**Exhibit 10.10**

 

SUPPLEMENTAL RETIREMENT AND

DEFERRED COMPENSATION PLAN

RESTATED AND AMENDED

Effective as of January 1, 1998

 

RECITALS

 

ThisKanawha Insurance Company Supplemental Retirement and Deferred CompensationPlan (the Plan) is adopted by Kanawha Insurance Company and Kanawha HealthcareSolutions, Inc. (the Employer) for certain of its executive or highlycompensated employees.  The purpose ofthe Plan is to provide those employees with supplemental retirement income andto offer those employees an opportunity to elect to defer the receipt ofcompensation in order to provide termination of employment and related benefitstaxable pursuant to Section 451 of the Internal Revenue Code of 1986, asamended (the Code).  The Plan is intendedto be a Top Hat Plan (i.e., an unfunded deferred compensation plan maintainedfor a select group of management or highly compensated employees) underSections 201(2), 301(a)(3), and 401(a)(1) of the Employee RetirementIncome Security Act of 1974 (ERlSA).

 

Accordingly,the following Plan is adopted.

 

ARTICLE I. DEFINITIONS

 

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

 

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

 

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

 

1.4                                COMPENSATION means the total current cashremuneration paid by the Employer to an Eligible Employee with respect to hisor her service for the Employer (as determined by the Employer).

 

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

 

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1.6                                 EFFECTIVE DATE means the effective date ofthe 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 isdetermined by the Employer to be a member of a select group of management orhighly compensated employees and who is designated by the Employer to be anEligible Employee under the Plan.  Byeach November 1, the Employer shall notify those individuals, if any, whowill be Eligible Employees for the next Plan Year.  If the Employer determines that an individualfirst becomes an Eligible Employee during a Plan Year, the Employer shallnotify such individual of its determination and of the date during the PlanYear 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, orany other corporation or business organization that, with the consent ofKanawha or its successors or assigns, assumes the Employer’s obligationshereunder, or any other corporation or business organization that agrees, withthe consent of Kanawha, to become a party to the Plan.

 

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

 

1.10                           PARTICIPANT means any person so designated inaccordance with the provisions of Article II, including, where appropriateaccording 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 thePlan.

 

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

 

1.12                           PLAN means this Kanawha Insurance CompanySupplemental Retirement and Deferred Compensation Plan, as amended from time totime.

 

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

 

1.14                           TRUST means the trust fund establishedpursuant to the Plan.

 

1.15                           TRUSTEES means the trustees named in theagreement establishing the Trust and such successor and/or additional trusteesas 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 ofeach 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 tobecome a Participant on the Effective Date.  Every other Eligible Employee shall beeligible to become a Participant on the first Entry Date occurring on, or afterthe 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 herparticipation is to begin.

 

Participation in the Plan isvoluntary.  In order to participate, anotherwise eligible Employee must make written application in such manner as maybe required by Section 3.1 and by the Employer and must agree to makeCompensation Deferrals as provided in Article III.

 

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

 

2.3                                 CHANGE OF EMPLOYMENT CATEGORY.  During any period in which a Participantremains in the employ of the Employer, but ceases to be an Eligible Employee, he or she shall not beeligible 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 3.3below, 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 aseparate Plan account in the name of each Participant or Beneficiary as thecase may be.  The Account shall at alltimes be one hundred percent (100%) vested in the Participant or Beneficiaryand to which shall be credited or debited: (a) amounts equal to theParticipant’s Compensation Deferrals and (b) amounts equal to any deemed income,gains, or losses (to the extent realized, based upon deemed fair market valueof the account’s deemed assets, as determined by the Employer, in itsdiscretion), attributable or allocable to (a).  The Employer shall have the discretion toallocate such deemed income, gains, or losses among Plan Accounts pursuant tosuch allocation rules as the Employer deems to be reasonable andadministratively practicable.  As to thecontribution and accrued additions under this Section 3.1, the Employershall maintain an Allocation Account for each

 

