salary deferral, withdrawal rights and the right of a
Participant to select a rate of return for the deemed investment of the Reserve
Account based on various measures permitted by the Administrator.

    NOW, THEREFORE, in consideration of the premises herein, the Plan Sponsor
agrees as follows:


                                   ARTICLE I
                              Definition of Terms
                              -------------------

    The following words and terms as used in this Plan shall have the meaning
set forth below, unless a different meaning is clearly required by the context:

    1.1    "Act":  The Employee Retirement Income Security Act of 1974, as the
same may be amended from time to time, or the corresponding sections of any
subsequent legislation which replaces it, and, to the extent not inconsistent
therewith, the regulations issued thereunder.

    1.2    "Affiliated Employers":  The Plan Sponsor and all of its
Subsidiaries.

    1.3    "Administrator":  The plan administrator provided for in Article XI
hereof.

    1.4    "Beneficiary":  The person or persons designated by a Participant or
otherwise entitled pursuant to Article IX to receive benefits under the Plan
attributable to such Participant after the death of such Participant.

    1.5    "Benefit Commencement Date":

         (i)    When used with respect to the Reserve Account, the first July 1
    or January 1 following the Participant's cessation of employment as an
    Employee of the Affiliated Employers for whatever reason.

         (ii)   When used with respect to the Rollover Account, generally the
    first July 1 or January 1 following the earlier of:

              (A)   The later of:

                  (I) The Participant's cessation of employment as an Employee
              of the Affiliated Employers, or

                 (II) The date the Participant reaches age fifty-five (55), or

              (B)   The date the Participant reaches age sixty-five (65).

<PAGE>

    In the case of the Death or Disability Benefits described in Article VI, the
    first July 1 or January 1 following the Participant's death and receipt of a
    claim from the Beneficiary, or following receipt of proof of the
    Participant's total and permanent disability.  However, if a Participant's
    Benefit Commencement Date occurs prior to January 1, 1990, such Participant
    shall continue to receive benefit payments as determined under the Plan as
    amended effective January 1, 1990.

       (iii)  Notwithstanding the foregoing, a Participant may elect to defer
    his Benefit Commencement Date to a January 1 or July 1, not later than his
    65/th/ birthday, provided that such election to defer the Benefit
    Commencement Date is filed with the Administrator in the calendar year prior
    to, and at least 60 days prior to, the otherwise applicable Benefit
    Commencement Date. Only one such election to defer the Benefit Commencement
    Date may be made by a Participant.

    1.6    "Board":  The present and any succeeding Board of Directors of the
Plan Sponsor, unless such term is used with respect to a particular Corporation
and its Employees, in which event it shall mean the present and any succeeding
Board of Directors of that Corporation.

    1.7    "Code":  The Internal Revenue Code of 1986, as the same may be
amended from time to time, or the corresponding section of any subsequent
Internal Revenue Code, and, to the extent not inconsistent therewith,
regulations issued thereunder.

    1.8    "Corporation":  The Plan Sponsor and any of its Subsidiaries approved
by the Board of the Plan Sponsor for participation in and adopting the Plan.

    1.9    "Deferred Thrift Benefit":  The amount awarded to certain
Participants under paragraph 4.3.

    1.10   "Earnings Fund Share":  The share of the Earnings Fund awarded to
certain Participants under paragraph 3.1, the Chief Executive Officer Incentive
Distribution to the Chief Executive Officer under paragraph 3.3 of the Plan and
the Eligible Executive's Distribution to the Eligible Executives under paragraph
3.4.

    1.11   "Effective Date":  The Effective Date of this restatement of the Plan
is July 1, 1995.

    1.12   "Eligible Employee":  An Employee who is employed by the Corporation
in:

         (i)  Its 200 pay series, or

        (ii)  Effective July 1, 1989, its 100 pay series.

    1.12A  "Eligible Executives":  The Chief Financial Officer and the Group
Vice Presidents.

    1.13   "Employee":  An individual who is employed in the service of the
Affiliated Employers as a common law employee.

    1.14   "Executive Bonus":  The discretionary bonus awarded to certain
Participants under paragraph 3.2.

    1.15   "Fiscal Year":  The fiscal year of the Plan Sponsor.

    1.16   "Participant":  An Eligible Employee but only during such period and
for such purposes as he is considered a Participant as described in Article II
of the Plan.  Participants may be classified as Active or Inactive Participants
as provided in Article II.

                                      -2-
<PAGE>

    1.17   "Plan":  This document, as contained herein or as duly amended, which
shall be known as the "Southern States Deferred Compensation Plan".  Prior to
July 1, 1995 the Plan was known as the "Southern States Deferred Incentive
Compensation Plan"

    1.18   "Plan Sponsor":  Southern States Cooperative, Incorporated, a
Virginia corporation, or its corporate successor.

    1.19   "Plan Year":  The twelve (12) month period beginning on the first day
of July of each year.

    1.20   "Rabbi Trust":  A trust fund described in paragraph 7.2 and
established or maintained for the Plan.

    1.21   "Reserve Account":  The bookkeeping account of a Participant
attributable to elective and non-elective deferrals under the Plan and to any
deemed earnings thereon less any amounts transferred pursuant to paragraph 6.1
to the Rollover Account.

    1.22   "Rollover Account":  The bookkeeping account of a Participant
attributable to elective and non-elective deferrals made prior to January 1,
1990 and deemed earnings thereon (less any distributions made prior to July 1,
1990) which are transferred from the Reserve Account pursuant to paragraph 6.1.

    1.23   "Salary":  A Participant's regular base salary paid or payable for
personal services rendered to the Corporation as an Eligible Employee, including
that portion of such amount which is electively deferred under or contributed to
this Plan or any other plan, whether a deferred compensation or cafeteria plan,
of the Corporation for such Plan Year, but excluding any such compensation
deferred or contributed from a prior period, bonuses, incentive pay, expense
reimbursement and allowances and benefits not normally paid in cash to the
Participant.  Salary for any Plan Year shall be determined as of the first day
of the Plan Year.

    1.24   "Subsidiary":  A corporation (other than the Plan Sponsor) in which
the Plan Sponsor owns an equity interest and holds fifty percent (50%) or more
of the votes entitled to be cast for directors.

    1.25   "Thrift Plan":  The Southern States Thrift Plan and Trust as restated
effective January 1, 1987 and as thereafter amended.


                                  ARTICLE II
                                 Participation
                                 -------------

    2.1    Participation.  The Board, upon recommendation of the President and
           -------------
Chief Executive Officer of the Plan Sponsor, shall determine in advance of each
Fiscal Year, the offices and positions that will be entitled to actively
participate in the Plan for the Fiscal Year.  Each Eligible Employee who is so
designated by the Board by his office or position for a Fiscal Year shall be a
Participant and an Active Participant in the Plan for the Fiscal Year.  In
addition, where a designated office or position is vacated by a Participant and
is subsequently filled during a Fiscal Year, or where an office or position is
newly designated (either a currently filled position or a newly created
position) for participation in the Plan, the Board, upon recommendation of the
President and Chief Executive Officer of the Plan Sponsor, may include any
Active Participant's successor or replacement and/or the individual who fills
the newly designated office or position, as a Participant and an Active
Participant in the Plan for such Fiscal Year, as of a date designated by the
Board.  For purposes of this paragraph, the Board's determination of the offices
and positions entitled to actively participate in the Plan shall continue in
effect for subsequent Fiscal Years unless changed in advance of a Fiscal Year.
In making its designation, the Board may distinguish between Employees who are
eligible to participate only in the deferral aspect of the Plan and those who
are eligible for the Earning Fund Program on the Executive Bonus.