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Participant.  The Allocation Account of each Participantshall be credited on the last day of each calendar quarter with the interest onthe averaged monthly ending balance in such Account during such calendarquarter.  The amount equivalent tointerest shall be at the prime rate of interest charged by ManufacturersHanover Trust Company, New York City (or another major New York City bank, ifthe named bank is not in business or has merged or become inactive in thecommercial 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 BalancedFund Account to another investment option provided by the Plan, the Employerwill compare the amount of the Participant’s Compensation Deferrals, plusaccumulated interest, as shown in the Participant’s Allocation Account, to thetotal shown in the Participant’s Balanced Fund Account.  Should the amount in the Allocation Accountbe 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'sBalanced Account.

 

Should a portion of theBalanced Fund be transferred the computation above shall be made and in theevent the Allocation Account is greater, a prorated amount shall be contributedto the Balanced Fund Account.

 

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

 

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

 

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

 

Compensation Deferrals shall bemade through regular payroll deductions or through an election by the Participantto defer the payment of a bonus not yet payable to him or her at the time ofthe election.  The Participant may reducehis or her payroll deduction Compensation deferral amount as of, and by writtennotice delivered to the Employer at

 

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

 

There shall be establishedand maintained by the Employer a separate Plan Account in the name of eachParticipant, which shall at all times be one hundred percent (100%) vested inthe Participant and to which shall be credited or debited: (a) an amountper Plan Year beginning in the first Plan Year of the Participant’sparticipation and ending the Plan Year prior to the Plan Year in which theParticipant terminates employment, equal to a percentage of Compensation (from0% to 35%) determined by the Employer for the Plan Year; a percentage of anyanticipated 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 tonon-discrimination test required by law; and (c) amounts equal to anydeemed income, gains, or losses (to the extent realized, based upon deemed fairmarket value of the Account’s deemed assets, as determined by the Employer, inits discretion), attributable or allocable to (a).  The Employer shall have the discretion toallocate such deemed income, gains, or losses among Plan Accounts pursuant tosuch allocation rules as the Employer deems to be reasonable andadministratively practicable.

 

Amounts equal to theCompensation Deferrals and Employer contribution credits will be paid by theEmployer to the Trust with reasonable promptness after the total of suchCompensation Deferrals and Employer contribution credits during any month orother period has been determined.

 

3.3                                 PARTICIPANTSIN PAYOUT STATUS.  Participants who arereceiving monthly payments under the Plan on December 31, 1997, shallcontinue to have their Fund Accounts held by the Employer, and will receivepayments under the terms of the Plan and its rules of operation in effectat the time their first payment was received.

 

3.4                                 EMPLOYERDISCRETIONARY CONTRIBUTION.  The Employermay, in its sole discretion, credit to the Account of any Participant employedby 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 aPlan Year will be credited to a Participant’s Account as of the Valuation DateSpecified by the Employer.

 

3.5                                 ADDITIONALEMPLOYER CONTRIBUTION.  For each Planyear under the Employer’s Noncontributory Retirement Plan during which aParticipant in this Plan is also a participant in the NoncontributoryRetirement Plan, there shall be credited to the Account

 

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of such Participant an amountequal to the actuarial equivalent single sum value of any additional accruedbenefit the Participant would have earned under the Noncontributory RetirementPlan for such Plan Year if the Participant had not elected to defercompensation under this Plan during such Plan Year.

 

3.6                                 OBLIGATION TO PAY AN UNSECURED DEBT.  The obligation to pay Participant the amountdeferred, with the adjustments provided for in the Plan, shall be carried onthe books of the Employer as an unsecured debt (the “Deferred Account”).  The balance at any time in the DeferralAccount is not held in trust for Participant, and neither Participant, his orher estate or personal representative(s) nor his or her beneficiaries shallhave 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 suchunsecured contractual obligation.  Allfunds in the Deferral Account shall continue to be part of the general funds ofthe Employer and subject to the claims of its general creditors.