                                      -3-
<PAGE>

    2.2      Termination of Participation.
             ----------------------------

    2.2(a)   A Participant shall cease to be an Active Participant upon the
first to occur of the following events:

          (i)  The Participant retires or otherwise terminates his employment
    with the Corporation; or

         (ii)  The Participant ceases to be an Eligible Employee.

    2.2(b)   A Participant shall be an Inactive Participant whenever he is not
an Active Participant but he is still entitled to future benefits under the
terms of the Plan.

    2.2(c)   An individual shall cease to be a Participant when he is neither an
Active Participant nor an Inactive Participant.


                                  ARTICLE III
                         Incentive Compensation Awards
                         -----------------------------

    3.1      Earnings Fund Program.
             ---------------------

    3.1(a)   With respect to each Fiscal Year, each Covered Participant for such
Fiscal Year shall be entitled to a share (the "Earnings Fund Share") of the
Earnings Fund for such Fiscal Year equal to the ratio of such Covered
Participant's Covered Base Salary for such Fiscal Year to the sum of all Covered
Participants' Covered Base Salary for such Fiscal Year.

    3.1(b)   For purposes hereof, the following terms shall have the meanings
set forth below:

          (i)  The term "Applicable Percentage" means the following percentage
    determined by reference to the Participant's incentive group:

                 Incentive Group                      Applicable Percentage
                 ---------------                      ---------------------

        200 Pay Series (Incentive Group A)                    17 1/2%
        200 Pay Series (Incentive Group B)                    15%
        200 Pay Series (Incentive Group C)                    12 1/2%
        200 Pay Series (Incentive Group D)                    10%
        100 Pay Series (Incentive Group E)                    10%

         (ii)  The term "Associated Companies" means corporations (other than
    the Plan Sponsor) in which the Plan Sponsor owns an equity interest of more
    than five percent (5%) but holds less than fifty percent (50%) of the votes
    entitled to be cast for directors.

        (iii)  The term "Covered Base Salary" for a Fiscal Year means the
    product obtained by multiplying a Participant's final annual base salary
    determined at the earlier of the last day of the Fiscal Year or the date he
    ceases to be an Active Participant by his Applicable Percentage for the
    Fiscal Year subject, however, to the following:

             (A) Where a Participant becomes an Active Participant on a day
        other than the first day of a Fiscal Year, ceases to be an Active
        Participant on a day other than the last day of a Fiscal Year, or
        becomes a member of a different incentive group while an Active
        Participant during a Fiscal Year, his Covered Base Salary shall be
        determined separately for each such period, his Covered Base Salary for
        each such period shall then be prorated on the basis of the ratio of the
        number of days in each such period to the number of days in the Fiscal
        Year, and his Covered Base Salary for the Fiscal Year shall be the sum
        of his Covered Base Salary for each such period.

                                      -4-
<PAGE>

             (B) Where a Participant is designated as a "partial" Covered
        Participant for a Fiscal Year, his Covered Base Salary shall be his
        otherwise determined Covered Base Salary for the Fiscal Year multiplied
        by the "partial" percentage applicable to him.

        (iv)   The term "Covered Participant" for a Fiscal Year means a
    Participant (other than the Chief Executive Officer and the Eligible
    Executives) who is an Active Participant designated by the Board to be
    eligible for the Earnings Fund Program at any time during the Fiscal Year,
    provided, however, that the Chief Executive Officer of the Plan Sponsor may
    disqualify a Participant at any time as a result of a performance not deemed
    to be of the caliber that warrants treatment as a Covered Participant and
    entitlement to a standard Earnings Fund Share:

             (A) In whole, in which case the Participant shall not be considered
        a Covered Participant and shall not be entitled to an Earnings Fund
        Share for the Fiscal Year(s) to which such disqualification relates, or

             (B) In part, in which case the President and Chief Executive
        Officer of the Plan Sponsor shall designate the percentage (the
        "partial" percentage) of the Participant's partial qualification as a
        Covered Participant and the Participant shall only be entitled to such a
        partial standard Earnings Fund Share (determined by adjusting his
        Covered Base Salary) for the Fiscal Year(s) to which such partial
        qualification relates.

        (v)    The term "Earnings Fund" means, with respect to any Fiscal Year,
    the lesser of:

             (A) The sum of (I) the product obtained by multiplying the excess
        of Net Earnings for the Fiscal Year over ten percent (10%) of Net Worth
        as of the beginning of the Fiscal Year by five percent (5%) plus (II)
        $5,000 for each full one million dollars ($1,000,000) of actual
        consolidated dollar volume in total operations of the Affiliated
        Employers for the Fiscal Year over budgeted dollar volume in total
        operations, or

             (B) The aggregate sum of the Covered Base Salary of each Covered
        Participant for the Fiscal Year.

        (vi)   The term "Net Earnings" means the consolidated pre-tax net
    earnings of the Affiliated Employers adjusted to reflect the imputed cost of
    investments in Associated Companies and to exclude in respect to Associated
    Companies all dividends, patronage refunds, gains and losses on investments,
    and equity in unrealized earnings and losses.

        (vii)  The term "Net Worth" means the consolidated book value of the
    assets less liabilities of the Affiliated Employers, excluding the recorded
    value of investments in Associated Companies.

    3.2    Executive Bonus Program.
           -----------------------

    3.2(a) With respect to each Fiscal Year, an Active Participant designated by
the Board to be eligible for the Elective Bonus Program shall be entitled to a
bonus (the "Executive Bonus") in such amount, if any, as is determined by and in
the discretion of the President and Chief Executive Officer of the Plan Sponsor
as soon as possible following the end of each Fiscal Year based on his
assessment of the Participant's performance during the preceding twelve (12)
months.

    3.2(b) The Executive Bonus to which an Active Participant may be entitled
for a Fiscal Year shall not exceed his Covered Base Salary for the Fiscal Year.

    3.3    Chief Executive Officer Incentive Program.  With respect to each
           -----------------------------------------
Fiscal Year beginning on or after July 1, 1997, the Chief Executive Officer
shall be entitled to an Incentive Distribution pursuant to the program described
in Appendix A to the Plan.

                                      -5-
<PAGE>

    3.4    Eligible Executives Incentive Program.  With respect to each Fiscal
           -------------------------------------
Year beginning on or after July 1, 1998, the Eligible Executives shall be
entitled to an Incentive Distribution pursuant to the program described in
Appendix B to the Plan.

                                  ARTICLE IV
                              Elective Deferrals
                              ------------------

    4.1    Deferral of Earnings Fund Share and Executive Bonus.  A Participant
           ---------------------------------------------------
may elect to defer the receipt of any or all of his Earnings Fund Share and his
Executive Bonus for a Fiscal Year.  The election to defer such amounts shall be
made annually and filed with the Administrator prior to the beginning of the
Fiscal Year for which such payments will be made; provided, however, that when
an individual becomes an Active Participant on a day other than the first day of
a Fiscal Year, he shall have thirty (30) days after he is notified of
commencement of active participation to file his election with the
Administrator.  Such election shall be in writing on a form provided by the
Administrator for this purpose.

    4.2    Deferral of Salary.  A Participant may elect to defer the receipt of
           ------------------
any or all of his Salary for a Plan Year.  The election to defer such amounts
may be subject to any maximum or minimum percentage or dollar amount as the
Administrator in its sole discretion may determine and shall be made annually
and filed with the Administrator prior to the beginning of the Plan Year for
which such payments will be made; provided, however, that when an individual
becomes an Active Participant on a day other than the first day of a Plan Year,
he shall have thirty (30) days after he is notified of commencement of active
participation to file his election with the Administrator.  Such election shall
be in writing on a form provided by the Administrator for this purpose.

    4.3    Deferred Thrift Benefit.  Each Participant who is an Active
           -----------------------
Participant at some time during the period from March 16, 1989 through December
31, 1990, inclusive, and who during such period would have been eligible to be
an active participant in the Thrift Plan but for the exclusion of Employees in
the Corporation's 200 pay series from active participation in the Thrift Plan
shall be entitled to a non-elective deferred award (the "Deferred Thrift
Benefit") in an amount equal to one and one-half percent (1-1/2%) of his
"Compensation" (as defined in the Thrift Plan) for that portion of the 1989 and
1990 calendar years beginning on the later of (i) March 16, 1989 or (ii) the
date he becomes an Active Participant through the earlier of (iii) December 31,
1990 or (iv) the date he is first eligible after March 15, 1989 to become an
active participant in the Thrift Plan.  For purposes hereof, such Deferred
Thrift Benefit shall be determined for each such separate period of exclusion
from participation in the Thrift Plan if there is more than one such period with
respect to a Participant.


                                   ARTICLE V
                 Allocations to and Vesting in Reserve Account
                 ---------------------------------------------

    5.1    Allocation of Deferred Earnings Fund Share and Executive Bonus.  The
           --------------------------------------------------------------
Earning Fund Share and Executive Bonus, or portion thereof, of a Participant for
a Fiscal Year which is deferred pursuant to paragraph 4.1 shall be allocated to
the Participant's Reserve Account upon receipt by the Plan Administrator of
notification authorizing the fiscal year award.

    5.2    Allocation of Deferred Salary.  The Salary which is deferred pursuant
           -----------------------------
to paragraph 4.2 shall be allocated to the Participant's Reserve Account as of
the last day of the calendar month in which such Salary would otherwise have
been paid, if the Participant is employed as of such date.  A Participant whose
employment terminates during the calendar month shall be paid the amount of his
deferred Salary for such month in cash.

    5.3    Allocation of Deferred Thrift Benefit.  The Deferred Thrift Benefit
           -------------------------------------
of a Participant with respect to a calendar month shall be allocated to the
Participant's Reserve Account as of the last day of such calendar month.

    5.4    Subtractions from Reserve Account.  All distributions, withdrawals
           ---------------------------------
and forfeitures from a Participant's Reserve Account shall be subtracted when
made.

                                      -6-
<PAGE>

    5.5    Deemed Earnings on Reserve Accounts.
           -----------------------------------

    5.5(a) With respect to the Reserve Account of Participants whose benefits
begin to be paid on or after January 1, 1996 and with respect to earnings
credited for periods beginning on and after July 1, 1995, there shall be
credited daily to the Reserve Account of each Participant earnings and losses
based on the deemed investments selected by the Participant (or, if deceased,
his Beneficiary) in accordance with the procedures adopted for the Plan by the
Administrator from time to time. The available investment options shall be the
funds available for directed investment under the Thrift Plan.  For periods
prior to October 1, 1997, the Reserve Account of a Participant who does not make
a deemed investment direction shall be credited with earnings and losses as
though his Reserve Account were invested in the Stable Value Fund under the
Thrift Plan.  For periods beginning on and after October 1, 1997, the Reserve
Account of a Participant who does not make a deemed investment direction shall
be credited with earnings and losses as though his Reserve Account were invested
in the Default Fund named under the Thrift Plan

    5.5(b) With respect to the Reserve Account of Participants whose benefits
begin to be paid on or before July 1, 1995 and with respect to earnings credited
for periods beginning before July 1, 1995, there shall be credited to the
Reserve Account an additional amount equal to the average balance in the Reserve
Account during  such Fiscal Year, multiplied by the rate of interest paid on new
debentures sold by the Plan Sponsor during the Fiscal Year, or in the absence of
such debenture rate, the daily average rate of interest charged by CoBank A.C.B.
for variable term loans during the Fiscal Year.

    5.5(c) Notwithstanding the foregoing, for the purpose of determining the
balance of a Participant's Reserve Account as of January 1, 1990 that is to be
transferred to the Rollover Account pursuant to paragraph 6.1, there shall be
credited to the Reserve Account an additional amount equal to the average
balance in the Reserve Account during the period beginning July 1, 1989 and
ending December 31, 1989 ( for purposes of this subparagraph the "Crediting
Period"), multiplied by the rate of interest paid on new debentures sold by the
Plan Sponsor during the Crediting Period, or in the absence of such debenture
rate, the daily average rate of interest charged by the National Bank for
Cooperatives, Baltimore Region for variable term loans during the Crediting
Period plus an amount equal to the April 1, 1990 distribution multiplied by the
rate of interest described above and applied for a three month period.

    5.6    Vesting in Reserve Account.  Except as provided in paragraph 10.2, a
           --------------------------
Participant's rights to the balance in his Reserve Account shall be fully vested
and non-forfeitable at all times, and the termination of his employment as an
Eligible Employee for any reason or his death shall not diminish the amount
payable to the Participant or his Beneficiary.

    5.7    Equitable Adjustment in Case of Error or Omission.  Where an error or
           -------------------------------------------------
omission is discovered in the account of a Participant, the Administrator shall
be authorized to make such equitable adjustment as it deems appropriate.

    5.8    Statement of Reserve Account Balance.  Within a reasonable time after
           ------------------------------------
the end of each Fiscal Year, the Administrator shall provide to each Participant
(or, if deceased, to his Beneficiary) a statement of the balance as of such date
in his Reserve Account.


                                  ARTICLE VI
                  Special Rules Relating to Rollover Account
                  ------------------------------------------

    6.1    Transfer to Rollover Account.  The balance of a Participant's Reserve
           ----------------------------
Account as of December 31, 1989 less any subtractions made for distributions
made prior to July 1, 1990 shall be transferred as of January 1, 1990 to the
Rollover Account.  Notwithstanding the foregoing, in the event that the balance
of a Participant's Reserve Account as of January 1, 1990 is less than Fifteen
Hundred Dollars ($1,500), such Participant's deferred benefit shall not be
transferred to the Rollover Account but shall remain in and subject to the rules
relating to the Reserve Account.

    6.2    Deemed Earnings on Rollover Account.  Effective January 1, 1990, at
           -----------------------------------
the end of each Fiscal Year or such other crediting period required under the
Plan, there shall be credited to the Rollover Account an additional amount

                                      -7-
<PAGE>

equal to the average balance in the Rollover Account during such Fiscal Year or
other crediting period, multiplied by the following annual rate of interest
determined on the basis of the Participant's age as of January 1, 1990:

                   Under Age 45                   10.50%
                     45-49                        11.00%
                     50-54                        11.50%
                     55-59                        12.50%
                   60 and Over                    13.00%

    6.3    Subtractions from Rollover Account.  All distributions from a
           ----------------------------------
Participant's Rollover Account shall be subtracted when made.

    6.4    Vesting in Rollover Account.  A Participant's rights to the balance
           ---------------------------
in his Rollover Account shall be fully vested and non-forfeitable at all times,
and the termination of his employment as an Eligible Employee for any reason or
his death shall not diminish the amount payable to the Participant or his
Beneficiary.