 

ARTICLE IV. ALLOCATION OF FUNDS

 

4.1                                ALLOCATIONOF DEEMED EARNINGS OR LOSSES ON ACCOUNTS. Pursuant to Section 4.5, each Participant shall have the right todirect the Employer as to how amounts in his or her Plan Account shall bedeemed to be invested.  In such a case,the Employer shall direct the Trustees to invest the Account maintained in theTrust on behalf of the Participant pursuant to the direction the Employer hasreceived from that Participant.  TheTrustees may, in their sole discretion, comply with a Participant’s directionwith respect to investment of assets of the Trust that are equal to the valueof the Participant’s Account in the investment options.  The Trustees shall provide the investmentoptions stated in Article VIII.  TheParticipant’s Plan Account will be credited or debited with the increase ordecrease 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 tothe net increase or decrease in realizable net asset value or credited interest,as applicable (as determined by the Employer), of each deemed investment optionwithin the Trust since the preceding Valuation Date shall be allocated amongall Participants'Accounts deemed to be invested in that investmentoption in accordance with the ratio that the portion of the Account of eachParticipant that is deemed to be invested within that investment option,determined as provided herein, bears to the aggregate of all amounts deemed tobe invested within that investment option.

 

4.2                                ACCOUNTINGFOR DISTRIBUTIONS.  As of the date of anydistribution hereunder, the distribution to a Participant or his or herBeneficiary 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 beestablished and maintained by the Employer to reflect the Account for eachParticipant with subaccounts to show separately the deemed earnings and lossescredited or debited to such Account and the applicable deemed investments ofthe Account.

 

4.4                                 INTERIM VALUATIONS.  If it is determined by the Employer that thevalue of the Trust as of any date on which distributions are to be made differsmaterially from the value of the Trust on the prior Valuation Date upon whichthe distribution is to be based, the Employer, in its discretion, shall havethe right to designate any date in the interim as a Valuation Date for thepurpose of revaluing the Trust so that the Account from which the distribution isbeing made will, prior to the distribution, reflect its share of such materialdifference in value.

 

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

 

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

 

(b)                   All amounts credited to the Participant’sAccount shall be deemed to be invested in accordance with the then effectivedeemed investment direction, and, as of the effective date of any new deemedinvestment direction, all or a portion of the Participant’s Account at thatdate shall be reallocated among the designated deemed investment fundsaccording to the percentages specified in the new deemed investment directionunless and until a subsequent deemed investment direction shall be filed andbecome effective.  An election concerningdeemed investment choices shall continue indefinitely as provided in theParticipant’s most recent Participant Enrollment and Election Form orother form specified by the Employer.

 

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

 

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nodeemed investment direction) until the next Designation Date, unless theEmployer provides for, and permits the application of corrective action priorthereto.

 

(d)                    If the Employer possesses at any timedirections as to the deemed investment of less than all of a Participant’sAccount, the Participant shall be deemed to have directed that the undesignatedportion of the Account be deemed to be invested in The Balanced Fund Accountmade available under the Plan as determined by the Employer in its discretionand set forth in Article VII.

 

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

 

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

 

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

 

ARTICLE V. ENTITLEMENT TO BENEFITS

 

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

 

5.2                                 HARDSHIPDISTRIBUTIONS.  In the event of financialhardship of the Participant, as hereinafter defined, the Participant may applyto the Employer for the distribution of all or any part of his or her Account.  The Employer shall consider the circumstancesof each such case and the best interests of the Participant and his or herfamily and shall have the right, in its sole discretion, if applicable, toallow such distribution, or, if applicable, to direct a distribution of part ofthe amount requested or to refuse to allow any distribution.  Upon a finding of financial hardship, theEmployer shall instruct the Trustees to make the appropriate distribution tothe Participant from amounts contributed to the Trust by the Employer inrespect of the Participant’s Account.  Inno event shall the aggregate amount of the distribution exceed either the fullvalue of the Participant’s Account or the amount determined by the Employer tobe necessary to alleviate the Participant’s financial hardship (which financialhardship may be considered to include any taxes due because of the

 

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distribution occurring becauseof this Section), and that is not reasonably available from other resources ofthe Participant.  For purposes of thisSection, the value of the Participant’s Account shall be determined as of thedate of the distribution.  *Financial hardship*means (a) a severefinancial hardship to the Participant resulting from a sudden and unexpectedillness 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 tocasualty, or (c) other similar extraordinary and unforeseeablecircumstances arising as a result of events beyond the control of theParticipant, each as determined to exist by the Employer.  A distribution may be made under this Section onlywith the consent of the Employer’s board of directors.

 

5.3                                 REEMPLOYMENT OF RECIPIENT.  If a Participant receiving installmentdistributions pursuant to Section 6.2 is reemployed by the Employer, theremaining distributions due to the Participant shall be suspended until suchtime as the Participant (or his or her Beneficiary) once again becomes eligiblefor benefits under Section 5.1, 5.2, or 5.3, at which time suchdistribution shall commence, subject to the limitations and conditionscontained in this Plan.

 

ARTICLE VI. DISTRIBUTION OF BENEFITS

 

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

 

6.2                                 METHOD OF PAYMENT.

 

(a)                     Cash Payments.  All payments under the Plan shall be made incash.  Accounts with an aggregate amountof $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 Participantor 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 theTrust or the Employer, as provided by Section 6.1, in a lump sum.

 

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Inthe event a Participant becomes entitled to benefits under Section 5.1, anaggregate amount equal to the Participant’s Account will be paid by the Trustor the Employer, as provided by Section 6.1, in a lump sum, on or aboutthe date of the Participant’s termination, or in annual installments made avera period selected by the Participant.  Suchinstallments 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 anannuity for the life of the Participant (or the joint lives of the Participantand his or her spouse) of actuarially equivalent value to the Participant’slump sum benefit.  The timing and mannerof 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.

 

Allsuch selections must be made by the Participant prior to his or her death ortermination of employment.  If aParticipant fails to designate properly the manner of payment of theParticipant’s benefit under the Plan, such payment will be made in accordancewith the Schedule of Payment stated in Article XIII, to begin on orabout the date of the Participant’s death or termination of employment.

 

If the whole or any part of apayment hereunder by the Trust of the Employer is to be in installments, thetotal to be so paid shall continue to be deemed to be invested pursuant toSections 4.1 and 4.5**under such procedures as theEmployer 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 theinstallment payments, in such equitable manner as the Employer shall determine.

 

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

 

Upon the death of aParticipant after payments hereunder have begun but before he or she hasreceived all payments to which he or she is entitled under the Plan, theremaining benefit payments shall be paid to the person or persons designated inaccordance with Section 7.1, in the manner in which such benefits werepayable to the Participant, unless the Beneficiary elects a more rapid form or schedule ofdistribution.

 

ARTICLE VII. BENEFICIARIES; PARTICIPANT DATA

 

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

 

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receive such benefits as may bepayable under the Plan upon or after the Participant’s death, and suchdesignation may be changed from time to time by the Participant by filing a newdesignation.  Each designation willrevoke all prior designations by the same Participant, shall be in a formprescribed by the Employer, and will be effective only when filed in writingwith the Employer during the Participant’s lifetime.

 

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

 

7.2                                 INFORMATION TO BE FURNISHED BY PARTICIPANTSAND BENEFICIARIES; INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES.  Any communication, statement, or notice addressedto a Participant or to a Beneficiary at his or her last post office address asshown on the Employer’s records shall be binding on the Participant orBeneficiary for all purposes of the Plan. The Employer shall not be obliged to search for any Participant orBeneficiary beyond the sending of a registered letter to such last knownaddress.  If the Employer notifies anyParticipant or Beneficiary that he or she is entitled to an amount under thePlan and the Participant or Beneficiary fails to claim such amount or make hisor 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 ofthe next of kin of the Participant is known to the Employer, the Employer maydirect distribution of such amount to any one or more or all of such next ofkin, and in such proportions as the Employer determines.  If the location of none of the foregoingpersons can be determined, the Employer shall have the right to direct that theamount payable shall be deemed to be a forfeiture, except that the dollaramount 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 madeby the Participant or the Beneficiary to whom it was payable.  If a benefit payable to an unlocatedParticipant or Beneficiary is subject to escheat pursuant to applicable statelaw, the Employer shall not be liable to any person for any payment made inaccordance with such law.