    6.5    Equitable Adjustment in Case of Error or Omission.  Where an error or
           -------------------------------------------------
omission is discovered in the Rollover Account of a Participant, the
Administrator shall be authorized to make such equitable adjustment as it deems
appropriate.

    6.6    Statement of Rollover Account Balance.  Within a reasonable time
           -------------------------------------
after the end of each Fiscal Year, the Administrator shall provide to each
Participant (or, if deceased, to his Beneficiary) a statement of the balance as
of such date in his Rollover Account.

    6.7    Death Benefits Attributable to Rollover Account.
           -----------------------------------------------

    6.7(a) Effective July 1, 1990, except as provided in subparagraph 6.9, in
the event a Participant who has a balance in his Rollover Account dies while an
Eligible Employee and before his Benefit Commencement Date, then the Beneficiary
of such Participant shall be entitled to a benefit under the Plan (the "Death
Benefit") in an amount equal to the following:

           (i)    In the event such Participant's death occurs prior to the date
    he reaches age 62, the applicable Death Benefit shall be equal to 70% of the
    balance of his Rollover Account determined as though he had lived and
    earnings had continued to be credited until the last day of the calendar
    month in which he would have reached age 65, or the actual balance in his
    Rollover Account as of the next July or January 1 following the date of his
    death, if greater.

           (ii)   In the event such Participant's death occurs on or after the
    date he reaches age 62, the applicable Death Benefit shall be equal to 100%
    of the balance of his Rollover Account determined as though he had lived and
    earnings had continued to be credited until the last day of the calendar
    month in which he would have reached age 65, or the actual balance in his
    Rollover Account as of the next July 1 or January 1 following the date of
    his death, if greater.

    6.7(b) In the event a Participant who has a balance in his Rollover Account
dies before his Benefit Commencement Date at a time when he is not an Eligible
Employee, then the Beneficiary of such Participant shall be entitled to receive
the balance in the Participant's Rollover Account determined at the next July 1
or January 1 following his death.

    6.8    Disability Benefits Attributable to Rollover Account.
           ----------------------------------------------------

    6.8(a) Effective July 1, 1990, except as provided in subparagraph 6.9, in
the event a Participant who has a balance in his Rollover Account becomes
totally and permanently disabled while an Eligible Employee and before his

                                      -8-
<PAGE>

Benefit Commencement Date, then he shall be entitled to a benefit under the Plan
(the "Disability Benefit") in an amount equal to the following:

           (i)    In the event such Participant provides proof of his total and
    permanent disability prior to the date he reaches age 62, the applicable
    Disability Benefit shall be equal to 70% of the balance of his Rollover
    Account determined as though earnings had continued to be credited until the
    last day of the calendar month in which he would have reached age 65, or the
    actual balance in his Rollover Account as of the next July 1 or January 1
    following the date proof of disability is furnished, if greater.

           (ii)   In the event such Participant provides proof of his total and
    permanent disability on or after the date he reaches age 62, the applicable
    Disability Benefit shall be equal to 100% of the balance of his Rollover
    Account determined as though earnings had continued to be credited until the
    last day of the calendar month in which he would have reached age 65, or the
    actual balance in his Rollover Account as of the next July 1 or January 1
    following the date proof of disability is furnished, if greater.

    6.8(b) For purposes hereof, the determination of total and permanent
disability shall be made by the Administrator in accordance with the following
standard.  A Participant shall be considered to be totally and permanently
disabled if he is unable to perform each of the material duties of his regular
occupation or of any gainful occupation for which he is reasonably fitted taking
into consideration his training, education or experience, as well as prior
earnings.  In making its determination, the Administrator may rely on the advice
of one or more physicians appointed or approved by the Plan Sponsor and the
Administrator shall have the right to require further medical examinations from
time to time to determine whether there has been any change in the Participant's
physical condition.

    6.8(c) In the event that a Participant's total and permanent disability
ceases:

           (i)    If he again becomes an Eligible Employee, no further
    Disability Benefits shall be paid and the balance in his Rollover Account
    shall be recomputed and he shall be entitled to the remainder of his
    recomputed Rollover Account (including any Death Benefit, if applicable) in
    such manner and at such time as though no total and permanent disability had
    occurred. The recomputed balance as of the day following the last disability
    payment shall be the amount which would have been in the Rollover Account
    had the Participant terminated employment on the date payment of the
    Disability Benefit began and received payments on the basis of the balance
    as of such date during the period of disability.

           (ii)   If he does not again become an Eligible Employee, no further
    Disability Benefits shall be paid and the balance in his Rollover Account
    shall be recomputed and he shall be entitled to any remaining payments on
    the basis of the recomputed balance.  The recomputed balance as of the day
    following the last disability payment shall be the amount which would have
    been in the Rollover Account had the Participant terminated employment on
    the date as of payment of the Disability Benefit began and received payments
    on the basis of the balance as of such date during the period of disability.

    6.8(d) In the event a Participant who has a balance in his Rollover Account
provides proof of his total and permanent disability before his Benefit
Commencement Date at a time when he is not an Eligible Employee, then he shall
be entitled to receive the balance in his Rollover Account determined at the
next July 1 or January 1 following the date proof of his total and permanent
disability is provided to the Administrator.

    6.9    Restrictions on Death or Disability Benefits.  Neither the Death
           --------------------------------------------
Benefit nor the Disability Benefit described in this ARTICLE shall be paid under
the following circumstances:

           (i)    The Participant fails to execute such applications, submit to
    such physical examinations and provide such truthful and complete
    information as may be requested by the Administrator,

                                      -9-
<PAGE>

           (ii)   The Participant is determined to be uninsurable based on the
    underwriting factors applied by the Administrator, or

           (iii)  The Participant's death or disability is the result of a
    suicide or intentional self-inflicted injury which occurs within the
    thirteen (13) month period beginning January 1, 1990.

                                  ARTICLE VII
                                    Funding
                                    -------

    7.1    Funding.
           -------

    7.1(a) The undertaking to pay benefits hereunder shall be unfunded
obligation payable solely from the general assets of the Corporation and subject
to the claims of the Corporation's creditors.  The Reserve Account and the
Rollover Account shall be maintained as book reserve accounts solely for
accounting purposes.

    7.1(b) Except as provided in the Rabbi Trust established as permitted in
paragraph 7.2, nothing contained in the Plan and no action taken pursuant to the
provisions of the Plan shall create or be construed to create a trust of any
kind or a fiduciary relationship between the Corporation and the Participant or
his Beneficiary or any other person.  To the extent that any person acquires a
right to receive payments from the Corporation under the Plan, such rights shall
be no greater than the right of any unsecured general creditor of the
Corporation.

    7.1(c) Where more than one Corporation participates in the Plan, the funding
and payment provisions hereof shall apply separately to each such Corporation.

    7.1(d) The Plan Sponsor may in its discretion make the payment of any or all
benefits under the Plan in lieu of payment by one or more Corporations.  Where
the Plan Sponsor makes payments on behalf of other Corporations, the Plan
Sponsor may require contributions by participating Corporations to the Plan
Sponsor at such times (whether before, at or after the time of payment), in such
amounts and or such basis as it may from time to time determine in order to
defray the cost of benefits and administration of the Plan.

    7.2    Use of Rabbi Trust Permitted.  Notwithstanding any provision herein
           ----------------------------
to the contrary, the Plan Sponsor may in its sole discretion elect to establish
and fund a Rabbi Trust for the purpose of providing benefits under the Plan.