 

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ARTICLE VIII. THE TRUST

 

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

 

8.2                                INVESTMENTOPTIONS.  The Trust shall provide investmentsin 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 ofthe Trust that are equal to the value of the Participant’s Account In theinvestment 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 providedherein, the Employer shall have the sole responsibility for and the solecontrol of the operation and administration of the Plan and shall have thepower and authority to take all action and to make all decisions andinterpretations that may be necessary or appropriate in order to administer andoperate the Plan, including, without limiting the generality of the foregoing,the power, duty, and responsibility to

 

(a)                    Resolve and determine all disputes orquestions arising under the Plan, including the power to determine the rightsof Eligible Employees, Participants, and Beneficiaries, and their respectivebenefits, and to remedy any ambiguities, inconsistencies, or omissions in thePlan.

 

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

 

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

 

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

 

(e)                    Appoint any persons or firms, or otherwise actto secure specialized advice or assistance, as it deems necessary or desirablein connection with the administration and operation of the Plan, and theEmployer shall be entitled to rely conclusively upon, and shall be fullyprotected 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 totime by written instrument all or any part of its duties, powers, orresponsibilities under the Plan, both ministerial and discretionary, as itdeems appropriate, to any person or committee, and in the same manner to revokeany such delegation of duties, powers, or responsibilities.  Any action of such person or committee in theexercise of such delegated duties, powers, or responsibilities shall have thesame force and effect for all purposes hereunder as if such action had beentaken by the Employer.  Further, theEmployer may authorize one or more persons to execute any certificate ordocument on behalf of the Employer, in which event any person notified by theEmployer of such authorization shall be entitled to accept and conclusivelyrely upon any such certificate or document executed by such person asrepresenting action by the Employer until such third person shall have beennotified of the revocation of such authority.

 

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

 

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

 

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

 

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9.5                                 PAYMENT OF ADMINISTRATION EXPENSES.  All expenses incurred in the administrationand operation of the Plan and the Trust, including any taxes payable by theEmployer in respect of the Plan or Trust or payable by or from the Trustpursuant 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 theEmployer shall respond in writing.  Ifthe claim is denied, the written notice of denial shall state, in a mannercalculated to be understood by the Claimant:

 

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

 

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

 

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

 

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

 

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

 

The decision on review normallyshall be made within sixty (60) days of the Employer’s receipt of the requestfor review.  If an extension of time isrequired due to special circumstances, the Claimant shall be notified, inwriting, by the Employer, and the time limit for the decision on review shallbe extended to one hundred twenty (120) days. The decision on review shall be in writing and shall state, in a mannercalculated to be understood by the Claimant, the specific reasons for thedecision and shall include

 

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references to the relevant Planprovisions on which the decision is based. The written decision on review shall be given to the Claimant within thesixty (60) day (or, if applicable, the one hundred twenty (120) day) time limitdiscussed above.  If the decision onreview is not communicated to the Claimant within the sixty (60) day (or, ifapplicable, the one hundred twenty (120) day) period discussed above, the claimshall be deemed to have been denied upon review.  All decisions on review shall be final andbinding with respect to all concerned parties.

 

ARTICLE X. AMENDMENT

 

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

 

10.2                           AMENDMENTS TO ENSURE PROPER CHARACTERIZATIONOF PLAN.  Notwithstanding the provisionsof Section 10.1, the Plan and the Trust agreement may be amended by theEmployer at any time, retroactively if required, if found necessary, in theopinion of the Employer, in order to ensure that the Plan is characterized as aplan of deferred compensation maintained for a select group of management orhighly compensated employees as described under ERISA Sections 201(2),301(a)(3), and 401(a)(1) and to conform the Plan to the provisions andrequirements of any applicable law (including ERISA and the Code).  No such amendment shall be considered prejudicialto 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 anytime, to suspend the operation of the Plan for a fixed or indeterminate periodof time.

 

11.2                           AUTOMATIC TERMINATION OF PLAN.  The Plan, but not the Trust, automatically shallterminate upon the dissolution of the Employer or upon its merger into or consolidationwith any other corporation or business organization if there is a failure bythe surviving corporation or business organization to adopt specifically andagree to continue the Plan.

 

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

 

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

 

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

 

ARTICLE XII. MISCELLANEOUS

 

12.1                         LIMITATIONS ON LIABILITY OF EMPLOYER.  Neither the establishment of the Plan or anymodification thereof, nor the creation of any account under the Plan, nor thepayment of any benefits under the Plan shall be construed as giving to anyParticipant or other person any legal or equitable right against the Employeror any officer or employer thereof, except as provided by law or by any Planprovision.  Except as to the provisionsof Article 3.1, the Employer does not in any way guarantee any Participant’sAccount from loss or depreciation, whether caused by poor investmentperformance of a deemed investment or the inability to realize upon aninvestment due to an insolvency affecting an investment vehicle or any otherreason.  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 theprovisions of the Plan or of any instrument or instruments implementing itsprovisions, or for the failure of any Participant, Beneficiary, or other personto be entitled to any particular tax consequences with respect to the Plan, orany credit or distribution hereunder.

 

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

 

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

 

12.3                          SPENDTHRIFT PROVISION.  No amount payable to a Participant or aBeneficiary 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 anyattempt to do so will be void; nor will any benefit be in any manner liable foror subject to the debts, contracts, liabilities, engagements, or torts of theperson entitled thereto.  Further, thewithholding of taxes from Plan benefit payments; the recovery under the Plan ofoverpayments of benefits previously made to a Participant or Beneficiary; ifapplicable, the transfer of benefit rights from the Plan to another plan; orthe direct deposit of benefit payments to an account in a banking institution(if not actually part of an arrangement constituting an assignment oralienation) shall not be construed as an assignment or alienation.

 

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

 

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ARTICLE XIII. SCHEDULE OF PAYMENTS

 

13.1               PAYMENT OF CERTAIN BENEFITS.  Benefit payments referencing this ArticleXIII 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, theEmployer 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 asfollows:

 

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

 

(b)                                 Timing and Manner of Payment.  In the case of distributions to a Participantor 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 theTrust or the Employer, as****provided by Section 6.1, in a lump sum.

 

Inthe event a Participant becomes entitled to benefits under Section 5.1, anaggregate amount equal to the Participant’s Account will be paid by the Trustor the Employer, as provided by Section 6.1, in a lump sum, on or about thedate of the Participant’s termination, or in installments made over a periodselected by the Participant.  Such installmentsmay be deferred for a period of time not to exceed age 75 of the Participant.  Such amount may be paid in the form of anannuity for the life of the Participant (or the joint lives of the Participantand his or her Primary Beneficiary) of actuarially equivalent value to theParticipant’s lump sum benefit.  Thetiming and manner of payments of distributions of Participant Accountestablished to comply with Section 3.1, must be paid in accordance with theSchedule stated in Article XIII, for the guarantee of interest set forth inSection 3.1 to continue.

 

Allsuch selections must be made by the Participant prior to his or her death ortermination of employment.  If aParticipant fails to designate properly the manner of payment of theParticipant’s benefit under the Plan, such payment will be made in accordancewith the Schedule of Payment stated in Article XIII,**to begin on or about the date of the Participant’s death ortermination of employment.

 

IN WITNESS WHEREOF, theEmployer has caused this Amendment to be executed and its seal to be affixedhereto, 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 ofJanuary, 1998, by and between Kanawha Insurance Company (Company) and theTrustees whose signatures appear below.