                                 ARTICLE VIII
                           Time and Form of Payment
                           ------------------------

    8.1    Current Earnings Fund Share and Executive Bonus Payments.  A
           --------------------------------------------------------
Participant's Earnings Fund Share and Executive Bonus, or portion thereof, for a
Fiscal Year for which no deferral election has been properly filed by the
Participant shall be paid to the Participant (or his Beneficiary) as soon as
practicable following the close of the Fiscal Year.

    8.2    Distribution of Accounts.
           ------------------------

    8.2(a) Distributions from a Participant's Reserve Account and Rollover
Account shall commence on the Participant's Benefit Commencement Date.

    8.2(b) Distributions from a Participant's Reserve Account which begin to be
paid on or after January 1, 1996 shall be made in quarterly installment payments
to the Participant or his Beneficiary over the Distribution Period on the first
day of each calendar quarter until the Participant's Reserve Account has been
paid in full as follows:

           (i)    The initial quarterly payment shall be based on the balance in
    the Participant's Reserve Account at the end of the calendar quarter
    immediately preceding the Benefit Commencement Date.  The initial payment
    shall be

                                     -10-
<PAGE>

    an amount equal to the applicable preceding quarterly balance divided by 41
    in the case of a July 1 Benefit Commencement Date or 39 in the case of a
    January 1 Benefit Commencement Date. The initial payment amount shall
    continue to be made quarterly until the following October 1.

           (ii)   The quarterly payment amount shall be recalculated and
    adjusted beginning with each October payment and continuing until the next
    October payment when the payment amount shall again be recalculated based on
    the balance in the Participants' Reserve Account after the preceding July 1
    payment. The new quarterly payment at each October 1 shall be equal to that
    adjusted balance divided by the remaining number of payments to be made.

           (iii)  The final quarterly payment shall be the balance in the
    Participant's Reserve Account and will be paid as soon as reasonably
    possible following the completion of the final June 30 valuation.

           (iv)   All payments, other than the final payment, shall be rounded
    to the nearest whole dollar.

           (v)    All payments will be deducted on a pro rata basis from the
    investment options which the Participant has selected pursuant to
    subparagraph 5.5(a) as deemed investments of the balance of his Reserve
    Account.

           (vi)   Effective July 1 of a final payment year which begins prior to
    October 1, 1997, the Reserve Account of the Participant shall be credited
    with deemed earnings and losses based on the performance of the Stable Value
    Fund investment under the Thrift Plan.

           (vii)  Effective July 1 of a final payment year which begins on or
    after October 1, 1997, the Reserve Account of the Participant shall be
    credited with deemed earnings and losses based on the performance of the
    Default Fund investment under the Thrift Plan.

    8.2(c) Distributions from a Participant's Reserve Account which begin on or
before July 1, 1995 shall be made in quarterly payments to the Participant or
his Beneficiary over the Distribution Period on the first day of each calendar
quarter until the Participant's Reserve Account has been paid in full as
follows:

           (i)    The quarterly payments during the Distribution Period are
    intended to be substantially equal.  Annual recalculations applying the
    Payment Factors shall be made in order to compensate for variations between
    actual deemed earnings credited pursuant to paragraph 5.5 and the assumed
    average rate of ten percent (10%) per annum.

           (ii)   The initial quarterly payment shall be based on the balance in
    Participant's Reserve Account on the immediately preceding June 30th in the
    case of a January 1 Benefit Commencement Date and on the June 30th of the
    immediately preceding calendar year in the case of a July 1 Benefit
    Commencement Date.  The initial payment amount shall be an amount equal to
    the applicable June 30th  balance multiplied by .041527 in the case of a
    July 1 Benefit Commencement Date or .040796 in the case of a January 1
    Benefit Commencement Date.  The initial payment amount shall continue to be
    made quarterly until the following October 1.

           (iii)  The quarterly payment amount shall be recalculated and
    adjusted beginning with each October payment and continuing until the next
    October payment when the quarterly payment amount shall again be
    recalculated.  The recalculation shall be based on the balance in the
    Participant's Reserve Account after the preceding July payment.  The new
    quarterly payment amount at each October 1 shall be an amount equal to that
    adjusted balance multiplied by the applicable Payment Factor for the
    quarterly payment number as of which the recalculation occurs.

           (iv)   The final quarterly payment shall be the balance in the
    Participant's Reserve Account.

           (v)    All payments, other than the final payment, shall be rounded
    to the nearest whole dollar.

           (vi)   The "Payment Factors" are as follows:

                                     -11-
<PAGE>

<TABLE>
<CAPTION>

                                            Payment Factors
                            -----------------------------------------------
              Quarterly        July 1 Benefit          January 1 Benefit
         Payment Number       Commencement Date        Commencement Date
         --------------       -----------------        -----------------
         <S>                  <C>                      <C>

              1                         .041527                  .040796
              2                         .039233
              4                                                  .041859
              6                         .041859
              8                                                  .045187
              10                        .045187
              12                                                 .049517
              14                        .049517
              16                                                 .055352
              18                        .055352
              20                                                 .063594
              22                        .063594
              24                                                 .076051
              26                        .076051
              28                                                 .096940
              30                        .096940
              32                                                 .138907
              34                        .138907
              36                                                 .265200
              38                        .265200
              39                                                 Balance
              41                        Balance
</TABLE>

    8.2(d) Distribution from a Participant's Rollover Account shall normally be
made in equal quarterly payments to the Participant or his Beneficiary over the
Distribution Period on the first day of each calendar quarter until the
Participant's Rollover Account has been paid.  The quarterly payments shall be
determined on the basis of the applicable interest rate described in paragraph
6.2.

    8.2(e) For purposes hereof the term "Distribution Period":

             (i)    When used with respect to the Reserve Account, the forty-one
    (41) consecutive calendar quarters beginning with July in the case of a July
    1 Benefit Commencement Date or the thirty-nine (39) consecutive calendar
    quarters beginning with January in the case of a January 1 Benefit
    Commencement Date.

             (ii)   When used with respect to the Rollover Account, the forty
    (40) consecutive calendar quarters beginning with the Benefit Commencement
    Date.

    8.2(f) Notwithstanding the foregoing:

           (i)    The Board shall have the right, in its sole discretion to
    vary the manner and the time of making the installment distribution provided
    in this paragraph by making such distributions in a lump sum equal to the
    balance in the Reserve Account and the Rollover Account at the time in
    question or over a shorter or longer period than required herein as it may
    find appropriate.

           (ii)   The Board, in its discretion, may require that the balance or
    a portion of the balance in the Participant's Reserve Account or Rollover
    Account shall be paid as a lump sum where the balance or a portion of the

                                     -12-
<PAGE>

    balance due to the Participant or any Beneficiary under either or both the
    Reserve Account or the Rollover Account as of the Benefit Commencement Date
    is twenty five hundred dollars ($2,500) or less.

           (iii)  All lump sum payments made pursuant to this subparagraph shall
    be made on July 1 of the calendar year in which the Benefit Commencement
    Date otherwise occurs, or if later, the July 1 next following the Board's
    determination to make such payment.

    8.3    Death After Benefit Commencement.  If a Participant dies after his
           --------------------------------
Benefit Commencement Date, no benefits shall be payable other than the remaining
benefits due to the Participant under the Plan which shall be paid to his
Beneficiary.