 

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

 

(c)                        WHEREAS, Company has incurred or**expects to incur liability under the termsof 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 shallbe held therein, subject to the claims of Company’s creditors in the event ofCompany’s Insolvency, as herein defined in Section 3(a), until paid toPlan participants and their beneficiaries in such manner and at such times asspecified in the plans;

 

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

 

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

 

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

 

Section1. Establishment of Trust.

 

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

 

(b)                       The Trust shall become irrevocable uponapproval 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, asamended, and shall be construed accordingly.

 

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(d)                       Theprincipal of the Trust, and any earnings thereon shall be held separate andapart from other funds of Company and shall be used exclusively for the usesand purposes of Plan participants and general creditors as herein setforth.  Plan participants and theirbeneficiaries shall have no preferred claim on, or any beneficial ownershipinterest in, any assets of the Trust.  Any rights created under the Plans and thisTrust Agreement shall be mere unsecured contractual rights of Plan participantsand their beneficiaries against Company. Any assets held by the Trust will be subject to the claims of Company’sgeneral creditors under federal and state law in the event of Insolvency, asdefined in Section 3(a) herein.

 

(e)                        Company,in its sole discretion, may at any time, or from time to time, make additionaldeposits of cash or other property in trust with Trustee to augment theprincipal to be held, administered and disposed of by Trustee as provided inthis Trust Agreement.  Neither Trustee norany Plan participant or beneficiary shall have any right to compel suchadditional deposits.

 

Section 2.  Payments to Plan Participants and TheirBeneficiaries.

 

(a)                        Companyshall deliver to Trustee a schedule (the Payment Schedule) that indicates theamounts payable in respect of each Plan participant (and his or herbeneficiaries), that provides a formula or other instructions acceptable toTrustee for determining the amounts so payable, the form in which such amountis to be paid (as provided for or available under the Plans), and the time ofcommencement for payment of such amounts. Except as otherwise provided herein, Trustee shall make payments to thePlan participants and their beneficiaries in accordance with such PaymentSchedule.  The Trustee shall makeprovisions for the reporting and withholding of any federal, state or localtaxes that may be required to be withheld with respect to the payment ofbenefits pursuant to the terms of the Plans and shall pay amounts withheld tothe appropriate taxing authorities or determine that such amounts have beenreported, withheld and paid by Company.

 

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

 

(c)                        Companymay make payment of benefits directly to Plan participants or theirbeneficiaries as they become due under the terms of the Plans.  Company shall notify Trustee of its decisionto make payment of, benefits directly prior to the time amounts are payable toparticipants or their beneficiaries.  Inaddition, if the principal of the Trust, and any earnings thereon, are notsufficient to make payments of benefits in accordance with the terms of thePlans, 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 toTrust Beneficiary When Company Is Insolvent.

 

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

 

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

 

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

 

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

 

(3)                                  If at any time Trustee has determined thatCompany is Insolvent, Trustee shall discontinue payments to Plan participantsor their beneficiaries and shall hold the assets of the Trust for the benefitof Company’s general creditors.  Nothingin the Trust shall in any way diminish any rights of Plan participants or theirbeneficiaries to pursue their rights as general creditors of Company withrespect to benefits due under the Plans or otherwise.

 

(4)                                  Trustee shall resume the payment of benefitsto Plan participants or their beneficiaries in accordance with Section 2 ofthis Trust Agreement only after Trustee has determined that Company is notInsolvent (or is no longer Insolvent).

 

(c)                       Provided that there are sufficient assets, ifTrustee discontinues the payment of benefits from the Trust pursuant to Section3 (b) hereof and subsequently resumes such payments, the first paymentfollowing such discontinuance shall include the aggregate amount of allpayments due to Plan participants or their beneficiaries under the terms of thePlans for the period of such discontinuance, less the aggregate amount of anypayments made to Plan participants or their beneficiaries by Company in lieu ofthe payments provided for hereunder during any such period of discontinuance.

 

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Section 4.  Payments to Company.

 

Except as provided inSection 3 hereof, after the Trust has become irrevocable, Company shall have noright or power to direct Trustee to return to Company or to divert to othersany of the Trust assets before all payments of benefits have been made to Planparticipants and their beneficiaries pursuant to the terms of the Plans.

 

Section5.  Investment Authority.

 

Inno 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 whichTrustee invests.  All rights associatedwith assets of the Trust shall be exercised by Trustee or the person designatedby Trustee, and shall in no event be exercisable by or rest with Planparticipants.

 

Section 6.  Dispositionof Income.

 

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

 

Section7.  Accounting by Trustee.

 

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

 

Section8.  Responsibility of Trustee.

 

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

 

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(b)                      IfTrustee undertakes or defends any litigation arising in connection with thisTrust, Company agrees to indemnify Trustee against Trustee’s costs, expensesand 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, expensesand liabilities in a reasonably timely manner, Trustee may obtain payment fromthe Trust.

 

(c)                       Trusteemay hire agents, accountants, actuaries, investment advisors, financialconsultants or other professionals to assist it in performing any of its dutiesor obligations hereunder.

 

(d)                      Trusteeshall have, without exclusion, all powers conferred in Trustees by applicablelaw, unless expressly provided otherwise herein, provided, however, that if aninsurance policy is held as an asset of the Trust, Trustee shall have no powerto 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 asuccessor Trustee, or to loan to any person the proceeds of any borrowingagainst such policy.

 

(d)                      Notwithstandingany powers granted to Trustee pursuant to this Trust Agreement or to applicablelaw, Trustee shall not have any power that could give this Trust the objectiveof carrying on a business and dividing the gains therefrom, within the meaningof Section 301.7701-2 of the Procedure and Administrative Regulationspromulgated pursuant to the Internal Revenue Code.

 

Section 9.  Compensation and Expenses of Trustee.

 

Company shall pay all administrativeand Trustee’s fees and expenses.  If notso paid, the fees and expenses shall be paid from the Trust.

 

Section 10.  Resignation and Removal of Trustee.

 

(a)                       Trusteemay resign at any time by written notice to Company, which shall be effective30 days after receipt of such notice unless Company and Trustee agreeotherwise.

 

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

 

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

 

(d)                      Iftrustee resigns or is removed, a successor shall be appointed, in accordancewith Section 11 hereof, by the effective date of resignation or removal underparagraphs (a) or (b) of this section.  If no such appointment has been made, Trusteemay apply to a court of competent jurisdiction for appointment of a successoror for instructions.  All expenses ofTrustee in connection with the proceeding shall be allowed as administrativeexpenses of the Trust.

 

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Section 11.  Appointment of Successor

 

(a)                       If Trustee resigns or is removed inaccordance with Section 10(a) or (b) hereof, Company may appoint any thirdparty, such as a bank trust department or other party that may be grantedcorporate trustee powers under state law, as a successor to replace Trusteeupon resignation or removal.  Theappointment shall be effective when accepted in writing by the new Trustee, whoshall have all of the rights and powers of the former Trustee, including ownershiprights in the Trust assets.  The formerTrustee shall execute any instrument necessary or reasonably requested byCompany or the successor Trustee to evidence the transfer

 

(b)                      The successor Trustee need not examine therecords and acts of any prior Trustee and may retain or dispose of existingTrust assets, subject to Sections 7 and 8 hereof.  The successor Trustee shall not beresponsible for and Company shall indemnify and defend the successor Trusteefrom any claim or liability resulting from any action or inaction of any priorTrustee or from any other past event, or any condition existing at the time itbecomes successor Trustee.

 

Section12.  Amendment or Termination.

 

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

 

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

 

Section 13.  Miscellaneous.

 

(a)                        Anyprovision of this Trust Agreement prohibited by law shall be ineffective to theextent of any such prohibition, without invalidating the remaining provisionshereof.

 

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

 

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

 

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The effective date of thisTrust 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 DeferredCompensation Plan

 

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