    8.4    Benefit Determination and Payment Procedure.  The Administrator shall
           -------------------------------------------
make all determinations concerning eligibility for benefits under the Plan, the
time or terms of payment, and the form or manner of payment to the Participant
(or the Participant's Beneficiary in the event of the death of the Participant).
The Administrator shall promptly notify the Corporation and, where payments are
to be made from a Rabbi Trust, the trustee thereof, of each such determination
that benefit payments are due and provide to the Corporation or trustee all
other information necessary to allow the Corporation or trustee to carry out
said determination, whereupon the Corporation or trustee shall pay such benefits
in accordance with the Administrator's determination.

    8.5    Payments to Minors and Incompetents.  If a Participant or Beneficiary
           -----------------------------------
entitled to receive any benefits hereunder is a minor or is adjudged to be
legally incapable of giving valid receipt and discharge for such benefits, or is
deemed so by the Administrator, benefits will be paid to such person as the
Administrator may designate for the benefit of such Participant or Beneficiary.
Such payments shall be considered a payment to such Participant or Beneficiary
and shall, to the extent made, be deemed a complete discharge of any liability
for such payments under the Plan.

    8.6    Distribution of Benefit When Distributee Cannot Be Located.  The
           ----------------------------------------------------------
Administrator shall make all reasonable attempts to determine the identity
and/or whereabouts of a Participant entitled to benefits under the Plan,
including the mailing by certified mail of a notice to the last known address
shown on the Corporation's or the Administrator's records.  If the Administrator
is unable to locate such a person entitled to benefits hereunder, or if there
has been no claim made for such benefits, the Corporation shall continue to hold
the benefit due such person, subject to any applicable statute of escheats.

    8.7    Claims Procedure.
           ----------------

    8.7(a) A Participant or Beneficiary (the "claimant") shall have the right to
request any benefit under the Plan by filing a written claim for any such
benefit with the Administrator on a form provided by the Administrator for such
purpose.  The Administrator shall give such claim due consideration and shall
either approve or deny it in whole or in part.  Within ninety (90) days
following receipt of such claim by the Administrator, notice of any denial
thereof, in whole or in part, shall be delivered to the claimant or his duly
authorized representative or such notice of denial shall be sent by mail to the
claimant or his duly authorized representative at the address shown on the claim
form or such individual's last known address.  The aforesaid ninety (90) day
response period may be extended to one hundred eighty (180) days after receipt
of the claimant's claim if special circumstances exist and if written notice of
the extension to one hundred eighty (180) days indicating the special
circumstances involved and the date by which a decision is expected to be made
is furnished to the claimant within ninety (90) days after receipt of the
claimant's claim.  Such notice of denial shall be written in a manner calculated
to be understood by the claimant and shall:

           (i)    Set forth a specific reason or reasons for the denial,

           (ii)   Make specific reference to the pertinent provisions of the
    Plan on which any denial of benefits is based,

                                     -13-
<PAGE>

           (iii)  Describe any additional material or information necessary for
    the claimant to perfect the claim and explain why such material or
    information is necessary, and

           (iv)   Explain the claim review procedure of subparagraph 8.7(b).

If such notice of denial is not provided to the claimant within the applicable
ninety (90) day or one hundred eighty (180) day period, the claimant's claim
shall be considered denied for purposes of the claim review procedure of
subparagraph 8.7(b).

    8.7(b) A Participant or Beneficiary whose claim filed pursuant to
subparagraph 8.7(a) has been denied, in whole or in part, may, within sixty (60)
days following receipt of notice of such denial, or following the expiration of
the applicable period provided for in subparagraph 8.7(a) for notifying the
claimant of the decision on the claim if no notice of denial is provided, make
written application to the Administrator for a review of such claim, which
application shall be filed with the Administrator.  For purposes of such review,
the claimant or his duly authorized representative may review Plan documents
pertinent to such claim and may submit to the Administrator written issues and
comments respecting such claim.  The Administrator may schedule and hold a
hearing.  The Administrator shall make a full and fair review of any denial of a
claim for benefits and issue its decision thereon promptly, but no later than
sixty (60) days after receipt by the Administrator of the claimant's request for
review, or one hundred twenty (120) days after such receipt if a hearing is to
be held or if other special circumstances exist and if written notice of the
extension to one hundred twenty (120) days is furnished to the claimant within
sixty (60) days after the receipt of the claimant's request for a review.  Such
decision shall be in writing, shall be delivered or mailed by the Administrator
to the claimant or his duly authorized representative in the manner prescribed
in subparagraph 8.7(a) for notices of approval or denial of claims, and shall:

           (i)    Include specific reasons for the decision,

           (ii)   Be written in a manner calculated to be understood by the
    claimant, and

           (iii)  Contain specific references to the pertinent Plan provisions
    on which the decision is based.

The Administrator's decision made in good faith shall be final.


                                  ARTICLE IX
                            Beneficiary Designation
                            -----------------------

    9.1    Beneficiary Designation.
           -----------------------

    9.1(a) Each Participant shall be entitled to designate a Beneficiary
hereunder by filing a designation in writing with the Administrator on the form
provided for such purpose.  Any Beneficiary designation made hereunder shall be
effective only if signed and dated by the Participant and delivered to the
Administrator prior to the time of the Participant's death.  Any Beneficiary
designation hereunder shall remain effective until changed or revoked hereunder.

    9.1(b) Any Beneficiary designation may include multiple, contingent or
successive Beneficiaries and may specify the proportionate distribution to each
Beneficiary.

    9.1(c) A Beneficiary designation may be changed by the Participant at any
time, or from time to time, by filing a new designation in writing with the
Administrator.

    9.1(d) If the Participant dies without having designated a Beneficiary, or
if the Beneficiary so designated has predeceased him, then his estate shall be
deemed to be his Beneficiary.

    9.1(e) If a Beneficiary of the Participant shall survive the Participant but
shall die before the Participant's entire benefit under the Plan has been
distributed, then, absent any other provision by the Participant, the unpaid
balance thereof

                                     -14-
<PAGE>

shall be distributed to the such other beneficiary named by the
deceased Beneficiary to receive his interest or, if none, to the estate of the
deceased Beneficiary.  If multiple beneficiaries are designated, absent any
other provision by the Participant, those named or the survivor of them shall
share equally in any amounts payable hereunder.


                                   ARTICLE X
                                  Withdrawals
                                  -----------

    10.1   Severe Financial Hardship Withdrawals.
           -------------------------------------

    10.1(a)  In the event of any Severe Financial Hardship and upon written
request of a Participant (or, if subsequent to his death, his Beneficiary), the
Administrator in its sole discretion may pay in one lump sum to the Participant
(or his Beneficiary) all or any portion of the Participant's Reserve Account
and/or Rollover Account.  Any such payment shall be limited to that amount
reasonably necessary to alleviate the Severe Financial Hardship, and any
remaining payments or account balances shall be appropriately adjusted.

    10.1(b)  For purposes hereof, a "Severe Financial Hardship" means an
unforeseeable emergency, and shall be defined in a manner consistent with the
meaning ascribed thereto under Section 457 of the Code as a severe financial
hardship of the Participant (or, if subsequent to his death, his Beneficiary)
resulting from a sudden and unexpected illness, accident or loss of property due
to casualty, or any other similar extraordinary and unforeseeable circumstance
arising as a result of events beyond the control of the Participant (or, if
subsequent to his death, his Beneficiary).

    10.2   Other Withdrawals.  Upon written request at any time prior to pay out
           -----------------
of the entire Reserve Account and Rollover Account, a Participant may elect to
withdraw all or a portion of his Reserve Account and/or his Rollover Account
subject to the following forfeiture provisions:

           (i)    The Participant shall forfeit ten percent (10%) of the amount
    elected to be withdrawn.  Such forfeited amount shall be subtracted from the
    account from which withdrawn but shall not at any time be distributed to the
    Participant; and

           (ii)   The Participant shall forfeit the right to make additional
    deferrals of Salary and/or of his Earnings Fund Share and Executive Bonus
    for one full Plan Year following the withdrawal.

It is intended that the forfeitures described herein constitute a "substantial
limitation or restriction" on the right to receive the amounts held in the
Reserve Account and the Rollover Account as that term is used for purposes of
Sections 61 and 451 of the Code.  Any remaining payments or account balances
shall be appropriately adjusted.


                                  ARTICLE XI
                              Plan Administration
                              -------------------

    11.1   Plan Administrator.  The Plan shall be administered by a plan
           ------------------
administrator (the "Administrator") to be appointed by and serve at the pleasure
of the Plan Sponsor, or in the absence of the appointment or in the event any
person so appointed shall fail or cease to serve, the Plan Sponsor shall be the
Administrator.

    11.2   Power and Authority of Administrator.  The Administrator is hereby
           ------------------------------------
vested with all the power and authority necessary in order to carry out its
duties and responsibilities in connection with the administration of the Plan,
including the power to interpret the provisions of the Plan.  For such purpose,
the Administrator shall have the power to adopt rules and regulations consistent
with the terms of the Plan.

                                     -15-
<PAGE>

                                  ARTICLE XII
                       Amendment and Termination of Plan
                       ---------------------------------


    12.1      Amendment or Termination of the Plan.
              ------------------------------------

    12.1(a)   The Plan may be terminated at any time by the Board of the Plan
Sponsor.  The Plan may be amended in whole or in part from time to time by the
Board of the Plan Sponsor effective as of any date specified.  No amendment or
termination shall operate:

           (i)   To decrease a Participant's Reserve Account balance or Rollover
    Account balance as of the earlier of the date on which the amendment or
    termination is approved by the Board of the Plan Sponsor or the date on
    which an instrument of amendment or termination is signed or approved on
    behalf of the Plan Sponsor, or

          (ii)   To vary the distribution plan of a Participant under paragraph
    6.2 after the Participant retires or otherwise ceases to be employed by the
    Affiliated Employers without the consent of the Participant or, if deceased,
    his Beneficiary.

    12.1(b)   Notwithstanding the foregoing, the Board hereby delegates to the
Chief Executive Officer the right to modify, alter, or amend the Plan in whole
or in part to make any technical modification, alteration or amendment which in
the opinion of counsel for the Plan Sponsor is required by law and is deemed
advisable by the Chief Executive Officer and to make any other modification,
alteration or amendment which does not, in the Chief Executive Officer's view,
substantially increase costs, contributions or benefits and does not materially
affect the eligibility, vesting or benefit accrual or allocation provisions of
the Plan.


                                 ARTICLE XIII
                      Adoption by Additional Corporations
                      -----------------------------------

    13.1      Adoption by Additional Corporations.  Any Subsidiary of the Plan
              -----------------------------------
Sponsor may adopt the Plan with the consent of the Board of the Plan Sponsor and
approval by its Board.


                                  ARTICLE XIV
                                 Miscellaneous
                                 -------------

    14.1      Non-assignability.  The interests of each Participant under the
              -----------------
Plan are not subject to claims of the Participant's creditors; and neither the
Participant, nor his Beneficiary, shall have any right to sell, assign, transfer
or otherwise convey the right to receive any payments hereunder or any interest
under the Plan, which payments and interest are expressly declared to be non-
assignable and non-transferable.

    14.2      Right to Require Information and Reliance Thereon.  The
              -------------------------------------------------
Corporation and Administrator shall have the right to require any Participant,
Beneficiary or other person receiving benefit payments to provide it with such
information, in writing, and in such form as it may deem necessary to the
administration of the Plan and may rely thereon in carrying out its duties
hereunder. Any payment to or on behalf of a Participant or Beneficiary in
accordance with the provisions of the Plan in good faith reliance upon any such
written information provided by a Participant or any other person to whom such
payment is made shall be in full satisfaction of all claims by such Participant
and his Beneficiary; and any payment to or on behalf of a Beneficiary in
accordance with the provision so the Plan in good faith reliance upon any such
written information provided by such Beneficiary or any other person to whom
such payment is made shall be in full satisfaction of all claims by such
Beneficiary.

                                     -16-
<PAGE>

    14.3   Notices and Elections.  All notices required to be given in writing
           ---------------------
and all elections required to be made in writing, under any provision of the
Plan, shall be invalid unless made on such forms as may be provided or approved
by the Administrator and, in the case of a notice or election by a Participant
or Beneficiary, unless executed by the Participant or Beneficiary giving such
notice or making such election.  Subject to limitations under applicable
provisions of the Code or the Act (such as the requirement that deferral
elections be in writing), the Administrator is authorized in its discretion to
accept other means for receipt of effective notices, elections, consent and/or
application by Participants and/or Beneficiaries, including but not limited to
interactive voice systems, on such basis and for such purposes as it determines
from time to time.

    14.4   Delegation of Authority.  Whenever the Plan Sponsor or any other
           -----------------------
Corporation is permitted or required to perform any act, such act may be
performed by its President or Chief Executive Officer or other person duly
authorized by its President or Chief Executive Officer or the Board of the
Corporation.

    14.5   Service of Process.  The Administrator shall be the agent for service
           ------------------
of process on the Plan.

    14.6   Governing Law.  The Plan shall be construed, enforced and
           -------------
administered in accordance with the laws of the Commonwealth of Virginia, and
any federal law which preempts the same.

    14.7   Binding Effect.  The Plan shall be binding upon and inure to the
           --------------
benefit of the Corporation, its successors and assigns, and the Participant and
his heirs, executors, administrators and legal representatives.

    14.8   Severability.  If any provision of the Plan should for any reason be
           ------------
declared invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall nevertheless remain in full force and effect.

    14.9   No Effect on Employment Agreement.  The Plan shall not be considered
           ---------------------------------
or construed to modify, amend or supersede any employment or other agreement
between the Corporation and the Participant heretofore or hereafter entered into
unless so specifically provided.

    14.10  Gender and Number.  In the construction of the Plan, the masculine
           -----------------
shall include the feminine or neuter and the singular shall include the plural
and vice-versa in all cases where such meanings would be appropriate.

    14.11  Titles and Captions.  Titles and captions and headings herein have
           -------------------
been inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.

    IN WITNESS WHEREOF, the Plan Sponsor has caused the Plan to be signed on its
behalf by its duly authorized officer or member of its Board of Directors on the
day, month and year aforesaid.


                                        SOUTHERN STATES COOPERATIVE,
                                              INCORPORATED, Plan Sponsor


                                        By:  /s/ Gene E. James
                                           ----------------------------------
                                        Its   President & CEO
                                           ----------------------------------

                                     -17-
<PAGE>

                                SOUTHERN STATES
                          DEFERRED COMPENSATION PLAN
                          (As Restated July 1, 1995)

                   Chief Executive Officer Incentive Program
                                  Appendix A
                                  ----------

    A-1.1     Definitions.
              -----------

    A-1.1(a)  "EBT":  Earnings before tax determined based on the audited
consolidated financial statements of the Plan Sponsor for the Fiscal Year and
appearing as "Savings from continuing operations before income taxes and
cumulative effect of change in accounting principles" adjusted for years
beginning on or after July 1, 1999 to exclude the equity in undistributed
earnings (losses) of associated companies for the Fiscal Year, net of deferred
income taxes.

    A-1.1(b)  "Incentive Bank":

                 (i)  With respect to the first complete Fiscal Year of any
       Chief Executive Officer's term, One Hundred Fifty Thousand Dollars
       ($150,000) plus any Incentive Formula Award for the Fiscal Year.

                (ii)  With respect to any Fiscal Year remaining in the Chief
       Executive Officer's term, the ending balance in the Incentive Bank for
       the prior Fiscal Year less the Incentive Distribution attributable to the
       prior Fiscal Year, plus any Incentive Formula Award for the Fiscal Year.

    Notwithstanding the foregoing, the ending balance in the Incentive Bank for
    the prior Fiscal Year, beginning with the ending balance for the Fiscal Year
    ending June 30, 1999, shall not reflect a negative balance.

      A-1.1(c)     "Incentive Formula Award": 1.5% of the amount by which EBT
for the current Fiscal Year exceeds 10% of the sum of the Plan Sponsor's total
Stockholders' and Patrons Equity determined at the end of the prior Fiscal Year.
For the first five (5) Fiscal Years of employment as Chief Executive Officer, no
Incentive Formula Award will be granted for a partial Fiscal Year. After
completion of five (5) complete Fiscal Years of employment as Chief Executive
Officer, the Incentive Formula Award shall be determined based on the pro rata
portion of the Fiscal Year during which the Chief Executive Officer was employed
in that capacity.

      A-1.1(d)     "Incentive Distribution": One-third (1/3) of the balance in
the Incentive Bank as of the end of a Fiscal Year, provided, however, no
Incentive Distribution shall be payable for any Fiscal Year in which the Plan
Sponsor incurs a loss.

      A-1.1(e)     "Stockholders' and Patrons Equity": Stockholders' and
Patrons Equity determined based on audited consolidated financial statements of
the Plan Sponsor at the end of the prior Fiscal Year adjusted to exclude
preferred stocks and accumulated equity in undistributed earnings (losses) of
associated companies, net of deferred income taxes.

      A-1.2        Chief Executive Officer Incentive Program.  An Incentive
                   -----------------------------------------
Distribution determined each Fiscal Year shall be payable to the Chief Executive
Officer following the close of such Fiscal Year. If no deferral election is in
place under the Plan, the Incentive Distribution shall be paid to the Chief
Executive Officer, or if deceased, to his Beneficiary, as soon as reasonably
practical following the completion of the audit of the financial statements for
the Fiscal Year.

      A-1.3        Forfeiture of Incentive Bank.  The entire positive balance of
                   ----------------------------
the Incentive Bank shall be forfeited in the event the Chief Executive Officer
terminates employment with the Plan Sponsor (whether voluntarily or
involuntarily), for any reason including death or disability, prior to
completing at least three (3) complete Fiscal Years of employment as

                                     -A-1-
<PAGE>

Chief Executive Officer. The lesser of the entire positive balance of the
Incentive Bank or One Hundred Fifty Thousand Dollars ($150,000) of the Incentive
Bank will be forfeited in the event the Chief Executive Officer terminates
employment with the Plan Sponsor (whether voluntarily or involuntarily), for any
reason (including death or disability) other than Normal Retirement under the
Retirement Plan for Employees of Southern States, prior to the completing at
least five (5) complete Fiscal Years of employment as Chief Executive Officer.

      A-1.4  Payout of Incentive Bank Balance.  Upon the Chief Executive
             --------------------------------
Officer's termination of employment with the Plan Sponsor for any reason, the
balance in the Incentive Bank, not forfeited pursuant to paragraph A-1.3, shall
be paid to the Chief Executive Officer (or, if deceased, his Beneficiary) as
soon as reasonably possible following the end of the Fiscal Year.

      A-1.5  Board Discretion.  The Board reserves the right at any time to
             ----------------
adjust any component of the Chief Executive Officer Incentive Program, including
the right to adjust EBT for unusual gains or losses incurred during a Fiscal
Year. However, the Board may not reduce the balance in the Incentive Bank or
defer payment of an Incentive Distribution for which no deferral election is in
place under the Plan.

      A-1.6  Separate Incentive Bank for Each CEO.  In the event that the Board
             ------------------------------------
continues the Chief Executive Officer Incentive Program for an individual who
succeeds the individual in that position on July 1, 1997, a new and separate
Incentive Bank shall be established for such successor.

                                     -A-2-
<PAGE>

                                SOUTHERN STATES
                          DEFERRED COMPENSATION PLAN
                          (As Restated July 1, 1995)

                     Eligible Executives Incentive Program
                                  Appendix B
                                  ----------

    B-1.1     Definitions.
              -----------

    B-1.1(a)  "EBT":  Earnings before tax determined based on the audited
consolidated financial statements of the Plan Sponsor for the Fiscal Year and
appearing as "Savings from continuing operations before income taxes and
cumulative effect of change in accounting principles".

    B-1.1(b)  "Incentive Bank":

                (i) With respect to the first complete Fiscal Year of any
   Eligible Executive's term, any Incentive Formula Award for the Fiscal Year.

               (ii) With respect to any Fiscal Year remaining in the Eligible
   Executives' term, the ending balance in the Incentive Bank for the prior
   Fiscal Year less the Incentive Distribution attributable to the prior Fiscal
   Year, plus any Incentive Formula Award for the Fiscal Year.

      B-1.1(c)    "Incentive Formula Award":  .40% of the amount by which EBT
for the current Fiscal Year exceeds a 4% return on Total Assets determined at
the end of the prior Fiscal Year.

      B-1.1(d)    "Incentive Distribution":  One-half (1/2) of the balance in
the Incentive Bank as of the end of a Fiscal Year.

      B-1.1(e)    "Total Assets": Total assets determined based on the audited
consolidated financial statements of the Plan Sponsor for the Fiscal Year and
appearing at the bottom of the balance sheet of the annual report of the Plan
Sponsor.

      B-1.2       Eligible Executives Incentive Program.  An Incentive
                  -------------------------------------
Distribution determined each Fiscal Year shall be payable to each Eligible
Executive following the close of such Fiscal Year. If no deferral election is in
place under the Plan, the Incentive Distribution shall be paid to the Eligible
Executive, or if deceased, to his Beneficiary, as soon as reasonably practical
following the completion of the audit of the financial statements for the Fiscal
Year.

      B-1.3       Payout of Incentive Bank Balance.  Upon an Eligible
                  --------------------------------
Executive's termination of employment with the Plan Sponsor for any reason, the
balance in the Incentive Bank shall be paid to such Eligible Executive (or, if
deceased, his Beneficiary) as soon as reasonably possible following the end of
the Fiscal Year.

      B-1.4       Board Discretion.  The Board reserves the right at any time to
                  ----------------
adjust any component of the Eligible Executives Incentive Program, including the
right to adjust EBT for unusual gains or losses incurred during a Fiscal Year.
However, the Board may not reduce the balance in the Incentive Bank or defer
payment of an Incentive Distribution for which no deferral election is in place
under the Plan.

      B-1.5       Separate Incentive Bank for Each Eligible Executives.  In the
                  ----------------------------------------------------
event that the Board continues the Eligible Executives Incentive Program for any
individual who succeeds the individuals in those positions on July 1, 1998, a
new and separate Incentive Bank shall be established for such successor.

                                     -B-1-